Starting Point For Sustainable Agribusiness

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The thrust of my piece, last week, is that since there are vast opportunities in the agribusiness value chains, there is need for you to choose to invest in your area of interest that you think is capable of yielding profit.

The first step in starting an agribusiness or any business for that matter is to look for a viable proposition.

This means finding out which product or service is marketable and the people involved in it.

There is no need going into any business until you have established the marketability of the product or service.

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Having selected a good product or service, the next step is to assemble a good management team. Then you look carefully at the premises, equipment and the financial resources needed to start the business.

If your product or service has an established market, ensure that your sales projections are realistic for a new business starting from the scratch.

Then determine the size of the market – is it expanding or contracting? How many competitors are already in the market and the market share of each one? Determine which proportion of the market you are targeting to capture in the first year, second year, third year. Ask yourself why people should buy from you instead of others – your Unique Selling Proposition (USP).

Then review your product or service to ensure that you have the legal right to produce and sell it. For instance, you would be courting trouble if you embark on marijuana or Indian hemp production. The law enforcement agencies would go after you. You may also need legal advice to protect the future of your product or service.

Business Organisation

You need to determine the form of business you intend to engage in. Here are some forms of business organisation you may consider.

Sole Proprietorship

The simplest form of business to go into on your own is sole proprietorship under your own name.

In this, the important point to bear in mind is that in this type of business, you take all the gains as well as be personally liable for all the debts that may incur in the business.

One can go into agribusiness with someone. This has the advantage of pulling resources together to launch into a business. Remember however that just as in sole proprietorship, if your partner incurs debts, even if unknown to you, you are still liable to them if he disappears.

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There should be a partnership agreement drawn by a solicitor to avoid problems arising from break-up of the partnership. The partnership agreement should have stipulations such as the procedures to be followed if one of the partners dies a definition of the partners’ remuneration, and whether decisions are to be made jointly or separately.

Limited Liability

The major difference between a company and partnership is the liability. Directors of a company are not personally liable for debts incurred by the company. You may need the services of an accountant or solicitor before going into Limited Liability Company. There are four main issues to be considered in Limited Liability Company. They are the name of the company, the objectives of the company, and Memorandum and Articles of Association (containing contributions and procedural rules) and filing particulars with the Corporate Affairs Commission (CAC).

Cooperatives

A co-operative society is a voluntary organisation formed by farmers and other stakeholders to pull their resources and ideas together and render services to members.

The objective is to protect members from exploitations by middlemen, to train members to get better price bargains for their produce.

It is also meant to ensure easy and quick dissemination of information to members as well as to foster unity and solidarity among members. It helps members to secure loans for inputs and to provide processing and storage facilities and marketing functions for their produce.

There are many types of Agricultural Co-operatives: They include Consumer Co-operative: This buys goods in large quantities from producers or wholesalers at controlled prices and sells to members at reduced price. Producers co-operative: This normally produces some commodity and sells to consumers at a higher price. It also assists members to buy inputs such as fertiliser and improved seedlings. It also purchases equipment such as tractors and hire to members. Multi-purpose co-operative: This combines many functions such as producing, processing and marketing crops of members.

Savings and Thrift Society

In this, members contribute money periodically from which they give loans to members at minimal interest rates.

Business Plan

Before you launch into agribusiness, you need a business plan. A business plan is a written document that gives the direction of the business. It acts as a guide to the business owner. Without a solid business plan, it is difficult to make a head way. It contains the aims and objectives of the enterprise, ideas and steps to be taken to achieve the desired objectives.

It provides relevant information for prospective investors and acts as a tool to measure the performance o the outfit over time.

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A good business plan can be used to obtain bank loans, to secure contracts, attract resourceful personnel, tidy up acquisitions and merger deals and to project the enterprise to stakeholders. As a result, the plan ought to be informative, relevant, realistic and practical.

A business plan may be structured as follows:

Cover Page: This contains a statement about the business plan. Table of Content: This contains subtitles and page allocations. Project Summary: Gives brief explanation of the business, prospects and needs. The Product/ Service: The distinctive products, services or ideas the business is to deliver. Market/Marketing: How the company intends to capture its potential market through packaging, pricing, distribution and advertising. Ownership/ Management Structure: Gives information on people to hold leadership and responsibility positions in the company. SWOT Analysis: Contains information on the strengths, weakness of the company’s competitors. Project Cost/projections: This includes statements about the company’s balance sheet, cash flows and profit and loss account. Appendices: This contains organisational chart, market information, and data to back up claims in the business plan and CVs of key personnel. The aforementioned processes are necessary as safety nests for successful and sustainable agribusiness. Remember that not to plan is planning to fail. May this not be your portion.


Read Original Report Here By Independent

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