Farmers and landowners considering diversification need to plan very carefully and research the market fully, says land agency firm Strutt & Parker.

Developing an alternative land use can often be a realistic and viable way of boosting income but a comprehensive business plan is essential to ensure optimum success.

Victoria Clayton, a surveyor in Strutt & Parker's Harrogate office, said: "Diversification is often a logical strategy and there are several interesting options for agribusinesses but it should not be undertaken lightly.

"Think carefully about the market from the outset and do not become carried away with seasonal trends. For example, if landowners are considering tourism and the potential for self-catering holiday units they should examine the occupancy rates for the region. Rates of only 50% can have a significant adverse impact on a scheme's viability.

"A portfolio of self-catering cottages might appear an attractive option when occupied during the summer but it becomes much less viable if those properties are empty for months during the winter."

Clayton added: "The cost of a diversification project can be a drain on resources but it is worth noting that the new Rural Economy Grant contains provisions to help tourism projects, one of which is to develop high quality accommodation with a minimum four star rating - although the applicant must be able to provide at least 60% of capital funding.

"In light of the Government's promotion of the British holiday industry, this could well be the time to develop an alternative source of income which capitalises on the flourishing rural tourism sector."

Clayton added: "The options do not end with holiday lets. For example, allotments on lesser quality land and truck stops close to major roads can boost income with relatively small amounts of investment. Additionally, immature woodlands provide scope for paintballing and clay pigeon shooting grounds, both of which offer exciting potential to landowners."

Clayton said: "The key to any successful venture is meticulous planning and, in particular, the production of a sound and fully considered business plan. Budgets, cashflow, market research and the skill set of the would-be entrepreneur as well as funding and planning issues all need to be taken into consideration. The unbiased and objective view of an external consultant will help in examining the viability or otherwise of a potential scheme.

"Most important of all, go in with your eyes wide open; if the numbers don't add up, don't do it."

For advice and information on diversification, please contact Strutt & Parker's Harrogate office on 01423 706786.