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Six questions for the ag entrepreneurs

So you’ve got an idea that might make a great new product or service. Should you invest in it?

Today’s agriculture isn’t your grandmother’s agriculture. While we still work the soil and practise animal husbandry, today we do so in wonderful ways that past generations could never imagine. From lasers and GPS to genomics and drones, agriculture has become a hotbed of innovation.

Nor is ag innovation the exclusive domain of the major multinational companies. Farmers and non-farmers alike are dipping their toes into the ag-innovation pool with an endless array of novel ideas.

Even so, however, it can be a daunting experience to try to convert an idea into an actual product or service, and then get that product or service into the marketplace.

Fortunately, budding entrepreneurs don’t have to take that journey alone. There are a number of ag organizations available to help aspiring entrepreneurs turn ideas into commercially successful products. Or, if necessary, these organizations can offer a bit of tough love. One that I have worked closely with for almost 10 years is Bioenterprise Corporation located in Guelph, Ont.

Bioenterprise is a not-for-profit centre whose sole purpose is to foster innovation in the agribusiness sector across Canada. Its team of agribusiness professionals provides entrepreneurs with early-stage feedback on the validity of its business idea. It also provides insight into areas that may need continued work, and it helps to fill in the gaps.

Here’s how it typically works. At Bioenterprise, if a business concept looks interesting and passes the initial evaluation phase, prospects are invited to expose their idea to an Entrepreneur’s Reality Check, a sort of friendly “Dragons’ Den.” Here, a group of senior industry experts will apply their skills and experience to give entrepreneurs a deeper evaluation based on the specific dynamics of the industry they plan to enter.

In this way, the Reality Check gives entrepreneurs direct access to industry-specific professionals that they would otherwise have little chance of meeting.

If the idea passes the Reality Check, the entrepreneur can continue working with Bioenterprise staff to receive help with writing patents, building a business plan, assembling financial forecasts, conducting market research, and of course, finding sources of seed money.

The best part is that there is only a nominal cost for all these services, in the range of $300 per month. You’d do well to get two hours of a consultant’s time for that kind of money.

But how do you know if your business idea is even worth giving Bioenterprise a call? Too often we fall in love with our own ideas, especially if well-meaning friends and family provide encouragement. Although their intentions may be genuine, rarely are these the best sources to ask for an evaluation of whether you should devote the next few years of your life and much of your savings to your innovation.

However, after working with dozens of ag entrepreneurs over the past 10 years, I have found six simple questions which, if answered honestly, can provide entrepreneurs with a good initial self-evaluation of whether their innovation is ready for the big stage.

Does my invention work?

More importantly, can I prove that it works using industry-recognized standards? The more third-party data you can generate to prove your product delivers on its claims, the better. If you can’t prove to the satisfaction of industry professionals that your product works, there is no need to even consider the next five questions. As the saying goes, “Without data, you’re just another guy with an opinion.”

Can my invention be protected?

That is, can my invention be patented, or is there some other form of intellectual property protection that can be used to keep competitors at bay. If it cannot be protected, it will be copied. As well, without protection, you can forget about enticing a major company to ever make you an offer. Along the same line, an often neglected question is whether you have freedom to operate. In other words, are you sure you are not infringing on someone else’s patent? Many entrepreneurs forget to check this, only to have the rug pulled from under their feet after they have invested a large chunk of their savings.

Can I register my invention?

Although not necessary with all products, many areas of agriculture are highly regulated. Do you know how your invention will be regulated, what government agencies will be involved, and whether you will be able to satisfy their questions? Some products, such as pesticides, food additives, or nutraceuticals can be very difficult to register and can cost several hundreds of thousands of dollars. Some technologies may not be registerable at all.

Can I manufacture my invention?

Making a prototype in your workshop is very different from scaling up into mass production. Do you have the expertise and capital resources to construct a modern manufacturing facility? Are the raw materials readily available, and will the raw material suppliers sell to you? It is not uncommon for competitors to have exclusive contracts with suppliers of specialized raw materials to keep others out of the industry.

Will I have customers?

What makes me believe that customers will switch from what they have been using for years and adopt my product? And how will I reach those customers? Distribution tends to be one of the most difficult steps for entrepreneurs. The best distributors tend to be tied up with the best suppliers, and they may be unwilling to carry your product if it could put that larger relationship at risk. Plus, if your product is destined for the mass retail market, such as with a novel food, gaining shelf space with one of the major food companies can be a daunting task.

Will I make a profit?

After investing all my time, energy and money into this venture, will the returns be worthwhile? Entrepreneurs often overestimate the market share they can obtain and underestimate the total cost to bring an invention to market. Unless you have previous experience, you may be surprised by the cost of patent protection, regulatory compliance, third-party research, and marketing. Building an early relationship with your accountant can help avoid nasty surprises along the way.

It isn’t necessary to have full answers to all six questions right away, but eventually each must be addressed. In my opinion the first question, “Does my invention work?” is the most important. If you can honestly say that you have invented something new and useful and can prove it works, it may be time to engage the professional help available at organizations like Bioenterprise and become one of Canada’s next successful ag entrepreneurs.

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