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Broaden Your Pitch: Growing Your Campsite Business

Broaden Your Pitch: Growing Your Campsite Business

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A business is either growing or failing.

Each day, the silent erosion of increasing competition, accumulating debt and rising cost of inflation are gradually taking the edge off your future business benefits.

So, growth is should be seen as more of a necessity than a luxury.

Growing your business is like upgrading from a medium to a large refillable drink.

A larger container to quench a heavier thirst.

In the context of your campsite business, your operational capacity is dictated by the number of pitches you have on offer at any time.

The more available pitches offered simultaneously, means the more possible revenue up for grabs.

For example:

20 equivalent pitches offers double the potential business revenue of a 10 pitch set up.

Expansion

Expanding your campsite pitch capacity is a quick method of growth.

If you’ve got the space, adequate proportion of available toilet amenities and the staff coverage to prepare all pitches prior to arrivals – it’s possible you could be ready for expansion.

Remaining at a level lower than your absolute potential capacity would be the equivalent of throwing money away.

Sure, if it’s a ‘serviced pitch’ – you’ll need to factor in an electrical hook-up, or waste water drainage – there will be a capital cost involved.

But overall, the increased revenue may well considerably outweigh the upfront capital investment.

Expansion of an existing business operation is seen as a relatively low risk strategy, on the basis that you’ve already proven both the demand and your ability to satisfy supply.

It’s just a matter of:

More of the same. However, if expansion is either not possible or favourable, there is…

Diversification

Diversifying your business operations is a potential for every business.

The ideal win-win is to introduce a new line of business that:

…plays to internal strengths, and;
…provides sufficient enough demand to warrant the cost and effort of adopting a new business activity.

Misalignment with diversification is costly.

And is generally more likely to fail versus a well-thought out expansion project.

(Although, that is not always the case.)

Acquisition

Organic growth via expansion or diversification comes from within.

Internal resources mobilised to build a bigger or more diverse business.

But there is a quicker – inorganic route…

…to buy an existing business operation that does what you want to do – already.

An existing going concern has its attractions – mostly immediate cash flow from an existing customer base.

But it comes at the disadvantage of costing a lump sum business premium.

Plus, it can be a very intricate job of getting the new business to successfully transplant it into your existing portfolio of businesses.

This inorganic kind of business growth strategy is also filled with uncertainties and unforeseen problems from:

…hidden debt, inflated revenue to clash of company culture and incompatible software systems.

These in their own way can lead to a dampening down of the actual realised profits (and can even lead to losses) of your newly acquired business operation.

Acquisition is be approach with serious caution.

Benefit Cost Ratio

Either way, whether by expansion or diversification…

…what is the way of testing if your growth plan is a financially profitable one?

The answer for most financial professionals is the benefit cost ratio/analysis BCR or BCA.

What is BCR?

Benefit cost ration is exactly as it sounds. The relative amount of project cost vs. project benefit – expressed as a ratio.

Simple enough, however the one more technical side of the BCR is net present value (NPV).

Net present value

Go to Net Present Value Calculator

(Screenshot taken from “Business Plan Bonus“)

Further reading: https://www.investopedia.com/terms/n/npv.asp

Net present value is the adjustment of monies invested today to account for it’s future projected value tomorrow.

A major factor to include in such calculations is inflation.

The devaluing fact of life in this credit-based era.

The purchasing power of our money today, will be less tomorrow because of the rising cost of living lifted by the use of credit.

Why?

The cost of borrowing i.e. interest.

Usury is the practice of adding a rate of return to the lender at as a percentage of the principal sum lent on top of repayment.

A reward to the lender for affording the benefit to the borrower for using his money for a period.

If the essential to life houses we live in are mortgaged on usury, then suffice to say this will impact our general cost of living.

The inflationary effects of usury will be felt across the board. This is commonly known as the rise in the cost of living…

…expressed as retail and commercial prices going up constantly as the ripple effects of the cost of credit are absorbed and passed on by all involved.

Because of this, any future projection of income earned must (for prudence sake) include the cost of inflation too.

Within the context of a BCA benefit cost analysis – this cost (of monetary value erosion) is deducted away from future projected earnings to the percentage forecast.

i.e. a 4% expected inflation rate is deducted year on year from future earnings.

After this, a simple division calculation can be performed to determine how many times the project costs can be divided into the overall adjusted project benefit (profits).

The resulting ratio is known as the benefit cost ratio.

A ratio of over 1 would indicate that the project offers a financial reward for running it: Green light. Go.
A ratio of under 1 would indicate that the project does not offer a financial reward for running it: Amber or Red light. Slow down towards stopping or even a firm ‘Stop’.