As the Australian economy transitions away from a mining investment boom to one driven by agribusiness and services, it’s worth understanding how businesses in three very different sectors are approaching their market this year.
Strategic planning in Agriculture
Global demand for food continues to rise, with the Department of Agriculture and Water Resources estimating “the value of world food consumption is projected to be 75 per cent higher in 2050 than in 2007.”
This will help drive opportunities for the Australian farming sector. The sector is presently investigating how it can gear up to meet this demand.According to Margaux Beauchamp, executive director of food and agribusiness with corporate advice firm BDO Brisbane, Australian agribusinesses need equity to fund their growth and take advantage of promising market conditions.
“There is currently a great appetite for investment in the Australian agricultural industry, but a large part of the sector is not investment ready and a gap currently exists between what investors are looking for and what is readily available on market,” says Beauchamp.
Strategic focus – investing for growth
“We need to be prepared to think outside the square and look at off market opportunities and aggregations. An integral part of driving investment within the agricultural sector is ensuring investors have a clear mandate of what investment opportunities they are looking for and why. This is so the best opportunities can be identified and aggregated to make them investment ready and provide all parties with the best chance of success,” she explains.
“Before they can draw equity from investors or perform well on the Australian Securities Exchange, most farms will need to take some steps to become more investor-ready. This means putting the right structures and processes in place to address some of the concerns that typically keep investors at bay,” she notes.
One of the reasons the industry is typically less attractive to investors is because it's so volatile. Therefore, being acquired by a larger entity or merging with another company to diversify the risk could, in some cases, prove helpful.
As Beauchamp points out, a number of sugar companies in Australia have been sold to overseas entities, while dairy cooperatives in New South Wales and Queensland have been sold to National Foods, a large, listed company, to bring in the capital that can fund their growth.
“Many enterprises in the sector are small, family-owned operations or cooperatives. These structures have their role to play, but may not be as competitive at attracting investment because investors want to know their money will be managed and provide for a strong return on investment. Overall, agricultural companies should incorporate some of the discipline employed by public companies and corporate enterprises.”
In other words, they should implement sound financial reporting systems, have an advisory board or board of directors and ensure they hold regular monthly meetings.
“Greater transparency and controls can make fund managers and other investors more comfortable putting their assets into the business. Of course, all agricultural investment proposals should be carefully planned with experts to address risk, reporting and transparency,” says Beauchamp.
It’s all about IT
Graeme Strange is the managing director of software development business Readify. It’s a business that is constantly developing intellectual property (IP) for itself and its clients.
Strategic planning focus: building long-term value in IT
“Generating and commercialising IP is at the centre of our current strategy. Already we have three products launched and generating strong revenue in the Australian market and three more in pre revenue stage,” says Strange.
“The biggest change for us in the last 18 months has been acquiring a stake in our partner, user experience design agency FOLK and buying out modelling, optimisation, analytics and visualisation experts Huegin Consulting. This means we can now offer what we call the ‘holy trinity’ of data, design and development to our clients as a fully integrated service,” he explains. Strange says Readify has an ambition to become the organisation that powers the next Airbnb.
“We believe technology is no longer about system administrators and business analysts – and technology companies that continue to behave like yesterday's service providers will be gone in five years.
“We are already marketing and creating offerings in the Internet of Things and in holographic applications and believe this will continue to grow.”
The business has a well-articulated business strategy stretching out over the next few years. “When you combine that with a programmatic way of looking at the future in terms of major technologies and trends … you can easily morph the business to take advantage of the leading edge and high value end of the IT industry,” says Strange.
“I believe it’s important to have a business model that morphs with an industry that is changing as rapidly as ours. Since launching in 2001, Readify has moved from offering development team augmentation to now offering software services as well as managed services, which sees us step into a subscription economy model,” he outlines.
The shift in the business’s focus has had an impact on its pricing structure. Says Strange: “We have always had a model that de-risks our projects for both our customers and our business. Rates are competitive, but we never strive to be cheap. Instead our model embraces value for money. We have also moved to a model whereby subscriptions and pre paid expertise are the norm.”
In terms of marketing, Strange notes many staff have a huge following on social media and he encourages them to build a personal brand through these channels.
“Our developers cultivate their own brand online, which in turn reflects on our brand and shows who we are as an organisation. As a company, we also rely on social media to help with the recruitment process. We are investing in LinkedIn for instance, which helps us create a community of people and a pool of talent we can tap into.”
In terms of the future, the business is looking at making acquisitions in the data and analytics space, building on the success of the last acquisition.
How car manufacturers are bucking trends with strategic planning
While many other car manufacturers are pulling out of Australia, Tomcar is one vehicle business that has its sights firmly set on the local market. The company builds and distributes off-road and all-terrain vehicles.
CEO and co-founder David Brim says the company is working towards a major announcement regarding a new vehicle it is producing.
“We expect to make an announcement in June. It’s something we have been working on for a few years; development cycles in the automotive industry are typically long. But we try to be flexible and nimble with our product development; we have a small team so we can bring new cars to market fast,” Brim explains.
The announcement will concern an underground mining version of the car presently being used for military purposes. “It’s going to be powered in a very different way,” Brim teases.
Strategic planning focus: pivoting for success
He says the idea of pivoting is important for early stage ventures. One of the reasons for Tomcar’s success is because quite quickly it saw applications for its vehicles in agriculture, which allowed it to diversify its client base outside of military applications.
“Then we pivoted again into mining. Now we have plans to launch a racing vehicle. We’ve been asked by the racing community for years for this. We’ve been more focused on commercial applications but this year the stars are aligned for us to launch a racing car.”
In terms of the business’s ongoing strategy, Brim says it’s more important to focus on the company’s core ideals.
“It’s easy to get side-tracked from strategy because things change every day. Our core ideals is what differentiates us; we’re not a big company that relies on strategy.”
One of the business’s advantages is that it outsources manufacturing. “This allows us to focus on communicating with customers and our distribution channels, so we don’t have to worry about manufacturing issues.”
When it comes to the future, Tomcar is planning to add six more staff this year to the sales and mechanical teams. It has also recently launched a new pricing strategy, that packages up special extras for the different industries it services.
“It’s more cost effective when you package extras and it also simplifies this process for customers,” he says.
The business has long relied on social media as one of its main marketing channels, especially targeted Facebook advertising. “Social media takes time to build momentum, but it’s very valuable being in customers’ feeds.”
The business has also arranged a strategic partnership with the Victorian Farmers’ Federation, which allows it to directly access its customer base.
Aside from its focus on marketing and growth, the business is also constantly exploring ways to reduce costs. Says Brim: “Our cars have 1600 components, 60 per cent of which are made locally. We’re always looking to control costs, but not at the expense of quality.”
There are no immediate plans to expand offshore, although Brim has South East Asia in its sights in the future.