Alternative businesses in a PSA environment

PSA is casting an increasingly long shadow over our land and its people. Its like being in a car crash when everything goes into slow motion, and you know it will hurt, but not how much.

Most of us can deal emotionally with a sudden event that changes our business reality, because we have no choice. The decision is made for us. But when our environment changes to some degree and we don’t know if it will get better or worse, and we have insufficient information, it’s really hard to make a big call that will impact on our future.

A choice facing some kiwifruit growers is if they should stay in the industry or seek an alternative use for their land. At a macro level the Chamber would like to see the growers stay in the industry and retain the financial equity, intellectual property and experience that has built up over the years.

Regrettably some don’t have that option due to financial pressure, and are choosing to be proactive and seek new forms of income, and the Chamber is starting to get calls seeking business advice and assistance.

The typical grower seeking advice has had years of Zespri doing all their sales and marketing, and while they may have received much greater volumes and prices than if they had done it themselves, the downside is that they have not developed the skills and experience needed to be successful in an alternative non single desk sector. The problem is that they don’t know they don’t have sales and marketing skills, and that can sink a new venture.

I learned a very valuable lesson about this when I started a business in my 20s. I was a good salesman for a company manufacturing cash safes, and decided to go out on my own. I cobbled together some staff and machines in a factory unit and thought they would make safes while I went out and spent most of my time selling and getting orders. But factory production soon faltered because I wasn’t aware of how demanding and time consuming the technical side of manufacturing was. I realised that my comfort zone was people and selling, and had to make a real effort to upskill myself and spent more time managing the technical side of the business. It was a big learning curve and it was fortunate I reacted quickly, and we survived.

It’s important that any growers thinking about alternate land use identify what their skills and competency gaps are in relation to those needed in the proposed new business.

The best scenario of course is to line up a buyer before one grows the new crop. If that option is not available then one may have to learn all about market research, advertising, packaging, branding, delivery, financial management, and debtor control. There are plenty of books, training courses and internet resources available to upskill.

Unfortunately too many diversifying owners struggle because they have a 'she'll be right mate' attitude. They jot some figures on the back of an envelope, borrow some money, and jump into the areas of the new business closest to their comfort zone. It’s critical they stay close to their buyer and understand timing of delivery in a supply and demand market, and its effect on price.

Another problem is that many ex-growers will be middle aged or older, and of a generation that has a No-8 fencing wire mentality where you figure things out as you go along. This model may have worked in the past, but won’t in the future.

The very best action is to write a business plan which is just a big checklist of things needed to cover, and questions one needs to ask. The most important part is the financial projections, which your accountant can help you with. However without market based understanding the income projections will be dodgy.

For a free business start up pack contact the Chamber and we will send you one.
The Chamber has business advisors and mentors who can also help, and we are currently developing training courses and resources for businesses who support growers.

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