Professional Documents
Culture Documents
Work Book.
Introduction.
This booklet shares the case studies of 5 farming families who have added value to the
primary product within the farm gate and/or diversified to increase their business. It also
includes the case study of a farmers market which is an outlet for some of these businesses.
It provides a template for a business plan based on the learnings of these 6 businesses to help
you add value to your primary business.
The purpose of this workbook is to guide you through the decision making process with some
simple questions to help you decide whether to add value to or diversify your primary
business, and then provide a framework for a business plan.
It provides you with the benefits of the lessons learned by the case studies in the Blue Print
Project, the participants of which are shown in the introductory quotes and photos.
There are two main mechanisms for improving value within the farm gate:
1. Value Add increasing the product of the raw material within the farm gate and
selling the more profitable secondary product rather than the primary product.
Example: primary product milk, value added product yoghurt.
2. Diversification improving the profitability of the business by broadening the base
of production, and extending the range that is produced.
Example: Farm also offering bed and breakfast accommodation, i.e. farm
stay.
Whether you are proposing to value add your business or to diversify the production, the
process to develop a business plan is the same. Follow the process, answer the 6 basic
questions and then develop the business plan for your new business development.
This booklet contains the paper copies of documents which are available electronically at
www.southcanterbury.org.nz or contact ADBT at 03 687 2682.
Bryan and Jackie Clearwater bought a grazing block to convert to a dairy farm now
named Peelview. The Clearwaters are both very interested in preserving and
contributing towards the environment so they decided they would also make the farm
organic.
The farm was 110ha not economically viable alone so to add value they decided to
produce organic natural yoghurt believing in its health benefits with its neutral pH,
and longer shelf life than liquid milk.
The product had to be affordable, easy to make and market, be as natural as possible,
have a great taste and be good for you. It is the only pot set yoghurt available.
The Clearwaters did not have the knowledge or skills required so they formed a
partnership with Ad Sintenie, who had a food safety and food production background.
Ad took over the yoghurt process. He came in as a shareholder (50%) with the
Clearwaters so he could take ownership of the product and run the plant.
As they grew the business it allowed Ad to move from being involved at weekends to
working permanently in the yoghurt business.
Planning - There was no formal business plan with financial targets and milestones.
However, Ad developed a three stage plan as a guideline..
Business Structure - Peelview (the dairy farm) owns the facilities and Clearwater
Organic Dairy (COD) leases them. COD purchases milk from Peelview.
Ads contacts in the industry assisted in getting the right equipment for the plant. He
also designed the food safety program and dealt with all the consents.
Financial -The yoghurt business now has production and financial targets.
M arketing has been an issue with limited shelf space meaning limited visibility for
consumers.
The yoghurt business is fulfilling the original goal of making the dairy farm a viable
economic unit.
One thing they would do differently is: Not convert a farm to dairying and to organic
and add on a yoghurt producing business all in one step!!! They should have gone
organic first then diversified.
Havoc Pork
Anything that makes you take a step back from what you are doing is
important Ian and Linda McCallum-Jackson, Havoc Pork.
Since 2001 Havoc Pork has evolved from a small pig farm selling weaners for others to fatten
to a finishing unit which sells all its own meat direct to the consumer, based on the belief
people want real meat
Value Add Proposal - T o be the first free range pork supplied farm to butcher within their
own business. To have quality and consistency and provenance of the meat - have all the
controls to ensure these and must control the growth.
Business Plan; its a red napkin from a restaurant in Dunedin and I framed it; its come to
pass most of it Linda. T hat business plan is a mind map written a napkin.. T he business
plan is a guide to their vision, but is not a detailed document.
T hey decided to prioritise the farm so when they were ready to take product to the market
there would be reliable supply. T his involved improving the farm infrastructure and
increasing the sow numbers.
Once there were fat pigs available they arranged for them to be killed at the abbatoir in
T imaru. Initially they were able to kill and on-sell their own meat, with any extra pigs being
bought by the business that had the abbatoir. Now all pigs are processed and sold within their
business.
Havoc Pork has bought a butcher shop in Waimate, but use a commercial licensed abbatoir.
2010 is the first year that they have enough stock to meet the demand.
Quality processing takes a month to cure a ham due to fewer nitrates etc used and that
means fresher hams produced pre-Christmas for that trade, not produced months in advance.
All about customer service. What does our customer want and how do we get it to them?
Ongoing market awareness and development is essential.
One issue has been the isolation - within own industry, from city to rural community.
Raymond and Adrianne Bowan have the 1360ha Fallgate Farm at Orari, producing a
number of crops including potatoes.
Raymond has 40 years experience growing potatoes, growing approximately half the
crop for processing as potato chips and the other half processed as fries.
Until the Bluebird factory at Timaru closed in February 2009 the Bowans were the
main suppliers, so this had a real impact on their business.
The Bowans knew that this was their opportunity in the market to develop their dream
of processing their own produce. Their vision and dream was to take their own
potatoes, process them into chips and sell them as their own brand.
They successfully purchased the ex-Bluebird factory, but when they took over it was
just a shell all of the plant had been removed.
They employed specialist staff to advise, bought a new plant from Holland, and put
emphasis on developing a product and meeting all regulations to launch the new chips
by October 2010.
A brand had to be developed, then registered and advertised for 3 months for
acceptance. Packaging had to be designed and a supplier sourced. This was all
completed by M ay 2010.
