Monthly Archives: March 2017

Excellence in Irish Beef Production

A passion for livestock inspired Thomas Halpin to follow his father into farming. And it’s a passion that has served the County Meath farmer well, as he’s transformed his farm by introducing efficiencies and increasing output. From improving grass management to introducing a closed herd system, Thomas shares his insights into driving efficiencies with the help of AIB Farm Finance and reflects on The Big Picture for beef farming in Ireland today.

Read on to see how Thomas makes the most of his farm.

Planning for the Future

“I took over the family farm in the mid ‘90s and was fortunate that my dad gave me the opportunity to do so. And it’s evolved since then,” Thomas explains. “Originally it was sheep and store to beef and as circumstances changed, we started developing a suckler herd here bringing all the progeny to beef.”

“We felt we needed to drive the farm on. We had a young family coming through. We had to maximise what we had,” he adds. “The idea behind it was to raise output – particularly through grass – and there was a lot of work to be done to get us into a situation to achieve that.”

As part of the transformation, Thomas took part in the Teagasc Better Farm Programme and brought in new processes. And with the farm continuing to develop, he is optimistic about the unique appeal Irish beef has to offer consumers.

“The big picture for Irish beef farming over the next few years is that I think there is a great story to be told,” he notes. “It’s a very challenging business, the beef business, there’s no doubt about it. Markets can vary and prices are a constant source of battle.”

“But I think if we produce beef as efficiently as we can and markets can provide a positive return for us, there is a future there. We produce a great product, it’s fully traceable and it’s grass based. I think there is a great selling point there. Hopefully those markets can be found to pay a premium price for a premium product.”

Expanding the Herd

Passionate about livestock since his initial introduction to farming, Thomas has focused on efficiently developing the herd over the past number of years – a process that has included the adoption of a closed herd system.

“When we started, we had approximately 60 suckler cows,” he explains. “We now have 100 on the farm. We’d hope to increase that a little bit if we can. It’s a closed herd here – by that I mean we breed our own replacements. We only use limited AI. We use stock bulls running with the herd. It’s probably slower in so far as you’re breeding from within. But we feel long-term, we have better control over the genetics.”

With three stock bulls, each offers unique traits to the herd and its development. “We use three different stock bulls,” Thomas explains. “We have a Charlie bull, predominantly for beef production. We use a Simmental bull with high maternal traits and his progeny is used for breeding. Then we use a Limousin bull for easy calving for first time heifers.”

“There is split calving here on the farm, we calve in February and March, we also calve in June and July. That increases the groups of stock on the farm but is easier to manage. We chose to have two separate calving dates from a labour point of view and from a health point of view, so we’ve not calving all at one time and we’re reducing the risk of an outbreak of disease.”

Introducing Efficient Grass Management

Along with a closed herd, Thomas has concentrated on ensuring the grass management system is as efficient as possible by introducing a paddock and roadway system to the farm.

“Grass is the most important thing to get right on the farm. It’s the cheapest most natural source of feed that we have, so we have to utilise it properly,” he says.

“We work on the basis that the cattle have 2-3 days grass ahead of them and no more. The idea is that you would grow it in three weeks and eat it in three days. 10 cm is the ideal height to let the cattle in and then the grass goes down to about 4 cm. We take the cattle out after 2-3 days and it encourages regrowth and grass will come back more quickly.”

Irish Talent to Flourish in the PorterShed

Ever wish you could hack the secret to the perfect work/life balance? Well, if you’re a startup looking for a place to call home in Galway, then PorterShed may be the ideal base for your business.

Located in the city’s Innovation District in the Docklands, the centre is an AIB-backed initiative to offer a co-working space and support to SMEs and startups locally.

Opened last year, the space is a hit with companies already. And its community is only set to grow. Charged with the role of Innovation Community Manager at PorterShed, Mary Rodgers works at the heart of the bustling entrepreneurial group.

“There was a real need for a space like this and it has proven itself that way,” she explains. “We’ve gone from 0-64 tenants in ten months. Of the 24 companies that work here, at least 10 of those were working from home or commuting to Dublin. Others were out at incubation and hadn’t been able to move on yet.”

