In Doubt

Well, the last week has been pretty depressing. After scrambling to get all the requirements together for the submission for funding, we were sent a discouraging email from the funding institution.

The funding institution had a large number of “concerns” with our business plan. The amount of funding was too high and the personal investments were too low. Those were the two big issues and I guess I should have been more prepared for this, but over the phone we were told by this same company that they could fund quite a bit more than what we were asking for and they required less personal investment from us then what we were actually investing.

I can’t figure out why this funding institution, which is a government run program, would lead us on like this. Maybe they had nothing better to do, who knows. And calling our venture “high risk” … what business isn’t high risk in Northern Ontario? Honestly.

We are going to take a week off and see if we stumble upon something to make this work. Eventually we are going to have to let the current owners know. I feel bad for them because they did a lot of work as well, to get this deal going.

This campground has been in business for 50 years, so hopefully somebody comes forward to keep the campground going, even if it isn’t us.

Holding On

It was another interesting week. I've spent the last 10 days analyzing our financials to death. Shawn and I have tweaked just about every number on the cash flow at least once, as we try and come up with the most accurate report possible. I think we have a great plan with some ambitious goals set. Although after sleeping on it, I can already see a couple changes that should be made. The next step will be to transfer the numbers from the cash flow to the rest of the financials, business plan, marketing plan, operating plan, etc. Fun. I’m really wishing I had logged my hours working on this thing.

We also sent an email to the current owners with our offer to purchase. After requesting some more details on the offer, we haven’t heard from them. I’m hoping today we hear something. If they agree to our price, we’ll be able to submit our business plan to the financial institute, as well as find a lawyer to start writing up a more official agreement.

Apparently it can take the financial institution 6 weeks to approve/deny a loan, so I guess we will still have some waiting to do. If approved, we will then need to have the land surveyed, inspected and appraised. We will also have a few municipal questions to get answered to clarify their laws on fires and water systems. I would love to be in this place by the end of the year.

Getting Refocused

This week has really flown by. Unfortunately I have gotten very little work done on the business plan, due to by inability to cost out our campground renovations. For some reason I couldn’t come up with prices, so I finally asked Shawn to take over. I’m not sure why it was giving me so much trouble, but I would spend 4 hours researching and have nothing to show for it.

Shawn is also firming up the new cabin quote as well as getting some questions answered, mostly through email. My big project right now is the marketing plan, which so far is taking too long… again, too much researching on my part. I’m just starting to get in a groove, so hopefully I’ll be able to see some results tomorrow

On Tuesday Shawn and I went to see the economic development team, which was a little disappointing.. The guy that went over the plan had absolutely nothing good to say about our venture. Shawn has dealt with this guy before, but I haven’t, so I was a little surprised at his overall negativity in our plan and our approach. The guy spent 2 hours criticizing why we would want to buy a business that loses money every year, attacking our investment requirements and my cash flow statement.

The guy reminded me a lot of a know-it-all school teacher. He was smart and knowledgeable, but often quoted generalized blanket statements as if there was no alternative. My favorite was when he said that banks won’t even think about lending us money, even though we know that the only bank we went to said they would try and help.
After that depressing meeting, Shawn and I went out for lunch and realized that there weren’t a whole lot of things to fix in our business plan.
We were told by economic development that we needed more budgeted for marketing, but we kept telling them that we hadn’t done marketing yet.

We were told that the cash flow statement was done incorrectly (which I guessed it would be since, I have never done one before), but the only thing he said was wrong with it was that I started the cash flow after we purchased the business instead of before. So, that will be a relatively easy fix.

The last thing he criticized us for, was our monthly expenses were pulled out of the air. I’m not sure why he thought that, but it is a good opportunity to go over all our expenses and really firm up the numbers. Most of the numbers are taken from the current owner’s income statement, so we can try and find cheaper quotes for things like insurance and banking fees to help the bottom line.

