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myschae

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Hello,

Like many, my husband and I are tired of the corporate grind and are looking at a small 'lifestyle' sized Bed and Breakfast in the Pacific NW area. It is an already established business that the current owner is looking to retire from with books showing revenue producing occupancy rates in a tourist heavy area.

We are both well travelled and have varied backgrounds with lots of management and business experience (partnership of a business and I'm full charge accounting and CS major). How important is direct hospitality industry experience to success in your opinions? Are we crazy to even consider this or is this something we can turn our experience in other industries towards it with effort? Some examples of our skills include: legal/regulation interpretation for federal agencies (him), bidding and business planning (him), successful grant writing and administration (me), full charge bookkeeping (me), full web development (SEO optimization, etc.) (me) and we both have hired, trained and supervised employees. We are also avid naturalists and would know a lot about the history, wildlife and attractions of the area.

We're also mostly friendly. ;)

Thank you for your replies.
 

gillumhouse

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I started my 3-guestroom B & B in 1996. background = working as a relief night auditor on my days off from my full-time job (computer operations - mainframes, not desktops), growing up on a farm, and dealing with 6 kids. I deem myself a success because the B & B has made enough to pay the bills (I am NOT in a tourist mecca), I am still in business, actually have guests in-house for the next 3 nights, and I add to the economy of my City. The skills needed depend on what you want to achieve and what size property are you planning to manage. I chose doing 3-room because that was what the house could do AND it was what I could manage on my own with no staff. THAT is why I say it depends on what you expect the business to do and how busy you WANT to be AND what your lifestyle (wants & needs) are to determine how much you will need to live on. The advantage I have is that I hate shopping and not just frugal - I squeak. I do not need much. For those who want to dine out, enjoy going out for adult beverage and/or smoke, want to travel, it will take more rooms and more skills and work.

My entertainment is working for my city, playing in the Community Band (if we can ever rehearse again), serving on boards (I am on a rail-trail foundation board & an small B & B group in the UK - I am in WV). So you see, there is no one answer to your question - it depends on what you want it to do. Most on here do high 6-figure or better revenues per year, my revenues would probably not pay their real estate taxes for the year. But I am in business and do what I want to be doing - it is NOT a hobby, I DO market and work the business by offering elopements, packages, etc. I am Gillum House - too old to remember an anon name and persona.
 

myschae

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I started my 3-guestroom B & B in 1996. background = working as a relief night auditor on my days off from my full-time job (computer operations - mainframes, not desktops), growing up on a farm, and dealing with 6 kids. I deem myself a success because the B & B has made enough to pay the bills (I am NOT in a tourist mecca), I am still in business, actually have guests in-house for the next 3 nights, and I add to the economy of my City. The skills needed depend on what you want to achieve and what size property are you planning to manage. I chose doing 3-room because that was what the house could do AND it was what I could manage on my own with no staff. THAT is why I say it depends on what you expect the business to do and how busy you WANT to be AND what your lifestyle (wants & needs) are to determine how much you will need to live on. The advantage I have is that I hate shopping and not just frugal - I squeak. I do not need much. For those who want to dine out, enjoy going out for adult beverage and/or smoke, want to travel, it will take more rooms and more skills and work.

My entertainment is working for my city, playing in the Community Band (if we can ever rehearse again), serving on boards (I am on a rail-trail foundation board & an small B & B group in the UK - I am in WV). So you see, there is no one answer to your question - it depends on what you want it to do. Most on here do high 6-figure or better revenues per year, my revenues would probably not pay their real estate taxes for the year. But I am in business and do what I want to be doing - it is NOT a hobby, I DO market and work the business by offering elopements, packages, etc. I am Gillum House - too old to remember an anon name and persona.
Thank you for your reply.

