Even in a challenging ag economy, dealerships are looking for opportunities which can strengthen the business for the future.
Acquisitions and consolidation have long been a part of the farm equipment industry. But collaborations and partnerships, especially on the precision farming side, could be key in further developing this side of the business for dealers.
Jim Henderson, executive partner with The Exemplary Group, a business consulting firm, says the ag start-ups, particularly on the software side, could offer some lucrative opportunities for dealers.
I had a chance to catch up with Henderson last week in Illinois during a dealer peer group meeting, to get insight on why getting in on the ground floor with ag tech start-ups could evolve dealers’ precision business.
“The challenge for a dealers is that there's both opportunity and risks. The risk is that a lot of these products have not figured out a market fit. And that's the biggest risk with a startup.
If you're out there and the product market fit is not proven, then you risk wasting a lot of time and money. If there's enough of a track record, it's proven enough that you can hop in. You want to be early, but not too early,
assuming you're just selling it. And the second part is, a lot of these ag companies, you've got to figure out how, have they thought through their channel program? Do they really want to work with dealers, or are they just trying to take your customers and then use them themselves? An eye towards that would be important and I think in many ways that’s something I would look at precision farming has been able to, in effect, you can help grade people's channel programs.
How strong are they and are they really viable or not?"
Henderson adds that dealers should not undervalue their relationships with customers and their ability to leverage new technology to fill a specific market need.