Aquaponics as a Business opportunity

How to Start your own Aquaponics Business at Home

credit to http://www.aquaponicsandyou.com/

With many people looking for ways to increase their income these days, starting a home-based business is an attractive option. There are several major hurdles to clear before you can start earning any money from a new enterprise, not the least of which is funding. Many new businesses need a huge injection of capital before any return can be realised and this factor alone prevents many from getting off the ground. An aquaponics business is the exception.

Unlike most other types of business, setting up an aquaponics farm does not cost hundreds of thousands of dollars. While the actual set-up cost obviously varies depending on the size of the system, experts claim that most investors can expect to see a return in a relatively short period of time. Some claim it is possible to have the whole system paid off in a twelve month period.

Aquaponic farming combines aquaculture and hydroponics. Fish are kept in a tank and the water from the tank is pumped through the plants and back into the tank, in a continuous process. Aquarium water is rich in nutrients because of the waste products expelled by the fish and it is these nutrients that the plants take up and use to grow. The water that is returned to the fish tank has been purified by the plants; this keeps the tank water clean and healthy for the fish.

The types of plants that are grown in an aquaponics farm are generally herbs and vegetables. Because they are not treated with fertilizers and the usual garden chemicals, they are considered to be organic produce. The fish you buy to stock your tanks can be eating varieties and this gives you another product to sell. Both the fish and the vegetables grow at the same time, using the same system. Organic produce attracts a premium price at point of sale and is keenly sought by consumers.

The main advantages of starting an aquaponics farm as a business include the low start-up costs, low production costs and the ease with which the system can be managed. You don’t need to rent or buy any space to carry out your business as you can use space in your own yard, garage or other parts of your home. Organic produce is becoming a popular product, especially at farmers’ markets and other local events, so selling your product should be quite easy.

If you are looking for ways to bring in extra money or you want to start your own business, take a close look at how to start your own aquaponics business. You don’t need to be a gardener and you don’t need any specialised skills to succeed in this type of enterprise.

Commercial Aquaponics and Profitability

credit to http://www.greenacreaquaponics.com/

The commercial viability of aquaponics is likely the hottest contested topic on most aquaponic forums today and is the million dollar question that everyone wants answered. While I’m still not willing to make my financial data public (you would be amazed how many people have asked), I will say that we are indeed a profitable farm based on revenue generated by the farm alone. Although our farm’s revenue is derived in diverse ways, even after extracting any non farm related revenue from things such as consulting, education or system sales, our Green Acre farm is indeed profitable on it’s farm generated merits alone. So it then begs the question, why have alternate streams of revenue if farming alone can be profitable? For several reasons. Let’s take a look at each one.

Reason 1 - A business with multiple revenue streams is a more viable, resilient business model. Having multiple revenue streams means a business can be more nimble and weather setbacks more easily. Literally. Setbacks from the weather are a very real possibility and probability for any kind of farming venture unless you farm in a controlled environment setting but even in controlled ag, crop losses can occur due to pest damage or disease. However having multiple streams can help insure there is still cash flow when a crop loss occurs. This is especially important for the aquaponic farmer as crop insurance isn’t yet an option. 

Reason 2 - Direct farm generated revenue from crops is rarely a consistent amount and alternate streams can supplement in between crop harvests and rotations. This actually is probably a little less true in aquaponic farming then in traditional Ag where all of a farms revenue might come in a two month period when the watermelons are ready to harvest. For we aquaponic farmers though, a carefully planned crop schedule and rotation can help insure a constant and consistent harvest of some crops such as lettuce and herbs but even the revenue generated by these will fluctuate with the weather and season.

Reason 3 - Alternate streams of revenue can subsidize a small farm business while it grows its operation to a size large enough to generate enough revenue on farm sales alone.Ah, now this is the ultimate goal for us and most likely for most aquaponic farming hopefuls; have a farm large enough to pay all the bills and then some. It’s not that the farm is unsuccessful or not profitable right now but its simply not large enough yet to produce enough revenue to support two individuals entirely. Understand though that this is purely a function of not having enough start up or expansion capital for a small farm business to create a large enough farm right out of the gate. However, just because a farm’s revenue is limited due to grow space and production does not mean it’s not a profitable business.

Reason 4 - Alternate revenue streams can self fund farm growth and expansions. Lets face it, expanding an aquaponic farm can be pricey and certainly more then its soil counterpart. Have we stumbled on the one drawback of aquaponics? Perhaps, but I will save that discussion for another blog but adding on additional grow space can easily incur a capital outlay of $20k or more or as little as $15 a square foot just for the system or as much as $100 a square foot depending on how you build and source it. We would have to sell an awful lot of lettuce to fund expanding our farm from direct farm sales. Quite honestly, this is the single greatest driver for our alternate streams because our goal is to have enough grow space for the farm alone to support itself and us and so far 100% of our expansion has been self funded from alternate revenue streams.

