How B&Bs Can Be Profitable & Enjoyable To Operate
Are you thinking about opening a bed and breakfast? Are you ready to escape the daily grind of your 9-5 job?
If you’ve reached the point of seriousness, you may have two unanswered questions: “Will I make money, and will I like it?”
In this article, we look at how B&Bs can be profitable and enjoyable to operate. We look at the pros and cons so you can make the best decision.
First, let’s address whether or not you’ll enjoy owning a B&B.
Why Do You Want to Own a B&B?
This is the very first question you want to ask yourself. Take a look at some common reasons people uproot their lives and purchase an inn:
- Some people buy a B&B because their children are gone, and they’re empty nesters.
- Others love to cook and entertain.
- For extroverts, a B&B is the perfect place to meet new people.
- Some people want to earn extra money.
The key to knowing why you want to own a B&B is a clear indicator of the bar you set for your expectations.
It can help you determine your likelihood of success and happiness.
What Will Make You Successful?
Before you sign the papers making you the proud owner of a bed and breakfast, you must ask yourself what success will look like.
Does success look like full capacity all year long? Or, are your expectations more realistic, and success looks like half capacity all year?
Determine if success looks like guests who are extremely happy. Ask yourself if you’re looking for repeat customers and online reviews, or you just want to generate new business.
Decide how you’ll measure your success. This is an important tool because you can use the data to see where you can improve and make things better to reach your ultimate goal of success.
What’s Your Break-Even?
In other words, how much money do you have to make to not only pay your mortgage and your costs but to make a profit?
Consider what some B&B owners expect out of their new bed and breakfast:
- Turn a profit the first year.
- Re-coup their costs.
- Simply have fun running it without going into negative territory.
- Make a living owning a B&B.
- Supplement their regular day job’s income.
Running a bed and breakfast comes with its own set of sacrifices. Those include working 24/7 and missing holidays. Is it worth it to you?
And, if you want weekends and holidays to spend with your family, can you afford to hire someone to run the B&B in your absence?
Bottom line – know what you need to make to meet your goals and how much of your time it’s going to take to get there.
Do You Have Any Help?
Another key indicator showing you if you’ll find operating a bed and breakfast enjoyable is if you have any support or help.
Do you have family members who will pitch in? If so, you will most likely be happier. It’s never easy doing all the work by yourself.
This is especially important to consider if you’re going to run your B&B out of your own home, and your family members are in residence.
Everyone will have to adjust their lives some, so if you have residents who don’t believe in your new venture, times will be difficult.
Make sure you have open lines of communication with your family if you are all living in your bed and breakfast.
Ensure your family is on-board with the bed and breakfast concept as well as what’s expected of them in the way of helping out and their chores.
Are You a Self-Starter?
Owning your own business and being self-employed requires a unique skill set.
In order to enjoy operating your B&B, you’ll want to be an organized self-starter. It also helps to know where your skill-set lies and where you’ll need to find help.
For example, you may be a great chef, but you don’t love marketing. Knowing this helps you know where you might need to outsource.
As a B&B owner, you are responsible for making all the decisions. Ask yourself if you are comfortable doing this. If the answer is yes, then you will enjoy owning a bed and breakfast.
Do You Have Reserves?
To take the initial first-year stress out of owning a bed and breakfast, it helps to have a cash reserve. This will definitely make operating a B&B more enjoyable.
In addition to money in the bank, you’ll want to have health, disability, life and property insurance lined up so you don’t have to worry about unforeseen circumstances.
A visit with an accountant is a good first step before starting your B&B.
Now that we’ve looked at how a bed and breakfast can be enjoyable to operate, let’s look at how it can be profitable.
Turning a Profit
In order to make a profit, you must always be looking at your revenues and your expenses and adjusting as necessary.
There are some general rules in the bed and breakfast realm that will help ensure you have a profitable business.
- To start, have another income source. For example, your spouse may work outside the B&B. This can help alleviate monetary stress in the first year or two.
- Do your research. Find out how many other bed and breakfasts are in your area, check on their occupancy rates, and know what to expect at varying times throughout the year.
- Aim for five rooms at the minimum. Any less than this, and your profits won’t be very high. Having at least five rooms gives the best shot at increasing your revenue. Remember – the more rooms you have, the more money you’ll make.
- Watch your expenses. You can do this by growing some of your own fruits, herbs and vegetables and doing the house maintenance yourself.
How to Figure Profit Levels
It’s fairly simple to figure out your gross revenue. For example, let’s say you have five rooms, and you charge $100 per night:
- If you fill every room, you’ll gross $500 per night.
- Fill every room for a week, and you’re looking at $3,500 per week.
- Do that over a year, and you’ll gross $182,000.
At first glance, that looks terrific. But, the average bed and breakfast operates around 50% occupancy, so in the above example, your gross revenue drops to $91,000.
Then, you have to account for your expenses, taxes, wages and insurance costs.
If you do your research, know what your location can support throughout the year, and have a marketing strategy in place, you can have a lucrative bed and breakfast.
B&Bs can be profitable and enjoyable to operate if you have realistic expectations.
The pros are many: you meet different people, you avoid a daily commute, you can live where you work while minimizing your home expenses, and you might have valuable time off during the off-season.
Just be sure to manage your expectations and plan for your future so you have the best B&B experience possible.
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