How do you ensure a diversification is successful and a wise investment? Michael Mack, specialist farm diversification adviser at The Rural Consultant, offers advice.
One of the biggest changes diversification can bring is the level of interaction with a wide range of people.
If you are not a ‘people person’, are you happy to make a dramatic change from being a solitary farmer, to smiling at people every day? It can be done but requires a change in mindset.
Consider whether you need to bring others in with people skills.
Keep an open mind and allow others to make decisions so the business can grow.
Your customer will depend on things such as where you are, how wealthy the area is, age ranges and your marketing methods.
Research and understand your customer, then build your brand, products and marketing around them.
Look at your competition – not just other farmers doing the same thing, but businesses which might draw your customer away.
Millennials represent more than a quarter of the UK population.
This cohort makes decisions and accesses information differently.
For example, rather than looking at websites, millennials are more likely to use social media.
Millennials are less likely to own a house and have children, but are more likely to be into ‘experiences’ and ethical consumerism.
So make sure your products, services and brand messaging reflect this.
If you are not a millennial yourself, consider bringing someone of that generation in to the business to effectively communicate and appeal to that generation.
A statement which explains what you plan to achieve and how will help when approaching banks, planners and authorities.
It will show you have thought about challenges, know where you are going and will keep you focused.
First talk to your bank manager or a specialist bank with a deeper knowledge of the sector.
Think about your project timeline – how long will it take to generate income so you can start to pay off borrowings? Do not be overly optimistic with time.
Factor in additional costs and how these might change due to Brexit.
Succession planning should be part of the process.
Talk to advisers and accountants about how you can bring family The best diversifications are where the person running it is passionate about what they are doing Michael Mack members in.
If children are included in the running of the business, they should be able to make decisions and be partners.
The best diversifications are where the person running it is passionate about what they are doing – they provide a driving force, which makes a big difference.
It is possible to learn to love something – sometimes you need to build a relationship with it first.
Focus on the most important developments first.
Keep looking at the numbers to make good decisions and build one thing well at a time.
Get your staff and processes working well.
Gather customer feedback as soon as possible so you can refine your products/services.
Install good financial management from the beginning – this might mean bringing in someone different to your farm secretary.