Start a new venture by drawing on research and existing skill sets
Horace Clemmons remembers walking behind a two-mule team on his grandfather’s 40-acre farm in rural Alabama. So when his business partner and former IBM colleague Saul Berenthal proposed manufacturing tractors for smallholder farmers in Cuba, Clemmons could relate to farmers’ limited access to resources and equipment.
Yet when the Cuban government rejected their company CleBer’s proposal to establish a local manufacturing facility citing failure to meet technology requirements, the agricultural entrepreneurs turned their attention to U.S. organic farms and smallholder operations globally.
“We just have a base philosophy that says if you’re going to achieve these kinds of things, you can’t play by the rules, you have to make the rules,” says Clemmons, whose manufacturing plant is in Paint Rock, Ala. He says producers can apply this viewpoint to their own entrepreneurial efforts. “What do you buy today that you know could be made just as functional and a lot cheaper than what’s made by the vertical business guys?”
Find Your Niche. The path Cleber has followed illustrates how top U.S. farm operators can think about, introduce and scale side businesses.
“The first thing you’ve got to do is identify what those core strengths are and what it is you can do with surplus labor or surplus shop space or surplus whatever it is you have in your business,” explains Bret Oelke, owner of ag consulting firm Innovus Agra and an expert in the field of business diversification.
Striking out as an entrepreneur isn’t easy. For example, fewer than one in five businesses founded in 1994 are still around today, and just over one in three founded a decade ago still are in operation, the U.S. Bureau of Labor Statistics reports.
Many row-crop farms launch related businesses such as commercial trucking and custom operations because they have the right equipment, certifications and labor in certain seasons, Oelke says. Yet those business categories are crowded.
Young farmers should consider carving out niches with services around farm technology, websites and newsletters, he says.
“They want to build within the business extra income, not only for the business but for themselves,” Oelke says, “so that they can enhance their skills, enhance the value of the business and, at the same time, generate enough revenue where they can start buying in.”
How to Build a Successful Side Business
If you want to expand your farm beyond production agriculture, it’s a good idea to understand the customers you’d like to serve and the opportunities your business can realize, says Horace Clemmons, a principal in the Paint Rock, Ala.-based manufacturing firm CleBer (thinkoggun.com).
1. Step back from your operation. Get the people and systems in place to enable you to think through your new business model.
2. Learn from the marketplace. Research the kind of product or service you’d like to introduce with attention to the customers who will benefit.
3. Identify the problem in need of a resolution. Determine what customers want and need. Find data points that reveal the scale of the issue.
4. Determine the size of the challenge. Identify other groups of people who could benefit from what you are building.
5. Involve customers closely in the business. Have conversations with prospective consumers. Explain your plans, take notes and adjust.
6. Evaluate competitive offerings. Your objective should be to provide a product or service that is as good as any other in the marketplace and also costs less for the customer.