Do you have an idea that you believe might be a great business? Larry Swain, an ardent entrepreneur who has started 16 different businesses, encourages people with ideas and a passion for business to pursue turning those ideas into income. In addition to his own entrepreneurial endeavors, Swain works with the South Dakota State University Entrepreneurship Program. He tells that his businesses over the last four decades have included a restaurant, a Brookings, SD, nightclub, and most recently, a pheasant lodge.
Swain says, “Even in South Dakota there are lots and lots of opportunities for business.” He shares some of the tip he’s learned to help generate the ideas that may offer an innovative business for the future.
Foremost, Swain says is adding value. “Value added is the key – especially in agriculture.”
He reports that 76% of consumer dollars are spent on products after they leave the farm gate. Thus, he says, “That is the potential that is out there. Selling direct – straight to the consumer – gets you more money.” Swain adds, If you can take an ag product and further process it to add value, you have more opportunity to capture those dollars.
As a second point, Swain emphasizes that “Bigger isn’t better.” Instead, he believes today smaller is often more efficient – and it may be what consumers are looking for.”
For instance, Swain says today’s consumers are concerned about the source of their food. But – they feel more confident about their food if they know it was raised and processed locally. And, they are often more likely to buy it – and even pay a premium for such local foods.
To tap into this food trend, Swain especially advocates taking old time ideas and putting new technologies to them.
As an example of this, Swain has worked with several dairy producers in the Midwest to set up micro-creameries. The premise behind these is that rather than having milk produced in mass dairies and traveling thousands of miles to consumers, a niche market of fresh, local milk is offered by the micro-creamery. The milk is even marketed in glass bottles and is available direct to consumers – either through an on-farm store, delivery or through a cooperative agreement with a local retailer.
Swain reports that the micro-creamery concept has been wildly successful for dairies with just 50-150 cows. In addition to selling their milk at a premium, these producers have also tapped extra dollars by setting up on-farm tours and a store for their consumers. He believes the beef industry could use a similar model for beef products.Swain says, “The farm and ranch lifestyle is a learning experience that’s worth money. Consumers want to know more about their food, and they are willing to pay more for that connection.”
Connect with Consumers
From his business experiences, Swain says understanding consumers is essential to a business’ success. “Find out what customers want and then sell it to them,” says Swain.
In this process, market research is a must, says Swain. But he adds that your research can be done on a small scale and locally – mostly by telephone. He advises asking a series of basic questions about what consumers are concerned about and what they are looking for to solve their concerns.
As another key, Swain says, “You want a niche where price is not an issue to the consumer.”
Lastly, how do you decide what to market?
Look at your ideas, the feedback from consumers, and the trends, says Swain. Also consider the natural resources available to you and your abilities. He poses questions like: Do you have tourism you could tap into? Do you have an aging population who needs services? Do consumers in your area seek quality foods?
As you consider the answers to such questions, Swain advises putting together a business plan to help direct your product development and marketing efforts. This will also help in developing priorities.To achieve success, Swain recommends your business idea should have the projected cash flow to be profitable in 2-6 months. Along with that, he says the key ingredient for success is to be enthusiastic and to be excited about change.
To learn more about how to be an entrepreneur, South Dakota State University offers an online Entrepreneurship Certificate program, of which Swain teaches several courses. Participants do not have to be enrolled in college and the classes are offered through distance learning technology online. Most are one-credit classes that are offered for six-weeks in the evening or on weekends. For more information contact Barb Heller, SDSU coordinator of entrepreneurship at 605-688-6522 or Barb.Heller@sdstate.edu. Their website is http://entr.sdstate.edu.