Expertise - Pulling together the right people and using their skills to achieve the end
goal.
The bank required a detailed business plan so they employed a consultant from
Christchurch to formulate this. They were sceptical initially but now know the value
of having a documented business plan.
Satisfaction - Being a NZ owned family business and seeing your name and product
on the shelf. Successfully achieving the dream!
Full control of process: Variety choice, growing conditions, harvesting, quality
control, processing, flavouring and then packaging. Fully traceable product.
Riverstone.
Fear of failure, loss of everything with all money in the business creates its
own motivation and is a strong driver to succeed Riverstone.
Riverstone is a family business with members of the Smith family jointly or severally owning dairy
and other farms, gift shop and award winning restaurant in North Otago.
T he initial value add proposals were in response to the high interest rates of the 1980s and
the constraints this put on cash flow. Initially value add was to diversify the income base,
and to expand their operations as much as possible through natural growth. T his has resulted
in the following: Dairy farms from one to six farms owned; Dry stock farms four farms
either owned or leased; Retail shop expanded since established in 1984; Farm stay
accommodation established in 1984 and Riverstone Kitchen established in 2006.
Interrelated businesses with the farm business building and owning the kitchen and leasing it
to the restaurant business.
Financial motivation has continued to be the reason for expansion and diversification.
Goals - all aspects of the business have financial goals which are regularly monitored, as well
as other goals and production targets.
T here is no formal business plan for any aspect of this family business. However, all aspects
are discussed, forming a loose plan and strong mental vision. Self-belief is important and
once you get something up and running the reality happens swiftly. There has to be a
passion to drive the success of ones own business, and further, passion is motivated by
success. Being successful requires hard work, effort and being clear about what you want
to achieve.
Riverstone Kitchen has a focus on seasonal food uses product they grow or available in
local district. While this has cost and profit advantages it also showcases other producers, and
is consistent with the international movement to local and fresh produce.
Further Value Add Opportunities are being planned.
All comes back to motivation. Being the boss gives you more motivation, and there is a
different focus. Fear of failure/loss of everything/all money in business creates its own
motivation and is a strong driver to succeed.
T eam work is important, and this is a family business with all participating actively.
Process
The business plan which is included as a template contains must have information.
However, depending on the type and scale of the business you are proposing it may not all be
required immediately.
The business plan attached is prepared as a cohesive document, but break it down into the
sections you may need to develop your business in a staged process. i.e. single person
business will not require the management summary or human resource plan.
Consideration
While a business plan is important and necessary there is a prior step to be considered. From
the case studies the participants have identified how important it is to have passion, vision,
and be prepared for the hard work required. From this has been developed a simple test for
those considering such a proposal, simply answering the following questions:
1. How will this complement my existing business?
2. Do I have the expertise, or how will I source the expertise necessary for this business
opportunity?
3. Will pursuing this opportunity be detrimental to my primary business? (i.e. time;
focus; finance; resources etc.)
4. How much does this matter to me?
5. What am I prepared to give up to make this happen?
6. What will happen if I dont pursue this opportunity?
Answering these simple questions will determine if there is enough drive and passion to
commit to the new proposal. If that is the case then the answers will also be necessary for the
business plan. If there is not the necessary commitment or resources to make the proposal a
success then finding out at this stage may prevent a costly mistake.
Each of the above points has been included in the following business plan summary which
provides a template for any one considering a new value add business developing their
primary produce.
Answer each of these questions to decide whether this business proposal will be
complementary, within the available expertise and resources, and you have the passion
necessary to commit.
Self-Help Tutorial
Work through the attached business plan summary.
The headings are shown followed by the summary of information you need to provide.
2. Vision Statement
What do you intend to achieve, by when?
(Note: A successful vision statement is brief and catchy, able to be used as a mantra to
success)
3. M ission Statement
How you will achieve the vision and develop the business?
4. Key to Success
2 or 3 reasons why you believe you will be successful in this proposal to add value to your
core business
5. Expertise
What expertise, skills and experience are necessary for this business proposal?
Do I have these skills, or employ staff with this expertise, or how I will source the necessary
expertise?
6. Complementarity
How pursuing this opportunity will be advantageous to the existing business and its vision
and goals. Time, focus, finance and resources all need to be included.
Any potential areas of conflict need to be considered.
Ensure there are no areas that will be detrimental to the existing business.
7. Goals
Up to 5 goals to focus you on where you want to go.
For each goal there will need to be a number of sub objectives that will allow the
achievement of the goal.
8. Company Analysis
a) How does this proposal fit within the existing business?
b) Will it have its own structure (company and/or trust structure recommended, but may
be sole trader or partnership)? Consult your accountant and/or lawyer and gain
advice.
c) Company Summary Who are you current type of business, who are your
customer(s)?
d) Company Ownership Registered where (E.g. NZ) and owned by whom
e) Company History
A bit about where you have come from and why
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NOTES :
1. All statements above should be brief, and clearly thought out.
2. Keep your statements concise and clear so that they are easily referable and memorable.
3. A business plan is a living document and only relevant if continually referenced and
updated.
This workbook has been developed from the Blueprint Research Project undertaken by
Heather Lawson, Living Land Consultants, and financed by New Zealand Trade and
Enterprise and Aoraki Development Business and Tourism.
The 6 case study participants are thanked for their invaluable involvement.
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