Section 2 – Financial


The bottom line of our approach to financing our new business was to avoid getting into debt. Considering how most businesses start up (and indeed continue to finance their growth), this might sound overly idealistic or unrealistic, but we saw it as an incredibly important rule. Vegetables are low value and low margin products and, as such, we believe a business whose main income (99% of it, in our case) is derived from vegetables will struggle to afford the repayment costs of a loan – especially a business being started by inexperienced growers.

If we were growers with 30 years experience behind us, or if we had a business plan with other (higher value / margin) sources of income then maybe we would consider getting a bank loan or other credit. The story of how Unicorn raised the money to buy the land in the first place is an interesting example of ‘community credit’, but of course is all made possible by the proven strength of Unicorn’s business model and very well established community connections.

Instead, we had the advice of some older farmers ringing in our ears – “never get in debt to the banks” – and that’s how we’ve gone about it. It turns out we’ve been incredibly lucky with bringing in outside funds for our project (partly because of our explicit environmental, social and educational purposes, partly because we set up at a time when such funding was readily available, a fair bit of help from friends and contacts, and a fair dose of luck!), and this has determined the speed at which we’ve been able to set ourselves up. As we argue below, we’re convinced we would have found a way to get growing even without grant funding, but there’s no doubt it would have been much harder and slower.

Money was raised from several sources:

  • Making Local Food Work (Big Lottery funding stream) – £100,000 – funding for the first two years of setting up, paying for some machinery but mainly revenue costs, i.e. wages, rent, contractors, marketing, maintenance, costs of seeds etc.
  • Local Food Fund (Big Lottery funding stream) – £9,900 – paying for a delivery van, biodiesel fuel, van signage and insurance, as well as a compost toilet
  • Rural Development Programme for England (EU money) – £42,315 – paying 40% of our costs of our irrigation system, building and (hopefully still to be done) renewable energy provision
  • Organic Entry Level Scheme (EU money) – £5,565 – contributing towards hedge planting and organic conversion costs

Other funds we looked into were:

This was our approach to fundraising:

  • establish a clear vision for the business as a whole and write the framework of a business plan – most of all clearly communicating our environmental, social and educational purposes, and the practical way these would be achieved
  • research which funds are most suitable for our work/aims, and find out about their eligibility
  • split the work we want to do into different projects that (a) fit a realistic timescale, (b) make sense as discrete projects (e.g. all the educational aspects of our work under the MBG Expansion Project), and (c) complement the funding opportunities that we’ve researched, choosing those that enhance and not distract us from our core ethos and aims
  • start drafting applications, paying really close attention to any guidance notes that are available
  • fine-tune the business plan, describing the different projects, providing as much detail as possible and including the kind of aims, language and key phrases that our potential funders are interested in

This approach has worked very well for us, but we’re by no means experts at fundraising. We were incredibly lucky firstly that there was a lot of Big Lottery money around for food projects at the time we were setting up and secondly that all the funders were happy to take ‘cold’ applications – i.e. applications from unknown newcomers. We know for example that, in practice, some funds require some kind of personal contact, established link or track-record. Some of the more successful fundraisers, it seems, spend a lot of time networking.

Overall, it must be said that this has not been the cheapest example of how to set up a new growing project. We’ve had to establish a new farm from a starting point of two bare fields, and we’ve had to set up a new business with all the necessary equipment – again having started with nothing. We’ve done all that in the space of just a few years, and the only way that’s been possible has been through well planned and timely fundraising.

Even in very different circumstances however (and bearing in mind that we want this report to be useful to others who may not have the same good fortune in terms of fundraising opportunities), we feel sure that we would have found a way to start growing vegetables, albeit probably faced with more challenges and slower development:

  • If, for example, Unicorn had found land that was already equipped with the infrastructure we need (buildings, water, electricity), this would have taken a huge amount of pressure off grant funding. By using contractors and borrowing machinery, costs could have been kept pretty low for a few years until sufficient capital was made to buy our own.
  • If Unicorn hadn’t been able to buy land in the first place, then we would’ve asked existing farmers or growers if we could rent some land and equipment. Again, costs could have been kept pretty low.
  • Our actual plan B – after Unicorn had bought the bare land at Glazebury, and having signed the tenancy with us – in the event that we couldn’t secure any grant funding was to build the business up much more slowly. This would have involved us working part-time elsewhere (essentially subsidising our lowly farm income with stable higher-paid work), growing simpler less labour-intensive crops (e.g. cabbages, squash) and slowly building up enough capital reserves to buy our own machinery. Our business plan forecast would have been more like 10 years instead of 5, and we probably would have had to put our building and/or irrigation plans to one side. Opportunities may well have been missed along the way, but we would have got there eventually.
  • With our explicit focus on environmental production, educational and volunteering opportunities and ethical food supply, we feel confident we could have raised at least some funds from the local community, either along the lines of community-supported agriculture (CSA) or a public loanstock issue.


