Innkeeping is about striking the proper balance between financial needs and personal desires. Finding the sweet spot often involves financing a bed and breakfast, and you should understand the ins and outs before beginning this process. Don’t worry, though. Inn Partners has you covered with everything you need to know to navigate it like a pro.
Read on to discover a wealth of information about how to finance a B&B. Just don’t forget to attend one of our upcoming Seminars for Future Innkeepers to learn even more! We have over 40 years of experience in the hospitality industry, and these seminars allow us to share our expertise with you in a friendly, personal atmosphere. Start your business right with Inn Partners!
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This is one of the most critical first steps of inn financing. Make sure you assess your own financial standing, especially in relation to the property that you plan to purchase. This is crucial to ensure you get a viable inn at the right price for you.
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Generally speaking, financially viable inns are properties that generate sufficient income to cover operating expenses, debt service (bed and breakfast mortgages), and provide a healthy return on investment. In comparison, lifestyle inns are typically smaller in size and do not generate sufficient income to cover operating expenses and debt service. These inns are commonly priced based upon real estate value, whereas financially viable inns are valued based upon their assets and business activity.
There are several myths about bed and breakfast financing , including the idea that bigger banks provide better loans. That is not the case, especially with smaller inns and B&Bs. Consider the alternatives that offer more personalized service, greater care, and attention to detail. Small banks are more likely to work with you and the Small Business Administration (SBA) to offer loan programs that are profitable for both parties. It’s a win-win!
So, you’ve found your ideal B&B, put your finances in order, and chosen the bank you intend to request a loan from. Before you contact the bank, we recommend creating your own business plan. You shouldn’t ask the bank what they will offer you — put your own business plan together first, and then tell the bank. This helps ensure your needs are met and streamlines the loan process.
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Notes: Most lenders require an investment between 20% – 30% of the sale price, including the down payment, closing costs, working capital, and reserves. Also, the financing piece often takes between 45 to 60 days, if it takes the form of a conventional loan from a local bank or national lender.
You’re officially one step closer to financing your bed and breakfast! Now, we’d like to invite you to attend an upcoming Seminar for Future Innkeepers. You’ll discover even more tips and industry secrets about the buying process from our team of experts that has over 40 years of experience and has helped sell over 450 hospitality properties in North America and beyond. Plus, we’re happy to offer consulting services and guide you through creative financing options. Simply put, we’re here for you. Get started with Inn Partners today!
We cannot say enough about how wonderful the seminar was, and how energized we are to bring our vision as innkeepers to life. Our questions about finances as well as the practical side of this career were addressed perfectly. Each of the three of you offered critical perspective and we thank you. Thank you for a brilliant introduction to the world of Innkeeping.Establishing any business and excelling in it is not something that happens overnight. Starting a B&B or small hotel is no exception, especially if you are new to the hospitality industry.
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With countless factors to consider before opening a property to the public, and even more to contend with once you are running your business day-to-day, it can easily become overwhelming.
But there’s no need to give up on your dream. In this article, we’ll provide a comprehensive guide to starting and running a B&B, so you can put your best foot forward and start enjoying the benefits of a successful small business sooner rather than later.
A bed and breakfast is a small accommodation property, typically owned and operated by a family or small team who also live on site. Generally B&Bs will have less than 10 rooms.
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Guests staying at a B&B usually expect a very homely atmosphere, simple luxury, a rich history and sense of individuality, and authentic food and beverage experiences. They are popular for weekends away, romantic trips, or for special occasions such as travelling for a wedding.
Firstly, you might want to think about if it’s actually something you want to commit to. It’s a huge undertaking that will require your devoted attention day in and day out. Many people may find the concept outweighs the practice.
It’s extremely important you know what to expect from the job. This is not simply so you know if you’re a good fit, but so that you can do the job well and give yourself the best chance at success. It’s an incredibly difficult endeavour to undertake alone or with a partner.
How To Navigate The Process Of Financing A Bed And Breakfast
Another consideration is why you are opening a bed and breakfast. Are you embarking on this journey because the lifestyle appeals to you and you love customer service, or because you see it simply as an opportunity to make money? Loving what you do is generally the recipe needed for favourable results. What you define as success is up to you. Maybe as long as you are receiving strong reviews and keeping your head above water you’re happy, or perhaps you want to be an award winning property.
Any business can be profitable, and of course that’s the ideal goal. Hopefully by providing an exceptional guest experience and becoming popular, your property can achieve profit through the right management and strategies. Before that becomes a reality, you need to establish a steady revenue income. This means attracting regular bookings.
When you really drill down the numbers, it’s probably unrealistic to expect to earn your entire living off one B&B property. Let’s use an example of a six-room property with pricing at $90 per night:
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The amount of money you can expect to make all depends on the size of your property, the area you’re located in and how luxurious your property is, but at the end of the day running a bed and breakfast is certainly not a get-rich-quick scheme. Or at least, if you treat it like one you’ll be sorely disappointed. Starting a B&B is more of a lifestyle decision rather than a savvy business choice and you’re likely to make a real profit when you sell it.
Again, it comes down to whether running a B&B is a good fit for you. If you have already had a successful career and want to supplement your previous income, then it could be just the thing for you.
There are a number of circumstances under which you might start a bed and breakfast. Perhaps you’re buying land to build one, or turning your own home into one, or purchasing an existing property.
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When starting from scratch and opening a new business, you first must consider many of the costs you might face. Depending on what country you’re starting your business, costs will vary. They include but are not limited to these 10 items:
If you’re new to opening and running a bed and breakfast there are countless pitfalls you might encounter if you’re not careful. Although it’s vital to be a “people person”, that alone is not enough. You need to educate yourself about how to market and sell your business and figure out what works. Otherwise, you’ll be overflowing with hospitality and no one to provide it to.
Any property with five rooms or more is too much to take on without help. When you decide you do need someone to help you run your B&B, it doesn’t mean it’s easy to find the right person.
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Find those skill sets that you do need – is it bookkeeping, cleaning, or cooking? Or do you need a multitasker who can do a little bit of everything? Remember that your time is better spent on servicing guests and figuring out how to market your property. Create a detailed job description once you’re sure you know what you need.
The next step is getting your job description out to a talented pool of individuals. Advertise on social media, through family and friends, on association job boards and website forums, and regular job sites.
Once you’re interviewing candidates it’s important to uncover quickly if they’re right for the role and also the right fit to work with you personally. Ask open ended questions to reveal their true character, get references from past employers, and even conduct practical tests if need be. You should only hire people you can trust.
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Then you need to maintain a good working relationship with the successful candidate. Ensure these 5 key ways to keep staff happy:
There are a number of advantages to buying an established bed and breakfast since a lot of the groundwork has already
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