How to start a bed and breakfast business

Snapshot

Running a B&B is a bit like having a new baby - lots of early mornings and laundry, a seriously diminished social life and the constant need for energy. But if you love caring for people, don't mind having strangers sharing your living space and are always able to give service with a smile, it's all worth it. Your biggest outlay will be on the premises - either buying an existing B&B or adding lots of en-suites to your home. Top earners can hit £100,00 a year, but the lower rungs are anything from loss-making upwards once the financial pressure of a big mortgage has been chucked in.

Day-to-day

You might be working within the comfort of your own home, but running a bed and breakfast is no easy feat. Expect very early mornings (everything has to be ready for when guests wake up) and say goodbye to weekends and most ventures out (as someone always has to be on-hand should a guest need you).

Day-to-day activities will be repetitive: having to undertake the same tasks you did yesterday, with the knowledge they'll have to be done again tomorrow. Cleaning rooms, making breakfast, doing laundry, repairing broken fixtures, greeting or saying goodbye to guests, and keeping strict accounts are all part of running a B&B.

The personal touch is what draws people to B&Bs, and things like learning guests' names and advising them on what to do during their stay are really important.

Above all, your job is to make sure guests enjoy themselves and want to come back again, or at least recommend to others.

The industry and market

The UK tourism industry is one of the largest in the world, comprising of around 180,000 businesses, employing 1.4 million people, and generating £19bn per year in foreign revenue.

The B&B sector turns over £2bn per year, making it 28% bigger than the low-cost hotel sector, and 35% of the size of the UK hotel sector.

The best B&Bs provide everything tourists look for: small-scale, high-quality accommodation with one-on-one personal service. This is an incredibly competitive industry, and you'll have to work hard to make your business the most desirable to potential guests.

Natural skills

  • Really enjoy being surrounded by new people - to the extent you're unphased by having strangers in your home every day.
  • Great customer care skills, and always happy to go the extra mile. Enjoy looking after others.
  • Enjoy cooking.
  • Keen cleaner and tidier.
  • Be good and handiwork and DIY, or have someone close to you who is who won't mind doing you constant favours!

Training

There are no set-in-stone qualifications required, but it's advisable you research this type of business thoroughly before starting up.

Several companies offer training programs for people aiming to open their own B&B:

  • The Bed and Breakfast Academy offers a course on how to set up, market, and run a successful B&B. It charges £250 for two days, and recommends that each person involved in running the business attend with you.
  • For those with a smaller budget, BandBtraining offers an eBook on a variety of topics for people aiming to start a B&B for £25.
  • Definitely sign up to training on food hygiene standards, particularly if you're going to run a large business, as you'll be inspected by the council at some point and yu don't want to be responsible for upset tummies.

Premises

Are you going to buy an established business, purchase and customise a new building, or renovate your existing home? Each option has its advantages, but buying an established business is usually the most hassle-free. It will cost more to purchase, but will already have a client base and so need little spent on marketing or renovation. It will also be easier to get finance from the bank if you can prove the business is successful.

If you decide to purchase a house and build the business from scratch, consider the size carefully. If you want a four bedroom B&B, you'll need a house with around six bedrooms so you and your family can live comfortably. Ideally you'll have your own private living room to give you a break from the guests. This is important for your business too, because guests will feel uncomfortable if they have to share space with your family.

Your premises will be furnished differently depending on how you market your business. Are you a value-for-money getaway, or a luxurious retreat? If you market your B&B as a quiet, relaxing hideaway, then a television in each room won't be necessary. If, however, you want to create a luxurious home-from-home, you'll need all the mod cons. Whatever your choice, make it clear on your advertisements what you offer.

If starting your B&B from scratch, remember that most guests expect a private bathroom, so you'll need to buy somewhere with multiple en-suites, or get these installed in whatever property you're using. Make sure you have sufficient parking spaces nearby and are well positioned for guests to visit local attractions. Avoid noisy roads, too, but not so much that guests would be scared to walk back alone at night.

Of course, as soon as you look at buying a property, you need to be thinking about mortgages. This can get complex when you're mixing residential and business premises - this article gives a good run-down of the basic considerations.

Staff

  • You'll usually require staff if your B&B has anything more than four guest rooms.
  • Staff need to be able to take on a variety of roles: cleaning, greeting guests, basic cooking, and so on. Ideally, your employees should be able to do everything you can do, to allow you some time away from the business.
  • All staff must have excellent customer service skills, because the happier your guests are, the more likely they are to refer you to their friends. This is an important way to get bookings in the tourism industry.

