Planning to Sell on The Day You Buy

BY MIKE GAST

It may sound counterintuitive, but the best time to start planning your exit from the glamping business may be the day you first open your resort.

That’s the advice of Amy Wirtz, Senior Consultant with The Family Business Consulting Group. Her company, based in North America, has worked globally for the past 25 years with family-owned businesses.

Wirtz has helped a plethora of family businesses including campgrounds, resorts, and other outdoor-related facilities. She says anyone coming into the glamping business faces the same exit planning issues she’s seen in other industries.

“Everyone knows that you need a solid business plan in order to succeed, but the first thing you should do is design your plan with an end in mind,” she said.

The Five ‘D's

Glamping owners – even those brand new to the business – need to be prepared from the start for circumstances beyond their control that could threaten the future of their facility.

“When you are setting up your plans and processes, you always should be thinking about ‘If something were to happen to me, who and how would someone take over what I’m doing?’”

Wirtz said glamping owners need to consider succession planning right from the start, and that includes a disaster plan for sudden, unforeseen challenges.

“There are five D’s that threaten any small business’s future,” she said. “They are death, disability, divorce, disagreement, and disasters. I’d also add an ‘R’ for retirement to that list.”

Know Why You're In Business

Wirtz said most family-owned businesses fall into two categories – those designed to provide owners with a steady paycheck from the start and possibly pass the business to the next generation; and those designed to rapidly grow, add value, and eventually allow owners to harvest wealth through a sale.

“Inside those categories are more questions,” Wirtz said. “If you are in the business to afford you a steady paycheck and a lifestyle, are you also planning for the next generation to take over? In that case there may not be enough value or steady cash flow to be attractive to an outside buyer if things change. If you are building your business to eventually sell it outside the family, then it’s all about value acceleration and creating the right systems and practices that could be taken over by a third party.”

Wirtz suggests glamping owners ask themselves the tough questions to determine precisely what they plan to do with their facility when their time with the business is over. “Families that initially plan to have the next generation take over shouldn’t assume those plans won’t change,” she said.

“I suggest families ask those succession questions right at the outset, and then revisit those plans every three to five years because people change their minds,” she said.

“If you are looking to build a company with value that you can sell someday – be it to your kids, your manager or on the open market – you still should be asking questions about how fast to grow, why to grow, and the ‘pain in the butts’ created if you grow too fast,” Wirtz said. “Growing too fast could break your systems regarding employees, capital use, and reservation systems. You have to grow at a pace that can be tolerated by the ownership, your cash flow, your people, and your systems.”

When it's Time to Sell

After more than a decade in the outdoor hospitality business, park owner Mari Garland was tired.

Her husband Tom had stepped back from the daily operation of their Grand Junction, Colorado park a few years earlier and by 2018, Mari was looking for her own exit.

“As we got into our last few years of ownership, our lives were in transition,” Garland said. Her two daughters were graduating from high school, her parents were aging and needed more help, and Tom was showing signs of burnout.

“We needed help evaluating where we were at, and how we were running our business,” Garland said. When she attended a seminar and heard Wirtz address the Five D’s mentioned above, Garland got moving.

“I didn’t want to be caught in an unplanned transition without duplicatable practices and systems in place,” she said. “You don’t want everything stored only in your head.”

Although the Garlands had originally purchased the park with a possible succession plan for their daughters in mind, their children had little interest in taking over. “We then knew that this was something that we needed to build up and eventually sell.”

Garland said the glide path to selling her park would have been much simpler if they had planned for the eventual sale from the first day they purchased their facility in 2007.

After Tom stepped away from the park, Mari successfully ran the park for another two years. But that success came at a price.

“It was a different dynamic and I became very tired,” she said. “I knew enough about selling a business to know that it would take from one to three years to complete. I didn’t want to wait until I was flat on my back. I knew that soon I would be overwhelmed and done. I wanted to sell the park while I was still on top.”