After reading around, I described the B&B as a 'lifestyle' type because it is small and will remain so - the zoning only ever allows for the 5 rooms it has for guests. There are living quarters attached that would suit our family and, mainly, living there IS the type of recreation we enjoy. We have discussed that it's a 7 day a week job, rather than 9 to 5 with weekends off. Most of the time we just like being around interesting things like reading about subjects, enjoying nature, interesting conversations... that sort of thing. We aren't looking to expand, just make enough to live and not have to move/change jobs in the current corporate whirlwind.

It's not the hard work we want to avoid, really. We're just tired of packing up and moving each time a big bottom line in a company decides to 'reallocate' resources. The 5 rooms and number of guests is something we both feel comfortable being able to handle together work wise. I posted here in search of any and all advice for what we might be overlooking -- in case any of you see something obvious so we appreciate whatever you folks can share with us.
 

Morticia

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Do you need hospitality experience? No. We came from the semiconductor industry. Never cooked for people other than direct family. Barely even stayed at a B&B before. We’ve been doing this for 17 years now. You learn as you go.

Try to start in the lead up to your peak season rather than in the middle or end of it. You want a little time to ease into it. Ask the current owners for some training time. You’ll need a few days.

After a couple of months it’ll seem like you’ve been doing this all your life. (Not in a bad way!)
 

Morticia

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Some things you should be able to do on your own:
  • Minor repairs (it’s expensive calling a professional to install a new faucet in a sink)
  • Bookkeeping (ditto on the expensive, and you really should see every week where your money is going)
  • CPR (just in case)
  • Website maintenance (looks like you’ve covered

    You can hire out the boring stuff like room cleaning. It’s good to know how to do it and how long it takes, but you’ll be happier not cleaning up other people’s messes. It’s much easier to be friendly and chatty the next day if you have no idea what pigs the guests are.
 

JimBoone

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Slightly different from most here on the forum, we operate an 8 unit motel. Prior experience, I'd stayed in a motel as a guest, jumped in and started with no training. About 30 years in and still enjoy the life. To me it all comes down to money, if you have enough or the business produces enough, it is a great lifestyle. Most of our years I worked an outside job for additional income. I don't mind being the maid or handyman as physical work often doesn't have the pressures or stress of high paying jobs.
 

FHI2426

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We'd be happy to talk to you, we bought our place Flag House Inn in Annapolis 3 years ago, background is marketing/finance in corporate world speech therapist. We both liked cooking, had travelled a lot, I was fairly handy. You have to like people, decent attention to detail. Our place needed a kick in the butt for marketing and we are getting the results and think we are better than lifestyle now... You can do it!
 

myschae

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Some things you should be able to do on your own:
  • Minor repairs (it’s expensive calling a professional to install a new faucet in a sink)
  • Bookkeeping (ditto on the expensive, and you really should see every week where your money is going)
  • CPR (just in case)
  • Website maintenance (looks like you’ve covered

    You can hire out the boring stuff like room cleaning. It’s good to know how to do it and how long it takes, but you’ll be happier not cleaning up other people’s messes. It’s much easier to be friendly and chatty the next day if you have no idea what pigs the guests are.
Thank you so much for your reply, it's very encouraging.

My husband is an engineer and is able to handle most household repairs - except electricity. We hire out electric. I've been a full charge bookkeeper for several small businesses and consulted setting up general ledger and accounting systems for franchise operations and administered federal/state grant monies. Full charge bookkeeping, including payroll, etc. is an area in which I've been a consultant so I'm confident in my ability there and I believe I can contribute to that part of the business plan. We've both been CPR certified (he's a former lifeguard and we've done some safety related response training) but it's a great idea to get recertified. Computer stuff - I run a tight ship so I'm hoping that's one area that I can leverage in the business plan to bolster our case to get small business financing.

Whew. Maybe this isn't as crazy as we thought! Every idea I'm getting here is going in my notes as I'm trying to write a really realistic and good business plan. I appreciate your time and suggestions.
 

myschae

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Slightly different from most here on the forum, we operate an 8 unit motel. Prior experience, I'd stayed in a motel as a guest, jumped in and started with no training. About 30 years in and still enjoy the life. To me it all comes down to money, if you have enough or the business produces enough, it is a great lifestyle. Most of our years I worked an outside job for additional income. I don't mind being the maid or handyman as physical work often doesn't have the pressures or stress of high paying jobs.
Thank you for your reply.

