Unlocking the potential within your farm

Maria Heneghan

Kevin Connolly

Sheep track walk

Maze in the Maize

Catering and meeting facilities on the farm

Your Equity!

What is it?

Why is it important?

Can it be better utilised?

Case Study

Westmeath Drystock FarmEstablished Self-Catering EnterpriseEstablished Bed & Breakfast

Family- Husband & Wife & 3 children

Farm Details

•110 acres (44.5 Ha)

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

Self-catering enterprise

•Set-up in 1999 in vacant farm house

•Taking up to 6 people•20 week occupancy

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

TotalNet Cash Income

Single Farm Payment

Net Cash Income from farming

Non-farm income State Transfers

Family Living Expenses

Tax Balance for Reinvestment

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

Business Goals

Cash flow

Better utilisation of available

assets

Planned retirement/ exit strategy

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

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!

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

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?

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

Unlocking the potential within your farm

Maria Heneghan

Kevin Connolly