One of the big questions that many rural businesses ask is why should they diversify, and are the benefits of diversifying their land and/or buildings worth the investment. These are important questions to be asking yourself when thinking of expanding your rural business, as diversification does come at a cost both financially and in time and commitment. You also need to make sure that your ideas for diversification work with the current activities on your land, they suit the target audience of the surrounding area and that there is a demand for your diversification plans. Obviously the cost of setting up and implementing such projects can seem very daunting, but with the help of grants and/or bank loans and careful planning and researching diversifying your business has the potential to create a lucrative revenue stream. There are many ways that diversifying can benefit your business, some of which we have covered below.
- Additional income streams - expanding your business and offering a wider range of attractions and services means an increased number of revenue sources, which in turn will increase profit. By creating a farm shop and restaurant the two compliment each other well in terms of revenue as products sold in the farm shop could be used in the restaurant and vice versa which in turn reduces wastage (loss of profit) and creates an up-selling opportunity as a customer who say enjoyed the eggs in the restaurant is likely to buy the ones in the farm shop if from the same supplier to recreate the same taste and experience at home. The added attractions will make your business a sought after destination to visit and spend time at, which will bring in greater footfall which will generate more revenue.
- Employment opportunities for the next generation - diversifying your business creates new employment roles, this is an exciting opportunity for the next generation to take control of and reduces the time you will
- otherwise need to focus on the new venture. This allows you to take a step back and focus on what you need to focus on within the business, whilst it gives the next generation the responsibility to get enthusiastic and stuck into the new project, which is a great way to test the waters and see how they respond to the challenge.
- Increased business stability - by not putting all your eggs in one basket and having a variety of different services on your land it reduces the risk of financial struggle. For example if you have a bad harvest, having other services like a play barn and restaurant can help subsidise the business in quieter months. This can help take a lot of stress and worry off you, and creates a safety net if an area of your business has a unforeseen issue.
- Optimising and capitalising on a readily available market - is there a need for a local delicatessen in your area, or is it really hard to find local produce, maybe theres no where local to take the children out for the day. Finding a gap in the market that answers the needs for your target audience and is a suitable service or offering to the demographics in your area will help massively with the success of your new venture. By solving a problem or need in the surrounding area you will already be on to a winner as people will naturally want to visit you as you will be offering something completely different and answering a need for your customer.