Finance guide to buying a Bed & Breakfast
Many dream of leaving their day job and moving to an idyllic part of the UK to run a bed and breakfast. The lifestyle change, the beautiful views, and lack of a commute should appeal to all. What do you actually need to know though if you’re actually going to follow through and buy a bed and breakfast? Well, first things first, it’s hard work but the benefits for many outweigh any negatives. If you’re looking to buy one, you’ll probably need to arrange your finance first.
The numbers are fundamental
What’s the easiest way to check to see the business performance of a bed and breakfast? The turnover and profitability of the business, which is obviously driven by the occupancy rate! The more successful an operation is, the more bookings it’s taking, it’s simple! If you’re looking at a business with a current low occupancy rate, you need to consider the following questions and ask yourself, ‘Is the business being marketed correctly? Is it listed on sites like booking.com? Is the rate too high for the area? Or does the B&B require refurbishment and upgrading?’. These are all vital factors that will determine how successful the B&B is.
Experience is key to success
Lenders will want to know if you have any previous experience in running this type of business, as they would with any application for finance. If you don’t have direct experience you will need to drill down on how the skills you have accrued prior could be transferred to running a successful enterprise in this sector. Use whatever experience you may have that may be relevant and transferable to running a B&B business.
Don’t trip up with TripAdvisor
Marketing your business the right way is important in any sector but it really is key for bed and breakfasts. You need to make sure you are managing any review sites properly. Many bed and breakfasts have run into severe difficulties by not managing their TripAdvisor presence. You need to make sure that there are no legacy issues online and that you are aware of the feedback you are receiving, both positive and negative and how to deal with this in a timely manner.
Bringing it all together
Ultimately, the lender will want to see the potential in you and in the business. How you’ll move through to growth, or a sound financial footing. The better the occupancy rate, the better the financials, but you’ll need to show that you are aware of the intricacies of running a business and have a strategy on how you’re going to reach your customers. If you are considering the transition to a B&B business, your first port of call should be to see how you’ll be able to fund your lifestyle change.
Finally, if you didn’t already know - Bed & Breakfast Day will be celebrated from the 18th to the 24th March 2019!