Planning an Olive Grove As a Family Business
January 8th, 2009 Filed under: Uncategorized — Small Home Business AuthorStarting up an Olive Grove as a family business presents some interesting challenges.It offers a wonderful lifestyle but can prove to be difficult to obtain finance to develop efficiently.Like any business good planning is essential and is a pre-requisite to seeking finance.
We all have a tendency to map things out in our heads and together with some rough calculations on the back of an envelope, we quickly convince ourselves that it is all possible.In practice, we tend to gloss over the less attractive details.Consequently, many people dive straight in and start a business without the necessary planning, which often results in a false start costing the owners money and time. A typical approach for most small farms is to plant some trees in the spare paddock and grow from there.Often it is started as a form of diversification to supplement the primary income from the property.
Consequently the investment in infrastructure for reticulation etc is usually very limited.Also the grove layout will probably have been planned for manual or semi-manual harvesting using wide spacing for the trees.Finally the selection and mixture of olive cultivars may not prove suitable as the operation grows. Ideally the approach should be to design the olive grove for its final stage when it becomes major, or even the primary, source of income.
This can then be broken down into a number of easily managed stages that can be implemented over time as an when the opportunity presents itself.Typically the olive grove might be expanded by 250 to 500 trees at a time which keeps the effort and costs to manageable levels. The key requirement is to design the grove layout, cultivar mix, and reticulation infrastructure to meet the needs of the whole grove.In practice this means the high cost capital items are likely to be required upfront which is contrary to the typical minimalist approach.For instance the whole property may require a large deep 6″ bore to provide sufficient water.Whereas the minimalist startup may get away with a shallow 4″ bore.However, the cheap approach will soon prove inadequate as the grove expands and it may prove necessary to replace the entire reticulation system. While most people start out with a few hundred trees to “give it a go”, it is clearly beneficial to consider the bigger picture, even from day one.
The trees will take up to 15 years to develop a full crop and that is a long time to live with a mistake. There are some basic rules, subject to individual circumstances, that help set the right direction.For instance, an almost universal tree planting pattern for small irrigated operations is to have trees spaced at 5 metre intervals in rows 8 metres apart.Also these rows should run north – south to ensure the greatest amount of sunlight on the olive canopies.
The lie of the land will also influence the most favourable position or positions for ground water wells.This in turn will influence the size and type of irrigation to be used.In most circumstances this will require a large size bore and pumping equipment form the outset.However, this could be partially offset by purposefully designing a smaller initial system that will eventually become a standby system for the future.
We now have a dilemma.The small family business testing out the viability of an olive grove certainly doesn’t want to invest heavily into the grove until they know it is the right decision.Therefore it is even more important to plan for the future and consider all the options.The planning doesn’t need to be too detailed but it should be realistic.It should consider how the grove will grow and how the infrastructure and high cost items can be managed effectively.
By putting all these thoughts into a carefully constructed business plan the family will be better positioned to make the right decisions upfront and manage the costs effectively.Also the business plan would prove invaluable when talking to the bank manager when seeking finance for all that infrastructure. Planning is good, if not essential, but don’t loose sight of the dream and get bogged down in details.Good luck!
For more information please refer to http://www.AvroBooks.com.
Mike Parsonage has created several very successful small businesses based on a simple business plans. His book “How to write a Business Plan” uses a genuine and successful real example for an olive grove to walk through the sections to meet your needs.
