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Diversifying: First Principles

Date: 17/01/2024 | Energy & Natural Resources, Rural Business

People, property, and passion are three key ingredients for many successful rural businesses. What we do – or don’t do – with each, can make of break us. With our property assets, the fear of making a mistake impacting not just us but future generations can be crippling. Yet, in this world of uncertainty, making optimal decisions at the right time is an essential part of being a successful land manager.

There are myriad things you can do with your land. Some are things you will choose to do yourself; others are best done in partnership with others. The former might include improving estate cottages to provide more and better rural housing. In the latter camp fall many of the large-scale renewable energy and battery storage projects, which are so prevalent at the moment. Prohibitive cost allied with planning and grid uncertainty will almost always mean that letting a third-party developer or investor drive the project forward is sensible. For you as a landowner, the biggest decision is ensuring commercial terms are right and choosing the third party with the best prospects of delivering for you.

In all of this, stick to first principles:

  • What is your business? How does it make money? As importantly, how does it lose money?
  • Is doing nothing an option?
  • Which options are temporary? And permanent?
  • How will the options affect your business? Which are complementary? Which stand alone? Which pose an existential challenge? (Existential challenges may still be worth pursuing if they allow you to do something completely new or to bring an obsolete business to an end.)
  • How will any proposals affect you? If your home is co-located with a proposal, will that affect you and your family? What cost do you place on that?
  • Is it the right thing for you at this time (bearing in mind the stars are rarely all aligned)?
  • Be sceptical of the person who promises you the earth for no or little effort.
  • Take advice from people who know what they’re talking about and have your back.

Through our LandBusiness articles we have tried to give you ideas as to how you might explore your opportunities, understand the risks, and navigate a path which works for you and your business. As professional advisers we are skilled in helping businesses to understand risk and reward and how to make sound commercial decisions. That’s why we are “Lawyers. For Business.”

This article was originally featured in the Winter 2023 edition of LandBusiness magazine.

The matter in this publication is based on our current understanding of the law.  The information provides only an overview of the law in force at the date hereof and has been produced for general information purposes only. Professional advice should always be sought before taking any action in reliance of the information. Accordingly, Davidson Chalmers Stewart LLP does not take any responsibility for losses incurred by any person through acting or failing to act on the basis of anything contained in this publication.

Written by

Andy Drane | Davidson Chalmers Stewart
Andy Drane

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