It has been proven over time that the Agriculture sector is a profitable if managed properly.Below are some tips which can help one achieve great success in this sector.
Manage operating risk – Managing operating risk implies keeping cash costs and land rents in line with revenues, recognising continued leaner profit margins and margin risk as well as taking advantage of forward pricing and crop insurance to manage risk.
Manage money and capital – You should by all means protect your working capital.This may involve extending your terms for items purchased on 10 and 20 year terms,lock in todays relatively low interest rates on capital expenses and deleverage.
Emphasise execution – Emphasising execution involves doing fewer things better and identifying areas that lose money.You also need to use standard operating procedures, optimise data management, simplify operations and automate where possible and then pay attention to details.
Increase asset utilisation – Increasing asset utilisation takes observing 24 hour per day operations,leasing rather than buying,using joint venture and shared machinery to intensify production,think in terms of earns and turns and embracing the idea of outsourcing or custom farming.
Increase margins – You can increase margins by controlling costs,buying right,using best management practices and technology and then market rather than price.
Use time efficiently – In the world of business, time is everything.Efficient use of time can be achieved by focusing on management, hire skilled employees, using scheduling and workflow planners and then developing standard operating procedures.
Grow volume and sales – Growing volume and sales entails increasing productivity,generating more volume with less investment and implementing joint venture for size and volume to gain market access.
Get smart and create value for your customer – This tip encourages a farmer to use consultants, network with successful farm and non farm business managers, develop managerial skills and understanding your customer and what you can do to create value for him or her.You should also differentiate on service such as quality, storage and just in time delivery.
