Thinking of doing something different?

We are often asked if there are any ways in which farm incomes and capital values can be boosted or diversified away from core agricultural enterprises – and there often are, but there are many things to consider in the mix.

Firstly it is important to look at the aims and objectives of the farming business, whilst considering the business structure. What is the farmer looking to achieve? It could be a second income for the farm run as a separate business or a business to accommodate family members returning from college for example. Is the existing business a “true partnership”?

Are all parties interested in the new venture or will this be a business separate to the existing business? How much time does the client want to dedicate to this project and does this need to be flexible? It may be that one person has more time to dedicate than the other. Does it need to fit in with other busy times of the year? For example around lambing, harvest, sowing etc. Some diversification projects lend themselves to flexibility, for example letting buildings for storage, workshops or lock ups, these do tend to impede on the farm yard more than other projects, however these can make the utilisation of the yard for agricultural purposes more difficult. On the other hand projects such as a new farm shop, or farm soft play areas etc are more tying and will require regular opening hours throughout the year to ensure continual custom.

Thorough market research and business plan is key to the new proposal. This will lead farmers into questions such as; How much will have to be out laid to set the business up? How will this be financed? Do we have all the skills we need to run a business such as this? Do we need planning consent? How will the new venture fit into the current farmstead and will this impact on existing enterprises or the further expansion of the farm in the future? Are there grants available? When will we aim to have the business running? There are many more questions that need to be considered when looking at a new venture, gaining advice from professionals will be extremely important.

Farmers might start by running their ideas past a bank manager or land agent, these ideas will often develop from there. Once the idea has been crystallised it is important to cost it out properly and project incomes. Before the business gets up and running, it is important to consult with your solicitor to look at the structure of the ownership of this business taking into account the aspirations of all and the future tax implications, your accountant will also advise you in relation to this. Involving a land agent is o4en important when looking at the ownership of the site to assist in being objective when – looking at increasing capital values, taxation, effect on single farm payments, planning, looking at any occupiers agreements and the management of these.