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 business.
The lifestyle change, the beautiful views, and lack of a commute should appeal to all, but what do you need to know 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. But if you’re looking to buy one you’ll probably need to arrange your finance first.
The numbers are fundamental
What is the easiest way to check to see the business performance of a bed and breakfast? The turnover and profitability of the business. This is obviously driven by the occupancy rate. The more successful an operation is, the more bookings it’s taking, it’s fairly simple.
But if you’re looking at a business with a current low occupancy rate, you need to understand why. Is the business being marketing correctly – for example, 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?
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.
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. Take the management of review sites. 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.
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 well aware of the intricacies of running a business and have a strategy on how you are going to reach your customers.
Your first port of call though should be to see how you’ll be able to fund your lifestyle change.
Finally, did you know Bed & Breakfast Day is celebrated on 24th March? You do now.
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