We're investigating the money side of things currently as we build our business plan. Do you know if it's advisable to indicate that we'd both be willing and able to do outside (remote) consulting on the side as we've done in the business plan for the B&B or might that be taken as a lack of commitment to the business? It's in our back pocket always but it's difficult to tell how that might be interpreted by folks inside the industry or .... lenders.

We have enough assets to make a credible application with a strong business plan based on a conversation I've had with the banker for the B&B we are considering. The owner was kind enough to refer him to us by name and arrange for him to expect our phone call to get information about applying for the loan - talk about inspiring hospitality. The current owner is local to the area, isn't planning to leave, and has expressed willingness to answer questions as needed if we can make the arrangement work out. We're just trying to put together the best case we can while trying to be absolutely realistic about our chances in the industry.

Thank you for your thoughts.
 

myschae

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We'd be happy to talk to you, we bought our place Flag House Inn in Annapolis 3 years ago, background is marketing/finance in corporate world speech therapist. We both liked cooking, had travelled a lot, I was fairly handy. You have to like people, decent attention to detail. Our place needed a kick in the butt for marketing and we are getting the results and think we are better than lifestyle now... You can do it!
Thank you so much!

I'm currently struggling with how to present our skills outside the industry to plausibly fitting inside the industry, if that makes sense. The bookkeeping/accounting is easy. His engineering role is federal regulatory compliance (FAA) and I have successfully conformed two full federal grant audits (ex. Title VI, Chapter 1 grant) -> attention to detail(?). I'm not sure what even qualifies as marketing experience, honestly. If you have any ideas or examples of how you presented that in a business plan, I'd love to hear it.
 

myschae

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We used to love giving dinner parties. Now we give breakfast parties. 😁
Of all the meals to make, breakfast happens to be my favorite. I've always wondered, though. Is there a different licensing system for the types of meals you serve? It might be location dependent, I suppose. I always assumed it was bed and breakfast because you mostly want to wake up, have something nice to eat and then be on your way. If you don't have an actual restaurant attached, are other meals alternate licensing requirements or is it that they don't tend to be worth the cost?
 

ramonalea

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Of all the meals to make, breakfast happens to be my favorite. I've always wondered, though. Is there a different licensing system for the types of meals you serve? It might be location dependent, I suppose. I always assumed it was bed and breakfast because you mostly want to wake up, have something nice to eat and then be on your way. If you don't have an actual restaurant attached, are other meals alternate licensing requirements or is it that they don't tend to be worth the cost?
"If you don't have an actual restaurant attached, are other meals alternate licensing requirements or is it that they don't tend to be worth the cost?" That also depends on state to state...I had many customers want to have dinner but it required a different license and the cost of hiring extra help was not worth the hassle. Our area the inspector said it was 1 meal a day, didn't matter which one, which I seriously considered dinner as this sleepy little town is 75% closed on Sun and Mon in most restaurants ex fast food. But then I would not have been a B&B but a B&D and I didn't want to be up at 9:00 washing dirty pots and pans.
I say GO for it, you have common sense and as long as you like people it will work out, just don't be surprised when little unexpected things happen (as they do) but smile and move on. It is a great job and very rewarding.
 

Morticia

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Of all the meals to make, breakfast happens to be my favorite. I've always wondered, though. Is there a different licensing system for the types of meals you serve? It might be location dependent, I suppose. I always assumed it was bed and breakfast because you mostly want to wake up, have something nice to eat and then be on your way. If you don't have an actual restaurant attached, are other meals alternate licensing requirements or is it that they don't tend to be worth the cost?
All of that is dependent on where you live. Some communities allow anything, some nothing. I can’t even serve cookies in the afternoon according to my licensing.

