>A business plan describes your business. It must answer all the basic questions of how you will implement your inn dream and open your business. It answers all the money questions. Your business plan will describe your efforts and results. It is like an energy map. Your business plan, for your inn as well as for any venture you undertake, is a unique personal document of what you are about to do and who you are at the time. The answers to the questions you and others pose will further clarify your dream, for yourself and your investors. It is the beginning of the bridge from your dream to reality. Different lenders request different formats for their business plan in so use this as a guideline for the general content and concepts.
The elements of your business plan are:
- Executive summary
- Mission statement
- Product description
- Market niche
- Management team
- Financials, both history (if this is an existing inn) and business valuation
- Personal financial statements
- What happens if the inn fails
Let’s look at these elements individually.
- Executive Summary
Concisely highlight, with the most attractive facets, your business plan. Include your mission statement, the financial projections, financial goals, and a brief summary of your track record.
- Mission Statement
What is your vision of the business? A mission statement is where you record your values, principles,
what matters most to you in your B&B business, and what relationships you want to have with the people who enter your inn. It is a one-sentence, clear, concise statement that says who you (as the B&B inn) are, what you do, for whom and where. Period.
- Product Description<
Describe the inn you want to buy and the type of B&B experience you are going to provide your guests, your auxiliary services, the building and grounds, and the location. Talk about the inn’s history, if it is an existing inn. Discuss the legal structure under which your business will operate.
- Market Niche
Explain your brand — what makes you distinct from the other B&Bs in your area. Describe your typical guest and what experience you will offer them. Explain how and where you will promote your inn; be specific about your marketing projects and their respective timing — how you will penetrate your market and attract the specific typical guest you just described.
Talk about how your inn satisfies community needs, compare yourself to other local hotels or B&B inns as far as what you are offering and how you price your product. Use verifiable figures from annual reports, associations, and trade groups.
- Management Team
Who will be working with you toward the inn’s success and in what capacity? How will these people support you as you grow your business? Present their backgrounds to emphasize each person’s ability to manage a business. This is a key area. What do you bring to the team and success of the B&B? What is your experience, education (formal and B&B), and what is your role at the inn?
If you are buying an existing inn, include the financial statements. Some lenders will want as many as five years of records, if they exist.
- History: discussion of what development and business path an existing inn has taken to get it to the point where you are ready to buy it. How has the B&B grown as far as income, number of guest rooms, or additional sources of income? What problems has the inn had; innkeeper illness, poor management, natural disasters?
- Business Valuation: this is an analysis of how the business’s cash flow relates to the purchase price. This examines income, expenses, maintenance, and various record keeping (books, maintenance, guest lists, etc.).
Estimate expenses high and income low, without being overly pessimistic. Include a profit-and-loss statement (P&L) — also known as income statements and balance sheets. Most importantly you will need a cash flow projection which will enable you to summarize your financial needs for start-up costs and the first three to five years of deficit spending, including your mortgage payments. Show your plan to meet your financial needs: the sale of a home, your savings and stocks, income from your partner’s job (partner as in spouse, significant other, business partner, etc.), and your suggestions of capitalization from the bank and investors.
- Personal Financial Statements
List your present worth and assets, your income and expenses, savings and your available credit.
- What Happens if the Inn Fails
Discuss how you can minimize loss or create another profit center for your investors and creditors. This point gives your lenders confidence in your business sense and thoroughness.
- Be aware of these turnoffs as you write your business plan:
- sloppy business plan — hand written, misspelling, or grammatical errors
- article copies of which you have blacked out sections
- testimonials from friends
- persevering until it hurts, i.e. too long
You will find that business is a flow, an exchange, a transformation of energy. It creates new energy options. Money is the barometer of that energy. Good business is selling your inn for more than you bought it for because you added value to it. Good business is turning your operation into a profitable concern.
There are contradictory ideas of how long a business plan should be; I’ve heard everything from 10 pages to “however many pages it takes”. My feeling is if you can’t concisely state your plan you haven’t thought it through sufficiently. Strive for a ten page plan, plus supporting documents, as an ideal length for your plan. You’ll be amazed at the thought and effort required to hone your ideas that much.