Planning and Financing Your Smallholding

There will be a time while you are settling in and doing the essential work when making money will not be high on your list of priorities. But this period must be kept to an absolute minimum. All the time you are not making money you are losing it. Your capital, whether cash or material belongings, will only last so long. This “wealth’ which you brought with you is precious and should be conserved. Money, especially in large quantities, is very difficult to earn in rural areas and many people who start smallholding think things are difficult during the first year to 18 months. But it is only after this period that the goods you brought with you start to need replacing and this puts a more realistic drain on your resources. It can be seen from this that it is essential to start earning within the first six months, allowing time to build up towards the one-year crisis. The more available cash you started with, the longer the crisis takes to occur and the more money is potentially lost in the meantime.

When you survey the projects you intend to undertake try to arrange them in terms of time to profitability. Often those showing a profit soonest will give a poorer return than longer-term investments. But it is pointless going broke waiting for the big one when you could have started two or three smaller projects which would have tided you over until then.

The agricultural ventures tend to be in the long-term bracket, often not paying back capital invested for at least a year.

Having fun must be taken seriously because ‘living on the job’ as smallholders do it is easy just to work; this can be as destructive as not working enough, only this time family relationships suffer. Take time out with your family to do whatever you fancy. Sunday afternoon is usually a good time, or late evening in summer. These breaks allow you to appreciate what you have worked so hard to attain and should be very special times for you.

All work under the heading the rest’ will probably have to wait until the business ventures are up and running and into profit The very fact that they were put in this category indicates that they are not essential, they do not earn money (therefore they must cost money) and they are not fun. So let them wait until either you can afford the time and money without anything else suffering or they are promoted to a higher category.

Before long you will have compiled a good list of jobs requiring attention. Somehow this list has to be graded so that you can not only do the most important work first, but do the jobs in a logical order, each one building on another, rather than randomly doing a bit here and a bit there. The other advantage of having a list is that when you finish one job there is no time-consuming thought required before you start the next one, just a glance at the list. The initial grading can be done under the headings:

·  Essential, ie leaking roof or no water.

·  Important, ie starting the business to get the money flowing.

·  Fun, ie whatever you want to do most.

·  The rest, ie all those jobs that will get done one day.

The essential jobs obviously need to be done first. A new fitted kitchen should not be in this category as a couple of old tables would do just as well for a short period. Be prepared to rough it for a while and the luxuries will seem so much better when they come.

Essential jobs are those which will get worse if not attended to, those which cause actual physical hardship or present a danger, and those which cause problems with earning money. If the workshop roof leaks or the floor is mud, get it fixed before you start work, otherwise tools will be ruined and items dropped will be lost for ever resulting in bad work and short tempers.

Once you have a safe and healthy environment you must start to earn the money. This is the most important category and will be dealt with in the next section.

Something encountered by newcomers to smallholding and self-employment in general is a lack of self-motivation. Although there will be jobs that require urgent attention, many can wait. It is easy to go to the market ‘just to see how the prices are’ rather than do something more constructive. But protracted tea breaks, late starting, early finishing and in bad weather not starting at all are a sure way to bankruptcy.

Those who have previously been self-employed will fully understand how difficult it can be to make money – make being the operative word. Others who have always been employees may not fully understand that when you are not working you are not earning. If you lose hour a week every week it would cost you one week’s wages in a year and that is only 12 minutes a day. This can soon turn your small profit into a large loss. Of course, there will be things to do that do not make you money directly (property improvement is a good example) but if it makes life easier or increases efficiency the profits will be indirect.

Smallholding is a way of life that must be enjoyed to make it bearable. It is not like a job that can be borne eight hours a day by thinking of the pay packet at the week’s end. For this reason it is unwise to embark on any project which you find unpleasant either as a whole or in part. No one actively enjoys the time when lambs go to slaughter, but if every time you see your lambs you dread the day they are ready to grade this will take all pleasure out of the enterprise, and it would be better if you found something else to do with your land.

If you do not become too familiar with your ‘farm animals’ the pet syndrome does not develop; this is a good reason for keeping pets and farm animals segregated in your mind.

After the turmoil of the move you wake up one morning and find that what you have planned for, striven for and dreamed of has happened. You now have a smallholding. For the first few days there will be plenty to do just finding the teapot and generally trying to create some kind of sanity out of the chaos.

Before you start anything major you need to get to know your new home, both the house and buildings and also the land. There may be essential jobs that you knew about before moving in, such as a leaking roof or broken window. There will undoubtedly be other work required which was not so obvious. Perhaps fences need to be mended – possibly the wire is still good but a post has rotted off in the ground. Such things may not be obvious until you actually walk around the fence and check each stake before an animal leans against it. (Stock have an uncanny knack of finding the weakest post and leaning against it.) Try to be organised from the start. Carry a small notebook and pencil with you if necessary and jot down everything that needs attention: ditches to be cleared, hedges trimmed and so on. With all this information in one place it can help to plan work. If a digger is needed for one job you may find other jobs for it while it is on your land.

Owning a smallholding does not make you a smallholder: running it and making a living from it does that. It is important that at all times you do not over-stretch yourself. The difficulties encountered in smallholding increase in proportion to the money owed. When choosing and buying your holding large sums of money are involved and a small percentage saving at any point can possibly put thousands of pounds in the bank. If you enter smallholding owing as little money as possible, it may make setting up your business more difficult in the short term, but it will help your finances in the long term. If every pound earned can be ploughed back instead of being split between you and the bank, the business will grow much faster after the initial set-up stage.

