Bed and Breakfast are typically found in historic homes. However, with the never-ending fruitions in the hospitality industry, B&Bs have also evolved and found a place in non-traditional buildings, high-rises, cattle ranches, dairy farms, countryside homes, hill stations and even on highways. If you like innkeeping and if you have an abandoned home perched by a riverside, you could convert it into a profitable bed and breakfast for tourists, travelers, wanderers, hikers, and many other people.
Starting a bed and breakfast is a great idea if you want to beat your regular job. You could start this as a side business and move full time once you are confident enough. In this blog, we will share with you how to start a bed and breakfast and run a profit.
First Know What You Are Getting Into
A Bed and Breakfast is a beautiful combination between the comforts of home and ambiance of luxury hotels. The service offered in B&Bs are extremely personalized, something that you at in your home. They are not as huge as hotels or resorts. They are usually big houses with four to ten guest rooms, a kitchen, and a dining hall. Additional amenities and facilities are secondary leisure.
Unlike hotels, or clubs or resorts, owners of B&B live on the site and usually perform many roles, such as of the housekeeper, caretaker, cook, food server, manager, guide and so on.
As a Bed and Breakfast owner, you will have to interact with your traveling customers, greet them in, and invite them to your abode, exactly like how you will extend your warmth to your guests at home.
You will have to treat your guests with personalized goodies, special services, such as a glass of lemonade after the guest returns from a long hike, or a plate of freshly baked cookies for a good conversation. You may also cook what they ask for or what they choose from your list of the menu option.
The food that you serve will be completely home-cooked and nothing fancy. You can serve it in the common dining hall or if the guests prefer, then to their rooms.
What Will You Earn?
Although the average number of occupancy has increased commendably in the last five years, including the number of available properties and room prices, we would like to remind you that bed and breakfast are seasonal and not an extremely high income grossing industry. Your profit will largely depend upon the number of guest rooms you have, the season, your locality, your popularity, and your promotions.
Unless your location is extremely famous for tourists or big events, you will hardly experience full occupancy round the year. However, you can do things to generate off-season traffic, such as using special tactics to invite people over the weekend.
Bed and Breakfast business is not for everyone. You need to be active, run the operations, and be the administrative officer. You need to have social skills, negotiations skills, be flexible, and be persistent to run a B&B business. Most B&Bs are family run. Therefore, before you start, your business plan, think about it, talk to your family, and then get going.
How Can You Take Ownership of a Bed and Breakfast?
Basically, you can choose between two types of ownership for establishing your Bed & Breakfast. You can buy the property and be the owner or you can be a renter
Become an Owner
If you have a family property that is lying unoccupied in a very famous location, you could use that for your business. Most bed and breakfasts are unused homes turned into a business. Owning a property clearly has many benefits. If you have mortgaged, you can still earn profits from your business once the loan is paid off.
The bigger part of your income from your property will be your profit. What’s more, once you are done with your business and when you plan for retirement, you could sell the property for a better price as well.
However, with ownership come responsibilities and duties towards your property. For instance, you will have to bear the repair and maintenance cost, you will have to pay the bills, such as insurance and taxes and if the mortgage is too high, it will take some time to pay it off. So, you have to maintain a bank balance that is more than the EMI of the mortgage. All these may or may not affect your budget. If your business fairs well, you will be able to break even within a year and a half.
Become a Renter
Or, you could rent the property and run this business profitably. You won’t have the responsibilities of the owner, like pay taxes, pay insurance or pay for maintenance, neither will you have to pay any mortgage.
On the other hand, you won’t be owning a permanent asset, and as long as you run the business, rent would be part of your expenditure. In the worst case, you may have to leave the property if you do not have a proper renewal agreement or if your rental agreement is over. This means, even if your B&B flourishes, it will have to shut down abnormally. However, you could take precautionary measures, such as negotiate for a longer rental agreement or lease the property for a couple of years.
Building a good rapport with the property owner may also help to an extent. You could also make a deal with the owner, like agreeing to pay a certain percentage of the profit if the owner allows refurbishing the place to suit a B&B.
Define Your Property
You have to define the characteristics and aesthetics of your property. You could make your B&B a historic place to stay. Historic-type of properties attracts more clients and travelers. Although it requires more work, it pays off better than other types of B&Bs.
If you want to go with a historian style, you need to decide which culture you want to depict. In addition, you should renovate and design the property based on it. You may have to collect artifacts, statues, pictures, and interior decorations based on the culture and history you plan to promote.
