Helping buy a £1,000,000 campsite: Buying a high cost business
Britain has 1.8m caravans and owners are constantly looking for campsites. It also has around 3 million enthusiastic anglers.
A business which could offer caravan camping with good coarse fishing, plus a range of other activities to cater for all the family, could be highly profitable - especially with an improving climate and a falling pound that makes overseas travel much less attractive.
But there is much more to a successful business than a field with a lake and standpipe or two. Today's campers want hardstanding with hookups, clean lavatories and showers. They want Wifi, a shop, laundry and even a licensed clubhouse.
We recently helped a couple buy an established touring site in Lincolnshire that offered all those qualities.
The potential for a growing business
Our clients lived in Lincoln and were a husband and wife team whose family had left home and were looking for a new and more relaxed lifestyle - although neither were looking for early retirement.
“We were really looking to improve our quality of life, but we needed to arrange an income as well as a home.”
They realised that they might have found just what they were looking for a few miles from their home. The business was a licensed caravan site with 27 acres that included some woodland - plus five acres of lakes.
“It was the trees that attracted us at first. Forested areas are something of a rarity in Lincolnshire. But not only was there woodland, there were the magnificent lakes. I was no fisherman, but I could see that they would appeal to anglers of all ages. Even a bad day’s fishing can be a good day in the right environment.”
There are around three million anglers in the UK - and many are looking to combine a holiday with some serious fishing. It meant the site had multiple income streams:
- Day fishing - £10 a day per rod is a standard charge, and a typical weekend could see as many as 70 anglers coming onto the site.
- The angling shop - lures, kit and clothing are all steady sellers, and opening for just a few hours a day was bringing £20,000 a year in sales.
- A cafe - breakfast, lunches, snacks and, of course, hot drinks were generating another £20,000, and there was scope for building the business to provide evening meals for campers - and possibly alcohol sales.
- Camping - the site was large, and the attractive location made it something of a magnet for touring caravans. A revenue of £120,000 a year was already being generated, and there was spare capacity that could be opened up.
There were good facilities, including a club house, covered childrens’ play area and a games barn. There would also be scope for new activities such as a zipwire and quad bikes.
“There was a very nice house on site too - it had once been a farmhouse, but it had been updated to provide a very comfortable modern home. It was actually bigger than the house we were living in.”
How we helped
The potential was obvious - but the price being asked for the business reflected the scope the business offered.
The price of £1,000,0000 reflected the existing business revenues, and the fact that the new owners would be buying a home as well as the business.
“It was a lot for this part of the world, but we would be getting a lot in return.”
The couple could raise around £500,000 from the sale of their home and some savings, and called us at Rangewell to help find the most cost-effective way to raise the rest of the money required.
We explained that costs might be high, because neither of them had experience of running a business - which lenders will always see as a potential risk, and price any loan accordingly.
However, we found a commercial property specialist lender who could provide £500,000 at 9.9 % over 15 years.
Armed with a firm offer, the couple negotiated with the vendor, and secured the business for £920,000.
At Rangewell, we help holiday business owners - find answers to their funding needs. Call our holiday property funding experts to see what they can do for you.