Opening a bed & breakfast is a good way to convert unused bedrooms in your home into a moneymaking opportunity. It can also be a means to get into the hospitality industry on a small scale with limited investment. Researching and writing a thorough business plan for your B&B dramatically increases your chances of making the venture profitable.
Why is a Business Plan Important?
While many people write their bed and breakfast business plans for the purpose of funding, the business plan can offer many more benefits. It’s challenging to have a clear vision until you put your ideas on paper and that’s where the business plan comes in.
The Small Business Administration shows that over 21% of small businesses fail in the first year and 50% fail in the first five years. The business planning process identifies issues on paper which can help reduce costly mistakes after opening.
What Goes into Your Business Plan?
When putting together your B&B business plan, you need to take into account some main factors, these factors will increase your chances of success.
A good B&B business plan needs to start with a good idea. Make a note of what you expect to achieve from your business and where you want to be in the short-term, mid-term and long-term. This will allow you to keep on track and make it easier to identify successes and losses, so you’ll be able to correct mistakes as you go along.
Getting your budget right will help everything else in your business slide into place. It’s more important if you are looking for financial backing of any kind. Underestimating your budget will result in a longer time trying to break even or nudge you into debt.
You need to consider the following monthly outgoings:
- The costs associated with financing your property
- Daily running costs associated with your property
- Marketing costs
- Employee wages
- Your personal living costs
Once you have your costs on paper, you need to try and work out the income earned by bookings. It is also essential to know the minimum booking requirements needed to say afloat.
It is worth setting aside some funds to act as a safety blanket in the event of any unexpected costs or a slow month.
B&B pricing structure
Once you have worked out your overheads and outgoings, you are in a good position to set the all-important pricing structure for your B&B business plan.
There are some essential considerations when working out your pricing structure:
- Market size – How many potential customers can you manage effectively?
- Competition – What will you charge in relation to your competition?
- Seasonal pricing – Will you adjust your pricing over busy periods?
- Special offers – Consider special offers or discounts for quiet periods
- Weekend to midweek rates – Will you change the pricing for the weekends?
- Single occupancy rates – Will you charge different rates for single travellers?
- Restrictions – Consider restrictions such as pets or children
- Cancellations – Consider your cancellation and refund policy
You will need to monitor and adjust your pricing structure on a regular basis.
Decide what you’ll do to promote your bed and breakfast, and work out a marketing budget. You can start with social media marketing and increase your budget when able. If you are unsure how to approach your marketing there are marketing agencies who can help you for a fee. Research how your competitors approach marketing and use their past experience to your advantage.
Define your Key performance indicators
Monitoring your performance is an essential part of running a successful business, and you will need to define how you will measure success when putting your business plan together. You will need to look at all areas of your business to be reviewed on a regular basis.
When defining your KPIs you may want to consider:
- Total sales per month – How do they compare with your plan, and are you growing year on year?
- Occupancy percentage rate – This is the percentage of booked rooms, does this meet your plan?
- Average room rate – You should be seeing a number close to your per-night rate.
- Customer satisfaction – Reference your feedback and reviews, is there a way to improve?
For advice and information on business plan writing refer to our blog or read further information about our business plan writing services. CBM can also be contacted via the contact form on our website or call our expert team on 01604 420 420.