Funding a farm project that you are passionate about
James Fulton of Amet Property discusses how you should be passionate about your diversification ideas to truly make them succeed…
Amet Property offer development consultancy services to rurally based businesses including appraisals to identify alternative uses of existing assets, help with obtaining planning consents for change of use and new build development, assistance with obtaining bank finance for projects and putting together grant funding applications.
The majority of the projects that we get involved with involve the conversion of individual buildings or whole farmyards into a use other than agriculture. This can be a project to produce a capital injection into a business through conversion and sale, a project to produce a passive income through the letting out of converted property or projects that produce a new trading business that makes use of the existing assets of rurally based business.
We are often asked to provide ideas for diversification of existing farming businesses. If you are asking this question then you should be really looking at a project to provide a capital injection or passive income, whether that be the conversion of buildings to residential or commercial use and then sale or letting of those buildings. It is important that any project that involves significant management and time input from the owner must be something that they are passionate about. Starting a new business is hard and in most cases requires many long hours in order to be successful. The best way to make sure you are committed to the project is to do something that you really enjoy.
Having established what a client wants to achieve our first step is usually an appraisal of the existing assets looking at their suitability for alternative uses taking into account technical and planning constraints that may affect what can be achieved. Having established that a project is technically feasible we would always advise that the next step is to produce a business plan. If you are going to seek grant funding or bank finance than a sound business plan is absolutely essential and if you are going to use your own money it is really important that you can do so knowing that the venture can be a success.
With the movement away from direct funding in agriculture there are likely to be more and more opportunities for grant funding. The growth programme funding made available through DEFRA and LEADER funding in specific areas has been extremely useful to many of our clients who are diversifying farming businesses or growing other rural businesses.
We have recently assisted a client in gaining planning permission to convert a redundant farm building into a new butchery to allow their already diversified business to expand. Even with relatively modest growth the business should employ an additional 5 people over the next 3 years providing a boost to the business and the local community and justifying the grant funding of over £170,000.
We have also helped another client who wanted to modernise their existing farm buildings so that they could improve the efficiency of the arable and livestock operations on the farm. The initial approach was to improve the existing buildings but this was too expensive to justify and so instead we gained planning permission to convert a number of the buildings into residential accommodation. These plots have been sold with consent which has provided all of the funds needed to build a new farmyard giving the business the ability to grow with the additional benefit that there was enough money left over that the father could retire from the business and would no longer need to fund his lifestyle from the business allowing the son and daughter-in-law to use these additional funds to re-invest.
Diversification is really about looking at the assets you have - whether that is physical assets or your skills - and working out how best to use them to generate an income and provide you with the lifestyle you want.
Contact Amet Property for advice about your diversification project.