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How to start an Agriculture Business

If you’re happy to start each day before the sun rises, no matter the weather conditions, you might be considering starting a small agricultural business. But before you rush off to quit your day job and pursue your vision, you need to appreciate what exactly managing a business in this sector involves. After all, as well as learning to cope with the wind, rain and mud, managing a small agricultural business in rural Britain demands many hours of dedicated hard work, astute planning, access to land, a reliable supply chain and sufficient amounts of capital. So, if you want to start an agricultural business, here are some things you may want to consider first.

Choose which type of agricultural business you intend to establish

If you’re determined to start your own small agricultural business, you need to understand every aspect of your chosen niche. When thinking about agriculture, what often springs to mind is cattle farming and crop farming, but there are so many different aspects of this sector you could explore. As such, you could start a new business specialising in anything from herb farming, fruit orchards, forestry, dairy, fishing, beekeeping, fire wood and weed killer to animal feed production. Yet no matter which direction you choose, your research must be concise in providing the vital information needed to enable you to effectively plan for the future.

Developing your small agricultural business? Need access to additional funds? Apply for Agriculture Finance and learn more about how your business could benefit.

Create a workable business plan for the future

If you want to start a new agricultural business and make it last well into the future, creating a workable business plan is something you can’t afford to neglect, particularly the research side. Just some of the information you need to collect should involve aspects such as the market, licenses, regulations, customers, location, external services (e.g. you may require a local vet), suppliers and equipment providers to funding opportunities. This is because by having all the relevant information at your disposal you can make key strategic and financial decisions that will work to benefit the whole of your agricultural business.

Acquire a suitable piece of land

Once you fully understand the intricacies of your chosen niche, the next step towards achieving your vision is to acquire a suitable piece of land. No matter which part of the UK you intend to established your business, if your intention is to buy agricultural land this may require a large capital outlay. But rather than stretch your finances to the limit, you could choose to rent agricultural land instead. However, before deciding on a specific piece of land, you need to think about whether:

  • It is in close proximity to your customers
  • Has sufficient access to water
  • Is fertile soil
  • Possesses enough space to build any required outbuildings (e.g. animal shelters, greenhouses and silos)
  • Joined to reputable neighbours

Renting agricultural land

If you lack sufficient capital, you might want to consider renting agricultural land for the time being. This means borrowing a piece of land from a landowner in exchange for rental payments, which are reviewed every 3 years according to the 1986 Agricultural Holding Act (AHA) and 1995 Agricultural Tenancies Act (ATA). Such rental schemes are also based on a variety of factors, including the profitability of your operations and the number of acres you’re occupying. Plus, although you do not own the land, you may also be responsible for maintenance and carrying out repair, according to the terms and conditions of the tenancy agreement.

Buying agricultural land

On the other hand, if you possess or are able to raise enough capital, you may, instead, want to purchase agricultural land. However, before going ahead, always check whether it’s Freehold or Leasehold. That’s because Freehold means that you own the land in question outright as well as all structures upon it, whereas Leasehold involves having to abide by and renew a long-term tenancy agreement. Nevertheless, if you’re looking to purchase agricultural land, there are plenty of ways in which you can support the expense, including land purchase finance.

Obtain funding for your agricultural business

In order for your small agricultural business to grow and remain sustainable, having access to sufficient amounts of capital is vital. That’s why, as well as deciding how to effectively manage your income and operating expenses, your financial business plan should also outline what external funding opportunities are available to you. However, during the early stages of your development, raising funds through traditional financial institutions will not be easy on account of having a limited trading history. Instead, you may want to explore alternative solutions such as Crowdfunding, local authority or sector-specific grants (e.g. the Rural Development Programme) and Peer-to-Peer Lending (P2P).

Yet, as your business develops and reaches its second trading of year, you may gain access to a wider range of funding solutions on offer from the Alternative Finance industry. Providing access to a new generation of finance products and lenders, your agricultural business could benefit from solutions such as Secured/Unsecured Business Loans, Commercial Mortgages, Bridging Loans, Invoice Factoring, Equipment Leasing Agreements and Overdraft Replacement to Asset Refinance. All you need to do is source an agreement which is appropriate for your vision.

Need help supporting your small agricultural business?

As exciting as it can be to work in rural Britain, you need to be aware that it’s not all sunshine and roses. From planting seeds or feeding livestock to managing your accounts, it all requires many hours of dedicated hard work and determination. Yet as your business continues to develop and take shape, there’s one aspect that you cannot ignore - access to sufficient amounts of capital. Without it, maintaining effective day-to-day operations and tending to the welfare of your crops and/or livestock will be a struggle. Fortunately, the Alternative Finance industry is providing more and more agricultural business owners with the funds they need to succeed. All you need to do is source a suitable finance agreement from a lender you can trust - which is where we can help.

At Rangewell, we’re an Access to Finance specialist working with over 300 lenders to offer you a comprehensive overview of more than 23,000 business finance solutions. Our services are completely free to use for business owners and their advisors and we’ll also guide you throughout the application process. So if you’re looking to supporting your agricultural business, apply for Agriculture Finance today or find out more with Rangewell.

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