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.