Please Note: This Article is 7 years old. This increases the likelihood that some or all of it's content is now outdated.

Running a Successful Bed & Breakfast Guest House

Running a successful Bed & Breakfast Business from the comfort of your own home has many advantages and rewards as far as being self employed is concerned:

  • Escaping from the rat-race of workplace politics and the daily grind of the long commute, as you work and live on the same premises – but it’s hard work so you need to be fit and healthy.
  • Meeting lots of interesting people – but you need to be the type of person that enjoys serving others and meeting this challenge.
  • Your business expenses can be minimised as your own home doubles as your business premises.
  • You can perhaps live in a better and bigger home than you would otherwise do because the B&B business supports this.
  • You gain independence and an enjoyable way of life – but you must work around the seasonal and time-bound way of the business. Early morning working is a fixed commitment, day in and day out, but usually the rest of the day is yours to do with as you please!
  • You may be able to have time off during the off season.
  • Your future is in your own hands – the way you market and run your business and the standards of excellence you provide, all have a bearing on its success.
  • Unlike a rental business, where income is classed as an investment, the B&B is a true business occupation giving the owners tax relief advantages when it comes to claiming expenses.
  • You have the great satisfaction of knowing that every bit of effort you put in is contributing to the value of your business investment. You are building an asset for the future which should have a substantial re-sale value when you eventually come to retire.

Bed & Breakfast accommodation for travellers and workers has largely been a European tradition going back to the early part of the last century.

Its increasing popularity however has mean that it has now spread to most parts of the world. Visitors to the United States and Australia will now find B&B accommodation every bit as popular as it is in Britain and Europe.

There are many types of B&B accommodation which makes the choice for visitors so interesting and rewarding – from the small country cottage to the large rambling castle.

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  • Most B&Bs are owner-occupied properties run by a husband wife partnership.
  • Some owners share facilities like lounge areas, dining rooms and bathrooms with guests, with separate guest bedrooms.
  • Other B&Bs have self-contained accommodation, perhaps in a specialist extension to the main property, or even a converted stable block, with full en-suite facilities.
  • In the smaller operations the husband or wife may have a part-time or even a full-time day job, whereas in the larger establishments the owners will be full-time B&B operators.
  • You will find B&Bs almost anywhere. In the cities like London you will find that they are busy during the week with transient workers, and may or may not take week-end tourist visitors.
  • You will find most B&Bs in country and tourist areas, particularly national parks, the English Lakes, areas of natural beauty and on tourist trails. In the UK towns and cities on the heritage trails like London, Oxford, Stratford-upon-Avon, York and Edinburgh are very popular.
  • Breakfast is normally the only meal provided, though some B&Bs will provide an evening meal on request.
  • Most B&Bs do not have a licence to serve alcohol, though some do. Where this is the case they will normally operate a small lounge bar in the evening.
  • Many small country inns combine their pub with a small B&B business, and many will have a full restaurant service.
  • Country lodges and Scottish castles make-up the interesting variety and choice available to B&B guests.
  • There are numerous guides to B&Bs and the Internet has become an increasingly important way to market accommodation for B&B operators.
  • The industry is now well regulated in most western countries so the standards of safety, comfort and hygiene are, on the whole, very high.

A Bed & Breakfast Business ?  Factors for Success:

Like all small businesses success is governed by approximately 20 per cent inspiration and 80 per cent perspiration – there’s no substitute for hard work and initiative.

Books and guides can be very helpful to teach you the basics, but without the application of consistent effort no amount of reading and planning will guarantee success:

So what are the main success factors in the business?

