Are you in the market to buy a bed and breakfast? Beyond just helping you to buy a bed and breakfast, there’s a lot that goes into planning to own and operate a successful business. From setting you up with solid business partners and ensuring you have a workable business plan to establishing and implementing the best strategies for digital marketing for hotels and bed and breakfasts, we’re here to help every step of the way as you seek to buy a bed and breakfast.
Before you buy a bed and breakfast, it’s vital to have a firm grasp of the industry. A great resource before you buy a bed and breakfast is to attend an aspiring innkeeper seminar with industry experts like our friends at the B&B Team. Not only will you learn more about the industry, but you’ll start establishing a network of vendors, industry experts, aspiring innkeepers like yourselves, and other seasoned innkeepers and professionals.
Now is also the perfect time to establish connections with digital marketing experts like Logan Marketing and Bed and Breakfast consultants like Get Heads in Beds, both of whom can offer vital insight into the important steps to take before you buy a bed and breakfast. Finally, turn to the extensive tips, tricks, and industry knowledge you’ll find at Inn Marketplace, the Bed and Breakfast industry’s one-stop shop for education and all things Innkeeping.
Things to Think About Before You Buy a Bed and Breakfast
If you’re in the market to buy a bed and breakfast 2023 or shortly thereafter, you probably already know that there’s a lot more to it than simply buying a piece of property and opening your doors to the general public. That’s especially true if you have your eye toward success – which we’re sure every prospective innkeeper does!
From knowing your target market to knowing which experts to call and when, many factors will dictate your overall success in owning and operating a Bed and Breakfast. Below, we’ve listed over 50 of the most important factors that will play into your plans to buy a bed and breakfast successfully.
Knowing Your Target Market
This may seem obvious, but you’d be surprised how many people buy a bed and breakfast without knowing or understanding their target market – or at least the very least, knowing how to market to that target market. Once you’ve identified a property and are working towards buying your first bed and breakfast, here are a few things to think about as you determine what your potential market will be.
- Consumer segments – Identify common characteristics you think your target market might contain and group them into various segments. This will help you understand who will be traveling to your bed and breakfast and why.
- Seasonality – Identify the busiest travel times for your property, and determine if it will be seasonally constrained.
- Competition – Identify any competition in your lodging space.
- Occupancy – Identify the average occupancy rates for your travel area and competitors, so you can accurately gauge your performance once you’re open and set your expectations accordingly.
- Average Daily Rate – Identify the range of Average Daily Rates (ADR) you can expect for lodging in your area, including properties on the low end and the high end, so you can set your prices appropriately.
- Location – Determine how your location may be an advantage or disadvantage for your business, and take steps to address this as needed.
- Metro areas – Identify any major metro areas near you, as this will largely be a geographical target for you in marketing to prospective guests.
- License Requirements – Understand all licensing requirements from your city or state to ensure business opening runs smoothly.
- Airbnb/VRBO – Determine how many Airbnb or VRBO properties are near you, and develop a strategy to market your property accordingly. Determine if it is beneficial for you to market yourself on these platforms as well.
- Trends – What travel trends might impact your business and your prospective guests?
- Diversity – Make a point to understand diversity in your target market and how that might drive business, and develop strategies for inclusion.
- Attractions/Things to do – Identify the key attractions bringing people to your area so you can market to/around any prospective audiences to them.
- Dining – Get to know the dining scene in your area so you can market around these establishments and make recommendations to guests.
Knowing Your Property
As you get ready to buy a bed and breakfast, it’s important you understand the important characteristics of your property and use those natural characteristics to help define your business. Here are some key things to think about.
- Size – scale your business plan around the actual size of your business so that it makes sense. Do you want to be a large or small property?
- Condition – This is important in determining upfront and ongoing maintenance costs as a part of your business plan
- Number of Rooms – along with size, this will help you scale a business plan and determine profitability.
- Architecture – Are there important architectural details to feature or preserve, and can that be an important part of your marketing?
- Décor – Will the decor match the architecture and period of your property, if applicable?
- Amenities – What amenities will you offer and why?
- Parking – Will you have ample parking for your guests? If not, what is your contingency plan?
- Reputation – If you plan to buy a bed and breakfast that is already operating, what is its reputation?
- Kitchen – Will the kitchen meet your needs and those of the health department, or will it need renovations?
- Laundry – Laundry is an important part of every innkeepers day, so be sure you have facilities in place to make this process as easy as possible.
- Yard – Is there a lot of yard maintenance to take care of? How will this be handled?
- Staffing needs – Aside from the sweat equity you’ll put in as the owner, what other kind of staffing will you need? For this, it’s important for you to know your skillset.
- New or Established – is the lodging property new or established? Will you be starting from square one, or will you be building off an existing business?
- Historical data & financials – If buying a pre-existing business, it’s important to have a clear picture of the historical data and financials as the business operated in the years prior to you buying it.
- Neighborhood – Just like when buying a home, choosing a property in a great neighborhood is an important consideration to make before you buy a bed and breakfast.
- Tax credits – Are there any special tax credits you’ll qualify for as a newly opened business?
- Points of differentiation – What makes you stand out from your competitors? Knowing this and knowing how to market around this can help you stand out in a crowded lodging space.
- Readiness to open – Have a plan to address everything that needs to be done before you can open your doors to the public.
