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How to Start an RV Park

Overview

How to Start an RV Park

Recreational vehicles are a popular way to vacation, whether for a weekend getaway or a road trip across the country.  If you love to RV, opening an RV Park could be an opportunity for you to use your passion to make a living with your own business.

Business Overview

An RV Park provides sites for RV drivers to stay for the night for a fee.  Sites have power, water, and sewer connections for the RV.  Some also offer sites for tent camping and amenities such as Wi-Fi, barbecue areas, pools, restaurants, and more.

Industry Summary

According to IBIS World, the Campground and RV Parks market size is $6.2 billion as of 2021, up 13.7% from 2020.   Over the last five years, the growth rate has averaged -1.9% per year, but this number was heavily impacted by a large decline in 2020 due to the pandemic.  Camping is popular with a large number of people in the United States.   According to Statista, in 2017, 41.8 million people participated in camping.

Related Industries

Campground

The popularity of RV camping is due in large part to the fact that it is much less expensive to rent an RV site than other forms of lodging.  The industry is expected to grow as the pandemic winds down, and people are ready to get on with their favorite activities.  According to RVtravel.com, 53,000 new campsites will be constructed in 2021 to meet demand.

Target Market

Your target market will be RV travelers, as well as other campers if you choose to have tent camping sites in your RV park.

Skills, Experience, and Education Useful in Running an RV Park

There are several specific skills that you will need to open an RV park.

  • Experience.  Experience traveling to RV parks is valuable in order to know how they operate and what they offer.
  • Knowledge of RV Parks.  You should do extensive research to find out the logistics of building an RV park, including the power, water, and sewer connectivity.
  • Business knowledge and experience.  You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
  • People skills. You’ll need to build rapport with your customers so that you retain them as customers and keep them coming back.

Checklist for Starting an RV Park

Starting an RV park can be an incredibly rewarding experience, but it’s important to make sure you’re prepared for the challenges ahead. Use this checklist to help get your business off on the right foot.

Step 1: Write a Business Plan

After coming up with the idea, the next step in starting your RV Park should be to write a business plan.  The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will b, and your ongoing expenses.

Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you to think through all the aspects of the business, and then serves as a guide as you begin.

Related: How to write a business plan

Step 2: Name the Business

Finding the perfect RV Park name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, it also has to be available to use. You can check your state’s website to see if the name is available and register your name.  Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.

Step 3: Form a Business Entity

A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a rv park, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC
 

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular LLC formation services include:


IncFile - $0 plus state fees & free registered agent for 1 year!

IncAuthority - $0 plus state fees & free registered agent the first year!

ZenBusiness - $49 plus state fees & free registered agent for 1 year!

Step 4: Select your Location

Location is critical for an RV park.  Successful RV parks should be near local attractions, such as a state park, national park, or hiking trails, and have convenient highway access. The only problem is that the better the location, the more expensive it will be.  You also need to find a location that will also be favorable to be zoned as an RV park.

Be sure to consider the varying types of RVs and trailers your guests will have and be sure to have different sized spaces to accommodate them.  Some guests will have large motorhomes and 5th wheels requiring pull-through spots, while others will have smaller trailers and popups.  Also, tent campers will need some space too, so don’t forget about them.

The facilities must be clean, and perhaps most important, having clean restrooms and showers is critical to having customers return to your park.

As the internet becomes more important in today’s connected world, offering good wifi is a requirement for many RVers. Even though this is an additional cost to set up, customers will be more than willing to pay extra for it.

With land prices likely being the largest expense and the price per acre varying significantly depending on the location and access to utilities, be sure you have ample space. If funds are tight and you can’t purchase all of the property needed, consider making an agreement with the landowner to give you the first right of refusal if someone else wants to buy the joining property.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

RV parks will need to obtain several permits and licenses to operate. The costs for permits will vary by municipality, and some will limit the number of sites. In addition to the permits, there will likely be regulations on utilities, wastewater disposal, and campfires burning as well.

In addition, there are also general local, state, and federal business registrations an RV Park may need, such as a sales tax permit and an Employer Identification Number.

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start an RV Park is another.  In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

Step 8: Get your Marketing Plan in Place

An RV park will need to set aside a budget to cover marketing costs on a continuous basis. Common marketing techniques for an RV park include social media marketing and online advertising, as well as road signage.  Developing a website can be a significant expense, but it can also give your RV Park greater visibility online.

Related: Low-cost ideas to market a new business

Every business is going to need a logo. Make a professional logo in no time with the free Canvaa logo maker!

Step 9: Get Business Insurance

There are several types of insurance to consider when starting an RV park. A few of these include:
– General liability insurance can help protect you from third-party claims of bodily injury and property damage.
– Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.
– Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.

The costs to insure an RV park will vary depending on a number of factors. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.

Related: Common types of insurance a business may need

Step 10: Hire Employees

You will need employees to help you run your RV Park.  Make sure that you select people with appropriate experience.

In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system for your RV Park is critical to the long-term success of your business.

Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up the accounting for your business

The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:

- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.

Find bookkeepers in your local area or use a service like 800Accountant.

How much does it cost to start an RV park?

Here are some of the typical costs you will face when you open an RV park.

– Land – $1,000 – $20,000 per acre
– Campsite preparation (leveling, gravel, concrete, septic tank, dump station, sanitary facilities, picnic tables, bathrooms, play areas, swimming pool, etc.) – $50,000 + depending on the location’s size and amenities.
– Utilities: connections with 15-amp, 30-amp, and 50-amp and outlets for 110/120 volts. – $1,500 and $3,000 per site.
– Zoning applications and permits $1,000 – $5,000
– Insurance $600 – $1,000

How profitable is an RV park?

If you rent your sites at an average of $50 a night and your sites are rented 70% of the year, you would make $12,775 per year in revenue per site.  If you have 50 sites, you would make $638,750 in revenue per year.

There is a seasonality factor for most RV parks, with the time between Memorial Day through Labor Day being the busiest. You will need to adjust your prices based on the season, and plan for downtimes.

Additional amenities such as pools, playgrounds, and laundry facilities can be huge selling points and help command a higher price per night if the budget allows.

Are there grants to start an RV park?

It’s extremely rare to find a grant to start an rv park business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.

Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.

What is the NAICS code for an RV park?

The NAICS code for a rv park is 721211, which is classified under Recreational Vehicle Parks and Campgrounds.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code and how to find yours

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