Campsites and caravan parks have been experiencing a business boom in recent years. With the rise of “glamping” allowing you to provide a camping service without the traditional lack of “creature comforts”, and a resurgence in the popularity of traditional camping means that it’s no longer just hobbyists taking camping holidays. In fact, according to the website Pitchup, UK residents take over 15 million camping and caravan trips per year.
That’s naturally lead to a renewed interest in purchasing campsites and caravan parks across the board, and we at ASC Finance for Business have certainly seen a fair few more applications coming across our desks. But like any specialised industry, there’s a few elements you need to be aware of when you’re looking at financing your purchase:
- Exactly what type of site are you purchasing?
There are many different types of campsite, and each one has a different income model. This is important both in terms of your cash-flow requirements and how lenders will evaluate any application for finance.
On one hand there are campsite or glamping sites where your clients come and rent a pitch for the week / weekend. These operate on a traditional business income model, whereby there are upfront and ongoing maintenance costs of the site, and income is received on a regular (if seasonal) basis.
By contrast, if you are running a static caravan park, the model is more similar to buying and selling larger assets for one off payments. This means that your capital expenditure is initially higher, and the income is driven by sales of the individual caravan units. Hence, lenders may place more weight on stock levels and caravan sales, rather than regular income to determine the viability of the business.
If you’re looking for a camping-based business, you have to be clear on exactly which style of business you’re looking for, and search appropriately.
- Do you know your legal obligations?
Running a campsite or caravan park isn’t as simple as just taking a plot of land and stating “people can camp here”. There are a variety of rules and regulations surrounding what you can and can’t do with your site. For starters, you’ll need a specific license for the type of venue you’re running – caravan park licenses and campsite licenses are not interchangeable. You’ll also have to contend with zoning laws and any other particular situations that can arise as a result of having your clients bring their own lodgings on your property.
- How are you going to manage cashflow?
Campsites and caravan parks can be a highly seasonal business. A lot more people will be willing to sleep in a tent on a summer evening than will in the middle of winter!
As such, you’ll have to have a plan to manage the “famine” periods properly to make sure you can benefit from the “feasts”, especially when you’re “settling in”. There are a number of options to do that, whether it’s serious financial management, digging into your savings, or even working capital loans – you just have to make sure you know what to expect, and plan accordingly.
This by no means covers every possible consideration you’ll need to take into account, though. There are plenty of things that you’ll need to consider when looking at a property purchase in order to find the funds you need for the campsite you want. That’s where we come in. At ASC, we’re experts at helping you manage all the little things you need to take care of to get your purchase done. So just give us a call!
ASC Finance for Business are Commercial, Business and Property Finance Brokers with 50 years of arranging faster, simpler, better finance for small businesses.
To speak to your local ASC Regional Director about getting finance, click here.