 

A Communal Space

Along with providing working space to businesses, the co-working environment offers people the opportunity to share ideas and learn from each other’s experiences. A crucial asset for any startup, Mary acknowledges the importance of this communal aspect.

She explains: “It’s so good for collaboration. In fact, there are two companies that come to mind that would not still be in business if it wasn’t for the support network and community in PorterShed.”

With high-profile members including Altocloud and Adoreboard, the access to experienced entrepreneurs makes the culture in PorterShed an exciting one. And the space offers a host of other benefits too.

Mary reveals: “There’s a lot of support from the local community also. For instance, our local coffee shop gave us a coffee machine and we had barista training. Now everyone’s making flat whites and mochaccinos! We also have beer on tap from a local independent brewery, who supply it free of charge. And we’re backed by AIB, what can I tell you? It’s great!”

The Inspirational Story of Ocean Bloom

As a grandmother of four and a qualified aromatherapist, Ocean Bloom founder Cheryl Cleminson has always been interested in skincare. But it wasn’t until a member of her family was personally affected that she discovered the power of seaweed. “When my grandson Alfie was younger and suffering from baby eczema, we tried all the products on the market, even the natural ones, and he didn’t get ease from any of them,” she explains.

By chance, she got chatting to an elderly lady in the community, who mentioned in her day they would take the children down to the sea and bathe them. This was just the spark of inspiration that Cheryl needed. “I started thinking about it and I collected some seaweed and made a baby seaweed bath for him and his skin started healing,” she says.

She began experimenting by blending the seaweed with oils and created products for family and friends. They were a hit, and someone suggested she should make a business from it.  She subsequently enrolled in a business course with her Local Enterprise Office and began an in-depth study into growing seaweed and its health-giving properties.  It’s been a whirlwind adventure ever since.

 

Launching the Business

Cheryl confides that getting the business up off the ground was one of the bravest things she’s ever done.  She’s bootstrapped it from the beginning, handling everything from product development to filling the containers.  She notes: “To start a business, usually people save up or they have all these processes in place, I didn’t have anything in place. I would lie in bed and feel a bit panicky and think, ‘I’m too old for this’.”  But hearing how her products work made it incredibly rewarding. “I think people coming up to me and telling me that the products have made a difference to their skin is the biggest highlight,” she says. “If I can carry on making a difference to even a few people, that’s the best reward.”

 

The Importance of Good Advice

For anyone interested in starting their own business, Cheryl offers the following advice: “I think it’s important to have a bank who knows you and has a good insight into your business.  You can have a magnificent business plan but if you haven’t got a bank who believes in it, then it won’t work.  I believe going to your local branch, to people who know you, is so important.”

It was the staff at her local branch who first told Cheryl about MyBusinessToolkit, a package offering access to a suite of five leading business tools, from Sage Accounting and Payroll to the bOnline website builder.

Having access to MyBusinessToolkit through AIB and in particular Sage has helped Cheryl to keep everything organised. She explains, “Since using Sage in MyBusinessToolkit, I can actually see how much I have in my account and how much I’ve spent on products and that gives me an idea of where my account is at.” The software is also a huge timesaver. “At the moment my time is so taken up with the business and Sage just frees me up.” Knowing that she won’t have to move to new software when the business grows is also a huge plus. “I know that Sage will grow with my business,” she says.  “Some of the other packages can only cope with a small amount of money going through it, but with Sage there’s no limit so I can just carry it with me as I grow.” Being able to pick up the phone and speak to a dedicated customer support person from BCSG is also a huge plus.

The unveiling of the second Budget

10 October 2017 saw the unveiling of the second Budget of the 32nd Dáil.  Delivering his first Budget, Minister Donohoe said the Budget “achieves sustainable and affordable tax reform, delivers improvements in services and ensures increased investment in our national infrastructure”. Thomas Sheerin, Tax Director at KPMG in Ireland, outlines some of the elements affecting SMEs.

1. Income Tax, Earned Income Tax Credit for Self-employed and USC Changes

The point at which an individual attracts the higher 40% income tax rate has increased by €750.  Therefore, for a single person the first €34,550 of income will be taxable at the 20% rate.  The first €43,550 will be taxable at the 20% rate in the case of a married person (one earner).

