Our three kids are now in secondary school and the eldest is starting his Leaving Cert year in September.

We want them all to have the best chance at college but even if we qualify for some help from SUSI, it will still be costly for accommodation, etc.

Our only income is from the farm and a part-time job. If we could get planning permission, we’d like to consider offering glamping yurts as we are in a very idyllic area. How do we go about this? Will a bank give us a loan to do it?

ANSWER: This is a very wise question, and your situation is one that many farming families are facing. The traditional route has been to seek further off-farm employment to supplement income. However, there is real value in utilising the resources you have, and it very well could provide an income stream in retirement also.

Consultation

I won’t delve too much into the planning permission, but I would recommend contacting your county council and arranging a pre-planning consultation to assess the chances of planning approval. There are a lot of factors affecting this, including the visual and environmental aspects right down to how your neighbours will react.

In terms of next steps, should you gain planning permission, it is all about planning the business. Agri-tourism is growing in Ireland and many family farms are diversifying by offering farm-based experiences. So what do you need to do?

1. Do your research

Assess your area for tourism offerings and gauge how much footfall is coming to the locality. By now, you should have a clear picture in relation to what other accommodation is available locally and how busy it is.

2. Create realistic costings

We often see ventures costed on the back of an envelope and this will not pass the test when looking for funding. Costings will include everything from site preparation, electricity and water/waste connections, building costs, amenities blocks and even how you will market the business.

3. Business plan and projections

When you have your costings established, it is time to create your projections and create your story. Seek advice from your accountant on this – this is going to be presented to the bank and possibly other funders, and it needs to not only impress, but it also needs to be realistic.

Remember that if you have three yurts available, they will not be reserved 100% of the time. Be realistic with your aspirations. Don’t forget that part of your business plan is your marketing plan.

4. Loan finance

When the bank/credit union assess your projections, they are looking to establish how viable this business is. They will analyse your occupancy assumptions and will stress your financials to ensure that there is sufficient debt service cover (DSC). This is essentially comparing the annual repayments to your projected surplus.

5. Grant funding

There are potential grants available to provide rural tourism and diversification. LEADER is one such organisation and I’d advise doing some research on this.

6. Additional costs

With the opportunity for additional income comes additional costs. Right now, it is highly likely that you have farm insurance only. You will need to consider specific insurance cover for this business, including public liability insurance.

7. Important red tape

Don’t forget that when providing accommodation, there will be fire safety requirements and obtaining the required certificates can take time.

8. Income tax

With additional income can come the burden of additional taxation. Speak to your accountant and gain a better understanding of the tax implications. For example, if you are projecting an additional €20,000 of annual income, you need a clear view on what you will be paying on tax. If the income is more, you may need advice on the structure of the business.

9. VAT

Depending on the projected level of income from this business, you may be required to register for VAT when providing short-term accommodation. If you were operating as a sole trader for both the farm and accommodation, it could affect your farm from a VAT perspective.

In summary, diversifying and offering accommodation could provide a sustainable source of income to your family, not only short-term, but for many years to come. However, planning is key so you are going into the venture with open eyes.

Andrew Brolly is fractional cfo with ifac, which is the professional services firm for farming, food and agribusiness.