Helping buy a £1,000,000 campsite: Buying a high cost businessPublished on 7th September 2019 2019-09-07T22:05:42+00:00 - Last update on 30th October 2019 2019-10-30T15:33:34+00:00
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.
Share this article
Discover your range of finance. Every type of finance for every type of business.
Our goal is very simple - to help businesses find the right type of finance as quickly, transparently and painlessly as possible.Find Funding