Farming: Business or Hobby?
Sometimes the purpose of a business is very clear, however many times it is below the surface, as businesses simply get on and “just do it”, but are driven by something in them that is great. Some themes come up frequently in terms of purpose – whether the businesses are outwardly successful or struggling.
These are a willingness to:
- fulfil a personal drive and ambition to do something great or to be the best
- provide a foundation for family well being - fulfill a way of life and a genuine love of farming
- provide something different that is good for people and the world
- enhance financial wellbeing
- simply do it, because it’s what we do.
It is important to note that whilst most of the operations are operationally sound, run professionally, and inspirationally led, not all are overwhelmingly viable businesses from a profit and loss perspective, or necessarily successful farming operations. There are many reasons this might be the case, but common themes are vagaries of the market and fickle consumer behaviour affecting demand in market, distortion of markets due to government influence, bad luck playing a part in business, or a lack of focus on profit and loss due to other factors being the prime driver of an operation.
How does an agricultural business maintain its essence and become better at fulfilling its purpose?
Many if not all usiness drivers are needed in some form to run a good business – and indeed many of the seemingly positive behaviours can be a negative and hold a business back if applied in the wrong manner (e.g. hyper competitiveness leading to low pricing, driving market share up and profitability down).
Perhaps the key overarching factor is that these businesses affect what they can, take account of the factors beyond their control, and get on with the job and make things happen. They are results orientated rather than problem-focused. They work hard AND smart to make their own luck.
Why do people farm – what is the essence of their purpose?
What is better farming is very much affected by the organisations philosophy or the essence of the operation itself.
“Achievement is not always success, while reputed failure often is. It is honest endeavor, persistent effort to do the best possible under any and all circumstances.” - Orison Swett Marden.
The key philosophies, which have driven impressive agri-business operations to improve their performance or offering to the market. It is clear that they are driven by a number of factors which result in them becoming great at what they do.
Enhancing Community Service and Keep Reputation.
It is not a given that an Agri-business with a solid philosophical grounding will be successful by all measures. This is most obvious with organisations with no stated objective of being financially successful, such as initiatives that focus on community outcomes. However it also is common in agribusinesses.
Often times the necessarily long term focus of a farm operation can make it look unviable – when other factors are in fact more important than short term viability.
Some agri-businesses are completely integrated, offering food grown on farm (both vegetable and animal), an amazing farm shop, distribution through premium outlets, and accommodation. Some offer extensive classes in a state of the art, the key philosophy is to do everything the best way possible. The story behind the product – based on old techniques, pedigree breeds and organics, is far more prominent that any concern for profitability. Enhancing the farm’s reputation, and sustaining its future, is the key driver.
Enhancing financial well-being
While a day-to-day focus on financials is important and may be a key factor in maintaining or growing an agri-business, this is seldom the central driving force in businesses. It is a means to an end – a stable financial grounding allows businesses to thrive and pursue the other philosophical goals that they have.
While financial well-being is a pillar of good business practice, it is not the key driver. While other philosophies may drive a business, it is clear that every viable business must be run with some focus on the bottom line.
How does an agricultural business maintain its essence and become better at fulfilling its purpose?
However, a lot more underpins business. While quality and “can do” attitude are also guiding strategies, recognition of the importance of commercial drivers is also ever present. Philosophy on sustainability is to give something back to the environment. So some started planting more trees. Every tree should have a commercial value though, otherwise the business is going backwards. Without commercial success you can’t achieve the other more holistic philosophies.
Passion
To fulfill a way-of-life and a genuine love of farming on a personal level, and to provide something different that is good for people and the world.
A genuine love of farming and a way-oflife is a prime motivating factor for many farmers. This is primarily for personal satisfaction stemming from a preference for living and having your family based in a rural environment. This can also be accompanied by a wish for “providing something different to people” as a central motivation, in that this may involve personal sentiment about how people should live a happier and healthier life.
But you Must Make Money
The key philosophical foundations of wellrun and aspiring agribusinesses is basic and various traits are common in most of these businesses.
However, one factor that need to be identified is simple because it’s what we do’ attitude. The philosophy is cited, but does not reflect actual practice. Often times people assume that they are farming the way their forefathers did – even though they are using far different techniques in the field, and operating at a far different level in the market. This is a purpose that allows top performance – to be rooted in a philosophy that does not allow improvement which is a recipe for bad business performance.
That said, the multi-generational aspect of farming remains a key strength in the industry. Multigenerational knowledge is important. Often times farming and business intuition is well honed due to the amount of time and situations that famers have been exposed to over their lifetime. However, they still welcome innovation, and organise themselves well. All of them are expert in technical operation of their business.
Perhaps the most common theme in agribusinesses which have succeeded in growing their businesses beyond their natural trajectory has been that they have taken a leap at the appropriate time. They have a structured strategic operation of their business – but at the same time know when to take a risk and grab an opportunity. While they have a structure, if needs-must they will over-rule their board.
One of the other most evident aspects of organisation in good farm businesses is the involvement of other people in helping manage and run the every-day activities of a company.
This applies to both operational and strategic decision-making. Business people essentially have to identify what they are good at and pay for the rest.
Farms also require relationships along the supply chain. In the least, good agribusinesses have productive relationships along the value chain, with some owning the value chain. A willingness to do better results in businesses integrating their business both horizontally and vertically to gain market advantage.
Essentially, successful agri-businesses are not prepared to compromise on providing the right product to the market. This is a combination of point of difference AND providing the necessary volume to have presence in a market.
What agri-business does best is affect what it can, take account of the factors beyond its control, and get on with it.