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Unlocking the potential within your farm

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%.

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Unlocking the potential within your farm

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  1. Unlocking the potential within your farm Maria Heneghan Kevin Connolly

  2. What is Rural Tourism ? Providing a Holiday Experience in a Rural Area

  3. What is a holiday experience ?

  4. A place to stay Something to do

  5. 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%

  6. Accommodation 2005 - 2006 Sept 06 End 06 Hotels saw increase of 61% 41% B&B 20% 11% Self Catering 35% 22% Camping & Caravan 50% 12% Hostels 45% 39%

  7. Self- catering ??? Cottage/ House / Lodges /Chalets Yurts 5 star Hostel Camping / Caravans Featherdown Farms Boutique Self -Catering

  8. Something to do

  9. Activities Walking Cycling Tennis Nature walks on farm Horse riding Golf Reading room Children ??? Art lessons

  10. Sheep track walk

  11. Maze in the Maize

  12. Catering and meeting facilities on the farm

  13. Start with search and re searching 1. your Idea 2. your vision Dont start with the JCB, Grant Aid & Business Plan

  14. Your Equity! • What is it? • Why is it important? • Can it be better utilised?

  15. Westmeath Drystock Farm Established Self-Catering Enterprise Established Bed & Breakfast Family- Husband & Wife & 3 children Case Study

  16. Farm Details • 110 acres (44.5 Ha) • Running 45 suckler cows – selling weanlings • Good facilities & sufficient slurry storage

  17. Self-catering enterprise • Set-up in 1999 in vacant farm house • Taking up to 6 people • 20 week occupancy

  18. 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

  19. Net Cash Income from farming Single Farm Payment Total Net Cash Income Non-farm income State Transfers Tax Balance for Reinvestment Family Living Expenses

  20. 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

  21. Business Goals • Cash flow • Better utilisation of available assets • Planned retirement/ exit strategy

  22. 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

  23. 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!

  24. 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 @ 6.5% • Annual repayment = €15,700

  25. 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?

  26. What are the offering ? Accommodation B&B and Self Catering Ancillaries Breakfast & Supper Gifts corner Home & local food Farm walks

  27. B&B 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

  28. Income 1452 bn x €35 = € 50,820 €12,800 Suppers 800 @ €16 €2,000 Walking Trails €1,700 Extra Total income from B&B € 67, 620

  29. Ancillaries 30 tea cosies @ €10 €300 20 crochet table centre pieces @ €15 €300 100 pots Jam €4.50 €450 Local crafts €650 Farm walk € 2,000 €3,700 Total

  30. 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

  31. Net Cash Income before tax for 6mth job €67,620 - €43,162 = €24,458

  32. The makeup of business profits (2007) €81,640 Total Profit Net Cash Flow = €59,500

  33. What makes them Successful ? USP Confident about their Range of Products They operate as a business Focused on attracting a successor to the farm

  34. B&B Whats Needed? En-Suite Food Health/ Spa Character Quality Spaciousness

  35. Unlocking the potential within your farm Maria Heneghan Kevin Connolly

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