If you were standing in front of the hard-hitting, business-savvy investors on TV’s “Shark Tank,” how would you pitch your farm business? Would it stand up to the sharks’ systematic vetting process?
Farmers have a lot to gain by thinking of their operation in this way, says Tommy Grisafi, commodity risk management adviser for Advance Trading in Valparaiso, Ind.
“You aren’t running a small shop,” he says. “You’re running a business with huge numbers. Your farms are complex organizations that took multi-generations to build.”
Whether you are looking to partner with an investor, impress your banker or craft a strategic plan, Grisafi suggests answering the tough questions that are listed below.
Draft a corresponding business plan, then have someone gut check it, advises Angie Setzer, vice president of grain at Citizens Grain in Charlotte, Mich. Aim for someone who has a general understanding of your business and market structure.
“You need to have at least one person in or outside your operation who you trust, has knowledge and is willing to give honest feedback,” Setzer says.
Tommy Grisafi and Angie Setzer will speak to attendees at the 2016 Executive Women in Agriculture conference, which runs from Nov. 30 to Dec. 2 in Chicago. To learn more and register for the event, visit execwomeninag.com.
Top ‘Shark Tank’ Questions
What are your sales? The sharks want to know if sales are growing. You should have a story about how your farm’s expansion has boosted or could potentially boost sales. The more a business can scale the better.
What do you bring to the table? The investors aren’t just buying an idea or business—they want the entrepreneur. So you need to highlight a record of success or why you’re dynamic enough to justify the gamble.
Why do you need our money? It’s usually not enough to seek funds to simply grow the business.
Why the big valuation? Investors want a big equity stake for the smallest investment possible. If you’re asking for a hefty valuation at a significant revenue multiple, you’d better explain your justification logically.
Is your product unique? If you’re entering an already-crowded market, you need an excellent case for why your product or service can beat out competitors.
How much debt do you have? Investors don’t want to help pay off debt. If you have significant debt, be able to justify it and know the borrowing terms.
How much inventory do you have? One of the best signs of a well-run business is small inventory of product. Being able to produce products in response to demand is a sign of having good data, a good sense of the market and a good supply chain.
What are your costs? Investors want to gauge your ability to make high profit margins by keeping costs low or having strong demand to keep prices high. You should be able to easily explain your cost of production and have a good handle on overhead costs.