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As with any business, agritourism entrepreneurs usually find it helpful to develop a business plan to direct the development and operation of the business. Although various aspects of the business will evolve over time having a plan in writing is advised, especially if bank financing is necessary. Some general guidelines and ideas for developing or expanding an agritourism enterprise are included in this section.
- Agritourism: An Economic Opportunity for Illinois
- Community Benefits of the Modern Farmers Market
- Product Pricing: A Touchy Issue for Businesses and Customers Alike
- High Tech is No Substitute for Good Customer Service
- Understanding Financing is Helpful to Potential Entrepreneurs
Liability Considerations for Agritourism
Liability is an issue that is usually at the forefront of concerns identified when agritourism is considered. While the recognition of liability is generally a “good thing,” it is often misunderstood through false assumptions or a lack of understanding about how the insurance industry works.
As agritourism enterprises are often started as a sideline business to an existing farming operation, it is often assumed that liability issues related to agritourism should be covered through the existing farm liability policy. The logic behind this assumption is that since the business is being conducted on the farm, it is part of the farming operation. While this may be the case, the business operator should always check with his or her insurance agent prior to conducting any new business activity to be sure.
Generally, farm liability insurance only covers activities involved with “traditional” or “typical” farming practices. Although the definition of a farming practice will vary from company to company, it is probably safe to say that activities that involve charging the public to visit your farm to go on a hayride, run through a corn maze, hunt wild game or any number of other innovative activities is not part of that definition and not covered by most general farm policies.
Recognizing that many of the activities involved with the operation of an agritourism business are frequently not covered by customary farm liability policies can uncover a number of hurdles to securing adequate coverage. Many of these hurdles are rooted in the uniqueness of the individual agritourism business. Since no two enterprises of this type are alike, it can be difficult for the insurance industry to assess the true risk associated with these ventures. In order to compensate for the unknown, the companies will often quote very high rates or refuse to provide coverage at all. For companies that do provide liability coverage for agritourism businesses, it is normal for premiums to be based on the expected revenue that will be or has been generated by the operation. It is important to keep this in mind when discussing insurance issues with other agritourism business operators as the rates quoted from these sources will probably not be comparable to your situation.
The best advice for securing liability coverage for your agritourism enterprise is to allow plenty of time for planning and investigation. Start with your current insurance agent as the first source of advice. Get several quotes if possible and network with others in the industry to learn from their experiences. In most cases, it is possible to find affordable liability coverage for the majority of proposed agritourism ventures, but it might take significant effort to identify the best solution for your situation.
Some general suggestions to prospective agritourism entrepreneurs are:
- Remember, this is not a “Big Farm/Small Farm” issue. Successful agritourism business are operated on farms of all sizes and by people of all experience levels.
- Develop a plan. By developing clear goals and communicating them to everyone involved (family members, employees, bankers, etc.) there is a much better likelihood of actually achieving those goals. The list of activities involved with operating a successful agritourism business is endless. Keeping “busy” will not be a problem, however, prioritizing and getting the right things done at the right time will be critical to business success.
- Keep profit in mind. Running a business is different than participating in a hobby.
- Look for and explore every opportunity to develop partnerships. There are a variety of resources available that can assist with the development and marketing of your business but must be made aware of your assistance before they can help you. Search the web, make phone calls, send emails, join associations and attend workshops. Some area businesses that might initially appear to be a competitor can turn out to be the best partners in the long run.
- There are no “silver bullet” solutions. Depending on experience, management ability, location, financial resources and a variety of other factors, no two agritourism enterprises are the same. The opportunity for success at some level is always present. It is up to the individual to capitalize on their strengths and overcome their weaknesses to develop their own niche in agritourism.
The To-Do List for Agritourism Business Development
- Evaluate your present situation and assess your available resources (financial, labor, management, facilities, location, etc.)
- Assess your goals
- Prioritize goals
- Identify potential opportunities
- Evaluate potential opportunities
- Develop a plan
- Put the plan in action
Typical Hurdles to Agritourism Development
- Thinking too big
- Thinking too small
- Ability or willingness to change
- Ability to invest
- Seeking (the right) advice
- Goals are not clearly explained or shared with everyone involved
- Field of Dream Syndrome (if you build it, they might not come)
Understanding Your Customer
- Who are they?
- What do they like?
- What don’t they like?
- What are their expectations?
- What are they willing to pay for what you have to offer?
- How far are they willing to travel?
- Who are your competitors? Other wineries or pumpkin patches, school activities, soccer, TV, or Wal-Mart
- What is the competition doing right?
- What can you do better or different?
- What type of advertising do they use?
- How does your product or service differ?
- Is competition always a bad thing?
Sometimes the concentration of similar agritourism related businesses in an area can be an advantage to all of the “competitors.” Various Wine and Orchard Trails are evidence of this.