AGRICULTURAL AND NATURE TOURISM
GOOD FOR THE PEOPLE AND THE LAND
Holly George, hageorge@ucdavis.edu, UC Cooperative Extension, Plumas-Sierra Counties
What Is It? Agricultural tourism is a business conducted by farmers or ranchers on their working agricultural, horticultural or agribusiness operations for the enjoyment and education of visitors. Its intent is to promote farm products and to generate additional farm income. In doing so, agritourism provides visitors with entertainment, recreation, participation, and education. Two websites that you'll find helpful are: http://www.calagtour.org and http://www.visitcalifornia.com. Nature tourism involves a commercial operation that works toward visitors' enjoyment, understanding, and appreciation of natural areas while, at the same time, conserving the local ecological, social, and cultural values and enhancing the local economy.
According to the World Tourism Organization, nature tourism is the fastest growing segment of the travel industry, averaging a 30 percent increase each year since 1987. According to the U. S. Fish and Wildlife Service (http://www.fws.gov/r9extaff/pr9833.html), "if wildlife-watching were a Fortune 500 company, it would have ranked 23rd in 1996." Bird-watching is the fastest growing segment of the nature-tourism business.
Agricultural and nature tourism provide farmers and ranchers a chance to diversify their operations, supplement their incomes, improve their communities, and care wisely for their environment. These industries are consumer-focused and respond quickly and directly to consumer needs, preferences, interests, and values.
Perhaps the greatest long-term benefit of agritourism and nature tourism is the chance they offer farmers and ranchers to educate people about the values and benefits of farms and ranches. More than 85 percent of Californians live in cities with at least one million people. Disconnected from the land, these people lack the knowledge and personal experience to make informed decisions about buying products or even voting on policies that impact agriculture. As advocates of rural values, agritourists and nature tourists can become strong allies of family farms and ranches and of the wildlife, habitat, and open space they conserve.
Why Vacation? A recent survey of Americans explored the whys of away-from-home vacations, reporting the following results. They are ranked according to importance.
To build and strengthen relationships To learn
To improve health and well-being To mark a special occasion
To rest and relax To save money or time; thus, traveling locally
To have adventure To reminisce
To escape To view nature, observe beauty
IS TOURISM FOR YOU? EVALUATING YOUR FARM OR RANCH
Revisit your goals Before starting any endeavor; it is vital that you revisit business goals. You must identify your underlying philosophy & objectives, and obtain agreement from everyone involved in your operation's decision-making—family members and outside interests. If you skip this step and fail to gain consensus, you face future misunderstandings, disagreement, and conflict down the road; stress; and only limited success.
Consider the Costs and Benefits Although agricultural and nature tourism can supplement your farm or ranch income, there is no guarantee. Small businesses have high failure-rates. Inability to understand the tourism business, lifestyle impacts, and time impacts; inadequate planning; poor people skills; shoddy standards; ineffective marketing plus financial problems all lead to downfall. You must plan and prepare.
Assess What You Have As you consider the activities and attractions that you'd like to offer, look at what your farm or ranch already contains. What is intrinsic and unique to your land and operations? Why would a person enjoy visiting it? What memorable experiences would a customer leave with? As you look at your operation, think long and hard about your area's natural, environmental, and nature-based resources, its scenic areas, and its history. Consider your farm's aesthetics. Look at its distance from main roads, proximity to urban areas, and proximity to active tourism regions. Consider access, infrastructure, services and facilities. Start your new enterprise with the attractions you possess today rather than purchasing something new.
Look at your people skills It is said that the successful tourism operator must have a deep-seated love for serving people. They must be a leader and a motivator, for both visitors and staff. Moreover, they and their staff must have a sense of humor, a strong dedication to excellence, a strong work ethic, physical stamina and be problem solvers.
Remember agricultural and nature tourists are looking for a quality experience. This means that visitors participate in meaningful, fun, and authentic activities and attractions. It means they are welcomed, respected, and cared for. And it means they get what they came for, and—when they leave—they leave wanting to return.
CREATING YOUR BUSINESS PLAN
A business plan is critical to success. To use an old cliché, failure to plan is planning to fail.
Creating a business plan allows you to anticipate your new enterprise's opportunities and challenges on paper—before you commit substantial resources. It is essential if you plan to obtain outside financing. Business plans may cover the entire business or a single enterprise within the business.
Executive summary A one-page summary of your plans. It consists of your business idea/concept and conclusions of your financial strategy. It comes first in your business plan, but it is written last.
A mission statement The mission statement reflects the core purpose of your business, stating your values and goals in a short, focused sentence of no more than fifty words.
