What do you do if your Agribusiness operation is no longer profitable?

If your agribusiness operation is no longer profitable, you might feel discouraged and frustrated. However, you don't have to give up on your passion and your livelihood. There are some steps you can take to analyze your situation, identify the causes of your losses, and implement solutions to improve your performance. In this article, we will share some tips on what you can do if your agribusiness operation is no longer profitable.

1 Assess your financial situation

The first thing you need to do is to assess your financial situation and determine how much money you are losing and why. You can use tools like income statements, balance sheets, cash flow statements, and budgets to track your revenues, expenses, assets, liabilities, and cash flow. You should also compare your financial ratios and benchmarks with industry standards and competitors to see how you are performing in the market. This will help you identify any gaps, inefficiencies, or risks in your financial management.

Add your perspective

Anthony Bellot
Report contribution
Assessing the situation via your income statement and balance sheet is critical. key elements I would look to evaluate are your working capital ratio, your debt servicing coverage ratio, and your ability to service interest only as well as your D/E ratio to understand the leverage. Depending on the agribusiness I would also consider items such as your A/R days on hand and Inventory days on hand. These ratios will tell you what is going on and the cause of it which is critical. From there compare your current financial ratios to your previous forecasts and look for any trends. Typically agribusinesses want to use a 5-10-year trend analysis to see if could this have been prevented.

Like

2 Evaluate your production system

The next thing you need to do is to evaluate your production system and see if there are any problems or opportunities in your inputs, processes, outputs, or quality. You should review your crop or livestock selection, your land use and soil health, your irrigation and fertilization methods, your pest and disease control measures, your harvesting and storage techniques, and your environmental and social impacts. You should also consider your labor, machinery, and infrastructure needs and costs. This will help you find any areas where you can reduce waste, increase yield, or enhance quality.

Add your perspective

AbdulMannan Muh'd Khalil

Agronomist and Agribusiness Enthusiast | Farm Technician@East-West Seed Nigeria | Helping people grow their food at home to improve nutrition & food security sustainably
Report contribution
Improve your farm productivity by adopting better farming practices such as using improved seeds, fertilizers, pesticides, irrigation and crop rotation practices to increase your yield and quality.

Like

3 Explore your market options

Another thing you need to do is to explore your market options and see if there are any ways to increase your sales, prices, or customer loyalty. You should research your target market, your competitors, your customers' preferences and needs, and your distribution channels. You should also look for new or niche markets, value-added products or services, direct marketing or branding strategies, or certification or accreditation schemes. This will help you create or improve your value proposition and competitive advantage.

Add your perspective

4 Seek professional advice

One more thing you need to do is to seek professional advice from experts who can help you with your specific challenges and goals. You can consult with agronomists, veterinarians, accountants, lawyers, extension agents, bankers, or consultants who can provide you with technical, financial, legal, or business guidance. You can also join or form networks, associations, cooperatives, or partnerships with other agribusiness operators who can share their experiences, resources, or opportunities. This will help you access valuable information, support, or collaboration.

Add your perspective

Anthony Bellot
Report contribution
Seek professional help early! You should have your lawyer, accountant, agronomists, and banker at the table together and working as one team to analyze the situation and come up with an attainable plan of action

Like

5 Implement an action plan

The last thing you need to do is to implement an action plan based on your analysis, evaluation, exploration, and advice. You should set realistic and measurable objectives, prioritize your actions, allocate your resources, monitor your progress, and adjust your plan as needed. You should also communicate your plan to your stakeholders, such as your employees, customers, suppliers, lenders, or regulators. This will help you execute your plan effectively and efficiently.

Add your perspective

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

Add your perspective

Anthony Bellot
Report contribution
When things do not go well. DO NOT PANIC. In an industry like agribusiness anywhere along the chain given this is such a global business events will occur that we truly cannot control. That is ok the worst thing you can do is panic. Another item that this article should look at is whether we have looked at all viable options for turning the business around one thing to look at is what exit from the business looks like. This is a hard reality as we never want to see less agribusinesses however we need to exhaust all options before going down this road as agriculture is so critical for everyday life.

Like

What do you do if your Agribusiness operation is no longer profitable?

1

2

3

4

5

6

1 Assess your financial situation

2 Evaluate your production system

3 Explore your market options

4 Seek professional advice

5 Implement an action plan

6 Here’s what else to consider

Agribusiness

Rate this article

Thanks for your feedback

More articles on Agribusiness

More relevant reading