Running a farm and setting up a new venture at the same time is not without its challenges, but its an option an increasing number of UK farmers are exploring. In this article, Chris Walsh, NFU Mutuals Farm Insurance Specialist, explores some initial considerations around farm diversification.
1. Do your research and have a plan
PLANNING and research are crucial in any diversification journey. The key first steps are considering what product or service you could offer and who your potential customers might be.
Exploring potential competitors and pinpointing what will make your new venture unique and difficult to replicate can also be beneficial. Remember to consider your financial position before, during and after planning your diversification.
It can be easy to focus too heavily on planning a diversification, however, its critically important not to neglect your core farming activity - your new venture should complement your main business activity.
Talking to people who have done it all before is simply invaluable, including conversations with experts, such as your insurance provider and health and safety professionals.
2. Do something you love
IT goes without saying, diversifying into something you have a genuine passion for is always a good idea. For instance, if you love hosting parties for family and friends, then a wedding venue might be just the diversification youre looking for.
If horses are already an interest, then a livery yard might be the perfect way to create some additional income.
3. Make use of what you already have
ITS worth thinking about all your existing farm assets, including land, location, buildings, people and skills. Have they reached their full potential, or could they take a leading role in a part of your wider business?
Are there any outbuildings which have become redundant or that could be used more effectively?
Investing in renovating them for events or hospitality could prove worthwhile. That unused building might be the perfect place for farmhouse weddings or an idyllic staycation location.
Your farms location could also be key to unlocking a profitable diversification scheme. For example, if your farm is on a footpath or near tourist hot spots that are already attracting visitors, this could give you the opportunity to market your new product or service to them as theyre already visiting your location.
If your new venture involves selling directly to the public, then it could be the first time you bring paying visitors onto your farm.
Therefore, public liability insurance should be a key consideration. It protects your business if its held responsible for accidental injury to customers or the wider public, or damage to their property.
Some farm insurance policies provide public liability cover as standard. Its essential to check with your insurer what your policy does and doesnt cover during the planning stages.
4. Protect what youve got
Putting suitable protection in place for your business, employees and customers is a crucial part of any farm diversification, in addition to ensuring you have developed a robust risk management plan.
The first step is to check whether you already have cover for diversifications as part of your existing farm insurance policy. If this is the case, make sure it meets the unique needs of your diversification. To do this, contact your insurer who can talk through your existing insurance.
Your responsibilities under health and safety legislation will change too as you diversify, both when you are developing your plan, for example using contractors or suppliers to convert or build new facilities, and when they are complete, and youre ready to unveil your new venture.
NFU Mutual Risk Management Services Limited (RMS) have a team of professional health and safety and risk management consultants who can provide expert guidance as you develop and launch your diversification venture.
Chris explains: As your business grows, youll need to ensure you have the right level of insurance cover in place and that new risks youre exposed to are considered and regularly reviewed.
Support Available
As the UKs leading rural insurer, NFU Mutual is here to support you. To see how they can help with your diversification journey, visit nfumutual.co.uk/fgdiversification, or contact your local NFU Mutual agency office
