Unlocking the potential within your farm

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Unlocking the potential within your farm

• Maria Heneghan
• Kevin Connolly

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What is Rural Tourism ?
Providing a Holiday Experience in a Rural Area
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What is a holiday experience ?
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A place to stay
Something to do
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How does Tourist Euro Get spent ?
Accommodation 27
Activity 9
Food 16
(52)
Gifts 12
(64)
Travel in rural area 16
Snacks 9
Other 11
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Accommodation 2005 - 2006
End 06
Sept 06
Hotels saw increase of 61 41
BB 20 11
Self Catering 35 22
Camping Caravan 50 12
Hostels 45 39
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Self- catering ???
Cottage/ House / Lodges /Chalets
Yurts 5 star
Hostel
Camping / Caravans
Featherdown Farms
Boutique Self -Catering
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Something to do
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Activities
Walking Cycling Tennis
Nature walks on farm
Horse riding
Golf
Reading room
Children ???
Art lessons
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Sheep track walk
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Maze in the Maize
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Catering and meeting facilities on the farm
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Start with search and re searching
1. your Idea 2. your vision
Dont start with the JCB,
Grant Aid Business Plan
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Your Equity!

• What is it?
• Why is it important?
• Can it be better utilised?

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Case Study

• Westmeath Drystock Farm
• Established Self-Catering Enterprise
• Established Bed Breakfast
• Family- Husband Wife 3 children

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• Farm Details
• 110 acres (44.5 Ha)

• Running 45 suckler cows selling weanlings
• Good facilities sufficient slurry storage

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• Self-catering enterprise
• Set-up in 1999 in vacant farm house

• Taking up to 6 people
• 20 week occupancy

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The makeup of business profits (2005)
50,000
47,340 Total Profit
Self-
Catering
40,000
Other
Premia
30,000
Net Cash Flow 35,000
20,000
SFP
10,000
Profit from
farming
0
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Single Farm Payment
Net Cash Income from farming
Total Net Cash Income
Non-farm income
State Transfers
Tax
Balance for Reinvestment
Family Living Expenses
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The Balance Sheet

• Farm Business Debt
• Small O/D stocking loans
• Existing self-catering project
• Outstanding 15,000 loan
• Assets valuation (2005)
• Land 17,000/ acre - 1.87 million
• Self-catering unit - 150,000
• Total Owners Equity 2 million

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Business Goals

• Cash flow
• Better utilisation of available assets
• Planned retirement/ exit strategy

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Options

• Look at the farming system
• Push the self-catering harder
• Use the equity available for off-farm investment
• Property at home or abroad OR
• Look at other tourism options

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Making the decision!

• Potential identified to tap into the demand for
  ancillary services
• Supplying food evening meals/ suppers
• Opportunities to sell farm local produce
• Develop potential for walking trails on the farm
• Decision made!
• expand in the tourism business using a bed
  breakfast to exploit the potential identified!

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How this option was funded

• Key costs
• Conversion of existing farm house
• Tracking out the farm walks minimum cost
• Total cost of conversion - 150,000
• To be borrowed over 15 years _at_ 6.5
• Annual repayment 15,700

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Borrowing for diversification

• Issues Identified Discussed
• Affordability of repayments
• Net Cash Flow from new business
• Stress test for rising rates
• Using the farm as collateral
• Matching security to loan value
• Land as security negotiate lower interest rates
• Limitations on future borrowing?

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What are the offering ?
Accommodation
BB and Self Catering
Ancillaries
Breakfast Supper
Gifts corner
Home local food
Farm walks
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BB and Supper
50 occup. over 52 wks
4 Bedr. 8 bednights (bn)
8 (bn) x 7days 56 / wk.
56bn x 52wks 2912 (full)
50 occupancy 1456 guests
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Income
1452 bn x 35
50,820
12,800
Suppers 800 _at_ 16
2,000
Walking Trails
1,700
Extra
Total income from BB 67, 620
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Ancillaries
30 tea cosies _at_ 10
300
20 crochet table centre pieces _at_ 15

300
100 pots Jam 4.50
450
Local crafts
650
Farm walk
2,000
3,700
Total
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Costs
19,596
Running costs 30
3,266
Marketing 5
Casual Labour
4,600
Borrowings 150,000 6.5
15,700 pa
43, 162
Total costs
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Net Cash Income before tax for 6mth job
67,620 - 43,162
24,458
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The makeup of business profits (2007)
81,640 Total Profit
Net Cash Flow 59,500
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What makes them Successful ?
USP
Confident about their
Range of Products
They operate as a business
Focused on attracting a successor to the farm
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BB Whats Needed?
En-Suite
Food
Health/ Spa
Character
Quality
Spaciousness
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Unlocking the potential within your farm

• Maria Heneghan
• Kevin Connolly