On the other hand, you could opt for a generic B&B property, such as a Game of Thrones or Avenger theme. You must bring your creative side out in setting up your B&B. The food should also match your property and service theme.
Location of Your Property
This should be the most important factor that you need to figure out way before you plan your business. In fact, your property site idea should top the list of your business plan. Remember that a B&B is mostly for travelers and tourists. So, it should be set in a place where there is a demand for lodges and home-stays. Location is everything when it comes to catering to the tourist group.
You need to do a bit of research in here. Make a list of unusual, yet soon-to-be-popular travel destinations in your state or the place that you have selected for business. Research and identify the number of B&Bs in those destinations. You could get help from forums like Airbnb and TripAdvisor to form your list.
Tourists choose Bed and Breakfasts over hotels and other stays for their historic ambiance, home-like services, cost-effectiveness, and quirky structures. You should choose a destination that has very few B&Bs and starts from there.
Register Your Business
- Whether you run a play school or a B&B, it is ultimately a business made for the commercial purpose. Therefore, you have to take measures and steps to make your business legal. First, think of a suitable and appealing name for your Bed and Breakfast. It should be sunny, bright and should remind tourists of the destination.
- To make the name official, you have to apply for a business license and register your business as per law. You will find the necessary information on your state’s website. If you still are not convinced, you may want to hire an attorney who will walk you through the business and legal terms.
- Bed and Breakfast or any other food and lodge based business is usually regulated by several laws. You need to ensure that you oblige to the various laws and permits laid by your state’s corporation authorities. You have to also make sure that the area where you are planning to establish your B&B is zoned for Bed and Breakfast.
- If you are serving liquors, you need to buy permit and license for that as well. Furthermore, you have to find out from your local Food and Safety Administration authorities about the requirements to be fulfilled in order to run a food and beverage business.
- B&Bs are indirectly a part of the food and beverage business. The business is highly regulated as it is related to health. You may have an impromptu visit from a food inspector to see if you are adhering to the quality of food and hygiene standards set by the law.
- Make sure you adhere to all national and local rules and regulations. Failure to do so may result in heavy fines and even cause your business to shut down.
Get Insurance for Your Business
- The government has made this a mandatory. No matter what type of business you run, you will have to insure it to protect it from legal claims and unforeseen risks. An insurance policy will protect your personal assets lest your business is legally sued.
- The numbers of insurance policies you need will vary depending on the country, the state, and the business type. You may have to obtain a limited liability insurance, worker compensation insurance, consumer protection insurance and few other. Please talk to a reputed insurance agent to understand what you will have to buy.
Taxes and Bank Account
- Make sure you have understood the tax laws and complied with it. Your tax filing process will change depending upon your business structure. For instance, if you decide to establish your business as a sole proprietorship or a partnership, you will enjoy tax benefits. On the other hand, you may run the risk of affecting your personal liabilities too.
- So, you need to carefully understand your tax obligations and work towards it. It is sensible to open a separate bank account for your B&B business. A separate bank account will help you gauge your business incomes and expenses accurately. It will also help you at the time of filing taxes. In order to open a business checking account, you need an Employee Identification Number. You can apply for EIN for free on your state’s IRS website.
- EIN is compulsory if you plan to hire employees.
Running Your Bed and Breakfast Business
Bed and Breakfasts promote comfort and home-like atmosphere more than luxury and abundance. In order to come out as an ace player, you need to ensure that your B&B sticks to your vision and mission statement – quality service and hospitality. Customers need to feel satisfied after checking out of your gatehouse. It is not compulsory for you to spend lavishly on the services and meals. But make sure whatever you choose to do, it adds value to the customer.
You have to start marketing your business before it is open for public. You need to figure out if your B&B is open yearlong or seasonally. You need to decide the services you offer, such as how many meals per day, the kind of cuisine you offer, is the B&B open for hosting weddings, parties or leisure activities, and would you like to include recreational activities such as sports, dance, swimming, yoga, meditation, horse riding, safari, etc. You need to also decide who your customers will be – retirees, couples, teenagers, or any other party.
All of these put together will become your brand value and your brand proposition – two main components of marketing, promotion, and branding.
As and when you grow into the business, try using different marketing strategies, such as launching a website, listing your B&B in travel portals, such as Expedia and Airbnb, marketing through social media and using video marketing and PPC marketing campaigns.
This is all you need to start a successful bed and breakfast. Hope you are able to open one. Please post your doubts and queries in the comments below. We are also open for suggestions and discussions.