We split our work on accounts into two – day-to-day records and forecasting.
(i) day-to-day records – The main jobs are:

  • invoicing – issuing invoices to our customers, paying invoices from our suppliers
  • data entry – primarily inputting all expenditure, income and wages into our accounting programme, and splitting those entries into different ‘account codes’, so that it’s easy to analyse the accounts according to different budget lines. Data entry for us also includes updating any info that’s needed for funding purposes (e.g. number of volunteers, weekly sales figures)
  • reconciling – making sure our accounts tally with our actual bank balance

From what we can tell, there seems to be three levels of complexity in terms of growers and their accounting software. At one end of the spectrum, there are those that hand-write invoices/delivery notes, use very basic Excel spreadsheets to organise their accounts, and reconcile by hand (i.e. pen and paper, ticking off bank statements). At the other end, there are those that have more sophisticated software that automatically generates delivery notes & invoices, reconciles at the press of a button, does payroll as well, and has various forecasting functions.

We’re somewhere in the middle:

  • invoicing – we have one piece of paper that acts as both delivery note and invoice, and we hand-write them in a duplicate copy invoice book (available from stationers). The customer gets the top copy, we keep the bottom copy. It’s quick, easy and flexible to deal with any newly negotiated price.
  • data entry – we use a free-to-download piece of software called TAS Basics, made by Sage. They’ll try and convince you to upgrade to a more complex fee-paying version, but we’ve found it’s not necessary. TAS Basics does budget line analysis and automatic reconciling, but doesn’t automatically generate invoices or do any fancy forecasting. We think that’s enough for us.
  • reconciling – as well as using TAS, we also double-check everything ‘by hand’, i.e. going through our bank statement, entry-by-entry and ticking it off. We feel this ensures thoroughness and certainty.

(ii) forecasting
We do two different forecasts:

  • Monthly forecastclick here for our template. This is the most vital tool to seeing how our cashflow looks over the coming year. One of the most common things we’ve had said to us is that it’s not a lack of profitability that makes businesses go bust, it’s a lack of good cashflow.

Growing vegetables is so seasonal, and the income reflects this. We try and organise our labour so that it’s equally seasonal but, generally speaking, as a cost it’s more consistent than our income. The particular pinch-point in the year is Spring, when income from over-wintering crops has dried up but when there’s a lot of ground work getting new crops established. We’ve also found our monthly forecasts essential in order to see our way through periods of high capital outlay – i.e. paying for our irrigation, building etc.

With the income forecast, we use our cropping plan (see section 3) to spread anticipated income across the 12 months. With expenditures, the first thing we do is put in annual or monthly scheduled payments – e.g. Soil Association fees, insurance, rent. That’s the easy bit. We fill in the seed costs according to the cropping plan (see section 3) and the monthly wage bill according to the staff hours planning we do (see section 6). We can put in anticipated one-off spends (e.g. new equipment), but the difficult bit is making an accurate guess of when unanticipated spends will occur – for example, maintenance costs. We end up spreading it evenly in quarterly chunks.

  • Yearly forecastclick here for our latest example. This obviously deals with the longer-term, and we’ve found it a really useful tool to help direct our growth. We know where we want to be in year 5 (our first anticipated year of breaking even) so we can map out the kind of targets we need to hit in the years leading up to it – in particular veg sales & wage costs.

End of year process

Day-to-day records and forecasting deal with the present and the future. We’ve found it’s just as important to look at the past. The most pertinent way we do this is by doing a crop-by-crop end of season analysis (see section 3 for this). Purely in terms of accounting, however, we’ve found it very useful to compare the previous year’s forecast with what actually happened – it obviously has an impact on how we do our next forecasts. At the end of the year we’re able to see which budget lines exceeded expectation and which didn’t.
As well as this, there’s a more formal end of year process – getting the accounts checked/audited by accountants. We’ve chosen our financial year to be the same as the calendar year – we’ve found this fits well with the seasonal demands of growing as we’re less busy in January-February, and we have the time to give to the end of year accounting process.

Once everything is inputted into our TAS accounting software, we simply run an audit trail in TAS and save the data in a .csv file. We send this to our accountants along with our hard copy files. They check over everything and prepare the final accounts (balance sheet, profit & loss etc.) and corporation tax return. It’s a relatively pain-free process.