One thing I don’t understand in all this is that the lending institution won’t approve/pre-approve a loan until a purchase price has been agreed to. It seems odd to me that I have to pay a lawyer to negotiate a price, so that I have 30 days to change all my financials in my business plan to match that negotiated price, then submit my business plan to a bank and find out if they will actually approve/deny it.

Failure

Monday we took our business plan to an accountant in town for review. He thought the plan itself looked fine, however wasn’t too impressed with the business we were hoping to buy. The business has lost money almost every year and shows no signs of doing better.

He does want to see some more documents from last year’s financial records, but other than that, the trip to the accountant didn’t really give us any great information, unless the loaning agency he referred us to pans out.


Today my brother brought our business plan to the bank for review. We know the business plan needs work, but we wanted some feedback on the plan and on our financials. After speaking with the accountant, he was pretty confident the bank wouldn’t loan us the money since we need over 90% of the funding to come from the Bank. The bank manager was kind and went over the financials and was trying to figure out how the bank could help, but in the end, the numbers were just too far off what the bank could help us with.

Tonight I did some number crunching and it appears that we would be able to meet the banks requirements, but we would be setting ourselves up to fail.

-Only one of us could go to the campground and their salary would be less than $25,000
-We would have no money to do upgrades and maintenance on park
-Would have to run the park seasonal instead of year round
-The park would never show more than $1,000 - $5,000 profits/year

This is due to the bank looking at our opening balance sheet and wanting to see a Debt to Equity Ratio not exceeding 4:1. This is not possible for us, as we are trying to take somebody’s struggling hobby and turn it into a successful business. For the first couple of years our ratio is going to be more like 8:1. By year 5 our ratio will easily be down to 3:1. Banks are such a waste of time in my opinion. It is hard to believe that banks originally made people money.

Lucky for us we have an alternative to the bank, although I’m now realizing that there is a lot more work that needs to be done. We need more details on our renovation projects, as well as a Marketing Plan.

I’m hoping to get these items completed by Monday.

Efficient Answers

The last 2 weeks have been a blur. Shawn and I have been working on our business plan non-stop. Working on it until 2am most nights is starting to catch up with me, as I’m having trouble getting out of bed in the morning.
The business plan is nearing the final stages. We have completed most of it, including the financials. We are hoping that next week we can get the final numbers needed to complete the plan and also we are hoping to have an accountant look over our numbers soon.
We’ve had quite a few delays while researching data for the business plan. Shawn, who is making all the phone calls, is having a tough time contacting people. And when he does finally get the right person on the phone, they can only answer one question and then direct him to another department for the other questions. It seems that Monday people are too busy to answer their phones and Friday they are never in their office.
Shawn and I are going to sit down and go over our questions still awaiting answers. Hopefully this will help us get answers more efficiently.
Shawn has also been calling some funding organizations to see how interested they would be in loaning us some money. This has been a little frustrating as these companies have websites that appear say they loan to campgrounds, but the people on the phone say they don’t. We are hopeful that a government funded program will help us, although we have been trying to speak with them and so far haven’t got passed the phone tag stage.
I should also mention that I’ve had 2 job interviews in the last week. One went really well and would be a great job … the kind of job that I have been looking for since 2001. The other interview went ok, although I don’t have all of the qualifications.

Decision Time

The last week has been a productive one. Shawn received some financial data from the campground, so we have had a lot to ponder. At first glance, the campground is in horrible shape in terms of profitability. The way it is now, it could not support my family and my brother’s future family.

After a deep analysis of the campground and the area around it, we are quite confident that the current owners are holding the campground back mostly because of their age. They have put a lot of years into the park, but are now ready to move on to the next chapter of their lives.

A big investment needs to be made into the campground in the way of curb appeal and upgrades. The water and electrical look sketchy in places, and the land itself has had a lot of clear cutting done.

