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Business Plan Sanity Check


penfoldisking

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Hi,

We're looking for some comments/sanity check on our plan to buy and run a Gites Complex in Central/SW area of France.

We are a married couple (kids grown up and left) mid 40's & 50 who are looking to leave the rat race in UK but don't want to retire yet.

We have relatives living in France and we have lived in Europe before.

We plan on buying an existing Gites business (upto 450,000 euros) from the sale of our 2 properties in UK (1st just on the market) in the next 12 -18 months. So no mortgage to worry about. We have a private income/pension of 20,000 Euros per annum.

With the uncertain nature of bookings are we going to be able to survive?

(Sensible) Comments please.

Also PM me if you have any good links of property agents/private sales of gites complexes.

Cheers

 

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We're looking for some comments/sanity check on our plan to buy and run a Gites Complex in Central/SW area of France.

Consider LOCATION very carefully

We plan on buying an existing Gites business (upto 450,000 euros)

This may limit the location  in which you can afford to buy

Bon courage

Edit

I have sent you PM giving a link to a website that has gites for sale but the prices start above 500,000 euros.

Some of the properties have been on the market a long time and as Frogslegs says the business has reached saturation point in some areas

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You actually sound sensible!

Word of advice...don't create another gite business as it is saturation point here in the Poitou Charentes. You will find many gites for sale for various reasons some at knock down prices. We enjoy being an owner and have increased bookings from 7 weeks in one gite to 44 this year between the two.

We have no pension to financially cushion us so making a success is obligatory.

Choose the location well, advertise, spend at least £500 in the first year, choose a good website designer to build you a site, be prepared to work, and smile.....all the time!

Bonne Chance

 

 

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It sounds like you've already made  some good assumptions and are asking the right kind of questions.  I prefer to work backwards so let's assume that your aim should be to have around 40,000€ pa to live off which should give you a reasonably comfortable life as long as you don't want to make too many trips back to the UK. So, as you already have 20k€ income from your pensions, you only need to earn another 20k€ from your gite lettings.

In order to make a profit of around 20k€ you really should be looking for a letting income of about 30k€ which should be achievable if you have the right properties in the right location. At this sort of income level, you will need to register as a business so don't forget you will need to budget for those nasty cotisation payments etc. but this shouldn't be prohibitive.

Location is all important in your search for the right property. Anything within an hour's drive of any of the ferryports will provide you with the greatest number of weeks rentals but failing that, look in popular tourist areas which are well served by the low cost airlines.

Gite holidays in France are no longer a cheap holiday option and so many of those people coming here these days are coming because they choose to and want something of a higher quality than the traditional rural gite.  You can look for bookings from many nationalities but it is the Brits who will pay the most to rent a good property. A single large house which sleeps up to around 14 or 15 people, which looks something special in photographs, has a heated swimming pool, quality furnishings and plenty to do for children could earn you your 30k€ rental income all on its own if marketed properly (do not underestimate the amount of money you will need to spend on marketing).

Your best bet is to find somewhere which is already up and running. Only consider places which can show you accounts detailing income and expenditure over a three year period and beware of that greatly overused word "POTENTIAL" which usually means "we have tried to make a living out of this and failed but you might fall into the same dream trap that we did"

A good starting point for finding gite complexes for sale would be http://www.francepropertyshop.com/ or http://www.gitecomplexes.co.uk/

Good luck.

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[quote user="Eslier"]
In order to make a profit of around 20k€ you really should be looking for a letting income of about 30k€ which should be achievable if you have the right properties in the right location. At this sort of income level, you will need to register as a business so don't forget you will need to budget for those nasty cotisation payments etc. but this shouldn't be prohibitive.

[/quote]

I agree with pretty much all that Eslier says, except that you should not have to register as a business.  Since you have a reasonable income already, your earnings from lettings will be allowable as earnings from a non-professional activity.  In other words it's a sideline. 