How to Write a Business Plan

credit to http://www.startupdonut.co.uk/

Writing a business plan

Many potential start-up businesses are daunted by the prospect of writing a business plan. But it is not a difficult process - and a good business plan focuses the mind as well as helping to secure finance and support.

The business plan will clarify your business idea and define your long-term objectives. It provides a blueprint for running the business and a series of benchmarks to check your progress against. It is also vital for convincing your bank - and possibly key customers and suppliers - to support you.

This briefing explains:

• What information to include.
• How to present your financial forecasts.

1 Executive summary

The executive summary outlines your business proposal. Although it is the last section to be written, it goes on the first page of the business plan. It will be read by people unfamiliar with your business, so avoid jargon.

1.1 The executive summary highlights the most important points and shouldsum up six areas.

• Your product or service and its advantages.
• Your opportunity in the market.
• Your management team.
• Your track record to date.
• Financial projections.
• Funding requirements and expected returns.

1.2 When deciding whether to back a start-up, bank managers and investors often make provisional judgements based on the executive summary.

The main body of the business plan is then read to confirm the initial decision. The appendices at the back of the plan carry detailed information to support the main text.

2 The business

2.1 Explain the background to your business idea, including:

• The length of time you have been developing the business idea in its present form.
• Work carried out to date.
• Any related experience you have.
• The proposed ownership structure of the business.

2.2 Explain, in plain English, what your product or service is. Make it clear how:

• it will stand out as different from other products or services
• your customers will gain through buying your product or service
• the business can be developed to meet customers' changing needs in the future

It is important to cover any disadvantages or weak points you feel the business may have. Be frank about these - it inspires confidence.

2.3 Explain any key features of the industry (eg special regulations, effective cartels or major changes in technology).

3 Markets and competitors

3.1 Focus on the segments of the market you plan to target - for example, local customers or a particular age group.

• Indicate how large each market segment is and whether it is growing or declining.
• Illustrate the important trends - and the reasons behind them.
• Outline the key characteristics of buyers in each segment (eg age, sex or income).
• Mention customers you have already lined up and any sales you have already achieved.

3.2 What are the competing products and who supplies them?

• List the advantages and disadvantages of all your competitors and their products.
• Explain why people will desert established competitors and buy from you instead.
• Show you understand your competitors' reaction to losing business and demonstrate how you will respond to it.

Unless there is a viable market and you know how you are going to beat the competition, your business will be vulnerable.

You must show you have done the market research needed to justify what you say in the plan.

4 Sales and marketing

This section is crucial. It often gives a good indication of the business' chances of success.

4.1 How will your product or service meet your customers' specific needs?

4.2 How will you position your product?

• This is where you show how your price, quality, response time and after-sales service will compare with competitors.
• Quote minimum order figures, if appropriate.

4.3 How will you sell to customers?

• For example, by phone, through your website, face-to-face or through an agent.
• Show how long you predict each sale will take. Many new businesses underestimate the time involved in winning each order. In year one you may spend up to 80 per cent of your time making contacts and selling.
• Will you be able to make repeat sales? If not, it will be hard to build up volume.

4.4 Who will your first customers be?

• Show which customers have expressed an interest or promised to buy from you and the sales they represent.
• How will you identify potential customers?

Unless you can demonstrate that you have a clearly defined pool of potential customers, starting your business is likely to be a struggle.

4.5 How will you promote your product? For example, using advertising, PR, direct mail or via email and a website.

4.6 What contribution to profit will each part of your business make?

• Most businesses need more than one product, more than one type of customer and more than one distribution channel.
• Look at each in turn. Examine your likely sales, gross profit margins and costs.
• Identify where you expect to make your profits and where there may be scope to increase either margins or sales.

Services and intangible products (eg computer software) are more difficult to market. Start-ups in these areas must pay special attention to marketing in their business plans.

5 Management

People reading the business plan need to be given an idea of why they should have faith in the management of your start-up.

5.1 Outline the management skills within your team.

• Define each management role and who will fill it.
• Show your strengths and outline how you will cope with any weaknesses.
• Describe the background and experience of each team member.
• Clarify how you intend to cover the key areas of production, sales, marketing, finance and administration.
• Management information systems and procedures should be outlined. For example, management accounts, sales, stock control and quality control.
• Show how many 'mentors' and other supporters you will have access to.

5.2 How committed are you?

Banks and any other potential investors will want to be sure you are committed to the business. Show how much time and money each of the management team will contribute, and what your salaries and benefits will be.

6 Operations

Explain what facilities the business will have and how it will deliver the product or service to the customer.

6.1 Show the pros and cons of the location.

6.2 Indicate the facilities you will need to start (eg equipment and machinery). Some start-up businesses only need a desk and a phone.

