So far we have covered the Production side of your business and touched on the Selling side of it. We have talked about but not discussed the issue of scale and its impacts on the business yet. Aquaculture is one of those businesses that benefits from scale – the more you can produce the lower your cost per unit of production. Hence aquaculture should typically be intended to be as large as you can physically make it and to whatever you can spend on it.
That said, it is not wise to start farming at a larger scale than you can comfortably continue with at a zero income level when you begin. There is much to learn about the complete tilapia value chain and whilst a business plan will assist you greatly in developing a workable model, no amount of business plan development will be able to teach you the skills you will need to master to produce your fish. If you have R50m+ on hand however a large project development will look very different and follow a different business development process.
You will need to think about your final destination when it comes to scale. Whilst there are benefits to growing as you go, there are limits to the impacts of economies of scale and these are demonstrable in your financial plan as you develop it.
However. No matter what the final end goal of your scale is it is almost mandatory that you consider piloting your operation first. Piloting is an important critical step in testing your assumptions, and in giving your practical, real world hard data that you can RELY on, as opposed to dealing with BEBTA speak and assumptions that are often out of touch with reality. This is your investment, your money and you can spend it any way you choose but if you operate and treat your business with a gung ho attitude and assumptions that everything will work out in the end it is going to cost you a lot of money and a lot of wasted time.
Our advice is to start off small, at a level that you are comfortable at. This means different things to different people – for some a single APU is a good start, for others a complete tunnel of 16 systems is a good starting point. Either way, the intention with a pilot is to prove concept, to learn the farm, to learn the species, and to understand the business’s day to day practicalities. As much as we can shout about the important things that require careful attention, until you are actually doing as opposed to reading about it, it might as well be us shouting into a vacuum.
Plan your scale and then test your plan. Your spreadsheet is a useful tool in showing you where and how the impact of scale is felt in your aquaculture business. Cheap at just R500….