Many of us dream about having a B&B. We picture ourselves living the life of Dick Loudon, a creative spirit who, with his partner, owns and operates an inn in a small, rural town that is both home and guest house to eccentric, lovable characters. Yes, it is a wonderful dream. But while you're dreaming, be sure to take a look at reality, and make yourself a plan. I am a firm believer that if you fail to plan, you plan to fail.
I started working on a B&B Business Plan years before we purchased The Grand Kerr House. I had a spreadsheet that allowed me to quickly drop in numbers to see if a break-even point might be achievable. Oh-oh, did I say "break-even"? That's right, I never thought in terms of making a profit or getting rich. If that is your dream, then a B&B is probably not going to be your reality. A Bed & Breakfast is defined by Merriam-Webster as "a house or small hotel in which someone can rent a room to sleep in for a price that includes breakfast the next morning". Normally a B&B will have four to six rooms and provide only breakfast. It's not easy to get rich with such limited offerings.
My personal opinion is that you can break even with four guest rooms working alone, make a profit with six guest rooms working with a partner, and find yourself totally overwhelmed with seven guest rooms unless you have a lot of (payed for hired) help. But that's just my opinion. The proof will be in your business plan and how well you execute it.
A Business Plan is needed for many reasons. It will force you to develop a realistic budget. The Bank or SBA Loan manager will want to review it before investing in your dream. It will help you to understand your market, your targets, your guest offerings, your pricing, and a myriad of other necessary things. You can write your own business plan, hire someone to put one together for you or even call me for help (I will do almost anything for a fee).
A Business Plan is not only useful at a single point in time, it will be useful throughout the live of your business. Once you have your B&B up and running, you can (and should) go back to it at least annually to see what has changed or should be changed. Your Business Plan is a living document that should never be ignored or allowed to die due to neglect.
Business Plans should include the following sections -
- The Summary or Abstract - a quick read for people not interested in the details
- The Objective - a general overview of your plan
- Market Analysis - customers, target market
- Lodging Competition - what do they have that you don't have, what will make you unique
- Competitive Strategy - market positioning and pricing
- Marketing Plan - advertising, promotions and other opportunities
- Management Structure - who does what
- Sales Forecast - projected sales and expenses
- Finances - start-up costs, sources of income