The Minister announced an increase of €200 in the Earned Income Tax Credit to €1,150 for 2018.  This credit is available to self-employed individuals who cannot benefit from the PAYE tax credit of €1,650 that is available to employees.

The entry point for the USC remains at €13,000.  However, the 2.5% rate is to reduce to 2% and the ceiling for this new rate is increased from €18,772 to €19,273.  This change ensures that full-time workers on the minimum wage do not pay the upper USC rates.  The 5% USC rate is also to reduce to 4.75% thereby reducing the top marginal rate of tax on income up to €70,044 to 48.75%.

2. Share-based remuneration

Following a public consultation and review of share-based remuneration that took place last year, a new incentive called Key Employee Engagement Programme (KEEP) is being introduced.  KEEP is to facilitate the use of share-based remuneration by unquoted SME companies to attract and retain key employees.  Gains arising to employees on the exercise of KEEP share options will be liable to Capital Gains Tax on the disposal of the shares.  At present, such gains on the exercise of options are subject to income tax, USC and PRSI.  This incentive will be available for qualifying share options granted after 1 January 2018.

3. Retailers and Tourism

The Minister confirmed that the reduced 9% VAT rate for tourism and related activities will continue to apply.

The old reliable excise duty on tobacco is to increase by 50 cents on a pack of 20 cigarettes with a pro-rata increase on other tobacco products.

4. Construction and Property

The rate of stamp duty on commercial property transactions is to increase from 2% to 6% with effect from midnight tonight.  However, a stamp duty refund scheme will be introduced for commercial land purchased for the development of housing, provided the relevant development commences within 30 months of the land purchase – further details to follow in the Finance Bill.

Funds of €750 million are to be made available to a new vehicle, Home Building Finance Ireland for commercial investment in housing finance.  This vehicle will increase the availability of debt on market terms to commercially viable residential development projects whose land owners want to build homes.

The holding period to qualify for the exemption from Capital Gains Tax for certain land and buildings will be reduced from 7 years to 4 years.  The exemption is available on the disposal of certain land and buildings that were acquired between 7 December 2011 and 31 December 2014.  Further details to follow in the Finance Bill which should be examined clearly.

The Minister announced an increase from 3% to 7% in the vacant site levy that applies to the second and subsequent years.  An owner of a vacant site on the register who does not develop the land in 2018 will pay the 3% levy in 2018 and the increased 7% levy from 1 January 2019.

Producing milk on leased land

This year’s Irish Grasslands Dairy Summer Tour, sponsored by AIB Bank focused on milk production on leased land visiting grass based dairy farms in Skeaghvasteen, Co. Kilkenny and Tullow, Co. Carlow on Tuesday July 25th. George Ramsbottom, Teagasc and IGA shares some of the key lessons to emerge.

With stocking rate increasing by approximately 10% since quota removal and one third of dairy farmers renting an estimated 30% of the land they farm, leasing land to increase milk production was the focus of this year’s event.  The topic attracted a record audience – over 600 dairy farmers from around the country attended the event.

Common themes

Common features of the host farms were the following:

  • The relationship that both hosts have with the owners of the land that they lease – both mentioned openness, communication and respect when asked about how they work with the owners of the leased land;
  • Their focus on improving soil and breeding the right cow – both farmers place huge emphasis on regular soil testing and planned fertiliser applications and believe in breeding highly fertile, high EBI cows to maximise the yield of grass utilised on their farms;
  • Their emphasis on financial budgeting and monitoring – both carefully plan cash flow on a monthly and multi-annual basis.

The Moran Farm

Cathal and Grainne Moran farm at Curraghlane, Skeaghvasteen, Co. Kilkenny.  Cathal started farming in 1997 with 16 cows when the farm also had beef, sheep and tillage enterprises.  Today he farms a total of 144 ha where just over half of the 120 ha milking platform is leased.  This year’s overall stocking rate of 2.5 LU/ha includes 259 cows and replacement heifers.  In 2016, the herd produced 450 kg milk solids per cow (4.30% fat; 3.67% protein).  Cathal plans to increase this to 360 cows within 2 years with replacement heifers contract reared off the farm.

