£520,000 loan to buy a fishing site: Buying a business that was also a home
There are around three million anglers in the UK - and many are looking to combine a holiday with some serious fishing.
There is more to a good fishing lake than digging a hole and stocking it. The location is crucial to success, and everything from water quality to parking needs to be carefully prepared for.
Day fishing can provide an income, but the real opportunities may lie with providing camping accommodation, and all the extra opportunities that may present for revenue generation.
There are not many properties with commercial fishing lakes and camping areas - but when they come up they can provide the basis of a rewarding enterprise.
We recently provided funding which would help a couple who are both keen anglers turn their hobby into a business.
Our clients were a husband and wife team who were lifetime anglers - both had won competitions. They knew the challenges involved in running a fishing business.
“Setting up a fishing enterprise sounds easy: dig a hole, fill it with water and plop in some fish. But there’s a bit more to it than that, if you don’t want to end up with a hole full of muddy water that clearly has no appeal to fish and even less for fishermen.”
A natural lake will be best or, failing that, a quarry or similar, which has been the home to fish and attracted anglers, may be a better approach than bringing in the diggers. An established lake will mean better fishing and a more attractive environment for anglers - even a bad day’s fishing can be enjoyable in the right environment. The stock in the lake is important - as are the facilities on offer.
“Trout are not the only fish that pull in the anglers. Trout fishing is being overtaken by carp.”
When our clients discovered an established fishing site for sale in Herefordshire that also offered scope for camping, they were immediately keen on what they saw.
The site had nearly 20 acres, with good road access, a café, tackle shop and proper toilets - which the couple realised was important for female anglers. Many women won’t go to the smaller fishing lakes because of the lack of facilities.
The site was also licensed for camping, which provided plenty of opportunity for development - and, above all, it was profitable.
The core business was a day ticket costing £10 for one rod - and we saw that on a bank holiday weekend the site was bringing in a hundred or more anglers. It meant an annual turnover of around £100,000, while the tackle shop and café could take another £25,000 to £30,000 a year. The potential of the camping business had hardly been explored, but the couple believed that they might take another £30,000 a year if they marketed the business properly.
There was also a two-bedroom lodge house and several outbuildings which could provide the basis for conversion into a club house, covered childrens’ play area and a bar.
It was ideal - but the rarity of such a business opportunity meant that the price being asked for the business was high.
The price of the site as a going concern was £750,000 - reflecting the existing business revenues, and the property on site. But buying a home as well as a business can often mean complication as well as extra costs.
They could raise around £300,000 by selling their existing home, but as both of our clients would be giving up work, they realised that they needed to keep some cash as working capital, as well as to invest in improving facilities for the business.
They called us at Rangewell to help find the most cost-effective way to fund their acquisition.
We explained that costs would be high, because neither of them had experience of running a business of this kind - which lenders will see as a risk.
However, we saw a solution. By providing an interest-only loan for two years, we could keep costs manageable for the initial period while they established the business, and started to develop its profitability.
We found a lender who could provide £520,000 at 0.85% per month for two years.
At the end of that period, we would seek to refinance - armed with two years’ accounts, which should provide evidence of the soundness of the business, and allowing them to arrange a loan at a much lower cost from a high street bank - which may be the most cost-effective source of funding.
At Rangewell, we help leisure and holiday business owners find answers to their funding needs - from trampoline park finance right through to unique leisure businesses and even adventure holidays and outdoor businesses. Call our Holiday Property Funding Experts to see what they can do for you.