Business Planning in Marine Aquaculture

contractThis article will provide a brief introduction to business planning for marine aquaculture.

Business planning for a marine aquaculture venture is no different than planning for starting any other type of business entity.  One must consider investment costs, operating costs, permitting and regulatory issues, marketing your product and generating a positive cash flow.

The first step in the process is determining the profit you would like to make from your venture.  Many people assume all they need to do is break even to be successful.  While this is not a bad thing, a successful marine aquaculture business should generate a profit.  The easiest way to estimate the amount of profit one would need to be considered successful is to look at their current standard of living.  Very few people, if any would enjoy being worse off economically than they are presently.  In general people tend to try to increase their economic status.  Use your current income level as the absolute minimum profit your marine aquaculture business has to make in order for you to consider it a success.

After someone has decided how much of a return they need to make, they can begin evaluating different production scenarios for the species they would like to grow.  “Working backwards” in this manner will better help someone determine if they have the resources necessary to start a successful marine aquaculture venture. 

The next step will be to determine the amount of production and sales needed in order to receive the required return.  One of the best ways to calculate this is to research current market prices for the species which you would like to produce.  This will give you an idea of the price you may receive for your product.  You will also need to determine how much it costs to produce your product.  This can be done by talking with current producers.

Once you have determined an average sales price and average cost of production, you can make a quick estimate on how much production you will need to meet your required return.  This leads to the next important aspect of planning for a successful marine aquaculture venture.  If you know your required production level, you can determine the minimum size of your aquaculture operation.  You must then find a location which will have the capabilities of producing what you want to produce.

After you have determined how large your farm will be, you can determine your capital costs.  Can you find an area large enough to accommodate your required production? Can you afford to purchase or lease this area?  How much will the equipment to grow your products cost? These are just a few of the questions you should research answers to in order to plan for a successful venture. 

Most new aquaculture ventures will require some type of outside financing.  You can combine all the information you have compiled into a business plan.  All lending organizations will want to see a copy of your business plan along with a copy of the projected financial statements you have put together.  Once you have obtained adequate startup capital and operating expenses, it’s time to start your farm. 

This has been just a brief overview of the business planning process.  One should consider consulting an attorney and/or tax accountant for more in depth business planning advice.  There are also many free resources available. Contact your local aquaculture extension specialist for more information.