Evaluating the financial potential of an entertainment farming/farm tourism business
It is not easy to develop reliable estimates to evaluate the financial feasibility of an entertainment farming/agritourism business. For one thing, start up costs should be able to account for all expenses related to the renovation of the farm, parking, long-term signage, and labor costs during the start-up phase. These costs, however, are subject to changes as modifications in the building plans and scope of business operations are usually made by the business owners. When the business actually starts operations, revenue projections are also difficult to set up due to the uncertainty in generating customer counts and the tendency of the business to implement variable pricing schemes (where prices are likely to be adjusted downwards during periods of low numbers of farm visits). However, “best” estimates of financial performance need to be developed to serve as a guide to developing and implementing business plans.