A prospective park owner contacted us to ask “My husband and I are looking to buy a campground. Is there any way you would be willing to share with me usual yearly expenses to run a campground not numbers just a list like insurance, electric, permits etc?” The question is absolutely valid and brings up the additional questions “Do you know what it costs to run your park?” and “do you keep a buffer for un-expected costs?”
Running a campground or RV park brings a mix of factors that will drive your expenses. While some parks are generally inexpensive to operate others are incredibly pricey. Factors such as location, zoning, competition, level of amenities, volume of guests, seasonal impacts, and availability of resources all play a part in driving your costs. Our answer to the question posed by the prospective park operator was: “It won’t be complete because every property is different but here you go (list of expenses):
- Land: Lease or mortgage payments
- Taxes: Land, buildings, income, sales
- Utilities: Water, sewer, electric, cable, internet
- Maintenance: Land, building, utilities, frontage, signage
- Employee: Maintenance, Customer Service
- Marketing/ Advertising: Local, national, print, digital, website, social media
- Opportunity: Can this money create a better return somewhere else. Also time is important consideration, are you running the park?
- Bureaucratic: Dealing with city, county, regional players (and complainers)
- Legal: You will get sued at some point by someone: make sure the next is very good.
- Insurance: Property, liability, disaster
- Equipment: Operations, maintenance, sites
We posted this question and response to the Exclusive Owners Group on Facebook (click here) and another owner responded “Expenses are totally different from park to park. What needs repair this year won’t next year. Example: I had to get 3 different sections of sewer repaired because of roots. Just the other night a guy plugged in to one of my 50 amp sites with a bad plug… fried my box. I had my electrician come out. Turns out prior owners had wire to small for 50 amp. So we are rebuilding correctly from the power pole to the site. Trench, conduit, meter box, electric box, wire. It can add up.
Changing Costs Can Change Income
Big news was made last week when the National Park Service announced a proposal to raise entry fees to 17 of the most popular parks in the country. If you look at the details they are really requesting a demand based pricing schedule to cover… wait for it… additional expenses. Due to the nature of public agencies it is exceedingly difficult for public agencies to reduce expenses leaving them with only one route to break even… raise their fees. What about privately owned business?
Private businesses have a serious advantage over public agencies in this regard. Private parks are capable of making drastic changes in their cost structure to grow revenue without touching rates. Before being able to make these changes private park operators need to analyze their past expenses, categorize those costs and then budget going forward. If the process seems over-whelming we suggest speaking with your CPA or tax professional who will be able to aid you in this analysis.
Knowing Your Costs is Vital
Operating a business has costs and those costs are incredibly important to the viability of your enterprise. Given the above list of costs are we missing anything? Do you do anything to protect yourself from uncontrolled cost increases?
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