Having a clear picture of what you want from owning a bed and breakfast will help you determine if the trade-offs still make it worthwhile
If you are like most people, there are three stages that you go through when trying to determine if owning a bed and breakfast is right for you. You may not recognize them all, because you didn’t get “stuck” resolving the questions at a certain stage.
These stages seem to apply to everyone - whether they are using their current home, looking for a new property or considering buying an existing B&B.
Here are the three stages, and the questions you need to answer to know if owning a B&B will bring you the income and fulfillment you are looking for:
Stage 1: Find out if you can have the life you want as B&B owner
Get really clear on what that life would look like and then determine if you have what it takes to be a success B&B owner under these circumstances:
- Do you have the type of personality to handle guest demands?
- Will the amount of work required still allow you enough time to do the things you want?
- Are you prepared to run your own business?
- Do you have the personal support you require to help you deal with this lifestyle?
I think the key to this step is understanding how much work it is going to be running a bed and breakfast. The best way I can explain it is to think about the amount of work you put into having a party – all the preparation and clean up required – and then think about doing that each and every day during peak season.
A lot of people don’t realize it, but the work doesn’t stop there – you also need to spend time working ON your business – planning, budgeting, marketing and learning new things – whether it’s technology, food and decorating trends, marketing concepts, etc.
Once you understand the amount of work you are dealing with, you will have to decide if all this work is worth the income you will be generating, and whether you will still have time to do the personal things you want to.
Here’s my trade-off
My B&B is located in a seasonal tourist town that attracts the majority of people between June and October. My goal for my bed and breakfast is to generate enough revenue to live off of and have some more time to do the things I want to do. My trade-off is that I am tied to my B&B for five months of the year to generate that income, but then I have seven months to do what I want. Since the kinds of things I want to do aren’t seasonal (I’d be in trouble if I was a golfer!) it really works for me!
Stage 2 – Do the research to make sure it will work
Once you are clear on the type of life you want, that will go a long way to helping you determine an appropriate location. However, you then need to make sure that this location will provide you the types of guests you want?
The most successful bed and breakfast owners are the ones who are smart enough to identify the kinds of people they want as guests – this is called target or niche audiences. The neat thing is that these people are generally people who are very similar to you! They have the same interests and are seeking the same things from your location that you are! When you have guests like this, you are comfortable and instinctively have a good feel for what they are looking for and can create a good connection with them. This type of situation will go a long way towards helping you achieve the personal fulfillment you were seeking by owning a bed and breakfast.
Once you have identified who these people are:
- Are there enough of your target group coming to the area that more accommodation is needed?
- Can you set up a bed and breakfast in that area?
- Do you have the financial resources to set up your bed and breakfast here?
If the answer to any of these questions is no, then you know you have to keep looking! (It took me two years to find the right property for my B&B)
Here’s my trade-off:
I had chosen Owen Sound as my ideal location. All my market research showed that the kinds of people I wanted as guests came to the area, and while it was a seasonal area, it still had a number of things to draw people in year-round. However, there was no way I could afford the type of property I wanted. Therefore, I chose to keep looking and found the perfect property in Parry Sound. The trade-offs? Parry Sound is about one-third the size of Owen Sound; it truly is seasonal and doesn’t have all the social and cultural activities I was personally hoping for. BUT, I was able to afford the type of house in the location I wanted and can still meet my income goals.
Stage 3 - Create the road map for your business
If you need to generate a specific amount of money from your bed and breakfast, then having a business plan is critical.
A business plan will help you to answer the following questions:
- How much money will I need to set my bed and breakfast up?
- How will I get people to stay at my bed and breakfast?
- When and how much money can I expect on a monthly/yearly basis for the first three years?
This is the document that utilizes all the research you did in Stage 2 to make you feel comfortable with the numbers you are creating.
A business plan is critical if you need financing. When creating your plan in these circumstances, it is as important how you position the information you provide as is the actual information. There are key factors that lenders are looking for – strong, quantifiable research based on reality, not what you think and why and how your business can achieve the financial goals you are projecting.
The trade-offs of not having a business plan?
If your projection the amount of money you planned to generate from the bed and breakfast is off, you won’t know why. In my case, I surpassed my first year’s revenue projections and was able to make as much revenue as the other well-known B&Bs in the area – without having an established reputation. This meant that I knew I had a pretty good chance of being successful in the long-term., so I went ahead and made the next major investment in the property – replacing all the windows in the house.
If you need help with some of the stages and questions you need to be asking yourself, I rRecommend you listen to the free recording “3 questions everyone who wants to own a B&B asks – or should” (Button on home page of web site)
If you are ready to move forward and want my guidance to help you with your current stage, please check out the courses I offer.