Understanding Profitability
Before you buy a bed and breakfast, make sure you understand what it is from your business to reach profitability.
- Financially viable – Is this Bed and Breakfast in an area that will make you financially viable, in particular when compared to the purchase price and any costs to open for business?
- Feasible – is your plan to open and operate a successful bed and breakfast feasible? Is there room for error and adjustment?
- Lifestyle – Is this property going to be an investment property, do you need to it to make a certain amount each year, or is this more of a lifestyle for you where occupancy and profitability are secondary concerns?
Knowing Your Skillset
It’s important to know what you can do and what you’re willing to do, and what you’ll prefer to hire out to other professionals. It’s also important to know if you have the financial capital available for such professionals.
- Cooking – Are you a great cook and look forward to preparing a delicious breakfast for your guests each morning, or do you need to bring in a chef to manage this end of business?
- Cleaning – There’s a lot more than laundry to do each day – where will find your reliable help cleaning?
- Decorating – Do you have a plan for decor, or do you need someone to help you find your sense of style?
- Maintenance – Who’s going to take care of the inevitable small and large maintenance tasks that will crop up?
- Yard care – Will you hire out a yard maintenance crew, or will you do the gardening yourself?
- Hosting – A website is a crucial part of your business. Where will you host your website?
- Marketing – digital marketing is an essential aspect of a modern bed and breakfast. Have you established a relationship with an online marketing agency yet?
- Financial – Find a bookkeeper and tax professional to help you manage the financial end of your business.
- Management – Will you be an on-site manager, or will you need to hire someone to do this for you?
- Computer – Make sure you have a computer that can handle the check-in and check-out process but all the other aspects of an online business.
Understanding the Financial Side of the Business
Before you take on the potentially huge debt of buying an operating a bed and breakfast, make sure you understand all the different financial aspects to the business, beyond historical facts and figures from above.
- Downpayment – How much is required of you for a downpayment? Do you have that, or will you be making a bigger downpayment than required?
- Working Capital – How much working capital will you need to operate and even grow your business?
- Debt Tolerance – How much debt can you realistically afford?
- Risk Tolerance – How risky of an investment can you afford to take based on your own personal risk tolerance?
- Ability to secure loan – Can you secure a loan? Are there any factors standing in your way?
- Financial/Bank Terms – Make sure you understand what all the bank terms and important financial information means as you embark on your effort to buy a bed and breakfast.
Have an Exit Strategy Before You Buy a Bed and Breakfast
Though it may sound weird, you should have a well-developed plan for an exit strategy before you buy a bed and breakfast. Knowing when and how to get out is important, so you don’t get trapped in a situation that’s either no longer desirable or tenable for you.
- When do you hope to sell – Do you plan to stay here until retirement or just a short period of time? How long do you want to own and operate this bed and breakfast?
- Business or Home – Will you live on-site, or is this bed and breakfast strictly a business for you?
- How will you sell – Make sure you know which industry professionals you’ll reach out to when it’s time to sell – including those vendors we work with exclusively here at Inn Marketplace.
Personal Factors That Can Impact Your Ability to Buy a Bed and Breakfast
Before venturing into any new business, it’s important to know how it will impact your life – that is particularly true with an industry as notoriously involved as innkeeping. Here are a few things to keep in mind about your personal life and how it may be impacted as you buy a bed and breakfast.
- Space requirements – do you need your own home, or can you make do with the usually small innkeeper spaces at most bed and breakfasts?
- Privacy – Do you require absolute privacy, or is it ok to share your home with potential guests, including shared spaces?
- Need for vacation/days off/nights off/work life balance – It can be hard to leave the innkeeping behind to take a vacation unless you have adequate staff to cover for you. Make sure you have a plan for breaks when you need them to prevent burnout.
- Work capacity – How many hours/days can you realistically work during the week, and how much downtime do you need to give yourself/the Inn?
- Financial expectations/needs – Is this a lifestyle property that affords you the ability to shut down, or do you need to squeeze as much profit out of this with maximum capacity as possible?
- Solo/couple/family – Will you be venturing into this bed and breakfast alone, or do you have the help and support of family or loved ones?
- Experience – Have you ever done this before? If not, do you know people in the industry that can help?
- Health considerations – Do you have limitations from any health conditions that might make you unable to work for a period of time, and can you plan for that?
- Timing – Is this the right time in your life for you to buy a bed and breakfast?
- Openness to diversity – Are you open to being an inclusive and welcoming property for all, or will you want to limit different types of diversity?
- Relationship solidarity – If you’re buying a bed and breakfast with a spouse or partner, are they as excited and invested in the process and outcome as you are?
Know the Services You’ll Need to Run a Successful Bed and Breakfast
Just like knowing your own limitations and your personal skillset, knowing which professionals to hire and when is an important thing to consider before you buy a bed and breakfast. Areas in which you might seek outside resources before and after you buy a bed and breakfast include the following:
- Legal
- Accounting
- Technology
- Software
- Maintenance
- Staffing
- Food Purveyors
- Marketing
- Photographer
- Property management system / Booking Engine
- Website
- OTA’s
- BNB Agent
We hope this guide helps you as embark on your journey to buy a bed and breakfast this year. As always, for the most comprehensive educational resources and the latest industry news, turn to the trusted experts at Inn Marketplace – the ultimate destination for the Bed and Breakfast industry.