Money

  • The bigger your business, the larger the property you'll need. More rooms may mean more guests, but they also mean more furnishing, more utility bills, and more staff.
  • The cost of buying either an existing B&B or a large property varies hugely depending on size, location, how the market is doing, how long the property has been for sale, and so on - anything from £50,000 - £5m.
  • Look at sites like http://www.hotelstobuy.co.uk/ and http://www.businessesforsale.com/talktalk/search/Guest-Houses-and-Bed-and-Breakfast-Businesses-for-sale .
  • Established B&Bs in sought-after areas don't stay on the market for long: in fact many receive offers before they're even advertised!
  • It's because of this that some experts recommend selling your home before searching for a business. If needs be, stay with family or live in rented accommodation until you find your new business, otherwise you could miss out because the sale of your property took too long.
  • A bank can provide around 70% of the purchase price for your new property, if you have a normal credit rating.
  • You'll need roughly 30% of the purchase price again for the ongoing costs,.
  • Expect to pay 5% of the purchase price to cover fees, stock, stamp purchase, business valuation and admin fees.
  • The cost of furnishing your business will vary depending on how you aim to market it - a simple B&B won't be outrageously expensive. It's the en-suites that will really bite into your budget.
  • Accurate records must be kept of all outgoings for when the time comes to pay tax.
  • Get an accountant. They can keep an eye on spending and help you avoid any nasty surprises.
  • A chunk of your initial funds will go on insurance, and you will need most of the following:
    • Buildings cover
    • Contents cover
    • Public liability - covers you for civil actions brought by guests who sustain injury on your property
    • Employee liability
    • Cancellation insurance - in case guests cancel at the last moment
    • Personal accident, health, and key person insurance - in case you're incapacitated at an important time
    • Motor insurance for business use
  • Here are a few companies that offer insurance specifically for B&Bs (links lead to relevant bits of the website):

First steps

  • Figure out if there would actually be enough guests in your desired area to sustain the business throughout the year. Visit your local Chamber of Commerce, local council and tourist information office to get important tourism information: how many visit the area, the types of attractions they visit, whether tourism is seasonal etc.
  • Also consider how many travelling businessmen and women spend the night in your area. They will be valuable guests through the 'slow season'.
  • Vigorously assess your competition and how you will beat it. Google searching is a great start - will you appear on the first page of search listings for your area? This is key.
  • Talk to your band manager early on about loans and mortgages.
  • Look at property prices in your desired areas.
  • Stay in B&Bs in your chosen area to get an idea of how the business is run. You can see how they're decorated, what the house rules are, what you're charged - and how to out-do them.
  • Read plenty of books and articles from people who've been there and done it to make sure this is the right choice for you. It's a big commitment, more so than many other types of business because of the big property expenditure, and you need to be sure.

Tips

  • Get food and safety standard accreditations.
  • Get listed on Trip Advisor - ask guests you get on with if they'll recommend you on it.
  • Make yourself known to local tourist offices and websites listing B&Bs in your area.
  • Put yourself up for as many awards as you can - read this feature for advice on how to stand the best chance of winning: /advice/sales-and-marketing/pr/how-to-win-awards
  • Give a decent, hearty  breakfast. Offer yoghurt, fruit and muesli as well as the full English.
  • Try adding a few locally-sourced ingredients to your breakfast menu - particularly if you're in the countryside. These days guests eat that up - literally.
  • Have a guest book and encourage guests to sign it, then add the most shining comments to your website.
  • Make sure your website is geared up with all the SEO you need to get found online - this is where the vast majority of guests start their search for accommodation.
  • Leave chocolates on guests' pillows - a small touch, but one that always brings a smile to a guest's face!
  • Have a leaflet counter full of brochures of things to do in the area during their stay, and give guests maps.
  • Show as many photos of rooms on your website as possible.
  • Provide very clear instructions for how to find you for all main modes of transport (road, air, train, etc) and give a number the guest can call should they get lost.
  • Have mini-bars and small fridges in rooms fully stocked and with price cards - these are great profit-makers.
  • Casually ask guests why they're staying with you (business, pleasure, a specific nearby attraction) and record results so you can tailor your advertising in future.
  • Have a protocol in place for what you'll do if a guest gets locked out late-night or loses their key.
  • Always offer to carry luggage.
  • Make recommendations for the best bits of the locality. Know your local area inside out!
  • Make sure guests are familiar with your terms and conditions and cancellation policies (it's standard for guests to have to give 24 or 48 hours notice to entitle them to a refund).

Common pitfalls

  • You need to budget incredibly carefully to see yourself through the off-peak season. Consult your accountant and save as much as possible after your first summer. Market to business travellers who might still need accommodation throughout winter, and offer decent discounts for off-peak visitors.
  • Mortgage payments make things complicated. See what we mean here.
  • Guests running off without paying can hit you hard. Take passports, credit card numbers or other form of ID at the beginning of a stay to avoid it.
  • You need to have a protocol in place for rude guests who stay up later making lots of noise, and disturbing other guests. Find a way to handle them without insulting them.
  • Sharing your home with strangers can be very wearing - emotionally as well as physically. Give yourself plenty of time away from the house when you can, and find time to enjoy the company of your partner, if you're working with one, away from the business.
  • Laundry and electricity bills will creep up on you. Talk to non-competitor B&Bs (perhaps in other parts of the UK) who are roughly the same size as you to make estimates.
  • Think ahead. If you're planning on having children (or more children!) in the next few years, you'll need to make sure you have rooms ready for them in the property you purchase now - even if those rooms won't be used for a few years.
  • Competition can be killer in top tourist destinations. How will you market yourself to get heard over other B&Bs? How will you differentiate and find a competitive edge?

Support and resources

Use what's out there to help you. Software like Smarta Business Builder will make it easier to keep track of all aspects of your business. Other resources include:

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