Garland said she worked with Wirtz for a year before the sale, documenting processes and procedures, finalizing financial records, and preparing her park. “Every dollar I spent with Amy was paid back with dividends when I was under the stress of a sale.”

Begin With the End in Mind

Garland said every glamping owner should not only start preparing for the eventual sale or succession of their facility from the start, but they should also start envisioning their life after the sale.

“Your identity is in owning that business,” she said. “You have poured everything into it, and you’ve made sacrifices. It has become your identity and now you have to revise who you are.”

“Owners should begin their glamping ownership experience with the end in mind,” she said. “I probably could have done it without help, but not as well.”

The Family Dynamic

For Mike Guervich, owner of the 100-year-old Cherry Hill Park camping and glamping facility near Washington, D.C, the issue wasn’t selling the park. It was navigating the pitfalls and conflicts that come from having several family members sharing duties in the business.

“My wife and I are the fourth generation on this park, and the fifth generation is already in place here, so we won’t be selling,” Guervich said. Two of Guervich’s three daughters – along with their husbands – had joined the campground operation and things were getting complicated.

“It was certainly getting tougher to operate,” Guervich said. The family’s first ownership generation had started welcoming a few campers to stay behind their general store in the 1920s. Now, there are 400 sites with 28 glamping accommodations units to operate.

“The business had grown so much, and now we had the next generation coming in,” Guervich said. “It was a matter of helping everyone find their place here.”

Guervich said he found a consultant’s help invaluable in sorting out everyone’s roles.

“There was lots of overlap and opportunities for conflict,” he said. “Amy (Wirtz) helped us out with communication and having those sometimesdifficult conversations.”

For Guervich, the primary issue was finding ways to work better together with family, and eventually designing the right way to pass it along smoothly to the next generation.

“I just wanted to keep it all moving forward,” he said. “We found that we needed help in having the right conversations. The process gave us the space we needed to talk freely about how we were all feeling.”

Guervich said his family members now have a clear understanding of each of their roles and are able to work “on the business and not just in the business.”

Growing the Next Generation of Ownership

Wirtz said she tells owners not to assume the next generation will be interested in taking over. Once owners have established that their children are interested in succession, they should develop an education plan to ensure their eventual success.

“If a glamping owner sees that their children have an interest in taking over, they should take them to consumer shows and trade shows, conventions, and any other potential learning opportunities,” she said. “Show them the industry and be prepared for them to change their minds a few times about taking over.”

Wirtz said the best family business transitions usually include some level of “buy-in.”

“It isn’t all a monetary buy-in,” Wirtz said. “If you are starting out in glamping at age 50 or 55 and your children are 18 or 19, you might want them to go get some experience somewhere else for a while with the understanding that you’ll need them back at your park at least part time by the time you are 65.”

She said it’s also important to make family members earn their positions.

“If it’s family, don’t assume everyone is going to just get along,” Wirtz said. “If family members are contributing, document it. Do a shareholder agreement so people know how to get I and how to get out. Make sure you meet annually to ask if they still want to be here, define what they are putting back into the business, ensure that they are paid what they are worth, and have a five-year plan for every family member.”

She also suggests glamping owners separate the meetings regarding family working now in the business from meetings regarding eventual ownership plans. “Those are two very different things. Don’t mix them up or you’ll end up fighting. Discussions about family relationships have to be separate from the business talks.”

Wirtz said she realizes glamping is still a somewhat “new” phenomenon compared to traditional camping, but the succession planning basics are the same.

“There is some heavy lifting involved when you are about three to five years away from actually selling or transferring the ownership of your park,” she said. “Family businesses include an emotional side that traditional businesses don’t have to face. There are strategies to make it all work. It just takes creativity and lots of conversations that families often don’t know how to have.”

About Mike Gast

Mike Gast was the Vice President of Communications for Kampgrounds of America, Inc. for the past 20 years. Now, he’s on to new adventures, helping others tell their stories through his freelance company, ‘Imi Ola Group. You can reach Mike at mike.imiolagroup@gmail.com