When we applied for financing we were homeless and unemployed, at that point for six weeks. The mortgage lenders were looking for information on how we were going to pay them. They were not asking about outside employment, but after last year they might do that now.

Look at it as applying for a job. What skills do you bring with you? How will you leverage those skills working for yourself? Make up a list of every task that needs to be done by day/week/month/year, how long that task will take, and who is responsible for accomplishing it. Even if no one ever asks, having that in your head makes you confident.

If you are planning changes that will bring in more guests, be prepared to present that info.

Talk with the banker and ask what they are looking for.
 

myschae

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"If you don't have an actual restaurant attached, are other meals alternate licensing requirements or is it that they don't tend to be worth the cost?" That also depends on state to state...I had many customers want to have dinner but it required a different license and the cost of hiring extra help was not worth the hassle. Our area the inspector said it was 1 meal a day, didn't matter which one, which I seriously considered dinner as this sleepy little town is 75% closed on Sun and Mon in most restaurants ex fast food. But then I would not have been a B&B but a B&D and I didn't want to be up at 9:00 washing dirty pots and pans.
I say GO for it, you have common sense and as long as you like people it will work out, just don't be surprised when little unexpected things happen (as they do) but smile and move on. It is a great job and very rewarding.
That makes total sense. We already know we'll need food handling licenses (they appear to be offered as online courses currently in the locality) but we haven't looked into all the details of the regulations.

We do like people. We've been discussing our marketing strategy. Since the place we're looking is maxed out zoned at 5 guest rooms, we're hoping to target the middle road customers. Not the spa experience but more cozy, friendly, and area specific knowledgeable travellers. I'm thinking specifically of some wonderful evenings we've spent in small pubs/restaurants in Ireland and Germany where people kind of gather around and tell stories or comfortably do their own thing. We're ok with people's own thing being a little weird. Actually, we were often the ones with the weird 'own thing' but in the fun know every esoteric pub song from ren faire kind of weird way. Local history, colorful stories, interesting facts about the area you might not otherwise find out about is the vibe we're aiming to create.

Thank you for the encouragement. I really want to make this work out.
 

myschae

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All of that is dependent on where you live. Some communities allow anything, some nothing. I can’t even serve cookies in the afternoon according to my licensing.

When we applied for financing we were homeless and unemployed, at that point for six weeks. The mortgage lenders were looking for information on how we were going to pay them. They were not asking about outside employment, but after last year they might do that now.

Look at it as applying for a job. What skills do you bring with you? How will you leverage those skills working for yourself? Make up a list of every task that needs to be done by day/week/month/year, how long that task will take, and who is responsible for accomplishing it. Even if no one ever asks, having that in your head makes you confident.

If you are planning changes that will bring in more guests, be prepared to present that info.

Talk with the banker and ask what they are looking for.
You are such a gem!

Yes. This is exactly what I'm producing for the business plan. I need three years of how we're going to fund the initial transition period, accounting for any supplies that need to be upgraded or refreshed (linen inventory, that sort of thing), debt management for the loan, economic viability of the area, some budgeting for refreshing the advertising. It's an existing business with a decent, but very outdated, website. The good news is the person they hired to do it way back when (circa 2012ish) wrote a clean, usable site. The better news is that's my day gig.

Honestly, part of the planning process for me is also working out day to day operations with an estimation of hours and amount of labor for both of us. We just want to live comfortably: be able to eat, have insurance, live in a nice place - we're not looking to invest for growth or become millionaires. We've already set our "if we only make $xx.xxx a year can we be happy?" point. I'm trying to plan this out with as much detail and intentional thought as possible both for the purposes of getting financing AND to make sure we both agree it's something we'd really be excited about doing. The more excited and happy we are about doing it, the better it will translate into the guest experience, I should think. That's why I'm here chatting with you fine folks. There's tons I don't know but I'm happy to research.

