Ask the Experts – Financing Your Park

 Adventure Parks, Business Planning  1 Response »
Oct 042017
 

2016-05-12 09.51.47

This article originally appeared on Adventure Park Insider

Question: I am doing my homework on how to obtain financing for my aerial park; can you suggest any terms or keywords I should use when talking to lenders? Anything I should avoid saying?

There are two primary sources of funding we typically see for aerial adventure parks: banks and private investors. Each one will want to know some keys pieces of information from you.

Banks will want to know about personal guarantees, collateral, and of course they’ll want to see your business plan.

Personal Guarantees: Unless you have other profitable businesses, a bank will want to get you and any private investors to commit to being responsible for the loan should the business default on the loan.

Collateral: Real estate purchased for the business and any structures added to the property are regularly used as collateral. Unfortunately, the aerial park itself is often not considered for collateral, since the bank will not be able to get full value for poles and cables that are repossessed. The equity available in your home is oftentimes included for collateral, also.

Business Plan: A well thought out business plan is critical for a bank to take you seriously. It will detail your research into the marketplace, how you will operate your park, and highlight the expertise of your team. It also details the financials of the business and how the business will make money. Private investors are a bit different from banks and will want to know a few more details. These details include your expected ROI, EBITDA, and your valuation of the business.

ROI: Return on Investment. This ratio is expressed a few different ways: The first is in the number of years it will take to get their initial capital back (typically, private investors want a return within three years). It can also be represented as an average of what percentage of their money is returned on an annual basis (a three year ROI works out to 33.33 percent, annually).

EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. This calculation is essentially a way to measure performance without having to factor in financing structures, accounting decisions, or how the business is taxed.

Valuation: the current value of the business. As a start up company without any operating history, the value of your business will most likely be whatever your start up costs are. Thus, if you spend $1 million to open the business, it is valued at $1 million to a potential investor. Now, should you be anticipating a higher than average return on investment, you may be able to get a higher valuation.

No matter what direction you end up going—banks, private investors, or both—you are going to need to know your numbers inside and out! The more prepared you are, the better your chances of obtaining funding.

The worst thing you can say is “I don’t know.” A better response is, “I’ll find out and get you an answer, ASAP.”

Good luck to you, and I look forward to climbing in your new park!

Key Numbers for your Adventure Business – Break Even

 Business Planning  Comments Off on Key Numbers for your Adventure Business – Break Even
Sep 222016
 

As you grow your business, there are several metrics you should be tracking to see how your business is doing. Here is one that is important to know:

Break Even

Break Even is the point where your business begins to make a profit. In the adventure business world, we typically use the number of visitors as the defining break even point. In other words, we need X number of people to come to our aerial park before we start making a profit. Here is an example of a break even chart and graph.

break-even-example

There are three elements to calculating your break even number. The first is your fixed cost. Fixed cost is the money you spend per year whether you are open for business or not and includes things like management salaries, utilities, marketing, and so forth. The number used is the yearly total of all of your fixed costs.

The second number is your variable costs. These are the costs that fluctuate as you get more guests. These can include liability insurance, guide or monitor pay, credit card service fees, etc. Variable costs are represented as the total cost per visitor.

The last number is the unit price. This is the average price you are charging for each participant. Be sure to calculate any discounts or childrens ticket prices into your figure.

As you look at the graph above, the point at which you start making a profit is where the revenue line (green) crosses the fixed plus variable cost line (blue). So in this example, with an average ticket price of $47, we would need about 13,000 visitors to break even.

Break Even is an important number to know for any Feasibility Study or Business Plan!

 

How feasible is your new adventure business?

 Adventure Parks, Business Planning, Zip Lines  Comments Off on How feasible is your new adventure business?
Aug 182014
 

2014-06-26 11.13.27

One of the most common questions that we get from prospective clients is whether or not their new business will be profitable. Most potential business owners want us to come to their site, evaluate their business model, check out the land, scope out the competition, crunch some numbers and give them a 100% thumbs up or thumbs down.

Easy, right?

Well…it’s not always that simple. There are a variety of factors that we take into account, any of which could be a make-or-break for the business. What we have done is devise a point-based system that will help determine the success of your business (and no, no one has ever scored a perfect 100%!)

Here are some of the factors that we look at, and questions that any new business owner, whether it is a zip line tour, aerial adventure park, climbing gym, or some other type of adventure business should be asking:

  • How far away is your land from the nearest population or tourist center?
  • How much space does the land have for your proposed attraction, and for future expansion?
  • Is the land currently zoned for commercial use?
  • Does your management team have adventure business management experience? What about other business management experience?
  • Who else do you plan to have on your team, and how much relevant experience do they have?
  • Is your project already capitalized or do you need investors? If so, are the investors already in place?
  • How much of a financial cushion does the business owner have? Are you able to go several months without generating revenue?
  • Who is your target market and where are they coming from?
  • Who are your competitors, and how high-quality are their services compared to your projected business?

If you see a question that you are not sure how to answer, or if you want to know your feasibility score, contact us at (888) 553-0167 or email us at info@strategic-adventures.com to learn more.

We look forward to hearing about your new projects!

http://www.strategic-adventures.com/content/feasibility-studies

Facilitated Growth

 Business Planning, Marketing  Comments Off on Facilitated Growth
Apr 082013
 

My wife Michelle and I have put together a unique training opportunity that we are hosting in Golden , Colorado April 18th and 19th and we would love for you to join us! Here’s what we’ve put together:

The Business Development Track by Paul Cummings includes:

1. Marketing the Experience – We all know that marketing is important, but how do we find the time for it amidst everything else that we have going on? This session will explore tools and techniques to help you communicate your message more effectively, and to the right people. The techniques that you learn will ultimately help save you time and money by spending those valuable marketing dollars in the best way possible.