The French tax system offers you the opportunity to take this Micro-Bic option and pay a very reasonable amount of tax on your non-professional earnings from letting furnished gites, up to a ceiling of a bit over 70,000 euros (I forget the actual limit).  I think this started as a concession to the farming community who once owned nearly all the gites.  The record keeping required is minimal, the declaration is very simple, and best of all, they let you keep most of your money. 

I would certainly suggest you talk to your local Hotel des Impots (Tax Office) and see if this option applies to you, before even thinking about registering as a business.

Patrick

Edit:  The official Gites de France figures for average occupancy are 16.45 weeks per year.  I suggest you use this figure in your forecast model and see if it works for you.  In my view you should be able to do much better, in the region of 20 - 30 weeks depending on where you are, provided you do the right marketing and maintain high standards.

   

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[quote user="Patmobile"]

I agree with pretty much all that Eslier says, except that you should not have to register as a business.  Since you have a reasonable income already, your earnings from lettings will be allowable as earnings from a non-professional activity.  In other words it's a sideline.

[/quote]

Not so I'm afraid.  If your expected earnings are 23000€ or more (September 2006 figures) OR if the income is more than 50% of your total earned income then you must register as a business at the Chambre de Commerce.  In this case both of those conditions apply so registration is obligatory whichever way you look at it.

[quote user="Patmobile"]

The French tax system offers you the opportunity to take this Micro-Bic option and pay a very reasonable amount of tax on your non-professional earnings from letting furnished gites, up to a ceiling of a bit over 70,000 euros (I forget the actual limit).  I think this started as a concession to the farming community who once owned nearly all the gites.  The record keeping required is minimal, the declaration is very simple, and best of all, they let you keep most of your money. [/quote]

The "micro bic" is a "tax régime" and not, as it is commonly misconceveied to be, a form of business registration.  Once you have registered your business you will have the option to elect the most efficient tax régime for you.  This may well be the micro (current turnover limit 76k€ for a gite business with 32% of turnover becoming taxable ) but it is also quite possible that you could be much better off in the réal régime. This is where the advice of a good French accountant will be invaluable.  There are many people who are drawn to the micro because of its simplicity when they could find themselves paying out much less under a the réal where all costs (a lot more than you might think), can be offset against income and capital investment (set-up costs and renovations etc.) can be written off over a period of years.  A good accountant will save you far more than you pay him or her!

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Thanks to everyone for the advice so far. It confirms that it should be possible providing we do our homework on the business we buy, find a good location and spend money advertising.

The one point we hadn't really gone into is the point raised about getting a good accountant. Is it easy to find an english speaking accountant ?

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Yes, you shouldn't find it too difficult once you know where you will be living.  If you ask around the various forums you will get recommendations. Accountant fees in France are much less than you would expect to pay for a similar service from a UK accountant.  Your accountant will take care of all the business registration matters for you and this will also get you straight into the French health system without the need for uk "E" forms etc.

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Working on the basis of them operating as a micro bic - surely if they already have an income of 20,000 euros, this would be well over 50% of their gite income (once you have taken off the approximate 68% abattement). Unless they had a turnover of around 65,000 euros from the gites, of course.

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[quote user="ltf"]Working on the basis of them operating as a micro bic - surely if they have an income of 20,000 euros, this would be well over 50% of their income (once you have taken off the approximate 68% abattement). Unless they had a turnover of around 65,000 euros from the gites, of course.

[/quote]

No - it is the gross turnover figure which counts.  As I said before, to "take home" around 20k€ they would need to aim for a turnover in the region of 30k€ and this is the figure (60% in this case) which is used to determine whether one needs to register as a business. This amount, in any case, would require registration even if it was less than 50% of income.

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Honestly, it is the net income that counts in the case of a micro-bic, not the gross. So you take the income after the abattement. Anyway, this is an old chestnut, there is no text that states obligatory registration at the Ch de Com if you only let accommodation and offer no extra services, even if your gross earnings are over 23000€. You can be classed  as non professional in this way up to the micro-bic limit of 76300€, without having to register there.

