Question:
My husband and I are considering buying a Caravan Park in New South Wales. One that interests us presently is located in a National Park - the land and most assets are leased. It has 17 chalets, and about 140 sites. We would like to know what steps we should follow in assessing the profitability of the business, what information to request from the vendors and what professionals to engage to aid us to assess the information.

We are particularly unsure how to assess the leasehold aspect. We would like to do a preliminary assessment ourselves before getting professionals involved. What publications do you have, or know of, that would be of assistance to us in the purchase and running of this business?

Answer:
Obviously, your first step in assessing any business is to look at the accounts/books. While you can do this yourself, I would recommend you hire an accountant for an eventual thorough review.

You should also find out the history of the site, how much tourism there is in the area, visitors to the national park etc. Tourism NSW may be able to help you with information on entering the tourism industry plus reports on the estimated tourism for a certain area.
As far as leasehold is concerned, you need to find out which government organisation manages the land and for administration so you can find out if the government currently has any additional plans for the land or surrounding areas. You will also need to see a copy of the “lease” so you will know exactly what can and can’t be done on that land and what your responsibilities are. You should also find out when the lease expires, whether you are then able to extend it and if there are any conditions on selling the lease. The owners or government department should be able to help you with this.

At the same time, you should ask the owners why they are selling the business and check with the local government department in the area you are considering to make sure there are no future projects which could adversely affect your new business, such as a new highway which would take tourists away from the National park or a motel being built nearby etc.

In addition to assessing the business’ profitability, you also need to develop your own business plan to see whether it will be financially viable for you. Having a rough idea of the income the park currently generates will help in this regard.

Filed under: Starting a Business, Buying & Selling a Business, Legal Issues
This page was added on 21 January 2002, last updated on 24 October 2006.