Welcome Lisa. Here's an interesting question to ask yourself before you go forward - is it the cooking that you love or having guests stay in your home and being on for most of the entire day that you'll love? I just had a guest stay with us this week who owned both a restaurant and then a small inn. I asked her which she preferred and without hesitation she said the restaurant because "at the end of the dinner service, I could lock the door, finish up and go back to my home until the next day." I think this is way more important that the operations of the inn and one most of us probably didn't investigate long enough before moving forward. I would certainly want to know the following:
1. income after expenses and debt service (will you have money to live on and take your own vacation or will it all be in the business)
2. how many hours do the innkeepers work a day on average
3. how much outside help do they have an does their help turn over every year -- very difficult finding good housekeeping help
4. Is the business very seasonal? If so, you'll want to be sure to take deposits on reservations so that you have cash flow over the year to survive
5. as others have said, zoning -- be sure that they've got everything done right or you could find yourself with costly upgrades like sprinklers, etc. if they have recently become mandated; also find out what is going on in the Town. Is it growing or dwindling? Any projects like landfills, groups against the Town growing, etc. that could lessen your business in the coming year. We had originally been going to build in one town and when I bought their local newspapers found out an inn's construction had been halted by a group trying to stop any development in their town. Cost the innkeeper tons of money. It's good to know if a town takes favorably to their businesses. Also, see what the planning board has recently approved - if any other hotels or inns are coming in which could take some of your occupancy away. We built at the same time that a local inn was selling and we have better occupancy than they do now and they have put all of their rooms on the OTAs.
6. if you want to do dinner, what is required for you to do so? You'll probably need a full commercial kitchen (along with fire suppression) so will it be worth it with the expense? Are you going to do breakfast and dinner? That's a really long day and why I haven't opened our restaurant yet even though I have the space and a commercial kitchen ready. I don't want to work 16 hour days. If you're going to hire help to do either breakfast or dinner, be sure the cost of the chef will leave you with a reasonable ROI.
7. what will you do about healthcare? I pay over $800 a month for a plan that only gives our family of 4 one physical a year and my mammogram - basically the only thing affordable to small business owners is what I refer to as a "god forbid policy" - it's in case we get seriously injured or sick and then we also have to cover the high deductible. A lot different than when I worked in the corporate world and one of the biggest expenses innkeepers have to figure out if they aren't working outside of the inn
8. after you've answered all of the above, is the scenario at the inn you're considering going to provide you with the life you want?
Good luck..
#2 - reminded me of a pizzeria many years ago we looked into buying. Working owners said it make $X net profit. I asked, do you pay under the table? Seemed the labor $$$ wasn't right for the financials. Also, I asked, how many hours do you work here weekly? He said "100" I asked, "and your wife?" "100". Basically, if all the numbers were correct, they each made about $7 an hour, not counting the payments we would have had to make to buy the business. And of course, self employment tax, the risk, etc,
Net profit is AFTER reasonable owner's salaries. That is why biz buy sell . com type sites call it "owner benefit" or hint at tax savings. In other words, the business might be unprofitable and they are trying to spin it.
There is a reason they are selling. It is rarely because they are full and happy with so much money they just want to move on with their lives. Watch restaurant or hotel impossible, etc. The frustration, anger, hostility, heavy debt of the owners will be YOU, if you are not careful!!!
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This is a very good reminder that the failure to account for ALL of the work is the number one reason why innkeepers are unbalanced, burned out, and unhappy. Over and over again this scenario plays out in the bnb industry.
Undersea, I am increasing sure that won't be you. I like that you are putting your past business experience into play to ensure that whatever you end up doing will have a solid foundation going in.
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I bought someone else's roofing company many years ago and got badly burned. It LOOKED really good and I did a lot of due diligence. Spent a fortune on lawyers to qualify for a loan. Would not believe all the judgments and unpaid taxes the man had. He cheated his church, his brothers and many others. Lying, conniving person.
Ran it for 3 years and learned more than I ever imagined. Now I could tell people what to look for.
I have quietly observed a LOT of the commentaries from some active innkeepers here. I saw myself, when I finally got out from under that mess. The mail, the phone calls for money (which I did not have).
I think some forget this is a business. When an innkeeper takes a bad review or comment personally, that goes with the territory. If I pay an innkeeper $125 for one night, and they are miffed I don't praise their breakfast, or have a dietary issue and they are unhappy about the inconvenience or a host of other complaints I see here... In what other business model do these attitudes fly? We can rant here, but some are living in a world that no longer exists. There is a lot of competition out there. We have to step up our game.
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Well, that is a big topic when you talk about the changes and what is required to be a part of the positive change that is going on in our industry. One thing to consider is that there is going to be less competition for certain markets that are emerging and building brands that bring your perfect guest from those markets to you is important. I have been thinking of starting a thread about it.
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I posted a week or so ago a book that I think nails it. Becoming an expert in something, especially if it is something special in your area.
I don't think it was really grasped. It is a French Bed & Breakfast owner, Yvonne Halling. I didn't go or her course, but her book is a wises read: Bed and Breakfast Magic: How to Transform Your Bed and Breakfast Into A Booming 6 Figure Business.
It is not about having bicycles available, or catering to hikers or bikers or fishermen or skiers or having equipment available.
It is about finding a niche (you enjoy) and becoming an EXPERT in it.
As she describes herself: "I'm currently in the heart of the Champagne region of France, and I welcome people from all over the world, helping them to discover the hidden gems of Champagne."
People come internationally - champagne aficianados - to her B&B, and she connects them with small champagne growers, in the very heart of champagne country.
Essentially, she is not competing with others, asshe is it and people seek her out.
THIS I think is the future. Ask any serious business coach, and they will tell you the value of education, expertise in something that you pass on to others - appealing to hobbyists.
So maybe you are an expert in model rocket, astronomy, the bayous, ghost hunting, antique weapons, the hiddens of a tourist city, coins, mineralogy.
You then set yourself up as the expert, and people at your B&B (themed, classes, displays, whatever) get the deep value of your wisdom, knowledge and connections to excite enthusiasts.
Her theory is, you an charge what you what, since you essentially have no competition.
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