After much nail biting, many sleepless nights and agitated phone calls the deal will come together, contracts will be exchanged and you will have a date for moving in. This can happen rapidly towards the end so be prepared, know what is to be taken and pack first what you can do without for a short while. If you decide there are things that you will not need in your new life sell them, but be sure that they really will be unnecessary before you do so. When it comes to moving the cheapest way is to hire a lorry and, with the help of your strongest friend, move yourself. Find out hire charges in advance and compare them with removal firm quotations. It really depends upon how far you are moving and how much you have to move, but, assuming the largest van drivable on an ordinary car licence is used and you are not doing more than a 500 mile round trip with shared driving, a 24-hour hire should be sufficient.

In some areas it is necessary to inform the electricity board of your arrival in writing two weeks in advance. This is particularly smallholding is important if the property has been vacant prior to your purchase because the company fuse will have been removed and there is nothing worse than not being able to have a hot drink upon your arrival. Because we had not given sufficient notice we had to make do with a quarter mile extension lead from a neighbour’s barn for three days. It is useful to know where the main water stop cock is and also the meter, if there is one. If this is not obvious outside your property it may be on the roadside where your main joins. If your supply crosses fields to get to you it may be some way off. However, the water board should be able to tell you if given sufficient notice.

This section states the obvious, but sometimes it is well worth stating. When selling anything presentation is all-important. The difference between the tidy garden with a few flowers around the front door and something less attractive can cost thousands of pounds. Most prospective buyers will drive by in a car first. If the outside appearance is not inviting you will probably never get them inside. If the view from the road is not very inviting spend a bit of time and thought on brightening it up a bit; some large pots with flowering plants always help and you can take them with you. Decorative order is a great selling point. If a property has a light, clean feel to it, it will have more appeal than one in need of a lick of paint. It is well worth spending some time and money to improve the feel of the place,

When it is time to place the property on the market it is best to have two or three agents (this from personal experience) as a sole agent does not have the same incentive to sell the property actively and can let it sell itself. Make a few phone calls to obtain good percentages; remember half a per cent can equate to many hundreds of pounds. Ask what you will get for your money. Will your property be advertised in the press? Will they use a photograph? Make them work for their money – you will have to pay enough/

Once an offer has been accepted and the purchase placed in the hands of your solicitor, the search will be conducted. This should bring to light any problems associated with the land or property such as impending development or a new bypass; this is standard with any property. With a smallholding there are other considerations which you may wish to discuss with your solicitor. There may be rights of way across the land or possibly you may only have a right of access across someone else’s land. It is worth checking on any restrictions imposed on you or by you on others. If you are looking for seclusion a right of way through your back garden could be rather annoying. Maintenance of fences and ditches is another point to raise; this should be stated on the property deeds and is worth knowing for future reference. However, if a fence is down or a ditch is blocked and it is giving you problems, the sensible thing is to rectify faults yourself and not worry about who is responsible.

Wayleaves are often encountered in rural properties where it has been necessary to run a service, ie mains water, across another person’s land; for this privilege a fee has been paid and an agreement signed giving access for maintenance, but also guaranteeing to compensate any damage caused. There may also be conditions associated with the wayleave; for example, the service may only be used for agricultural purposes. This is unlikely to pose any kind of problem, but you should be aware of the possibility. This fee is normally a lump sum paid on granting of the wayleave and therefore, excluding problems, should cost you nothing if already arranged, if power lines pass over your land and you have poles or pylons situated within your boundaries, the electricity board pay you a wayleave fee annually. This varies with the type of pole and the use to which the field is put. Thus you are paid less for a single pole than a pylon and less if it is in rough grazing land than arable. For a single pole in a grazing field the payment is about £5 per annum.

In general take the time to discuss and understand any points raised by the search or anything in the deeds that you do not understand or that your solicitor points out. Take your solicitor’s advice, as what may appear to be a problem to you may be perfectly normal practice or vice versa.

When you have decided on a price that you would be happy to pay for a property, make your first offer lower than that; you can always increase, but it is very difficult to decrease your offer.

Be aware of exactly what is included in the asking price. If there is some machinery or stock on the holding which is not included this could be used to overcome a deadlock. If you have made your final offer and they have made their final concession, rather than lose the property it may be possible to agree to their price if certain items of stock are also included in the sale. It may not have the value but it saves face on both sides and allows the deal to proceed.

Before you make the offer think of the suitability again. It may seem perfect at the time, but consider the changing seasons. Also consider the passing of years; if you are young, would it be suitable for (more) children? If you are not so young, would it be convenient for shopping without transport?

Think again of your intended methods of earning a living; if they should fail what would you fall back on? Would it still be suitable? Location can play a large part here; road frontage may seem undesirable, but if you wish to do farm gate sales, pick your own, or bed and breakfast, a mile-long track could deter your customers. Buying a smallholding is different from buying a house; you want not only a place to live, but also a place to work. They must both be right for the whole thing to succeed. When you feel it is right make the offer and get ready.

When you make your initial offer the estate agent will probably want to know your financial position, and assuming you have a property to sell, how far advanced your sale is. You want to be able to say my property is under offer and we expect to complete in x weeks’ and if you can say this truthfully so much the better.

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