unlocking the potential within your farm
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Unlocking the potential within your farm. Maria Heneghan Kevin Connolly. What is Rural Tourism ?. Providing a Holiday Experience in a Rural Area. What is a holiday experience ?. A place to stay. Something to do. How does Tourist Euro Get spent ?. Accommodation 27%. - PowerPoint PPT PresentationTRANSCRIPT
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Unlocking the potential within your farm
Maria Heneghan
Kevin Connolly
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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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Your Equity!
What is it?
Why is it important?
Can it be better utilised?
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Case Study
Westmeath Drystock FarmEstablished Self-Catering EnterpriseEstablished 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)€47,340
Total Profit
Profit from farming
SFP
Other Premia
Self-Catering
€0
€10,000
€20,000
€30,000
€40,000
€50,000
Net Cash Flow = €35,000
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TotalNet Cash Income
Single Farm Payment
Net Cash Income from farming
Non-farm income State Transfers
Family Living Expenses
Tax Balance for Reinvestment
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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
investmentProperty at home or abroad ORLook 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/ suppersOpportunities to sell farm & local produceDevelop 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 costsConversion of existing farm houseTracking out the farm walks – minimum cost
Total cost of conversion - €150,000 To be borrowed over 15 years @ 6.5%
Annual repayment = €15,700
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Borrowing for diversification
Issues Identified & DiscussedAffordability 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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The makeup of business profits (2007)
Profit from farming
SFP
Other Premia
Self-Catering
Bed & Breakfast
Ancillary Services
€0
€10,000
€20,000
€30,000
€40,000
€50,000
€60,000
€70,000
€80,000 €81,640 Total Profit
Net Cash Flow = €59,500
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Unlocking the potential within your farm
Maria Heneghan
Kevin Connolly