Farm Diversification: 400+ Ways To Diversify Your Farm Income

Within this guide we hope to offer much food for strategic thought on the matter of diversifying your farm-related business

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Farm diversification is all about finding profitable uses or applications for resources which you might already have on your working premises.

For one reason or another, you might be thinking of complimenting your core farming business with alternative (diverse) revenue sources.

Diversification is, by definition, the act of adding further products or services to your existing marketing mix.

…a SmallholdingsForSale Definition

Get Me Straight To The 400+ Ideas!

“How should I diversify my farm business income?”

There are no hard and fast rules to diversification.

Your newly added products or services could either be ‘related to’ (extensions of) your established farm business, or it could be entirely ‘unrelated’ ( i.e. startup).

“Do I need a loan or grant to diversify my farm?”

No.

You need a business plan.

That’s where we can help. We are professionally qualified consultants in business diversification.

Our first talk, however, is free.

“I need farm diversification advice…where should I start?”

Farm diversification is a matter of strategy.

Running a farm of any size or type is demanding and labour intensive – albeit to varying degrees.

Generally, capital investment is also required to equip new ventures e.g. machinery, buildings, modifications, marketing etc.

Getting the maximum return (profit) for your efforts is the key to running a successful and long lasting agricultural business.

This guide lays out the step by step approach our professionals take to helping farms like yours diversify to become more stable.

“What are the key success factors for farm diversification?”

Diversifying your farm business requires dedicated resource allocation, lots of nurture, keen oversight, enduring patience – not to mention lots of grunt work to get it off the ground.

Diversification is nuts and bolts. It’s functionality over style.

“What are the advantages of farm diversification?”

Typical motives for diversification are:

• Minimizing trading losses…
• Break out of seasonality…
• Business growth…
• Cross selling opportunities…
• Attracting a new customer base…
• Spreading commercial risk…
• Exit planning/succession…
• Hold market territory…

Whatever your reasons for diversifying your farming enterprise, we hope you find this guide excellent value to help you along your way to success.

Breaking Down The Essentials Of Farm Diversification

Within this chapter we explore the principals governing farm diversification.

In order to diversify, you first need to have a solid understanding of core business and it’s parameters.

These primary building blocks will suffice a kind of framework for building constructive ideas for farm diversification & assessing all viable opportunities.

Within reason, an agricultural operation like a farm will typically have characteristic features.

Some farms will have more emphasis on one or more particular features over and above others, but generally the contents of a farm are going to be quite predictable, by definition.

Here is a summary of agricultural capital assets which help define the character of small farms, as we see it:

1. Fields/Land
2. Buildings
3. Livestock
4. Natural Features
5. Machinery
6. Staff
7. Specialist Installations i.e. something different installed on-site
8. Inventory
9. Agricultural by-product
10. IT Infrastructure
11. Tree Produce
12. Garden

The points above are fairly self-explanatory.

We feel the capital assets of most farm operations will fall into one of the ten categories above.

Each one the numbered points above really comprises an asset class.

Within each class there are countless sub sections and types.

The idea at this stage is simply to frame our thinking before tackling more free thinking stages of farm diversification planning.

This way we build on substance early on and hopefully arrive at a much more fruitful and ordered destination.

An Outline Of A Farm Diversification Business Plan

Reasons to diversify: strategic rationale

As noted above, diversification is a matter of strategy.

Business is all about…”serving customers profitably.”

Successful businesses apply equal emphasis to both serving value to customers, as well as profitability.

This is financially sustainable business practice.

Without financial sustainability and growth, your business will get outstripped by growing costs and shifting threats.

Customers who value what you do uniquely and who supply your business with increasing financial profitability is the key.

The future health of your farming enterprise will depend upon its robustness to ride out increasing challenges within its marketplace.

Also, maintaining financial viability to remain suitably resourced is key.

Having enough strategic agility to take advantage of investing in commercial opportunities when they arrive is also critical to survival.

Problem identification is the beginning of a farm diversification plan.

To begin with, simply declare the internal problems being faced within the current commercial conditions.

These are the strategic drivers for diversification.

The impact that such a move to diversify will have on your current organisational set-up and staffing is an important part of forward planning.

Starting afresh in a new direction will require a hands-on expense of labour.

Not just merely in ‘operations’, but also in support activity, like administration, or cleaning.

These man hours need to be accounted for and included in your plans.

Technological adaptation is also worth thinking about.

Will your new business venture require the investment of specialist kit?