Your business concept or idea Your business idea comprises a one-page concise, complete, and persuasive statement that describes the what, where, why and how of your enterprise. Include a description of your
Measurable goals and objectives Goals are the long-term plans you want to achieve in the next three to five years. Objectives are your short-term (one-year or less) plans that identify how you will meet your goals. Goals are what is to be accomplished; objectives are how it is to be accomplished.
Background information (industry research and market analysis) Explains why you are selling what you are selling. For example, it might contain potential visitor days and expenditures; preferences and interests; competition; and complementary services in your area.
Management needs and management history This explains how you will run your business, describing your management team, legal structure, insurance, and staffing needs. It also notes what regulatory agencies you will be working with, and how you will address their requirements.
Marketing strategy Your marketing strategy and advertising might be as simple as word of mouth or focus on repeat customers. Or it might be a well-planned promotional campaign that prudently chooses marketing methods, distribution, and location. Marketing methods could include, for example, printed materials, mass mailings, radio spots, newspaper advertisements, and other media advertising.
Financial strategy Your financial strategy is basic to obtaining money. It identifies your sources of existing debt and your financing needs, specifying your fixed assets, start-up costs, several basic forecasts as well as your monthly principal and interest payments. It includes a conclusion that explains how your new enterprise will fit into your current operation and summarizes your financial documents. Your three main financial documents are your 1. income statement (or profit and loss statement with assumptions), 2. balance sheet (assets, liabilities, and net worth), and 3. cash flow projection including sales projection and assumptions.
The appendix The appendix is at the end of the business plan, furnishing supporting documents. Include your financial statements, customer support statements, and credit terms available to your business.
To predict how your new enterprise will impact your entire operation, compare a financial statement with your new enterprise to a financial statement without it. There are affordable funding sources available for agricultural expansion into tourism, and there are people available to help with the process.
THREATS TO SUCCESS In spite of the optimism surrounding small-business start-up, most small businesses flounder. In fact, eighty percent of small businesses fail in their first five years. Unquestionably, all entrepreneurs make mistakes, but those who recognize and correct them are more likely to succeed.
The How-To Manual has many useful worksheets to guide landowners through the process of developing their own business plan and financial statements.
NAVIGATING LEGAL CONSTRAINTS
Most agritourism and nature enterprises confront legal conditions or restrictions from federal, state, and/or local government. There are laws, regulations, and municipal codes and ordinances. It's likely no surprise to learn that adding ag or nature tourism activities to your facility may triggers added legal requirements.
Looking at Basic Categories To start an agritourism or nature tourism enterprise, you must comply with requirements or obtain County zoning approval. You must adhere to regulations that protect the environment, your neighbors, and your visitors. The five broad categories relevant to agritourism and nature tourism are
Land Use and Development County zoning codes spell out the allowed uses of private land in unincorporated areas. These codes address rules on building, construction, signage, and more.
Environmental Health Counties are responsible for incorporating the provisions of the California Environmental Quality Act (CEQA) into their county codes. Counties assess and address the environmental impacts of development projects, including water quality, waste disposal, septic, and traffic.
Public Health and Safety For agritourism or nature tourism enterprises, most public-health concerns relate to the sanitation and safety of food-processing or food-handling operations. Food-safety regulations are set forth in the State Health and Safety Code and enforced at the county level. Public-safety regulations ensure adequate fire prevention and security measures plus access to facilities.
Licenses and Taxes Administrative regulations are required of all businesses. They include business licenses; sales taxes, federal, state, and local taxes; and the many employee-related laws. Certain businesses have additional licensing or tax burdens. For example, bed and breakfasts (B&Bs) are required to pay a motel tax, and wineries must have a liquor license.
Direct Marketing Regulations protect consumers who buy farm products, by ensuring that packaged products are labeled correctly and completely and that scales weighing these products are accurate.
Although you might feel overwhelmed by the preceding policies, regulations, agencies, permits and licenses, take it one step at a time! Research the process. Ask lots of questions. The more you know in advance, the better questions you will ask, and the better prepared you will be to prevent costly delays and difficulties. Agency websites and staff can answer questions, provide information, and help landowners meet requirements.
A good working relationship with all agency staff is vital, both during the permit-application process and later during inspections. The time required for the permit approval process varies with each operation; allow for a lengthy procedure. Regulations are important to the development and cost estimates of a business plan; so, landowner should identify them early in their planning. The manual has specific examples to help you.
