Planning key to securing farm diversification funding – top tips
With increasing numbers of farmers looking to future-proof through farm diversification, Jo Lampkowski, of AMC bank, shares her top tips for those looking to secure funding
Utilising existing assets to create new revenue streams can help farmers reduce risk and overcome uncertainty.
Jo Lampkowski, regional agriculture manager for the Agricultural Mortgage Corporation (AMC) in the north of England, looks at what farmers need to consider before going down the farm diversification rabbit hole and what information they need to prepare and prioritise to secure any funding needed.
1. Get good market knowledge
It is essential to do as much research as possible. For traditional farmers considering a move into non-farming activities it is important to reflect on how much is known about the market.
Consider the level of demand, competition and outline what the business can do to differentiate itself. Also consider any new means of distribution and where the new product or service will be sold.
2. Sufficiently prepare the current farming business and premises
Weigh up whether the new enterprise will enhance or support the existing business and how this could be maximised and consider any negative impact on current trading and how this would be managed.
This includes whether the existing business will service borrowing for the new enterprise and whether the existing premises is adequate.
3. Put people first
It is important to carefully assess the impact on existing staff and whether they have the capacity and skills required. A lack of expertise or inadequate competences to run the new business can lead to failure, so consider if there is a need to hire new people, develop existing talent or whether it may be better to outsource.
If new staff are required, farmers will need to consider recruitment.
And the owner may need to divert their attention away from the core business to focus on the new enterprise.
4. Set sights on sustainability
Sustainability is an essential consideration. When exploring a new enterprise, it is important to assess its environmental impact and, if this is beneficial, how this can be maximised and promoted to help develop the business.
5. Take professional guidance
Seeking out sound business and funding guidance to help the diversification venture is vital. Farmers should speak to professional advisers who can offer guidance, sources of finance and advice on how to effectively manage the transition to the new enterprise.
Careful planning is essential and can help mitigate risk.
6. Prepare a thorough business plan
This should include set up costs, cashflow projections and budgets, financial accounts of the existing business and confirmation of any requirements such as planning permission or licences.