Industry sector:

Small holding: Buy an existing business

You might decide to take over an existing smallholding rather than start your own venture from scratch. Buying a going concern can mean that:

  • crops are already in the ground or in storage and livestock herds and flocks are already established
  • the land has already been converted to organic (if you want to go down that route)
  • the buildings, polytunnels, machinery and equipment are already in place
  • there are established customers
  • the business can generate income immediately
  • suppliers have been identified and relationships established with them
  • the business has a track record which can help if you are looking for finance
  • relationships with agricultural contractors have already been established

However, look critically at any business that you are interested in to make sure that the price you negotiate with the seller is a fair one. Try to establish why the business is for sale - for example, is the owner keen to retire or is there another personal reason for selling up.

Your market research into the sector as a whole and the locality in particular will help you to establish whether or not the owner is selling because he or she can no longer make the smallholding work financially. This may not necessarily deter you - your primary goal may not be to make huge amounts of money. The important thing is to have established the current position so that the price you pay for the business is not too high.

Other matters to consider include:

  • the state of the buildings, equipment and so on. Will you have to spend money refurbishing or replacing assets
  • the condition of any animals, crops, feed, packaging and so on that you are buying. Check these over carefully, especially any commodities that are perishable
  • existing staff rights
  • does the business owe money that you will be responsible for

Ask your accountant to look critically at the business accounts for the past three years and discuss with him or her the selling price in the light of what the accounts reveal. Make sure you budget for other professional fees such as legal fees and valuation and survey costs.