2. Selling the Experience – If you run a business, chances are you already have some sales experience. Do you have a process in place, or are you just “winging it?” Come learn how to develop a real sales process that yields long-term clients, and find out what is the most common “make or break” for businesses.

3. Starting your own Business – What does it take to start your own business? What are the common pitfalls and less known obstacles to creating a successful venture? I’ll show you!

4. Growing your Business – Whether you are running a successful operation or struggling to make a profit, chances are your business could use a bit of fine-tuning. This interactive discussion will target the areas of your business that most need adjusting so that you leave feeling well-equipped to make the changes you need, and take your business to the next level.

Maximum of 20 people in each session.

The Group Experience Track by Michelle Cummings includes:

1. Awesome Icebreakers & Energizers- Come prepared to play and learn a ton of interactive activities in this action packed workshop. The adventure based activities are suitable to share with groups ages 12 and above and group sizes of 4 to 50+ participants. Activities that keep your group meaningfully active and engaged throughout their experience. They can be used together or to break up the day. Build your bag of tricks in this action packed workshop.

2. Effective Debriefing Tools and Techniques- Are you good at the games but not so good at the debrief? Do you ask questions and get blank stares from your participants? This workshop will focus on 10+ effective debriefing tools that are simple and easy to use. We will discuss nine different techniques for processing to help liven up your debriefing circles. Learn simple and effective ways to process experiences so they relate to real life and future learning. In this interactive workshop participants will experiment with an interesting array of prop based methods that lead to metaphorically rich reflection. These tools from the book “A Teachable Moment” are easy to duplicate or make on your own.

3. Conflict Resolution/Bullying Prevention- Walk out of this workshop with a variety of tools and techniques for dealing with conflict, bullying and discipline issues. Apply your learning immediately to help your participants understand that through collaboration, encouragement and an appreciation of differences in one another’s lives we can defuse tense situations and de-escalate conflict.

4. Best Problems Solving & Communication Activities- Michelle’s most favorite activities and new ideas!

Maximum of 80 people per session.

Specifics can be found on the Training Wheels site at the following link: Facilitated Growth

We hope you can join us!

 

Paul

 

The Importance of a Business Model

 Adventure Parks, Business Planning, Value, Zip Lines  Comments Off on The Importance of a Business Model
Mar 202013
 

It’s no secret that one of my favorite shows on television is Shark Tank. My other favorite is Hell’s Kitchen, but that’s a different blog post… On Shark Tank, business owners present their companies and ideas to a panel of successful investors by doing a quick 3 minute presentation before the “Sharks” start asking questions.

The first question is almost always “what are your sales so far?” In other words, are people buying what you are selling? If the answer to that question is a very low number, the sharks ask why no one is buying yet. If the answer is a large number, the sharks will wonder why the business owner is seeking more funding. What they are really trying to discover is what business model the owners are using. How is the business engaging clients and making money?

A business model as several key components that you must consider whether you are starting a new business or looking to grow an existing one. They include:

  • Your Target Market
  • Your Value Proposition
  • Sales Channels
  • Client Engagement Strategies
  • Key Activities of the Business
  • Key Partnerships
  • Key Resources
  • The Cost Structure
  • and Revenue Streams

If one of these components are missing from your business plan or strategic plan, you are not going to be as successful as you could be. One recent contestant on the show recently stated to the sharks when they asked about her business model “We don’t have a business model, we’re making this up as we go!” It should be very telling that all of the sharks lost interest the second that came out of her mouth.

What is your business model? Could you explain it to someone in a few minutes?

Paul

(My 10 year old typically watches the show with me. Last week I had missed the intro of one of the presentations and I asked him what was going on with the proposal. He replied “He’s been in business for six weeks, has $10,000 in sales and is giving his company a valuation of $500,000. I think he’s going home disappointed.” That’s my boy!)

http://www.strategic-adventures.com/content/business-plans

4 things investors want to see in your zip line business plan

 Adventure Parks, Business Planning, Zip Lines  Comments Off on 4 things investors want to see in your zip line business plan
Jan 222013
 

When you are writing your business plan, or having someone write it for you there are four key elements that you want to be sure are detailed in your plan. If investors don’t see all four of these elements, your chances of being funded are greatly diminished.
1. Detailed Financials – This should go without saying, and yet it is surprising how many plans we see here at Strategic Adventures that have minimal financial data. You need at minimum a Profit and Loss Statement, a Balance Sheet, Cash Flow Statement, industry related Business Ratios, and a detailed Start Up Cost Analysis. You should also be prepared to have your personal financial statements and tax returns reviewed.
2. A Business System – Investors also want to see that you have a well thought out method of operating. How are you going to run the day to day business? What marketing tools will you be implementing? Who is responsible for doing what in your business?
3. Experience – You need to show that you and/or your partners have experience in either running a business or in the industry you’ll be operating, preferably both. It may be time to brush up that resume!
4. Skin in the game – What level of financial commitment are you personally making in the new business? Investors don’t want to be in the position of holding all of the responsibility if the business hits a rough patch. They want to be sure that you won’t just walk away!

So as you’re preparing to make your plan or if you think you are ready to present a plan you’ve written, be sure you are covering the above points in as much detail as possible.

Paul

P.S. Are you getting a bit overwhelmed with writing a plan on your own? We can help! Call our office today at 1-888-553-0167 for a no cost consultation.

http://www.strategic-adventures.com/content/business-plans

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