Skip to content

Financial Planning for Successful Rural Diversification

Farm Accountant FD Solutions and Accounting believe that a mixture of both economic and financial pressures are forcing farmers to diversify their income streams to support their businesses long term.

Engaging professional support in the feasibility stages maximises the chances of developing proposals which will secure the bank funding needed.  Here are five areas worth consideration in the planning stage.


With so many options available, farm accountants FD Solutions and Accounting believe what works for one farm might not be possible for another.  Always keep in mind whether this income stream will achieve desired end aims and whether this produces –

  • Cashflow to support existing lines of business.
  • Employment or a business opportunity for family or staff members
  • Capital growth
  • Better use of assets
  • It is always preferable to consider more than one investment opportunity so as to weigh up each’s strengths and weaknesses against original objectives.

Return on Investment

Alongside the usual financial KPI measure, we believe certain non-financial matters could be equally as important, such as –

  • Can the existing business still run with management’s time diverted to this potential project.
  • How will this impact existing staff – who typically bear the impact of change.
  • Is it possible to assess what additional skills (or training) will be required.
  • How resilient do you consider yourself and have you planned for unforeseen issues?

Professional Advice

Farm accountants FD Solutions and Accounting consider engaging professional advice during the planning stage is key.  This could be a fractional finance director / CFO, solicitor or land agent together with family members.  Typically lenders will be looking to satisfy themselves that –

  • Any planning permission has been received  
  • Any renovation or new build has been costed and competitively quoted.
  • Does any funding request adequately cover project timescales with adequate contingencies
  • Are relevant licences in place
  • What corporate structure will the new venture take – for example limited company.

Business Plan

A good business plan should provide confidence to you, family and lenders. Farm accountants FD Solutions and Accounting recommend you identify areas to focus on and that risks are properly accounted for.

This should include a summary covering what is planned, funding requirement along with the payback period.  The main plan ought to include –

  • What makes the venture unique or different
  • Local competition
  • Evidence of a customer demand.  This could come from, for example research or test trading
  • Route to market and why – for example social media, content and platform.
  • Are the financial projections expected – if they look too good the lender will most certainly question them!
  • Assumptions and research to underpin financial projections
  • Budget projections for different scenarios – best, worst and most likely.
  • Reasonable repair costs to keep the project ‘like new’

Is the cash conversion cycle reasonable – no good having profits tied up for long periods as production costs or trade debtors.  Cash makes loan repayments not profit!

What the Lender Wants

From FD Solutions and Accounting experience with farm accounting expect a Dragon’s Den type of challenge to your figures.  Lenders require confidence every aspect of your investment stands up and that a business plans shows –

  • A proposition which is well considered and researched
  • Balanced funding proposal clearly defining your stake in the new venture
  • Contingency plan scenarios if business levels are not achieved.
  • Route to repayment of the lenders funding together with a timescale

FD Solutions and Accounting has many years of experience preparing business plans and understand the importance of future investment.  We are committed to helping our farming customers turn their plans into success.  We are based in Paddock Wood, West Kent and have clients throughout the county, in East Sussex and nationally.    

Recommended Posts

No comment yet, add your voice below!

Add a Comment

Your email address will not be published. Required fields are marked *