The HMRC website showed us everything we need to know about payroll. We started by registering ourselves as an employer, after which we received a free payroll pack including a CD Rom of their PAYE Tools program. The program goes through a few simple steps:

  • we add an employee’s details including tax codes
  • we then input a wage (we pay weekly, so we do this every week) with an associated date
  • then, from the tax code information and the wage figure for each employee, the program’s P11 calculator works out how much tax needs to be paid – employee’s NI (National Insurance) and income tax as paid by the employee and then employer’s NI too
  • we are left with a figure to pay as net wages to the employee

We pay the tax online by debit card.

The main advantage of the P11 calculator is that it’s free and simple to use, especially for a relatively small organisation such as ours. The disadvantage is that we need to input all the information again into our TAS accounts. More advanced accounting software will do the job of the P11 calculator for you and mean you don’t have to input information for a second time into your accounts – and it’ll print off wage slips for each employee.

Other considerations

(i) choice of bank account – because we’re a co-operative (Industrial & Provident Society), we were able to set up a free ‘Community Directplus Account‘ with The Co-operative Bank. Free banking makes a big difference and it seems to be a rare thing. The only other bank we considered seriously was Triodos Bank (we quickly ruled out other banks on ethical grounds), but unfortunately they charge for business banking.

(ii) VAT – one of the first things we did after establishing the business was to register for VAT. Vegetables are charged at zero rate VAT (and should be shown as such on invoices), so we have no income-related VAT to deal with. With our expenditures, however, we’re able to claim back all our VAT, which has been very useful.

A couple of specific repercussions of VAT registering is (a) the effect on cashflow – i.e. paying invoices in full but only getting the VAT back at the end of the quarter, and (b) VAT eligibility of some grant funds – e.g. we had to pay all VAT on anything we paid for with the Making Local Food Work (Big Lottery) funding, which created an extra complexity to our accounts.

(iii) insurance – we have got basic insurance for material damage (inc. theft), employer’s liability, public & product liability and personal accident. We found it took some time to read through all the different policy options from the different insurance companies we contacted. There are lots of extra elements we could have added, but in the end we approached it fairly simply in terms of the greatest risk to us (as workers) and our business. These are the companies we considered:

Employer’s liability and personal accident are by far the biggest costs (each comprising 30-35% of the total cost).

One issue we came up against when we were first looking for insurance was with the biggest farm insurer, NFU Mutual. For some reason (which was never explained to us very clearly) they were unable to offer us a quote because we didn’t have a building. This, thankfully, didn’t seem to be a widespread policy, as we received enough quotes from other companies.

To start with, our van had separate insurance (we paid £1,500 for a year’s comprehensive cover – undoubtedly inflated because of the postcodes of where we live in Manchester). The following year, however, we discovered that it is considerably cheaper to get a motor insurance policy that covers our tractors as well as the delivery van – we now pay c.£500 for a year’s comprehensive cover for all of our vehicles together. As with normal car/house insurance, the number of named drivers, postcodes of where it needs to be insured, and previous no-claims bonuses all combine to influence the end price.

(iv) time – probably the biggest issue with all of the work described in this section is having the time to do it. We have purposely chosen to do as much of this work in-house, to avoid extra costs. We only pay for our end-of-year accounts (c.£600) and a couple of invoice books (c.£13). For the first year we also paid to have access to TAS advice and support (c.£100 a year), but we’ve dropped this now as we feel sufficiently familiar with the software. It’s possible to lighten the workload by getting a professional book-keeper to do your day-to-day accounts (we’re not sure on going rates), or to outsource your payroll (for example our accountants charge £50 per quarter for upto 3 employees, plus extra admin costs for the end of year and any personnel changes through the year).

We’ve split the responsibilities, so one of us does data entry, reconciling and forecasts, one does payroll, and we both do invoicing.

Even so, for most of the summer it’s really hard to stay on top of it all, because we’re so busy on the land. It’s tempting to outsource some of it, but we’ve chosen to maintain control and a working proximity to all the numbers and how the business is doing – it’s keeps us busy, but it’s worth it…

Running costs

This is a rough breakdown of our annual running costs, estimated at the time of writing:

Wages£21,0002 part-time workers throughout the year, 1 full-time Apr-Oct & part-time in winter
Training £350
Soil analysis £50
Seeds & modules£4,900(c.7 acres of production)
Rent£2,450(n.b. for all 21 acres)
Van diesel£1,000
Tractor diesel£1,950 (i.e. red diesel)
Maintenance £1,375 (machinery, equipment, infrastructure)
Office costs£25(invoice books, account files)
Events / visits £200(i.e. open days, school visits)
Memberships & subscriptions£790
Legal & professional£200(reserve for e.g. tenancy negotiations)
Financial£600(end-of-year process with accountants)
Financial£600(end-of-year process with accountants)
Marketing£430(bags, boxes, labels)

Section 1 – Overview            Section 3 – Crop Planning