Approximately 80 percent of owner wealth is in the business, and yet two-thirds of them don’t incorporate a recent business valuation or develop an exit plan for the transition of the business.
Many owners aren’t positioning their business to transfer successfully so that they can “harvest the wealth” locked in their fishing & hunting lodge, camp or resort operation. Are you counting on the sale of your business for your retirement funds? Is monetizing the sweat equity you’ve expended in developing and running your business important to you? If so, you need to make sure your business is sellable.
Many Business Owners Can't Sell When They Want To
The goal of selling or transferring most fishing & hunting lodge, camp & resort businesses is to fund retirement.
In reality, however, many owners won’t be able to sell their businesses when they’re ready because they’re not taking the critical steps required toward a transition.
Approximately two-thirds of fishing & Hunting Lodge, Camp & Resort business owners would like to retire in the next 10 to 15 years, unfortunately most of these owners are woefully unprepared for this event.
Many owners appear to be waiting until late in the game to begin planning for the eventual sale of the business so I applaud you for taking action early.
Owners should be getting educated about the process and make time for planning.
The “How To Sell a Fishing & Hunting Lodge, Camp or Resort Handbook” was assembled to educate owners on the process and help them prepare.
Its important to start educating yourself so that you can sell when you’re ready.
Common Obstacles That Prevent a Business From Being Sellable
Fishing & Hunting Lodge, Camp & Resort Business owners are rightly proud of things like their business name, logo, staff, guest list and past financial performance.
Unfortunately, being proud of something can delude your perception of what its market value is.
Something that an owner views as a strength could become an obstacle to the sale.
It takes a lot of forward planning to identify obstacles you may face when trying to sell.
Here a few common obstacles that you may need to overcome (or at least minimize the effect of) in order to successfully exit your business:
Net Income Is Too Low:
One way of valuing fishing & hunting lodge, camp & resort businesses is based on a multiple of EBITDA.
When asked, the “typical” outdoor tourism business buyer almost always responds they want to buy a business that will enable them to earn six figures ($100,000 or more).
There’s significant demand for businesses with a consistent EBITDA of $100,000 or more. It’s also much easier for buyers to obtain financing (for many reasons) at that minimum level of EBITDA.
If the EBITDA of your business is less than $100,000, the odds of having a salable business are significantly reduced.
Useful Article to Help Resolve this: 13 Ways Fishing & Hunting Lodges, Camps & Resorts are Increasing their Revenue
Unrealistic Expectation of Value or Unknown Value
This is the biggest hurdle for most fishing & hunting lodge, camp & resort business sales.
The market doesn’t care what you need for retirement, it’ll go elsewhere if you’re not being realistic about the value of your business.
Far too many outdoor tourism business owners put their business on the market with unrealistic expectations.
Buyers, especially if working with a professional advisor, seldom, if ever, overpay to acquire a business.
Serious buyers won’t even inquire on your business listing if they know its over priced.
I get it, getting full value for your business to fund retirement is extremely important, but you’ve got to be realistic and not expect selling your business to be like winning the lottery.
75 percent of fishing & hunting lodge, camp & resort business owners have not had a formal valuation conducted in the last five years. The way they’re gauging where their lodge’s value is at is by hearsay on what some other guy sold for.
I recommend getting a professional business valuation 1 or 2 years in advance of selling to know where your business’ value is at and can plan accordingly.
If the value isn’t where it needs to be the business appraiser should be able to point at a few items you could address to get the value up.
By giving yourself a 1 or 2 year window before you plan on hitting the market you’ll have time to make improvements. But please understand there’s a ceiling for any business.
Useful Article to Help Resolve this: How Seasonal Resorts & Lodges Are Appraised
Unorganized Guest List
Fishing & Hunting Lodge, Camp & Resort vacations are expensive. Having a curated list of loyal repeat guests is extremely valuable to a new owner.
If you don’t have a strong list of loyal repeat guests, or it isn’t organized into a form that the new owner can easily take action on, then expect this to setback your business sale.
There is certainly a cost to acquire new guests, whether its paying for advertising, enrolling in our GrowSMART Program, having a new website designed or hitting the road and attending trade shows. All of these items have a cost.
Having a strong guest list will help the new owner reasonably estimate occupancy for their first season operating your business.
A guest list should be well organized with all of the client’s information (address, phone, email, social media profiles), anything that will help the new owner stay in contact with the former guest and hopefully retain their business after they take over.
Less than 48 percent of businesses with multiple partners have a buy-sell agreement in place.
This is something that should have been planned out in the business plan, similar to the point of a pre-nup when you get married.
Depending on the reason for leaving, poor partnership planning can be a major hurdle to the sale of your business.
Poor Accounting System
Poor accounting systems produce meaningless financial statements and are a huge obstacle to a successful sale.
Buyers are interested in businesses that are well organized with professional accounting systems providing reliable statements.
Inadequate financial records create uncertainty and doubt. Once skepticism and distrust arises in a buyer’s mind, a successful sale transaction is highly unlikely.
Too Much Involvement Required from the Owner
I know, anyone considering buying a fishing & hunting lodge, camp or resort business should know it’s a pile of work but I don’t think they ever truly understand until they witness it.
I estimate this hurdle alone eliminates 90% of buyers once they get a “look under the hood”.
Its all coffee on the deck and fishing in the evening on social media, but the reality is running a fishing & hunting lodge, camp or resort is a grind.
BUT there is absolutely someone out there just like you who is willing to take on this labor of love.
If you are concerned that your business may not operate efficiently while you are away on a two-week vacation, you may not have a salable business. You could consider putting in place some sort of middle management if the budget allows for it but more than likely this is a hurdle you’re just going to have to live with.
Make Your Business More Sellable
Just because a fishing & hunting lodge, camp or resort owner knows they are ready to sell doesn’t mean they begin the process instantly. Most procrastinate for years.
The hurdles discussed above can be enough to cause the owner to sit on their decision and stall the process.
Having a thorough understanding of the first key steps in the exit planning process can help relieve procrastination.
There will always be the fear of letting go for any owner who has worked hard over countless years building and growing their business.
However, staying focused on the reasons they want to transition and the benefits it can bring to them professionally and personally will help relieve the worries and hesitations.
This article has been prepared by Frontier Hospitality Advisor for general information only. Frontier Hospitality Advisor makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Frontier Hospitality Advisor excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this article and excludes all liability for loss and damages arising there from.