The Kealy Farm

Jamie and Lorraine Kealy are first generation farmers.  Coming from a non-farming background, they purchased 12 ha of land while Jamie worked as a building contractor.  He commenced milk production on a 26 ha fertile leased farm at Slaneyquarter, Grange, Tullow, Co. Carlow calving 60 heifers in the spring of 2014.  The lease also included cubicle accommodation and a milking parlour.  The following year, Jamie leased another 10 ha across the road from a second lessor and he currently milks 94 cows stocked at 2.6 cows/ha on the milking platform.  His herd produced 530 kg milk solids per cow (4.47% fat; 3.70% protein) on 780 kg meal last year.  He plans to increase the size of the herd to around 120 cows over the next couple of years.

The Perfect Business Premises

Finding the right premises can be one of the most difficult tasks for any entrepreneur or business owner. But with some careful planning and preparation, you can take a lot of the stress out of the search. Read on for five things to consider when choosing your business premises.

Size Matters

When considering the size of your premises, it’s usually best to start small. Try to find somewhere that is adequate for your needs right now but that gives you the flexibility to expand depending on your business growth over the next few years. This is preferable to choosing rather larger premises which could prove unwieldy and expensive to run right now. One option to consider is a shared office space. An increasingly popular option for entrepreneurs and small businesses, this could entail you renting a space specifically designed for sharing or coming to an arrangement with another small business to split the costs of a property. Renting a hot desk is another great option when you’re starting out. There are plenty of hot desk spaces around Ireland – including the AIB-backed Ludgate Hub in Skibbereen and PorterShed in Galway.

Location, Location, Location

Your business’s location is important for many reasons and can vary greatly depending on the type of company you run. For example, if you’re a retail business then you’ll need a location with a high degree of customer footfall. But if you’re not customer-facing then you may be able to locate your business in a quieter and less expensive area. You’ll also need to consider your employees. An area that is too remote or lacks adequate transportation links will have difficulty attracting and retaining staff – which could have a long-term impact on your company’s potential for growth. Finally, image is another concern. Consider how the surrounding area will impact on your appeal to customers, clients and potential investors.

Counting the Costs

Undoubtedly the biggest concern when it comes to choosing your premises will be the financial costs. Firstly, you’ll need to decide whether to rent or buy. Renting is an attractive option if you’re just starting out, as it won’t require a heavy initial outlay. However, if you’re intending to stay in the same location for some time renting may not be the best choice over the long term. And don’t forget, your rent or mortgage will not be the only cost associated with the property – you’ll also need to consider your various overhead costs – including stamp duty, insurance, security and utilities. Before committing to a lease, make you’re completely happy with the terms on offer – including the length of term, statutory rights, and the presence of a break clause.

Legal Obligations

Before committing to any property, you’ll need to assess your legal obligations. This may include gaining planning permission to allow the premises to be used for your particular type of business, and ensuring your building or office complies with health and safety and fire regulations. If your business is open to the public, you will also need to take steps to make your facilities accessible to disabled people. And you’ll also need to consider noise restrictions – in certain areas deliveries or manufacturing activity may only be allowed between specific times – as well as making provision for adequate waste disposal.

Starting the Search

When you’ve decided on the characteristics of your ideal property or space it can be helpful to create a list that clearly outlines your requirements. When writing this specification document, make sure to distinguish between “need-to-haves” and “nice-to-haves” which will give you some flexibility in your search. You can then provide an estate agent acting on your behalf with the spec sheet, which will allow them to provide you with a list of properties that meet your needs. Make sure to check in with the local council or enterprise board too – there may be grants or incentive schemes available in certain areas that you can take advantage of.

Profitable Farm Expansion

When planning on-farm investment it is unwise to base any investment decision on the performance of the farm in a very good year or indeed a very bad year. We advise farmers to take a multi-annual view of their farms and examine the performance over the previous 3-5 years, accounting for variances in profitability.

