Diversification for rural businesses does not need to be complicated or expensive. With this is mind, it is important to ensure all internal opportunities have been fully explored before considering other options.
For some farmers, this could be something as simple as introducing an alternative crop or integrating a different breed of sheep or cattle for a niche market. A simple internal diversification within a rural business can often lead on to external opportunities for further diversification.
There are key factors to consider when looking at different options for change, which can be categorised into internal and external factors.
Internal factors to consider would be looking at how a new diversification would fit in with the current enterprises, considering when the diversification will be at its most demanding and if the original business has the capacity to cope. An example could be turning an outbuilding into a holiday cottage, consideration would have to be given to the location, would it be an attractive location for holidaymakers and as peak use would likely be summertime, would this diversification add undue pressure to the existing business during this time? Could the holiday cottage be used all year round and if not, is the income worth the investment? The review of existing assets and questioning whether they are utilised to their maximum potential or suitable for alternative use is an important internal factor which may lead to diversification.
In addition, it is important to consider your own objectives and skills. The decision to diversify is often life-changing and can affect others involved in the business, whether it be a family member or business partner. Establishing your own attributes in addition to the skills and objectives of other stakeholders is vital before looking into external factors that influence diversification options.
External factors will have more of an impact on the type of diversification which is likely to be successful. Key considerations are location, the demographics of an area, sphere of influence and existing competition. Often diversifications are a service or product being offered to the public; with this in mind it is important to understand the wants and needs of the prospective consumers and this may involve some level of market research prior to deciding where to invest
Fisher German can assist you in identifying options for change, providing analysis of competition, reviewing opportunities within the marketplace, and advising the likely return on investment for potential options. Collating this information will enable management decisions to be made.
We will take time to understand your concerns and aspirations to enable you to make a choice that suits your individual business. A successful diversification will bring in further income, ensuring financial risk is spread sustainably and the business can be maintained for future generations.
Click here to find out more about our rural property management services.
