Aquaculture Farm Financial Management During the Pandemic
Engle-Stone Aquatic$ LLC
The most common mistake is not taking business planning seriously! Growing your crops is not enough — you also need to consider whether profits will exceed costs and who you will sell to. The timing of production cycles and customer demand plays an important role here. Another common mistake is overestimating production (underestimating mortality) and having unrealistic expectations about the selling price, which can put you “in the red” financially. This rookie mistake is so common that veterans have coined it “oyster math”. Be conservative in your expected production yields and sale price.
Because mistakes are unavoidable and new opportunities will undoubtedly present themselves. You will learn through experience about production, marketing, and sales. Being too ingrained in your initial vision and assumptions can lead you down a path of failure. You may find that mortalities are higher than expected, your target sales outlets are inconsistent, price is lower than expected, and/or new and better opportunities may open up. Stepping away from farming and thinking about what went well and where improvements can be made will help you maximize profit.
Yes, many are free or inexpensive. Organizations like the Maine Aquaculture Association, Coastal Enterprises Incorporated, the Small Business Administration, and SCORE have experience helping aquaculture companies develop business plans. Another great option are general business training programs such as Top Gun run by the Maine Center for Entrepreneurs.
Some key elements are:
A business model is a high-level approach to profitability based on factors such as your scale, revenue sources, customer base, and product story. For example, a small boutique farm has a different business model than a large volume grower. There is no one right business model. The important thing is to generate sufficient profit to support your business goals.
In general, it’s good to have a diversified sales portfolio that includes out-of-state markets and multiple buyers. This strategy helps insulate a business from local product surpluses which can make it hard to find a buyer offering a good price. Sales outlets for Maine’s aquaculture products have traditionally been direct-to-consumer/restaurant, distributor, and/or wholesaler, though recent progress has been made in retail sales such as high-end grocery stores.
Engle-Stone Aquatic$ LLC