The key driver of expansion is to increase the profitability of the farm. So it’s worth asking prior to embarking on expansion, ‘What is the proposed expansion worth to the business?’ In order to achieve profitable farm expansion, there are a number of key conditions that need to be met. While in this article we will look closely at the dairy sector these considerations are applicable to other farm sectors. Here are some things to consider before expansion.

Low Variable Cost Base

The competitive position of your existing business prior to expansion is vital in achieving profitable expansion. For a dairy business, the level of variable costs is the key. Expansion should allow a farmer to reduce his/her unit fixed cost as the fixed cost base is spread over a larger production base. However, variable costs are likely to increase in line with production – therefore, they need to be at a competitive level prior to commencing expansion.

In order to expand efficiently, in particular for Spring-milk systems, grazed grass will need to continue to form the vast bulk of the dairy cow’s diet. Therefore, the milk production platform available will have a major influence on how much a dairy farmer can expand on a profitable basis. For any business, there is a level beyond which it is unprofitable to further expand i.e. the law of diminishing returns. When assessing a dairy farmer’s business, this principle is most appropriately tested by examining the stocking rate on the milking platform.

Age Profile and Potential Successor

It is likely to take 10 years or more to see the full benefits of substantial expansion. In addition, the initial expansion phase is likely to involve a heavier workload for the farmer. When considering expansion, the farmer in question must take a long-term view of the enterprise examining:

  • The long-term plan for the operation
  • If a likely successor has been identified
  • If there will be significant off-farm financial demands on the business in the intervening period (such as family education costs)

Social Media Marketing Guide for Your Business

Social media has fundamentally changed how we interact with one another in almost every aspect of our lives – and this is no different for a business and its customers. These days, most companies no longer consider social media as an added extra – it is something they must embrace.

If you’ve thought about incorporating a social media presence into your business but aren’t sure where you should start, we’re pulled out a few pointers to help establish and grow your business’s digital presence.

The first thing you should do is compile as much research on your target market as possible. What do you know about your audience and how they interact with brands online? Different demographics will have use different social media platforms and in different ways. For example, there’s no point putting a lot of effort into your Twitter account if your audience primarily lives on Instagram. As well as knowing which platforms your audience are on, you’ll need to know how they use those platforms. Is it a place for conversation and feedback? A place to share images and experiences? These questions will have a major influence on the type of content you start to share on your own platforms.

It’s also important to examine what are your competitors doing in the social media space – so that you won’t be treading over the same ground or making similar mistakes. You should also consider whether there are channels or platforms that give you a new way to reach customers which haven’t been used yet. Acquire an all-encompassing view of the market so that you can take that information and implement it.

Establish a Strategy

When you’ve accumulated enough knowledge about your target market, you can begin designing your social media strategy. Start by outlining your goals. Again, these will vary depending on your product/service and your audience. Your main goal may be to raise awareness of a new product launch or it may be to increase conversions on an existing product.

If you’re relatively new to social media, it’s crucial to start building an engaged audience who will help spread your content on their own social channels. One common way of doing this is to partner with an influencer who can use an already engaged audience to get the word out about your product. At this point, it’s also vital to create a social media calendar which outlines key upcoming dates (such as new product launches or important shopping holidays) and aligning your social media activity with it. It’s also important that, whatever your approach, you maintain a consistent tone of voice so that your brand purpose and personality resonates through every post.

Build Relationships

Now that your social media strategy and platforms are in place, it’s time to embrace the medium as a two-way channel of communication. Interacting with customers, new or existing, will humanise your company and make your customers feel more valued. Connecting with customers through social media is a compelling way to retain their business and, down the line, create longstanding loyalty for your brand. Be considerate, approachable and helpful anytime you engage in conversation in the digital space – whether that’s through a social post or in response to a comment. Even a complaint from someone can become a meaningful exchange that both parties learn from when approached with compassion and care.

Adapt and Grow

The hard work’s been done: at this stage you’ve established an informative and engaging social media platform that’s received positive interaction. The next step is to learn from the experience and take on board all input you’ve obtained. Existing customers’ insights are an indispensable source of information which you should take full advantage of. Data collected from your business’s online activity can also track the success of any given social media action in real-time, giving you an in-depth understanding of your company. This will give you the resources to astutely apply changes to your business strategy and fuel future success.