Farming is an enterprise where you can double or even triple your investment in 6 months to one year but it is laden with huge risks.
In my previous blog posts, I have provided technical information on different crops for those who wish to start a farming enterprise; but this one is unique, for the focus is success in agribusiness.
A farming business is the easiest business to start; all you need is a piece of land. If you don’t have any, there are people, always ready to lease their land.
Secondly; you must have the resolve to work hard, equipped with technical knowledge on the crop you wish grow and be abreast to the ever changing crop or farm operations and financial literacy skills.
Most of us assume that capital is the paramount factor in agricultural production, this is not true. In my opinion, managerial skills reign supreme- they determine success or failure.
A knowledgeable agricultural investor/farmer will view farming as a production line. The factory is the soil, where inputs are necessary in sufficient quantities for flourishing crop growth.
Most farmers do not supply the requisite inputs in the desired quantities. They either, oversupply or undersupply them; two conditions having a considerable influence on the quality of and price at which to sell the product.
Farmers all over lament that the costs of production have sky rocketed while the commodity prices have remained low; even in this condition, there are those who are smiling all the way to the bank.
For instance, during the rainy season, grass sprouts all over even on public land. Those with foresight harvest the grass aggressively; store it for the dry season or replenish their barns.
An Agro-based business thrives during seasons of biting shortage or during seasons of high demand like Easter and Christmas; successful farmers position their resources for such occasions.
All we need to succeed in any business including agriculture is the ability to forecast and lay plans that will shape the business/firm in the present term, medium term and in the future.
HOW FINANCIAL LITERACY AFFECTS AN AGRIBUSINESS
Success in business is the wish of every businessman or lady in Kenya; unfortunately only a handful makes it. A discussion on a popular web forum www.wazua.com attributed this failure to lack of financial literacy.
“The...biggest handicap to most people achieving financial freedom is the lack of financial education. We have people all over who are keen to invest and start business, but the truth of the matter is that 90% of the businesses started fail within the first 5 years of operation.”
The question is; which financial education is needed to succeed in business? Must you arm yourself with complex accounting formulas or equations to calculate profit or loss, sales projections or turnover?
We have witnessed people, who’ve had suboptimal education succeeding in business; some of whom are billionaires! This proves to succeed; only a basic education is necessary.
All we need to understand is; what is capital, what are sales, when do you make a profit or loss and how to deal with and regulate expenses, and, recognize that every decision taken, has a financial implication to the business.
Many people have bright business ideas. Once they take the bold step to implement them, they fail to differentiate capital from sales, profit from sales, and fail to monitor expenses to peril of the business.
Successful businessmen whether learned or not, have learned by experience and practice the role of capital in business, the tricks of increasing sales, the ways of increasing profits while reducing losses and the effect of ballooning expenses on a business.
Of course there are other ‘accounting calculations or concepts’ [if implemented] assist a businessman to accurately determine if his business is doing well.
I believe the most basic accounting concepts constitute the foundation of any business; other accounting formulas evolve from them.
Customarily, we are quick to leap into opportunities without seriously analyzing them. We consequently finish up missing the bigger picture.
We are rash to engage in business because of the greed of achievement. A business is like a seed; there are preparations that must be put in place before planting the seed.
You don’t expect to harvest immediately after planting, the seed must be natured; the bountifulness of the harvest is determined by how we natured the seed.
At times, regardless of the effort done, we miss a harvest because of reasons beyond us; the same applies to business.
When we critically analyze ourselves and the business, we will be able to understand our limitations and how they affect the business so that adjustments can be made.
There exists a very big gap and the same must be addressed if we want to progress as a country and get out of the shackles of poverty and of course the middle class mentality.
No comments:
Post a Comment