Financial Perspectives

Muddling through just doesn’t cut it these days and never really did which is why one of the first things you should do when you’re starting a new business venture is to write a business plan.

You might think that you only need one if you’re looking for outside investment. Not so. A business plan is the route map for your business and even if there’s only yourself involved, you need to have that map around.

With that map, you have the signposts that you need to ensure that you’re going in the right direction and, more importantly, it’ll help you pick up on any problems early on when you’re a better chance to correct them. It’ll speed up your decisions too as it makes it easier to make the yes/no strategy decisions a lot quicker.

Don’t think that it’s something that you just do for the bank and then put in the drawer. A business plan is a living document. Things change and you need to take account of that as the years go by. For example, your competitors will surely change over the years and change how they do business too; you need to reflect that in your own plans.

Which is a very long way of saying that you’d be crazy not to take Trump University up on their free course “How to Write a Business Plan“. And, no, it isn’t a course just for us MBA graduates but is something for everyone in business or who would like to be in business.

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The actions that the American, British and European central banks have taken have all affected their respective exchange rates of course.

We’ve seen the pound move from a typical $1.50 to more like $2 these days and that’s obviously had quite a considerable effect on international trade between the two countries which has always been substantial. Although it’s clearly an advantage to tourists from the UK going to America clearly the move in the other direction has gone down substantially.

Within Europe the pound has gone from around 60p to the euro to more like 80p for a euro these days which, combined with the dramatic price increases in discount airline flights, has pretty much killed off British tourism in Europe this year.

But the impact on tourism is just one aspect (and a minor one at that) of the impact on the European economy. It might be great for the European tourists to have really cheap holidays this year but if the exchange rate continues at anything like the current level they’ll soon find themselves out of a job as their products are priced out of the range of export markets.

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When people think of moving to France their first thought as to how to generate an income is to buy a gite complex and rent it out to people from back home.

It sounds like an idyllic lifestyle, doesn’t it? You work one day a week and the rest of the week you can be sunbathing by the pool.

The snag is that you need to wash all the sheets and towels and carry out maintenance work during the week. OK, so two days work and five at the pool? In theory, you might get away with that though, of course, the guests will be using the pool too and, usually, expect you to do things for them like organise tours or the area, tell them all the best places to go and so on.

What’s frequently forgotten about in all this is the financials that go along with this lifestyle. From a typical six or seven person gite you can probably get around 700€ a week in the peak season. That size of gite equates to a small three bedroom house in size and, of course, amount of work to look after. In reality most people aim for a gite complex of around four or five gites. On the whole, you’ll eventually reach an occupancy of around ten weeks per year for the gites which translates into around 35,000€ a year of an income.

However, there’s the matter of expenses to consider. Bearing in mind that you only have four or five hours to reset the gite between guests you’ll end up hiring a cleaner to help you which eats into the income somewhat and you may need someone to look after the pool. There’s also the business of maintenance: unlike a normal house rental you’re getting a new set of tennants virtually every week and that tends to be quite hard on the furnishings so you’ll need to renew at least some items pretty much every year.

Oh, and don’t forget the taxes!

I’ll look at the normal alternative to this next time ie buying a B&B.

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