If so, what are the permutations – will there be additional training involved, or staff changes required?

Resource utility (modification & maximise)

How well is the ownership of your current farm resources, capital equipment, and assets being converted into optimal profitability?

Any spare resource capacity reflects inefficiency within your farming operation, where much valued profitability is being lost.

Think of it much in the same way as leaky pipes.

The more leaks in the system, the lower the benefit delivered to the user & increased loss.

The opposite is also applicable.

Put is this way – the more time that your equipment, staff or assets spend dormant, the more of an item of expense they become.

Therefore, the less profitable.

As with anything in business, before you go ahead with following through with any idea, you must first do your due diligence.

You must calculate if the opportunity will be ‘worth‘ your while.

In other words, “…will this idea, after all expenses and overheads still a return a profit.”

If the answer is, “…yes…“, then it’s viable on paper.

However, this doesn’t instantly mean a green light should be given to it.

In such cases, opportunities might yet be vetoed entirely, or placed on the back-burner for review at a future convenient strategic interval.

Strategic priority comes first.

Users & synergy

Consideration of your end users is integral to getting the most value out of your diversification strategy.

Seeing as it is the value proposition of products & services as perceived by end users that has most impact on profitability, finding synergies which strengthen the value perception can multiply the benefits far and wide.

The more customer value perceived from each ounce of diversification investment – the greater the profitable rewards for your business.

Less can be more with a well oiled diversification strategy.

The more audience synergies and angles you integrate into your plan, the further it will go with minimal push.

Possibilities

Scenario planning is key to having success with farm diversification.

Outlining your strategic possibilities and assessing them in theory for viability should grant greater confidence for your eventual practical solution.

Trading off one solution against another in a head-to-head comparative analysis, allows a like-for-like weighing up to order options by executive priority.

New business

As with every new business venture, it needs footfall (physical or virtual) to prosper.

For businesses where a viable audience would need to be gathered from scratch having unfamiliarity with the product or service, demand generation is required.

This is a more resource intensive type of campaign, one which relies heavily on the production of quality marketing collateral.

The marketing collateral produced should inform the business’s various audiences of the beneficial details surrounding the companies new commercial offering.

Much effort will be made in the way of making the customers firstly aware of the new offering, in order to generate interest, then to generate desire to act upon the communication & purchase.

Where a customer-base/audience already has familiarity with a product or service, the goal for generating new business is achieved by way of lead generation.

The generation of sale leads, based on an existing market demand. This is less intensive.

Impact

How will the running of this new business venture impact the use of existing resources and assets?

Will core business operations suffer at all?

Are existing profits likely to be affected by the taking on of this new venture?

Assessing the likelihood of how much the new business will impact the existing set-up will give rise to an accurate calculation of overall, or ‘net’, profitability.

Feasibility

The long term feasibility of the newly proposed business is what you’ll want to make sure of for years to come, before embarking on all the upheaval.

Outlining a roadmap of sustained earning potential over, say, 6 years, will grant confidence to all involved whilst tackling the day to day minutiae.

A well thought out plan authored with professional business advisory input, projecting long term growth and profit is a comfort of mind prior to making commitment.

Seasonality

Like with many agricultural related businesses, seasonality is a critical trend affecting consistency of trade demand.

Typically, spring/summer signifies a peak in trading conditions – usually related to harvest time, new births among livestock, or ideal conditions for outdoor activity.

During the down turn in clement weather throughout autumn and winter, seasonally influenced businesses face an abrupt cease in trade.

Farm diversification plans should factor in the smoothing out of business cashflow throughout the seasons.

Business planning

Once persuaded of the feasibility of your new business idea, authoring a comprehensive business plan is a worthwhile investment.

Detailing every aspect of how you intend to make the projected figures a reality will leave nothing to imagination or chance.

With management accounts including: gross profit, balance sheet and cashflow, the business plan is a granular level process of what you expect from the new venture.

Marketing

Bringing your new products/services to the marketplace successfully is all down to sound marketing.

View your vertical marketplace/value chain as a fruitful field which needs harvesting in order to bring in-house all the external opportunities for profit making.

This way you won’t go wrong.

In successful business, there is no such thing as competition.

Only participants within an environment where as peers you can all get along by occupying your own space confidently. The common goal shared by all is to serve one another excellently and to raise the collective bar for value distribution throughout.

400+ Farm Diversification Ideas At Your Finger Tips

The following are top farm diversification ideas for smallholders seeking an improved business income:

 

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