Setting Up a B&B – Can You Make A Living?
It’s probably not too surprising that the question I am asked most frequently by prospective B&B owners is “Can I making a living from running a B&B?”Unfortunately there is no simple yes or no answer to this question. So my answer is always “It Depends”. There are lots of different variables, most of which I’ve listed below.
The other problem with working out how much money and how successful you will be is that as most B&Bs are run from the family home, a lot of the costs involved are costs that you would be incurring anyway even if you weren’t running a B&B.
If you were to look at an existing B&B accounts the profit figure may look small, but that will probably be because they have included a proportion of day to day bills and mortgage interest – some of which you can use to offset against your tax bill. What you can and can’t claim is a bit of a minefield – so please see an accountant!
So what are the variables that will affect how much money you can make??
How Much Money Do You Need To Live On?
Whilst one person can happily survive on a few hundred pounds a month, someone else may find it difficult to survive on a few thousand. So first you need to work exactly how much money you need.
What Will Your Start Up Costs Be?
Setting up a B&B will involve some cost. Those costs will depend on the whether you are setting up in your existing home, buying somewhere else to set up as B&B or buying an existing business.
If you’re setting up from scratch you may need to install en-suite bathrooms, buy new furniture, install fire safety measures, decorate, commission a website, buy linen etc.
Be aware that even if you are buying an existing business you may well need to spend some money making improvements. With recent changes in fire safety legislation and the quality standards this may make a big hole in the budget – so do your homework carefully.
What Will Your Ongoing Costs Be?
As I mentioned earlier one of the advantages of running a B&B is that you can claim a proportion of the cost of running your home against the money you make. So effectively you can reduce your tax bill.
However having more people in your home using lights, more heating, water etc. will also increase your utility bills. So you will need to allow for this in your cost projections. Again it’s impossible to say how much extra it will cost you – it depends on the size of your home and how energy efficient you are – a good reason for going green!
Your costs will also be dependant on the type of B&B you run. If you’re offering a basic continental breakfast your costs will be lower than someone who is offering a 5 star menu including smoked salmon, kedgeree and luxury cereals.
Running a higher standard of B&B may also incur more money in keeping it up to standard and require you to offer better quality ( and more expensive ) extras.
Remember to allow for the cost of replacing items as they wear out or break such as towels, sheets, crockery and even carpets eventually.
Other ongoing costs include website maintenance, insurance, marketing, advertising etc.
How Much Money Are You Likely To Make From Your B&B?
The amount of money you actually receive from guests is again dependant on a whole load of different variables. A 5 star B&B next to the main RSC theatre in Stratford is likely to take a lot more money over the year than a 3 star B&B in the middle of the countryside in an area that no one knows about! So you need to consider location, quality, facilities, competition, pricing, rating, target market and more.
As you can see if running a B&B is a serious money making venture for you – rather than just a lifestyle choice – it really is essential that you do your homework to see if your business will make the income you require. And if it is just a lifestyle thing – you may still incur considerable costs – do your financial projections and see if it’s really worthwhile.