Consider any potential limits to production capacity.

If you are going to manufacture or distribute products, show how and where you are going to warehouse them and for how long.

6.3 Provide a list of employee roles you need to fill and the skills required to fill them.

6.4 Show how you selected your suppliers.

Keep it real

Sales forecasts produced for start-up businesses are often over-optimistic. Here are some important reality checks.

• How soon can you start selling?
• Will potential customers hold off for a year before they take you seriously and place an order?
• How often will you be able to sell?
• How many days can you spend selling?
• How long will each lead take to line up?
• What percentage of leads will turn into sales?
• How much will you be able to sell?
• What will the average sale value be?
• Will most people give repeat orders, or must you find new customers each time?
• How long after a sale will it be before you can collect payment?
• How much income can you realistically expect each month?

7 Financial forecasts

Your financial forecasts translate what you have already said about your business into numbers.

7.1 A realistic sales forecast forms the basis for all your other figures.

Break the total sales figure down into its components (eg different types of products or sales to different types of buyer).

7.2 Your cashflow forecast shows how much money you expect to be flowing into and out of your bank account and when. You must show that your business will have access to enough money to survive.

• Demonstrate that you have considered the key factors affecting cashflow - eg level and timing of sales revenue, wages.
• Show when there will be more money coming in than going out ('cash-positive').

7.3 Your profit and loss (P&L) forecast gives a clear indication of how the business will move forward. Summarize the annual P & L forecast for each of the first two or three years of trading.

7.4 If you are launching a larger start-up, you will also need projected balance sheets.

These will show you the financial state of your business on day one and at year end, perhaps for the first two or three years.

7.5 Do not get too protective about your forecasts. You may need to revise them.

For every forecast, list all your key assumptions (eg prices, sales volume, timing). Small business advisers at banks and your local business support organisation will often help you put together your forecasts free of charge.

8 Financial requirements

The cashflow forecast will show how much finance the business needs. Your assessment of the risks will determine whether or not you need to arrange contingency financing.

8.1 Say how much finance you will want, when and in what forms.

For example, you might want a fixed-interest loan and an overdraft facility.

8.2 State what the finance will be used for.

Show how much will be for buying equipment and how much for working capital (financing stock and debtors).

8.3 Confirm that you will be able to afford it.

9 Assessing the risks

9.1 Look at the business plan and isolate areas where something could go wrong (eg if your main supplier closes down).

What you would do if it actually happens?

9.2 Consider a range of what-if scenarios (eg what happens to your cashflow if sales are 20 per cent lower or 15 per cent higher than forecast). If there are serious risks:

• you can arrange contingency funding to cover the finance you may need
• you may decide that the business is too risky and abandon the whole project.

Assessing risk will help you minimise problems and help build up your credibility with any investor or bank.

10Appendices

10.1 Detailed financial forecasts (monthly sales, monthly cashflow, P&L) should usually be put in an appendix.

Include a detailed list of assumptions.

For example, the profit margin on each product, debtor collection period, creditor payment period, stock turn, interest and exchange rates, equipment purchases.

10.2 You may want to give other relevant information.

• Detailed CVs of key personnel (essential if you are seeking outside funding).
• Market research data.
• Product literature or technical specs.
• Names of target customers.
• A list of external data sources used in your research will add credibility to the information.

11 Presenting the plan

The more solid information you can gather for your own use, the better the business plan will be. But a banker or other outsider will not have time to read through all the details.

11.1 Keep your business plan short.

Most business plans are too long. Focus on what the reader needs to know.

11.2 Make it professional.

• Put a cover on the business plan and give it a title.
• Include a contents page.

11.3 Test it.

• Re-read it yourself. Would reading your plan give an outsider a good feel for your business and a grasp of the key issues?
• Show the plan to friends and expert advisers and ask them for comments.

Aquaponics and Worms

Credit to Vermiaquaponics article by Great Lakes Aquaponics
http://greatlakesaquaponics.wikispaces.com/Vermiaquaponics

Vermiaquaponics is actually a word my father and I invented. It is in laymans terms the same thing as aquaponics but with a combination of worm breeding. You use the worm castings to make a nutrient tea which is then used to feed the plants through their roots directly and in the form of foliar feeding. Foliar feeding is when you feed a plant through its leaves. You spray the tea onto the leaves directly and the goal is to have the nutrients be absorbed in more than one way. Then the worms themselves are used to feed the fish thus eliminating some of the cost of fish feed, and making these aquaponic systems more self sustainable.

