Here’s the final third of my questions you should ask yourself before you buy a bed and breakfast. Though this is the end of my proposed questions, on this topic, I hope you’ll continue pondering your concept. I hope you’ll also challenge every idea you have to learn its pros and cons. And continue educating yourself to make sure you take the right path and create the best B&B you can.
Here is the last ten of the thirty questions.
- Do I want to operate other businesses outside the B&B operation, using the B&B property? (e.g., antique store, tours, classes, teas)
- Will the cash flow of the property support the business with its new debt service?
If not, is it something you can fix easily? Are you paying too much for the B&B? Do you want to buy a B&B inn that doesn’t support itself even minimally? How can you sustain this sort of cash draw? And how will you be able to sell the business later? - If the business doesn’t have a positive cash flow is it because it’s new, poorly managed, or in a bad location? Can you fix the problem and turn the business around?
The difference in questions between this and the previous is minor, but there is a difference of degree. If the business can’t pay the debt service it surely can’t pay the other expenses. The business may be able to pay the debt service without being able to pay all the other expenses.
Again, are you paying too much for the B&B? Are you paying for their “blue sky” rather than making your own? Can the business be turned around? Does it fit your dream perfectly? Tough, soul searching questions for you to answer before proceeding. - If not, do I have what it takes to create a positive cash flow situation?
- Will the cash flow create the money I “need” to live?
- What would it take to create that kind of money?
- Is there growth potential in the business?
Can you increase room rates, or are they maxed out for the area and the condition of the property and business? Can you improve the occupancy rate with the style you will introduce or by your marketing plan? Can you add rooms or create another income stream there at the property? Are you paying the seller for the work and effort you are going to inject into the B&B? Can all of your ideas be implemented? - How much am I willing to compromise?
Over the years, I have had one client who found the perfect B&B; location, price, quarters, cash flow, etc. For everyone else, it has been a compromise. Since there are most qualified buyers than sellers, the biggest factor to becoming an innkeeper is how flexible you are with your vision and quest. Most B&B Brokers I know have had the same experience with their clients. - Do I have a business mind and common sense?
Innkeeping is not rocket science. But people often have a narrow vision of what innkeeping is to them. They create an inn in that image, not the one dictated by the market place, and without conducting any research. If your location demands meat and potatoes, you don’t offer caviar or a vegan diet. However, if caviar or vegan is what you want to offer, then perhaps that location is wrong for you. Innkeepers must listen to and learn from the market; and adjust their inn accordingly. If you do buy or develop a B&B in an area that doesn’t mesh with your vision, are you a creative marketer so you can attract your ideal guest? Are you able to sustain the inn financially for several years until your reputation is established and the business is strong enough to sustain itself? Basically, get feedback and be willing to adapt, either your vision or your market niche. - Have I prepared myself for this change in lifestyle and career? (e.g., classes, books, conferences, internships)
The difference in questions between this and the previous is minor, but there is a difference of degree. If the business can’t pay the debt service it surely can’t pay the other expenses. The business may be able to pay the debt service without being able to pay all the other expenses.
Again, are you paying too much for the B&B? Are you paying for their “blue sky” rather than making your own? Can the business be turned around? Does it fit your dream perfectly? Tough, soul searching questions for you to answer before proceeding.
Learn about innkeeping, bookkeeping/accounting, marketing, cooking, maintenance, locksmithing, gardening, first aid — everything you can learn to make your B&B experience better and more profitable. The more you know about business the better you can manage others doing those tasks. That makes life better.
You owe it to yourself to understand the financial aspects of the B&B industry before investing your money in it. There was a time I felt that “where there’s a will there’s a way”, as far as making it in the B&B world. I’m not sure dedication, passion, and hard work are enough any more. With the proliferation of B&B inns across the country, the threat of terrorism, and a volatile economy, tourism is different than it was. Travelers are more dollar conscious than they were before, meaning they shop carefully for their accommodations; they’ll pay for customer service and an outstanding guest experience, but they won’t pay for average or run-of-the-mill service or experience. It takes money to buy a profitable B&B, to stay afloat until a new inn is profitable, and to create a special B&B that will command the money you want for renting your guest rooms. Shared baths don’t cut it anymore and it takes money to create enough bathrooms for each guestroom you have. Amenities are more important now than ever, and it takes money to buy and install them. Customer service means employees, and it takes money to hire reliable, quality staff.
Having a comfortable home for yourself is important. You give so much of yourself that you must have a place to refuel, renew, and regenerate so that you have a fresh outlook for when you interact with your guests. Inadequate owner’s quarters is something you’ll find as you search for your dream inn. Historically, innkeepers have lived in sub-standard quarters; today’s buyers aren’t willing to make that sacrifice. But, what one person thinks of as a sacrifice another thinks of as a palace; know what you want or need in your living quarters to be comfortable and happy. You don’t spend much time in your quarters, but the time should be satisfying, so make sure you know what that means to you.
Know what level of busy-ness you want, how much income you need the B&B to produce, and what you need in life and whether innkeeping can satisfy your needs. If you don’t take the time to figure that out now, you are far more likely to experience disappointment — and possibly financial ruin.