We are going to step you through the process of what building a successful fish farming business is all about. There are some hard truths in this and whilst we are focussed on tilapia this is only as an example.
Note that we use the word business. We are commercially focused in other words and in order to be successful in what is essentially a brand new industry means you need to know what you are doing.
In any business there are two big broad areas to be considered. Firstly there is the Production of a good or service and secondly there is Selling that good or service. We’re doing that right now – our product is the APU and the process of selling it is this website that tells you what this product can do for you.
However, we have found that most people who want to start fish farming have no idea what fish farming is all about and that we have to teach them before we can sell them anything.
Quite often this means we lose sales. But rather that than selling something on false pretenses, BEBTA style.
So let’s begin. Quite often the emails that come in read along the lines of “I want to farm fish – I have water and land”.
Further interrogation will sometimes reveal that the four big questions haven’t been thought of yet.
What do you want to farm?
How do you want to farm it?
How much of it do you want to farm?
Where do you want to farm it?
All of this fits into the Production side of the business. Some questions come in about the Selling side of the business – such as “I want to farm fish but I don’t know where I can sell my fish?”
It is hard to know how to sell fish if you don’t know how many fish or even what fish it is that you want to sell.
The way to start the process is to consider a few different scenarios in broad terms. For instance, we always find it useful to decide on an annual tonnage target of production of fish, or to consider an annual profit target. This will start to give you some broad ideas as to the scale of these things.
For instance, if we take 20 tons of fish production per year, 20,000 kg of fish, and we sell that for R45/kg for an annual turnover of R900k. If we produce the fish for R35/kg that leaves a profit of R200k. These are just rough and ready numbers of course but if we drill down into them we can get a sense of the scale of operation needed to produce this level of tonnage. 20 tons per annum breaks down into 1.67 tons of fish every 30 days which is 4,166 fish of 400 grams each. Loosely this is about 1,050 fish every week.
What this simple rough math has already done for us is to give us a sense of what is involved. Of course it assumes perfect and linear production which may or may not be possible. The sales price and the cost of production figures are just a guess at this stage and the next step is then to check these two figures to a higher degree of detail to see if they are even achievable, or realistic.
What we need now in other words, is the dreaded spread-sheet.
Spread sheets are incredibly powerful amplifiers of assumptions. If you assume something to be fact and it turns out not to be fact the spread sheet will exaggerate the differences in such a way that it is not in your favour. This is called Murphy’s Law. Do not assume anything without a sound basis to do so and the words “the expert opinion was….” will not hold water when the auctioneer is selling your equipment to the highest bidder for between 5% and 10% of what you paid for it.
BS in = Super BS out when it comes to spreadsheets in other words.
We probably need to decide on a species we want to farm first. We can revisit this later on once we have carried the exercise through to completion – and in our case the species we will be looking at is tilapia for a number of cogent and valid reasons which are detailed in the business planner that you can buy from us. Or you can do all the homework and research yourself and save yourself the five hundred bucks.
Now that we have a species the question becomes one of addressing how we produce it and how we work out what it costs to produce it. Once we have the Production side of the business documented and understood then we can look at the Selling side of the business. And once both Production and Selling are done we’ll be in a position to see whether the business makes sense or not.