1. Assessing and Managing Business Risks: Financial & Market Risks

2. Objectives:
By the end of the session, the participants shall have:
Identified the various types of risks farmers face when planning more commercial operations; and
Describe strategies how to manage risks.

3. Risk is any factor that may cause losses to the farm business.
Implementation
Problems

4. External Risk
Changes in market prices
Low rainfall or too much rain
Internal Risks
Decision on what to produce
Type of what input to purchase or use

5. Farmers can control the internal risks more easily, and there are also ways to manage external risks, provided these are recognized and addressed in time.
Risk management is a guarantee for success, and often allows the farmer to effectively minimize the negative effects to his/her business.

6. Some risks associated with farm business
Production and technical risks
Marketing and price risks
Financial risks
Institutional Risks
Human and personal risks
Climate change
Workshop

7. Risk management strategies
Risk-reducing inputs
Risk-reducing technologies
Selecting low risks activity
System flexibility
Production diversification

8. Risk management strategies
Reserves of inputs and produce
Spreading sales
Market price information
Contract farming
Selling assets

9. Risks Uncertain and variable market prices
Greater chance of pests & diseases damaging a crop from more intensive agricultural production
Changes in climatic conditions
Failure in the production of a new commercial crops or livestock activity

10. Risks
Failure in the adoption of new techniques of production aimed at increasing yields in commercial activity
Institutional risks as farmers rely more heavily on the support and regulation of organization outside the village

11. Risks
Human or personal risks, such as injury to or the death of the head or main worker in the farm family
Borrowing risks that increases as farmers commercialize and borrow money to finance their new commercial operations.

12. Things to be considered to assess and manage the risks
Impact of the risk if it occur
Financial consequences if it occurs
Likelihood it will occur
The risks management strategy you should use

13. STEPS TO EFFECTIVE MARKETING
Step 1: Determine Your Customer’s Needs
Step 2: Analyze Your Competitive Advantage
Step 3: Target Your Market
Step 4: Use Your Marketing Mix to Satisfy Customer Needs 13

14. Step 1: Determine Your Customer’s Needs
Ask Yourself
WHO are my customers? ( Teenagers? Retired people? People with lots of leisure? People with special interest?)
WHERE do they live? (Rural? Urban? Out-of-the municipality? province? region? Country?) 14

15. Step 1: Determine Your Customer’s Needs
Ask Yourself
WHY do they use me instead of the competition? (Personalized service? Prices? Quality? Store hours? Availability of merchandise?)
WHEN do they come to me? (Daily? Once in a while? at unusual times?)
WHAT particular services or products are they looking for? (What are my best selling items?) 15

16. Appropriate product innovation Customer Service
Step 2: Analyze Your Competitive Advantage
Cost
Quality
Supply Reliability
Appropriate product innovation
Customer Service 16

17. Step 3: Target Your Market
You must target your market because you have limited resources
. It’s a question of focusing your time, energy and financial resources on those who will most benefit from your business while providing you with a fair return. 17

18. Consider these approaches . . . . .
. . . Focus on a particular geographic area (perhaps a 5 to 10 kilometres radius from your production site)
. . . Focus on your best selling products or service (if you have a winner, promote it!)
. . . Focus on those who are likely to patronize your business (if you are selling vegetables- households; if you are selling blue jeans – teenagers) 18

19. Using the 80/20 rule of thumb. . .
80% of your PROFITS come from
20% of your CUSTOMERS
80% of your SALES come from
20% of your NORMAL PRODUCT LINE 19

20. Using the 80/20 rule of thumb. . .
List your BEST customers:
_______________________________________________________
List your BEST product and/or services:
_______________________________________________________ 20

21. PROMOTION & ADVERTISING
Step 4: Use Your Marketing Mix to Satisfy Customer Needs
PRODUCTS & SERVICES
DISTRIBUTION
PRICING
PROMOTION & ADVERTISING 21

22. How to Develop a Market? By providing a space to display the product?
Or constructing a market place? Is it enough?
Online Marketing
Cellphone/ Telemarketing 22

23. Market Development
a process of increasing demand and sustaining the demand of a product . .
in so doing producers and handlers earn reasonable returns on investment 23

24. STRATEGIES IN DEVELOPING A MARKET
Effective producers organization.
Increase volume of sales
Keep channels as short as possible
Adopt appropriate technology & efficient infrastructure
Provide adequate financing 24

25. STRATEGIES IN DEVELOPING A MARKET
Maximize use of available resources
Improve on handling method
Know government rules
Establish linkage with other government agencies
Promotion and advertisements 25

26. ROLE OF DA & LGUs IN MARKETING
Gather and disseminate relevant market information.
Supply, Demand & Price
Conduct market matching
Provide market infrastructure
Farm to Market Road
Market Promotion
Fairs & Exhibits 26

27. Marketing Principles Who is my prospect buyers.
Determine what the customers want to buy
Determine how much the customer want to buy
Produce the product the customer want to buy
Establish production and distribution scheme that fits your customers requirements
Learn from others

28. SUCCESS FORMULA:
SUCCESSFUL BUSINESS =
KNOW HOW+CAPITAL+RISKS

29. Salamat Po