The following guest post is by Susan Poole, B&B coach and innkeeper of 40 Bay Street Bed and Breakfast, an Ontario B&B.
Ready to become an innkeeper? There are a number of advantages to buying an established inn rather than converting a home into a B&B:
• You have a revenue stream from already-booked guests right away
• You will have a good idea of the cash flow for the business
• You know what the operating costs of the business are
• The key systems are already in place to run the business
• Suppliers have already been sourced
• Most sellers will be glad to help you with some sort of training/support after the sale
However, there are some key steps for making sure you purchase the bed and breakfast that is going to suit you best, even before contacting an inn-broker. Here are my four steps to create the blueprint for your search.
Step 1: Understand year ideal bed and breakfast
The first step is to get very clear on the type of bed and breakfast you wish to purchase.
• Clarify what the perfect bed and breakfast would look like. Think about things like location, size, décor, the type of guest you would prefer, seasonal or year-round business, etc.
• Get very clear on the amount of revenue it needs to generate in order to maintain the lifestyle you envision having while owning the bed and breakfast.
• Get some sense of the personal financial investment you can make. Have discussions with your financial adviser and banker. Be prepared; they will try to talk you out of it and present the worst-case scenarios, but it is important food for thought.
Step 2: Narrow down the location
Now comes the time to narrow down your search area.
• The larger the area, the more opportunity for finding the best fit. It might be a city, region, or state/province, or even an area of the country you would like to be located in. Base the location on the “vision” you created above.
• What attractions, events, and activities does this area offer to draw people in?
• Compare the types of people who come to do those activities with the reasons your ideal guest would come--are they the same?
Step 3: Research and engage the services of an inn-broker.
Many of these specialty real estate agents have owned bed and breakfasts themselves, so they have the knowledge to really understand the industry. I recommend you take the time to speak with several agents; it is important that you feel heard and understood and that they grasp what it is you are looking for. A lot of the time, that comes down to communication styles.
As you carry on with the next steps, it is important you keep your broker in the loop with the information you uncover during the next steps. Remember that it is important that you do the next steps, whether they think you should or not.
Step 4: Put the opportunities into perspective
Any purchase is going to come with trade-offs--it’s a fact of life. However, having a clear vision of your idea bed and breakfast combined with an understanding of the local marketplace will aid you in determining which trade-offs you are willing to make.
• Start researching the competition in the area so you can compare the property you are looking at against these other lodgings. This will help you understand the uniqueness of the property you are considering, whether there are under-served target markets in the area, and if the current room rates are appropriate.
• Once you have narrowed down your search to one or two properties, identify the opportunities that each property offers to increase revenue. This is essential, because lenders will want to see you can carry the additional costs of a mortgage or loan. It is also wise to check with the local municipality that you can actually implement your ideas (now or in the future).
• Have a serious discussion about the pros and cons of each property with the real estate agent so you can get a true feel from someone who has industry experience about how realistic your plan is.
Having a clear understanding of what type of property you need and can afford will save everyone a lot of time and effort. Engaging the services of an inn-broker will assist you in finding viable properties; quite often they know of lenders who understand this industry and are more sympathetic to your application than a regular bank may be. Doing your research for individual properties will provide you with the opportunity to understand the current marketplace and the trade-offs you need to make, as well as the opportunities to expand the business.
About the author: "How to turn your passions into a thriving bed and breakfast business" system,how much income they can create, how much work it will be and what the risks are for them.
Pictured: Cliffside Inn in Newport, RI