Vermiaquaponics will soon become the future of aquaponics. In a way many people use certain aspects of it by feeding their plants with extra micronutrients and such.(for example chelated iron, manganese, zinc, etc) But what makes this version so unique is that it will help eliminate the cost of fish feed which becomes an enormous expense. In addition you are feeding your fish great protein which should theoretically help them to grow faster and bigger. Although worms do not give fish 100% of their diet, and are nearly 90% composed of water, so supplements will be required. So essentially your getting your fish wish less cost improving your profit. 


One concern I have about this new form of growing is when it gets to the commercial scale. Places like the University of the Virgin Islands are harvesting over 5 tons of fish annually and in order for something like this to be beneficial to them you would need a very vast number of worms. Making vermiaquaponics less practical on a commercial scale but definately beneficial on the hobby scale. Something to consider if trying to convert from aquaponics to vermiaquaponics is that you will need the space to grow your worms, and to make sure you will have enough worms to be able to integrate this technology into aquaponics.

The focus on vermiaquaponics is to not incorporate it in systems producing such high quantities of fish. For the Urban Farmer, primary focus should be on plant growth in order to make profit. Using as little fish as possible and supplementing with tea will reduce other costs. The key is to get the right number of fish to plant growth ratio and also adding the vermiaquaponics side of the equation. When all these numbers can be worked out maximum plant growth to cost can be achieved giving you maximum profit.

Aquaponics News #2

Newsletter from Nelson Pade's Aquaponics Technology, System and Supplies New Incentive Program for Workshop Attendees An incentive program is now available that rewards attendees of Nelson and Pade, Inc.'s 3-day Aquaponics and Controlled Environment Workshop with a discount on the purchase of Clear Flow Aquaponic Systems®. Beginning with the April, 2012, 3-day Aquaponics and Controlled Environment Workshop, each attendee will receive a certificate (good for 30 days after the workshop) that gives them a substantial discount on the purchase of a Clear Flow Aquaponic System from Nelson and Pade, Inc. 2012 Workshop Schedule Nelson and Pade, Inc. has posted the 2012 workshop schedule.  When you attend a Nelson and Pade, Inc. workshop, you will be presented information based on 20+ years of experience in the three critical areas: aquaponics, controlled environment agriculture and the economics of aquaponics. No matter what your application, understanding these three areas is critical to your success.  Learn from the best!  Attend a Nelson and Pade, Inc. Workshop. Next workshop:  April 19-21, 2012 Clear Flow Aquaponic Systems® Clear Flow Aquaponic Systems® are designed for maximum production with minimum inputs.  From the F5 (Fantastically Fun Fresh Food Factory) to our commercial systems, these are highly productive and efficient systems.  Check out our current projects to see where Clear Flow Aquaponic Systems® are now being shipped. UWSP/Nelson and Pade Aquaponics Course The Introduction to Aquaponics Course/Biology 498, offered in partnership with Nelson and Pade, Inc. and University of Wisconsin-Stevens Point has begun.  This course, co-developed and co-taught by Rebecca Nelson, John Pade, and Dr. Chris Hartleb, is the first of its kind.  The Spring semester course is full, but future course offerings will be announced. Sweet Corn in March? Yes! Our demonstration greenhouse is thriving and we are enjoying an abundance of fresh vegetables and fish.  This week, we ate aquaponically-grown sweet corn, kohlrabi, Swiss chard, lettuce, herbs, beans and huckleberries.  In a couple of weeks, our tomatoes and strawberries will be ripe.  We can’t wait! Questions? Feel free to email or call us with questions: 608-297-8708 info@aquaponics.com Or visit our Aquaponics Information pages.

Aquaponics Presentation #2

BALANCING AN AQUAPONICS SYSTEM

There are several items that needs balancing in an aquaponics system 

1. Nitrate level ~ high: Nitrogen-eating bacteria converts Ammonia to Nitrate

2. Water pH level ~ 7.0 optimum 

3. Sodium salts concentration ~ low 

4. Iron (Fe) addition 

5. Fish feed 

   

BENEFITS OF AN AQUAPONICS SYSTEM

 

There are a lot of benefits of managing an aquaponics system, such as:

1. Conservation through constant water reuse and recycling 

2. Organic fertilization of plants with natural fish emulsion 

3. The elimination of solid waste disposal from intensive aquaculture 

4. The reduction of needed cropland to produce vegetable crops 

5. The overall reduction of environmental footprint for crop production 

6. Small efficient commercial installations can be built close to markets therefore reducing food miles

7. Small systems are easily setup and operated; thus everybody can try 

8. If many people in our country starts their own small aquaponics system at home;

            a) sell surplus harvest, good side-income source 

            b) use fresh food daily, increase in overall health 

Besides all the benefits and profits, one should be aware of its disadvantages, such as:

1. Initial expense to start an aquaponic project

2.The infinite number of ways to configure

3. Rely heavily on energy, technology & control

4. Have multiple 'single points of failure' where problems can lead to

complete loss of fish stock


***presentation continues into #3, refer older post***