10 Things To Consider Before Setting Up a B&B
Dreaming of packing in your day-job, selling your home and starting a new life as a B&B owner?
We don’t blame you, after all being your own boss sounds like the perfect scenario, doesn’t it?
Whilst owning a B&B can be a fantastic venture, there are many things to consider first to understand whether it’s a fitting career and lifestyle for you. And it is just that, an entire lifestyle choice that you will be making.
Here are 10 things to consider before you make that final life-changing decision…
1. Ask yourself, why are you buying a B&B?
Give real thought to what you’re hoping to achieve from this venture. What your expectations are and why you think this business is better suited to you than another.
With that reasoning clear in your mind, find a B&B owner or two to meet with and hear first-hand the reality of the industry.
There will naturally be pros and cons, as with any business venture, so gather as much insight and advice as you can before you go any further.
2. Asses your qualities
Are you a people person? A patient person? A morning person…or an evening person for that matter? A dab-hand at DIY or not to be trusted with a hammer? An amateur chef or interior designer in the making?
Owning a B&B can require all of the above and much more, you’re the epitome of a ‘jack of all trades’, so it’s important to think about where your strengths lie and determine which areas you think you may find challenging.
Consider whether you’re comfortable being the go-to person in a small business, and whether you will require staff to support you.
3. Is this a retirement plan or a career change?
Many people think that being your own boss creates a better work life balance and whilst the flexibility it offers can be rewarding, running a B&B can very easily be a 24 hour a day, 7 days a week job.
Dependent on your business structure you may be the receptionist, accountant, marketer, cleaner, chef, plumber painter and decorator…all in one day!
Be sure you understand the responsibilities you’re taking on and that you’re comfortable with the at times demanding lifestyle you’re creating for yourself.
4. Think carefully about what market segment you wish to attract...
Although it is unlikely that you will only attract one market it’s important to think about who you will be marketing to as this can hugely impact other elements of your business: pricing, service, marketing.
Would you like to primarily cater to families, young couples, older couples, groups, holiday-makers, weekend stays?
5. …and think about your location and seasonality too
If you’re by the coast you’re likely to have quite a seasonal business; securing higher room rates in high season but a likely dip in guests during the winter. Is that what you’re aiming for?
Equally, if you’re in or near a city you’re more likely attract guests year-round. Will that suit you better?
Do your research on the location; events, traditions, other attractions and destinations, as this too will determine the guests you will attract.
6. Consider your competition
When deciding on a location don’t forget to check out the competition too. Are there other B&B’s nearby? Are you confident there is enough business to share?
This may lead you to think about your service – will you offer something that the competitors don’t? Something that will make you stand out from the crowd?
7. Budget planning and accounts is essential
Prior to launch, your budget planning will be based on educated guesses and assumptions, but it will force you to accurately calculate your room costs per night which in turn helps you set your room rates.
Allow for peaks and dips in room rates when planning, all of which will be affected by location, guest type and the competition i.e. If you are near a business village or city centre you may attract business people Monday to Thursday and can charge healthy week day rates, but what happens at the weekend, is it still a popular location with tourists? Is there a large wedding venue close by that you can work with for overflow guests at weekends?
When you are comfortable with your room rates, you can then play with your budget to assess what happens to your net profit when expected occupancy changes.
Can you still make a viable business plan?
If so, then be ready to record your accounts once the B&B opens its doors (and track all spending prior too!). You will need accounts, even if basic, so you can judge the performance of the business and indeed know how much is owed in Tax. Basic accounts also helps you focus on analysing the truth behind your budgets, and enables you to monitor profitability. The black and white figures of expenses vs income don’t lie!
To see how much you could make as a B&B owners, download our FREE Net Profit Calculator spreadsheet below.
|Net Profit Calculator For B&Bs||18.75 KB||Download|
8. How will you market your business?
Don’t wait until you’ve bought the property and stocked the rooms to then think about how you will secure room reservations. People need to know you’re there to book a stay.
Some of the marketing channels you may consider are:
- Printed materials: business cards and brochures
- Website: either with your basic information or with a booking engine included
- Advertising: flyers, newspaper and radio ad placements
- Online travel agents: registering on sites such as booking.com or lastminute.com
This all needs to be considered in your budget planning otherwise your first year or two in business may be very quiet indeed!
9. Don’t forget the legal requirements
Being up to date on the latest laws takes time but it is essential. Due to frequent updates on many laws we are unable to offer detailed advice on the below legal requirements, but advise that you consider these before committing to setting up a B&B:
- Planning permission - Planning legislation defines the ‘use’ of a property and the decision lies with your local authority. Although there are no hard and fast rules relating to ‘use’ of premises, if your property is primarily used as a home and less than 50% is used by paying guests then it can be considered primarily as a home, and should not require a change of permission. Having said that, there have been cases when small B&B’s have been challenged by local authorities and have been told to apply for change of use. This is one that you will certainly need to do your homework on.
- Tax threshold - Do you need to pay business rates or can you continue just paying council tax? This currently influenced is by the size of the business and the primary use of the premises. Find out more here: www.voa.gov.uk
- Fire regulations - The rules relating to fire regulations in England and Wales (Scotland and Ireland have their own laws) changed in October 2006. The new regulations mean that every B&B owner (regardless of size) should carry out a fire risk assessment and implement practical fire prevention measures. If you are unsure how to carry out a fire risk assessment then seek advice from a consultant or ask a specialist to carry out your 1st assessment for you at a fee. Help can be found at www.gov.uk/government/publicat...
- Alcohol license – You may be wondering whether you’ll even need an alcohol license if you are a traditional B&B offering only breakfast. What you may not realise though is that you even gift your guests with alcohol you require a licence. If people are celebrating an occasion wouldn’t it be nice to offer a bottle of champagne, or even provide a complimentary bottle of wine on arrival for guests staying for three or more nights for example. Without an alcohol licence, you cannot offer complimentary alcohol. The cost of the alcohol should be calculated into the room rate and therefore is not actually free.
- Copyright licenses: TV licence and Audio licence. You may not realise that a normal TV licence is not sufficient to cover TV being watched by paying guests. You will also require a music licence if you have either a TV or radio in the rooms, or if you play recorded music in public areas. Another consideration is DVD concierge licence which is required if you supply (either free, or at a charge) DVD’s for your paying guests to watch. More information can be found: www.filmbank.co.uk
- Food hygiene regulations - Food safety is generally common sense, but also comes with a set of regulations to comply with. This regulation covers all food business operators, including B&B’s where breakfast is served. More information and help can be found at https://www.food.gov.uk/busine...
- Disability regulations - These regulations state that disabled people have rights to gain access to goods, services and facilities, and as a B&B owner you are required to make reasonable adjustments to your property to permit access to disabled people both externally and internally. Find further information here: https://www.visitbritain.org/w...
10. Finally, don’t forget insurance!
A standard domestic household insurance policy is not suitable cover for a premise with paying guests. Specialist B&B insurance policies are available from many providers and these types of policies cover you for normal domestic use buildings and content cover, but also cover public liability and sometimes, for an extra fee, theft or malicious damage by guests.
Like all insurance policies they vary in price and don’t forget to read the small print to ensure you have ample cover for your B&B.
There is a lot to consider when buying or before buying a B&B. If you’ve considered all the above and feel confident that owning a B&B is the career and lifestyle for you then you’re ready to start planning and get hunting for the perfect property.
Running a B&B can be fun when you get it right, but to get it right is the key.