Finance smarts for glamping businesses

Recently, I was acquainted with a couple in their late 50s who had decided to set up their own glamping business in 2019, with a plan to acquire 4 glamping pods. Once they had sourced the pods and secured the necessary planning permission, they went to market to find a suitable finance solution to fund their exciting new business venture.

This couple owned a very beautiful home that had been in the family for over 50 years, valued at around £1 million with 5 acres of land. So, after a brief bit of research they were introduced to a mortgage broker, who was pleased to offer the couple a £300k bridging loan to acquire the new pods. This loan included £200k for the pods themselves, £50k for infrastructure and £50k to settle their outstanding mortgage. The security? Their family home.

This was an excellent deal for the mortgage company, as their offer for the couple was £300k advance with the security of £950k from the property. And for the couple, it was incredibly easy as they did not have to provide a business plan for their new glamping venture – they simply needed to offer the security of their family home for a smaller advance. In their minds, the new business would easily be able to afford these payments, so they went ahead with the loan.

In December 2019, the infrastructure works were completed and the pods were installed in January 2020, ready to go for the first season.

Then, 2 months later… Covid! As you might imagine, this huge unforeseen event meant that trading that season did not happen, as it didn’t for many operators in the glamping sector, nor did it the season after. In fact, it was not until the summer of 2022 – 18 months later – that they began to trade. 18 months of money going out, and 18 months of nothing coming in!

Because of this, the couple were falling behind on their monthly repayments, and the interest was mounting up month by month. For the mortgage company, this was great news! The rising debt meant more money for them, and the fallback was selling the couple’s home in order to get their money back. It was a win-win.

Sadly, the latter has now happened, and the family have been forced to sell their home and move elsewhere. And, with the sale proceeds from the home minus all the charges from the mortgage company, this has left them with very little and their dreams totally shattered.

This awful story is just one example of some of the devastating effects the wrong financial advice can have on any glamping business. Sometimes, you might believe you are receiving good advice, particularly if you speak with a financial advisor who has lots of experience and strong knowledge, but this does not mean they will have your best interests at heart, or know your sector like they should.

Finance - It’s something we don’t love to talk about, but something we should know more about

Whether you’re a new business, or have an established company and are in the market for new glamping equipment, obtaining finance for your purchase can be an inevitable part of the process. With the right finance product, you will be well on your way to a successful investment. However, with the wrong one, it can be a whole other story.

During my time working as a finance professional in the hospitality and leisure industries for over 20 years, I have had the pleasure of working with many wonderful people in the glamping industry. But, equally, the misfortune of encountering business hopefuls who have been taken advantage of by finance “professionals” who have left them in difficult situations that could have been avoided with the right advice.

Here’s another story for you: I worked with a trampoline park business who were planning to open 3 new sites and, therefore, were looking to use a funding solution in order to help them on their new venture.

They had previously worked with a wellknown broker, but the broker was unable to acquire the full amount of money that they needed for their business. When they came to speak with us, we managed to get the full package they needed, and so they were happy to work with us instead.

It transpired that three of the lenders we were working with had also issued acceptances to the other broker. Once this broker discovered this was the case, he decided to phone up the lenders and tell them that new information had come to light which made them think the customer wasn’t credit worthy. His attitude was that if he wasn’t going to get the business, nobody could have it.

It also transpired later that the interest rate the customer was given by the broker was 3%, when it was in fact 32%!

In this case, we managed to convince the lenders to reinstate the offers (crisis averted), but it does really go to show that there are people operating in the market who simply do not have your best interest at heart, and are looking to line their own pockets at the expense of others.

So, what is the lesson to be learned in all this?

When looking for a finance solution for your glamping business, or for any business, you absolutely must engage with a certified, trusted advisor who looks at the whole market and can give you full transparency when it comes to funding solutions.

You need to speak to someone who has a solid reputation. Someone who understands the importance of a business plan. Someone who can clearly articulate affordability issues to you so that you understand the importance of cash flow when it comes to purchasing a finance product. Someone who understands your sector specifically and can provide tailored advice.

And how do you go about that?

At my talk at The Glamping Show on 20th September, I’ll be talking more on how to go about finding an accredited and reputable finance professional to help you avoid your own finance horror story, as well as some of the specifics involved in acquiring the right sort of finance, such as the importance of a business plan.

Join me and Trevor Pirie, Vice Chairman of The Guild of Business Finance Professionals, in Theatre 1 at 11am.

By Neil Baxendale, GTF Event Equipment & The Guild of Business Finance Professionals