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The trouble is that there is so much misinformation flying around on the ex-pat jungle drum network, as is demonstrated by ltf's incorrect beliefs.  The best way for anyone to ensure they are doing things properly is to seek the advice of a French firm of accounts who (most importantly) have experience in this area. For anyone in the north west area of France I can thoroughly recommend (and others on this forum have already recommended this firm in the past):

http://www.account-revision.com/missions-uk.html 

(This link is to the English version of their website)

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[quote user="ltf"]Honestly, it is the net income that counts in the case of a micro-bic, not the gross. So you take the income after the abattement.
[/quote]

ltf - your post is incorrect regardless of what you understand from your accountant.  All you have to do is read the tax forms that you're sent to know that it is  the 'chiffre d'affairs' (turnover) that is the criteria for the micro regimes. Bulletin 991K 'Benefice Industriels et Commerciaux' each year informs you that you can benefit from the regime micro. It also carries all the information.

Steve

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Steve,

If you actually bothered to read my post properly and Eslier's point I was referring to, you will see I was writing about the supposed requirement for Ch de Com registration, not the earnings level that entitle you to be in the microbic regime which is based on turnover.

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[quote user="ltf"]Steve,
If you actually bothered to read my post properly and Eslier's point I was referring to, you will see I was writing about the supposed requirement for Ch de Com registration, not the earnings level that entitle you to be in the microbic regime which is based on turnover.
[/quote]

fair enough ltf, but it wasn't too clear.

Likewise 'earnings' above. It should read 'the turnover' level that entitle you to be in the microbic regime which is based on turnover. 

Steve

 

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[quote user="Sc"]

[quote user="ltf"]Steve,

If you actually bothered to read my post properly and Eslier's point I was referring to, you will see I was writing about the supposed requirement for Ch de Com registration, not the earnings level that entitle you to be in the microbic regime which is based on turnover.

[/quote]

fair enough ltf, but it wasn't too clear.

Likewise 'earnings' above. It should read 'the turnover' level that entitle you to be in the microbic regime which is based on turnover. 

Steve

 

[/quote]

Yes it should have, but to repeat the same word twice in one sentence wasn't very good use of English and didn't really make sense either.

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Tax is one thing, Registration another. Are you saying that you can earn up to 76300 euro without registration? I dont earn anywhere near that but I have to register,I was under the impression that to earn money as self employed person here in France you had to have a siren/siret no. If what you say is true then nobody would be paying any cotisations at all and we would all be well off.????

Mel

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What I was talking about was the letting of furnished accommodation 'locations meublées' no other business. Rightly or wrongly is still regarded as being largely non professional. The question is whether it is, or not, complusory to register at the ch de com and there is no text that says it is (at the moment). This may change in the future of course - it did so recently regarding trading on E bay.

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One rule of thumb that seems to be applied (though there is no universal rule) is that if your chambres d'hôtes or gîtes are a part-time activity additional to another business or employment then you do not have to register separately (though you do of course have to declare the income). If they are your main source of income, though, you may need to register.

The micro limits vary according to the nature of your business. If you buy materials or stock your turnover will be higher than if you merely provide a service and the different micro limits reflect this. Micro is not always the best option, even if you have a low turnover. It can sometimes prove more cost-effective to be on the regime réel even though this means producing full accounts. This probably would not apply to chambres d'hôtes, but it is worth bearing in mind.

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I Quote from "le guide du créateur tout savoir tout connaitre" by gite de france

Les propriétaires exerçent des activités de tourisme vert à titre professionnel(principal ou secondair) sont tenus d'acuitter des cotisations sociales sur leurs revenus.

Tel est le cas des agriculteurs ou des personnes inscrites au registre du commerce au titre de leur activité touristique.

 Make of it what you will.

Mel

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We have a private income/pension of 20,000 Euros per annum.

With the uncertain nature of bookings are we going to be able to survive?

Hang on a minute, am I the only one on this forum who thinks that 20K euros per annum is enough to survive on over here? [8-)]

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