If you are planning on starting up a bed and breakfast, you are stepping into one of the most popular and trendy business for travelers today. Many have come to appreciate the home style atmosphere of a bed and breakfast as a great alternative to the sterile but sometimes posh surroundings of modern motels and hotels. In most bed and breakfasts, you meet the owners when you check in or maybe when you reserve your room. Each room is unique and breakfast is anticipated to be a great finish to an excellent stay.
If you are the owner, the story can be a little different. Most owners live in or near their bed and breakfast. This can be a part of the hidden costs of a bed and breakfast. You can never really be away from work. It cost you more than a week's profits to hire someone to take care of things when you need a vacation or become ill. To be profitable, the B & B has to stay relatively booked most of the year, and you have to be the primary source of labor.
You will need deep pockets to afford to survive the first year unless you can raise the money to buy a thriving B & B. That will cost you premium dollars. Like most new businesses, a bed and breakfast has certain initial costs that cannot be circumvented. You have to buy or build a building that will adequately house your business.
You probably will not find a large house with 5 or 10 bedrooms that someone will rent to you for a hotel. It also needs a large dining area and a kitchen that approximates being commercial. This size building is not normally free. You will need a large pile of cash to get this place. Plan on a payment unless you are sinking a lifesavings into to buy it outright. Either way, it is a financial risk. If you can avoid a loan, it will leave you more breathing room in the profit margin. However, it might create cash flow problems later it you drained your cash reserves too low.
If the kitchen is not already up to health department standards, you will need to make extensive modifications to bring it up to par. The equipment needed can be very expensive. It would be wise to do your homework before laying out the money for the house or building. You may have to install special sprinklers or other fire related equipment also. An exterminator will have to be kept on a retainer to make sure that the bug population stays low to non-existent.
You will have to buy food. There will also be the potential for a lot of food to be wasted. This will be by guests, overcooking, and spoiling because you overbuy. Pots, pans, plates, flatware, cups, etc. will all have to be purchased before the first meal is served. Spices, storage containers, table coverings, and furniture are also big cost items. This is just for the breakfast part of the deal.
Each of those guest rooms has to be adequately decorated and furnished if you want customers to stay the night, return for future stays, and tell their friends to come to your establishment. The televisions need to have a good signal from cable or satellite. This will have a hook up cost and a monthly fee. The utilities have to be on. This means deposits and pay ahead costs on the first bill. Most of these costs will hit before one cent of revenue is makes it to the cash register.
If you want guests, you will need to advertise. This will be risky at first because you will have to advertise as though you are open before you actually are. The advertising will force you to finish preparing to open by a set deadline. This deadline can create costs because you may not be able to shop for bargains and open on time, too. If you want to fill up from the beginning, you will need to finish a room or two to have pictures for the ads. You will have to spend for advertising in several types of publication and probably pay to have a website established with plenty of keywords to get into the search engines.
You will need a hard surfaced parking area because most travelers today are not very understanding about walking in mud or gravel. You will need to pave about twice as many parking spaces as you have rooms. If you sell breakfast to people who do not spend the night, you may need even more spaces.
Laundry is another key area. You need to be able to keep up with all of the sheets and towels that are soiled by the guests. You will need about three times as many towels and linens as you have beds to start. More is better. Depending on your physical condition, you may need help to make up rooms and do the laundry. There will be training costs before you open.
A good rule of thumb in opening any business is to estimate the costs and double them. You will need to plan on a slow ramp up on the business. It may require up to three months before you business is steady. Not planning for this will only guarantee that you will not have enough cash to hold on until a profit can be made. Do not forget things like bookkeepers, computers and software, and other fees that may arise like building permits for construction and modifications.
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