Very good farmers, not particularly good business-people: A rural financial counsellor perspective on rural business failure

Abstract

Capitalising on the food and fibre opportunities of a burgeoning global population requires a high performing and resilient agribusiness sector. Necessarily, this includes a business focus to identify opportunities and implement strategies to ensure the delivery of food and fibre products demanded by the global marketplace while managing impacts of a dynamic operating environment. Current agriculture policy in Australia recognises the varying capacity of rural businesses to thrive in this environment and provides both indirect and direct welfare support. One example is the provision of a publicly funded financial counselling service to rural business in financial stress. This research has used interpretive description to better understand the drivers of the financial hardship experienced by businesses accessing the Rural Financial Counselling Service (RFCS). Guided interviews were conducted with 32 Rural financial Counsellors (RFC) who had at least five years experience in the role. Thematic analysis of the interviews highlighted the social, environmental and financial complexities impacting the successful operations of a rural business. The key finding of this research is that despite the myriad influences impacting businesses in this cohort, business failure reflected a lack of business skills, which could be aggregated under the umbrella terminology of business acumen. These skills are more nuanced than simply poor financial literacy, extending to the manner in which business operators understand the fundamentals of their business environment and are able to intervene to maximise the opportunities and mitigate the threats. Consequently, decision-makers focussed on production preferentially to the business of capitalising on that production. The research identified opportunities for research relating to the challenge of enhancing the business acumen of rural business decision-makers, as well as illuminating the business and social context of gender in rural business sustainability.