The current owner sent over spreadsheets from her reservation tracking software (I forget the name of it) but the occupancy rate seems decently revenue generating from the quick look I've had time to give it. I haven't had a chance to analyze it yet, but much of the time it appears to be above 90% occupancy (remember, only 5 rooms) and I'm just not sure it's plausible to try to sell an increase over that. Refresh, update marketing, and convince them we can keep it going to cover the debt servicing as part of the business plan if we don't take too big of a hit on transition. (They've maintained positive revenue even with covid and having to close/run at half occupancy for the past year. I assume banks will be aware all hospitality businesses had a rough 2020).

With all the reshuffling going around all over the country with changing business models from the pandemic, I imagine there are a lot of people re-evaluating how they want their 'Where do we want to be 5 years from now?" plans like we are.

I'm all about having a plan, back up plan, and contingency plan. What obvious things does an outsider tend to overlook?
 

Morticia

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@myschae 90% occupancy? Over how many months? A better tack would be raising rates. 90%, without cleaning help, will be miserable over the course of month over month. Even with only 5 rooms. It’s a lot of work!

When we started out we were working 150 days in a row with no time off at all. We work wiser now.

If you only work six months, then put your head down and do it. But, if this is a year round business it’s unsustainable without help.
 

GoodScout

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Hospitality experience is not needed. We had none before were bought our inn.
Being hospitable is critical. We've seen so many innkeepers who can't make guests feel they're welcome in their home.

We train our team to greet guests when they walk in the door as if they're a favorite aunt they haven't seen in 10 years.
 

gillumhouse

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As Mort said, raise the rates if it is 90% occupancy. that rate will not only kill you, but it will not help your marriage. You will be exhausted. I would not ever (as if I have to worry about it) want to be more than 75%. I am actually looking to increase my Elopements as a revenue source so I need fewer room nights to support me. Fewer room flips, less laundry......

One thing I advise in my aspiring workshops is to go to a lawyer and draw up a succession document for the business. I have seen too many (it will never happen) divorces and/or deaths kill a B & B. I know of at least 2 personally that had to sell because of this. One divorce - he left her with nothing and she could not handle the workload alone. The other - he died, did not believe in insurance, and left the house to her but the money to his kids. She had to sell up. It is cheaper to look at ALL the possibilities and what ifs in the beginning. Stuff happens and this is something no one thinks of until it happens.
 

myschae

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@myschae 90% occupancy? Over how many months? A better tack would be raising rates. 90%, without cleaning help, will be miserable over the course of month over month. Even with only 5 rooms. It’s a lot of work!

When we started out we were working 150 days in a row with no time off at all. We work wiser now.

If you only work six months, then put your head down and do it. But, if this is a year round business it’s unsustainable without help.
Excellent questions. The current owner sent over a spreadsheet that I haven't had the time to closely examine, yet. I believe it's 12 - 18 months and I'm not sure how all the fields are calculated so I'm going based on the text description that was sent to us on that occupancy rate. We're in a really preliminary stage still and I am so thankful you mentioned that because, naturally, I assumed that 100% occupancy was a standard goal.

Right now, I've been inside our current assets and that paperwork to figure out how we'd survive the buy and transition and hadn't quite gotten to the harder (and more unknown) portions like examining revenue verses actual costs. Back in my accounting consulting days, I did run books for a budget motel so I know a few things about budgeting for linens - which can get ruined or taken or worn out faster from so much cleaning. There were a few interesting stories about that which I'm sure would surprise none of you. This is exactly the kind of advice I most appreciate!

I found some great posts on this forum about pricing: on season, off season, and shoulder season that I've saved to factor into the plan. I've not gotten far enough to work out pricing yet. We are including legal and appraisal/evaluation (due diligence) representation into the budget for the set up costs because contracts are so important to get done correctly. This information tells me I need to really scrutinize the information given to me to figure out how they came to their figures and potentially build multiple models at varying revenue vs. season/time costs - which is the kind of thing I should probably have thought of in the first place.

Thank you, I really needed this advice.
 
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