The upside is the price and the potential. The park is located in a great place, so with a few nature trails, and some web marketing, the place could really take off.

Kellie and I are fully on board with the plan to purchase, as is my brother Shawn and his girlfriend. Our parents are reserving judgment, but only because there is still so much to do before we could ever own the place.

So now that we are committed to making a proposal to buy the campground, we can start working on a business plan.

Campground Hunting

What a week!

Shawn and I decided to take a trip up to the campground and see what it looks like. We didn’t want to invest too much time in a business plan until we knew what kind of potential the campground had. We left on Sunday morning (September 20^th, 2009) and returned home Thursday afternoon (September 24^h, 2009).

Since I don’t have a passport, we had to take the long way around the Great Lakes. Instead of a 14 hour drive, we had an 18 hour drive. Getting a passport is now a little higher on my agenda!

We left my house at 4am in Shawn’s truck, with a tent trailer hooked on the back. We didn’t pack a whole lot, just a cooler of food, fishing rods, some blankets and lots of electronics. We had a couple digital cameras, a couple GPS’s, and video camera, CD player, and an mp3 player.

We made good time, as we arrived at the campground at around 10pm. We checked in with the owners, who were expecting us late. They set us up with a great campsite by the river and we quickly setup our trailer and got a good fire going.

We spent a couple nights at the campground exploring it and the surrounding area, and then started to make our way back home on September 22^nd. We ended up splitting the drive home into a 3 day drive. After driving for about 6 hours on the 22^nd, we spent a night at Lake Superior Provincial Park. The park seemed very small with a few campsites squeezed between the highway and the Lake as you could see both from our site.

The next day we started out early and set out for Killbear Provincial Park. This was a very nice park. It was large with lots of great campsites. We setup in a campsite next to the Lake, but far, far away from the highway.

The last day of our journey was disappointing, as the trailer broke, causing a bit of a commotion on the 401 highway. After securing the trailer, we were able to make it back home by roughly 3pm.

Noteworthy:
-We should have been more prepared for bear country. It wasn’t until we were almost out of bear country that we actually read up on the dos and don’ts. For the most part, we didn’t do anything stupid, but reading the stats on bear break-ins was a little alarming.

-The countryside up north is very inspiring. We were constantly pulling out the camera to take a picture, although the pictures never looked as good as the view.

-over $400 in gas was spent on the round trip. That caught me a little off guard. The tent trailer was quite heavy, and there were a lot of hills to climb with the truck.

Blood Ties

After discussing a possible career change with my wife, I’m pretty happy. I can tell she is very reluctant, but not outright against the idea. I think the hardest part for her is the distance we would have to travel. The campground we are looking at is a 14 hour drive, with a shortcut through the U.S.A. Moving away from our family and friends would definitely be difficult, as we have really leaned on them in the past. They have always been our safety net, but the way I look at it, if we can make a campground into a success, then we won’t need a safety net.
My wife and I have agreed that anything drastic should be done in the next year, before our oldest girl starts school. My unemployment runs out in a few months, but I doubt we will have a campground by then, so I’m still desperately looking for a job.

A Beginning

Today my brother Shawn and I came up with an idea of owning a campground. Actually my brother has been looking at buying a campground for a few years, but he has just finished College and is now in a position to tackle the feat. He was shocked that I said I would be interested, mostly because I had a wife, 2 kids, and a mortgage, and party because I have never wanted to move away, nor have I ever mentioned wanting to own a campground.

The truth is, until that conversation, I had never thought about owning a campground. I’ve always liked the jobs I’ve had, working in an office, creating databases, graphs and other reports, but to be honest, I’m pretty easy to please. Maybe a change is just what I need.

My brother and I have experience doing pretty much everything from fixing farm equipment and renovating houses, to Victorian landscaping and pouring cement. Throw in experience with sewing, renewable energy installations, designing websites, surveying, operating heavy equipment, and you have a pretty impressive list of accomplishments.