  • Business Plan is an important first step in setting-up any new venture – there are lots of guides available here.
  • A Business Plan involves knowing your market and your USP – your unique selling point. What can you offer that gives you the edge over the competition?
  • Research the area thoroughly before investing in a property, unless you are buying an existing successful business – remember, new B&Bs will need planning permission.
  • Make sure there are no local plans or changes in your locality which may adversely affect your business. A new road planned etc.
  • Conversely, there may be plans afoot which may help your business and you could be first in – for example, a new tourist attraction.
  • Think about your clientele – purely tourists, or is it possible to accommodate transient workers when tourists are not around?
  • You might try it first with what you already have – converting a few rooms won’t cost you the earth – but remember you will needplanning permission and you will also need some investment in fire precautions such as alarms and fire doors (can be pricy) before you can start. Your local authority Building Control people will advise.
  • How much money will you need to invest and how much will you need to borrow?
  • Many businesses fail because they don’t have enough funds – they’re what is known as undercapitalised – so you need to borrow enough, but not so much that the payments put you under pressure.
  • Remember, unless you are very lucky, or you are taking over a thriving concern, it’s going to be some time before your business gets up to full steam ahead. This could easily take you up-to 5 years.
  • Learn how to do an accurate Cash Flow Forecast as part of your rolling business plan.
  • Don’t over invest in the early years – if it’s a new venture, as opposed to an existing business you take over, start small by working part-time as well.  Do one or two rooms and then invest more as the business proves itself.
  • Keep you overheads low. Do most of the work yourself in the early years. Cooking, cleaning and bed changing don’t take a lot of skill, so most owners can manage this. Honing your do-it-yourself maintenance and decorating skills will help tremendously in saving you money.
  • In the early years you will have time on your hands, but not a lot of cash, so now is the time to do-it-yourself. Later on when the rewards start to come in you might be in the envious position of sitting back and watching someone else do it for you.
  • As you get used to doing your Business Plans and Cash Flows you will realise that the important points in running your B&B are:
    • Your monthly overheads in relation to income
    • The number of rooms you have available
    • Your bookings and occupancy rates
    • The amount of money you spend on marketing
    • How much you spend on paying others
    • How seasonal is your business – can you fill in for void periods with alternative guests?
    • What are your loan repayments in relation to income?
    • Remember, the higher your overheads the higher rates of occupancy you need to break-even – aim to break even on 20 to 30 per cent occupancy.
  • Work out what is the minimum number of rooms you will need and your estimated occupancy rates to break even: (1) when you are  working part-time to supplement the B&Bs income and (2) when running the B&B business full-time.
  • Be prepared to put in long hours especially in the early years.

Producing a good business plan enables you to take a more objective view of your proposals – let’s face it, most people faced with the prospect of owning and running their own business for the first time see everything through rose tinted glasses!

You need to very carefully identify your areas of strength and also your weakness. Generally your strengths will take care of themselves, so you need to concentrate on you areas of weakness.

For example, are you apt to start things but then lose interest and fail to finish? A common trait, but fatal when it comes to seeing a business through to success. Perhaps your partner is a good finisher to compliment your flair and imagination, or vice versa?

What opportunities present themselves for the future and what threats might be on the horizon? For example, operating a tourist based business has been much tougher in the UK since 9/11!

Don’t be frightened of competition in the area. In fact B&Bs often do better in areas where there is plenty of competition. (1) you know there is a market and (2) B&Bs usually help each other out with vacancies – so go out of your way to make friends with other B&B owners.

Join the local or national associations for B&B owners, get yourself listed in the local and national guides and with the Tourist Boards.

Seriously think about using the Internet to market you business – used intelligently the Internet can provide you with a serious amount of business. But don’t pay out a fortune to have a web site done – it’s not necessary.

Above all, determine to run your B&B on the premise of excellence – excellent customer service, clean, comfortable and safe accommodation with a high standard of catering and you can hardly fail! Good luck.

Tax Incentives for a Bed and Breakfast Business

B&B is recognised as a business (generating earned income) by the Inland revenue, unlike property letting which the Inland Revenue class as investment income (unearned income)

There are some valuable tax incentives when you are self employed and running a business. You will be able to claim all your operating expenses and loan interest against you income.

Insurance for B&Bs

In these days of higher risks and a litigious public, adequate insurance cover is vital. The types of cover you need to consider are:

  • Buildings cover – your mortgage company will insist on this
  • Contents cover – your contents should be adequately covered.
  • Public liability – covers you for civil actions brought by guests who may sustain injury on your property.
  • Employee liability – you are likely to employ casual labour in the process of running your small business and this cover is a legal requirement.
  • Cancellation insurance – in case guests let you down.
  • Personal accident, health and key-person insurance – in case you are incapacitated at critical times.
  • Motor insurance for business use – you are likely to use you vehicle for the holiday letting business.
  • See also Insurance
Please Note: This Article is 7 years old. This increases the likelihood that some or all of it's content is now outdated.
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