April 11, 2023
Are you tired of the corporate grind and looking for something else? That nine to five just isn’t cutting it anymore?
Well, many, just like you are looking at investing in a campground, buying a campground would be a great idea for a family lifestyle move that appeals to a lot of people these days.
I’m Donna Bordeaux, CPA with CampgroundAccounting.com. We specialize in working with family-owned campgrounds throughout the United States and helping them achieve their dreams from owning a campground.
One of the big questions that comes into play with the investing in a campground and is it worth it, are the numbers. You can scour the internet and you’ll find very few up to date numbers on what can be expected in campground ownership.
We are in mid-January as I record this, and yes, we have the numbers from 2022 already.
We utilize this data to help our clients grow each and every day to learn what pitfalls might be heading their way and the trends of the industry.
Now, I’ll forewarn you the information I’m about to share with you today is not just your average campground. This is a campground working at its full potential.
Working with us as their partner and growth and looking at tax savings and wealth building through building the campground of their dreams is something that helps them do better than average.
So my numbers today that I will share are talking about the potential of the campground, not just every campground you’ll see when you investigate.
We’re going to talk about the revenues that you can expect, the profits that you can expect, and what type of return on investment is common.
So let’s dive in for 2022.
First, from a size perspective, these are campgrounds valued probably between a million and 5 million all throughout the United States. They range in size from about 35 sites to up to a hundred.
Many have cabins or glamping situations involved as well, and some may be seasonal campgrounds. Others may have transient, guests who are off the highway or along a journey or on a family vacation. So a wide variety.
Let’s take a look at the revenue. First off, revenue average for 2022 of the campgrounds that we work with was $560,000. You’ll find that’s pretty good for the family run campground and the industry that’s going to be comparative when you look at the potential of somebody who’s pulling out all the stops and doing everything they can to build their dream campground.
Next, the cash flow to the owner. Now, we don’t necessarily just focus on net profit because those aren’t really comparing apples to apples in a lot of cases. Many owners run different expenditures through their businesses, not illegally, but legally.
Some may have payroll running through their business. They may have health insurance benefits, automobiles, travel meals and entertainment charitable contributions. So we wanna even the playing field and give you an idea of what kind of cash flow would be generated from a campground like our clients.
For 2022 with no depreciation and the owners add backs in there., the average campground earned $142,000 for their cash to the owner. So that is a margin of about 25.5%. Pretty phenomenal in my opinion.
This beats out a lot of business types, many business types on average, if they are a product-based business or even a service-based business but not just personal services average about 10 to 15% as a good margin. Our campground owners did 25.5% on average.
Next, let’s make a little adjustment because the other thing you need to understand is that most of these campground owners live on site. Their housing expenses are part of the business operations.
In America, it is estimated that 35% of a household’s income is spent on their household living expenditures. If you don’t have to have that 35%, that makes this equivalent to a much higher paying position in a job or in owning a business.
If we back out that 35% to put it on an even playing field. So if you were considering buying a printing business, an ice cream shop, whatever it may be, and you’re looking at the net cash flow to owner, you need to make that adjustment if the housing expenses won’t have to come out of your personal budget.
So if we add back that 35% for housing, that brings our average campground owner cash flow to about $220,000 equivalent. Pretty phenomenal.
Again, that’s 39% of revenue. So if we’re comparing a traditional business purchase to the campground, we can have a much lower income to pay taxes on and be an equivalent standard of living.
Last, let’s talk a little bit about return on investment ROI. There’s a lot of focus on ROI. That is when I invest my money, if I was investing in the stock market, I might be looking for a 7, 8% return. Whatever your risk tolerance is.
If I invest that same money into a campground, what would my equivalent return rate be? The ROI for our clients last year was 18.2%. Now that’s not just net profit, that’s after all the depreciation and any extraordinary items are considered.
So 18.2% return on investment, again, even in today’s market, that is pretty phenomenal!
So if you are interested in diving into what it would look like if you were to purchase a campground, let’s talk.
We work specifically with buyers to make sure that they understand what they’re getting themselves into in the investigation process and the due diligence. My dog agrees.
We can help you take a look and find your dream campground and decide if this is the way for you and your family to change your lifestyle.
For additional read: How to Prepare Campgrounds for a Holiday Season
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Donna Bordeaux, CPA with Campground Accounting
Creativity and CPAs don’t generally go together. Most people think of CPAs as nerdy accountants who can’t talk with people. Well, it’s time to break that stereotype. Lively, friendly, and knowledgeable can be a part of your relationship with your CPA, as demonstrated by Donna and Chad Bordeaux. They have over 50 years of combined experience as entrepreneurial CPAs. They’ve owned businesses and helped business owners exceed their wildest dreams. They have been able to help businesses earn many times more profit than the average business in the same industry and are passionate about helping industries that help families build great memories.