Planning to diversify

The rural community is changing rapidly with more and more rural businesses looking to diversify. Careful planning and the right insurance are essential in order to prosper.

According to previous figures from Department of Environment, Food and Rural Affairs (DEFRA), at least half of all UK farms already use some form of diversified activity to add to their income.

Taking the first steps can be daunting, especially as a large percentage of farms are family-based small and medium sized enterprises. Owners and tenants may, for instance, have little or no experience outside their core business activities. For that reason careful planning is essential.

DEFRA also warns farm diversification is not guaranteed to boost business and can be a complex process, but also reports that diversified activity can bring in an average of £10,400 a year.

Areas of business traditionally considered by estates looking to diversify include evolving an area of their land to become a tourist attraction, selling produce, opening facilities for craft making and retailing or using land for energy generation.

Others have even closed their original business and started an alternative one on the same land, although this will almost certainly require planning permission. By contrast, estates which use agricultural land or buildings for agricultural purposes – the definition can be quite wide under ‘permitted development rights’ – may be able to do so without having to apply for permission.

CLA Insurance can help you understand what type of insurance and how much cover you need for your new business venture.

Possible insurance requirements:

  • If you need to take on new staff, are they covered by Employers’ Liability insurance?
  • Are all business activities insured for Public or Products Liability?
  • Are all revenue streams insured in the event if a material loss?
  • Have risk assessments been carried out on any new activities involving members of the public?
  • Have you purchased any air pressure or lifting equipment for new projects – if so, do you have Engineering Inspection insurance?
  • If you plan to add play equipment or hot tubs for paying guests, remember to advise insurers.

The key is to seek advice from professional advisers as soon as possible. Approaching CLA Insurance early in the process can help determine what types of business are feasible and how much protection is available.