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“What’s next?”
Considerations and pitfalls for agribusinesses looking at new business opportunities

by Jeff Brandenburg

TO SURVIVE AND THRIVE, every business will eventually need to look for new growth opportunities. Those who are involved in the agribusiness industry are no exception. At some point, the management of a business is going to ask, “What’s next?”

It’s a simple question, but anyone who has ever asked it knows that the answer is not.

There are a number of issues that must be considered before launching a new venture, and a number of pitfalls awaiting organizations that have not adequately planned and prepared.

Fundamental considerations

Seeking new opportunities for an established business in not unlike starting a business from scratch. An established business is likely to have more experience and greater resources than a start-up; even so, there are some fundamental questions that must be asked before any actions are taken. Here are a few of those crucial questions:

What do our customers/members need? It’s the most basic question of any business, but it can be overlooked in favor of the statement, “This is what we want to sell.” Don’t skimp on research — including formal surveys and focus groups — to learn what needs are not being addressed by your current offerings or those in the community.

What do we do well? You might call these your core competencies or specializations. But no matter what you call them, they’re always the best place to start. There’s nothing wrong with stepping outside of your comfort zone, but the farther you step, the more likely you will need to invest in new people, equipment and facilities to make a new venture work. Your new venture should complement what you are doing now while using existing brand equity to establish its own credibility and market position.

Are any of our current services underutilized? If the answer is yes, your best bet may be to learn why these offerings are underutilized, and develop a strategy to address those issues. It may be possible boost sales and profits simply by continuing to offer the same (or very similar) products and services, but reintroducing and repositioning them to address the market situation.

Do we have the right people to pursue this opportunity? Human resources make all the difference. If the right people aren’t already in place, identify what it will take to get them and how their expertise can benefit the entire organization.

Are there opportunities for a joint venture? Acquisition is one way of expanding membership and profits – one that many companies have generally done very well. Joint venturing is another option. Take a look at suppliers, vendors and even customers that may compliment your business. Consider what you can do together that neither can do alone.

Beware of the pitfalls

The road to success is littered with failed businesses that pursued an opportunity without first taking a dose of reality. Here are a few of the roadblocks they encounter:

Little or no expertise. “We’ll learn as we go” is a recipe for failure. Before green-lighting any new venture, you need to understand your product or service, your market and your competitors. If you don’t already have the people, hire them. Remember, you’ll be playing catch-up with your competitors from day one – you’ll need every advantage you can get.

Failure to set a timetable for success or failure. Develop reasonable goals and milestones and build a strategy for reaching them. The last thing you want to do is keep pumping money into a lost cause, but you won’t know when to stop unless you set limits and stick to them.

Spreading resources too thin. Don’t cripple your venture from the start by placing its success or failure on the shoulders of people who are already maxed out, or equipment that can’t handle the extra load. Better to bring in new resources that can be devoted exclusively to the new venture.

What’s next for your enterprise? What will keep your business viable, and take you into the next century? It may be biofuels, retailing, technology, manufacturing, alternative energy or some yet-to-be-imagined innovation.

Technology, instant communication and a global marketplace are sending organizations in more directions than ever before. Change can happen fast. Growth will come to those who ask questions and plan for success.

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