DEVELOPING YOUR RISK-MANAGEMENT PLAN
You are responsible for the health and safety of your visitors and employees. While risk and thus liability cannot be eliminated, they can be reduced and managed via a risk-management plan. There are two components of a risk-management plan: farm safety and financial well-being. Farm-safety risks involve your physical operations. Financial risks involve employee issues plus, for example, loss of a major customer, injury of a guest, or closure of a farmers' market. Both components involve strategies that reduce risk to visitors and employees and, therefore, reduce liability to farmers and ranchers. You must rely on your management team—particularly your lawyer and insurance agent—to help determine your liability needs.
Purchasing Coverage Choose a package that protects your personal assets. The cost will vary with company, activities, and risks facing your visitors. It should reflect the share of your entire operation that your new enterprise encompasses. So shop around! Start with your current insurance provider and then contact other companies and other agritourist and nature tourist operators, asking plenty of questions. The manual has a form to help you keep track of their answers.
When you do purchase coverage, make sure that it's with a quality company, you understand it, and—like all other aspects of your enterprise—you routinely review it, at least once a year. Ask yourself two questions:
1) Does the difference between the insurance premium and the income gained allow you to earn enough to make your new enterprise worthwhile? 2) Can you realistically pass the insurance cost on to the customer—or will the cost of the insurance limit the demand for the activity?
Risk management regarding employee issues revolves around good sense and sound information. California has an infinite number of laws covering personnel issues and contracting, so it is important you consult with your lawyer. Of primary importance is that you embrace good management practices. When you learn and follow good hiring and training practices and you safeguard employee health and safety, you are well on your way to protecting yourself legally. The manual has several worksheets to assist you and some companies to contact.
FORMING YOUR MARKETING STRATEGY
The marketing strategy of your business details the steps you take to promote your product or service. It describes what you offer to get customers walking through the door and what you do to keep them coming back. It depends on your product(s), price, promotion, and place of sale. It also depends on your customers, competitors, complementary businesses, and cost of production.
A marketing strategy has many components: the market, the enterprises features and benefits, the message, promotion and advertising, and the competitive advantage. Word of mouth is the most powerful and inexpensive promotional method. Good relations with neighbors, other local businesses, and community members are essential to the success of an agritourism or nature tourism enterprise.
Collaboration with local businesses can be a powerful marketing tool. Local residents can work with one another, government-agency representatives, and scientists to begin to revive their agricultural economy.
Your marketing strategy begins with the conception of your business idea and continues through the sale of your product. Your marketing strategy carrys on—as you evaluate your success, learn, act, and reflect, evaluate, learn, act, and reflect. It is a continuing and ongoing process, requiring time, money, and people skills. It is integral to the success of your business—which depends on the quality of your business plan.
Start by identifying the trends in the agritourism and nature tourism industries that affect your enterprise. Learn the ways they affect you. Project how the market may change and what you will do to keep in step.
Identify your target customers and their characteristics, their needs, your opportunities to address their needs, and your methods to most effectively provide products and services. Find out who is visiting your region; tourism boards and your Chamber of Commerce know and will share this information. Then, from within the larger agritourism or nature tourism market, decide to whom you'll cater. After you identify your customers, learn their unique set of characteristics and needs, realizing they can change over time.
That's not all. Take time to calculate the approximate size and growth potential of the target market(s) using population figures, sales tax information, industry information, and more. And estimate how much of the total market you will capture.
What is Your Marketing Cost? The cost of marketing research, promotion, and continual customer feedback is an ongoing cost of business. Consequently, you must budget for it each year. Your marketing costs depend primarily on your enterprise size and type and on your advertising and sales methods. Expect to pay 10 to 25 percent of your total operating costs on marketing during your first four years. As you build a sound reputation, however, your marketing costs will decrease—unless competition and other external factors compel you to put more money into marketing to maintain your market share.
What's the Price? How much you charge customers reflects how much it costs you to manufacture, market, and sell your product or service relative to the features and benefits provided by local competitors. Take your break-even point (the cost of business expenses and add a percentage for profit, your "margin"). If you find yourself charging substantially more than your competitors, review the results of your market research. If you find yourself charging far less, take another look at your quality of service; perhaps it needs upgrading.
Whatever marketing tools you choose, make sure they're the ones to which your customers respond best—not just the tools you like best. Be consistent with them. Don't select your promotional methods and then change them like you change your socks! Too often, the small business owner gets a new idea, modifies the original message or look, and confuses the consumer. The University of California Cooperative Extension's Agriculture & Nature Tourism Workgroup can be accessed via the web at: http://groups.ucanr.org/Ag_Tour/. Have Fun and Good Luck!!