How to Start a Bed and Breakfast Business | A Complete Guide for Your New Venture

It's always been your most prominent dream: you want to start a bed and breakfast business in an exquisite environment. You enjoy interacting with new people every day.

That's an exciting way to beat your dull day job. 

Running a bed and breakfast business is a great experience. It is a highly profitable venture under the right circumstances.

If you are ready to join the small business owner's rank, this article is just the thing you need. It is a complete guideline on how to start a business venture and shows you how to get through the planning stages. You will also learn how to register it properly and ensure it is legally compliant.

What is a Bed and Breakfast Business?

Inn bed and breakfast sign


The bed and breakfast industry is part of the hospitality industry and is a mix between a private home and a boutique hotel. Usually, the bed and breakfast owner makes the service very personal. 

It blends both the comfort and luxury amenities with the décor and atmosphere of a beautiful private residence.

A successful bed and breakfast establishment usually have at least five rooms. Additionally, providing breakfast to the guests crowns the package deal. The manager or the owner lives on-site with the guests and interacts with them. Usually, this feels like you’ve invited guests to your home.

Here are the steps you need to follow when starting your business:

How to Start a Bed and Breakfast Business

Step 1: Have a Bed and Breakfast Business Plan

It would be best if you had a clear plan for the success of your new business. It helps map out the business specifics and discover the unknown aspects of the company.

To meet all the business formation legal requirements, you should choose trusted and affordable formations services and registered agents services that can help you with starting up and running your B&B business from a legal perspective.

Some of the things your business plan should outline include;

  • The costs involved in opening the business: There are high costs when opening a bed and breakfast business. The most expensive item, by far, is purchasing the property. BedandBreakfast.com offers a list of bed and breakfast establishments on sale.
  • Recurrent bed and breakfast expenses: Some of the significant recurrent expenditures in bed and breakfast businesses include maintenance costs, insurance, taxes, and mortgage payments. Other recurrent expenses include licensing fees, cooking supplies, and utility costs.
  • The target market: The ideal customers would be those who travel a lot, usually for pleasure, and have discretionary income. Those on vacation are the ones who would most likely need a more intimate setting than business travelers.
  • How bed and breakfast make money: This business setting makes money by charging lodging fees inclusive of breakfast. The charges may be per night, week, bi-weekly, or monthly.
  • How much profit a bed and breakfast makes: Its profitability depends on how many rooms you have, the room rates, and the occupancy rate.
  • How to make the business more profitable: To increase the profitability of your bed and breakfast business, you can entice guests with special packages and sell takeaway meals in the neighborhood. Additionally, you can charge extra to those celebrating special events.
  • The business name is crucial, yet it can be a challenge. If you do not have a chosen name, you can use the help of a business name generator. When registering the business name, you should research the business name first by checking:
  • Federal trademark records
  • Web domain availability
  • Social media sites
  • The state’s business records
Bussines plan


Step 2: Create a Legal Entity

Establishing a legal entity protects you from personal liability if the bed and breakfast business faces a legal issue. A business structure to consider includes a limited liability company (LLC), sole proprietorship, or corporation.

Step 3: Tax Registration

Before you can open your business, register for various federal and state taxes and apply for EIN (Employer Identification Number) from the IRS. EIN allows the Internal Revenue Service (IRS) to identify your business for tax.

Step 4: Open a Bank Account and Get a Credit Card

For personal assets protection, you will need dedicated business banking. When you mix business and personal accounts, you risk losing your assets if your company gets into legal problems. This is known as piercing the corporate veil in business law. In addition, it also makes tax filing and accounting easier.

Also, you need to learn about building business credit to assist you in getting credit cards or any other business financing for the business.

Laptop and bank cartoon

Step 5: Business Accounting Set-Up

Keeping a record of your source of income and expenses is crucial to grasping how your business performs. Keeping precise and accurate account details makes the process of filing taxes simpler.

Step 6: Get the Needed Licenses and Business Permits

Depending on where you intend to open your bed and breakfast, you might need specific licenses. Learn more about business license requirements here. A food establishment (see all about bakery business here) should expect regular visits by the local health department regularly.

To operate the business, you will need to obtain a CO (Certificate of Occupancy), which is a confirmation that you are compliant with the government regulations, zoning codes, and building codes.

If you intend to lease the business location:

  • The landlord should obtain the Certificate of Occupancy (CO)
  • Before you lease, confirm that the landlord can get a CO valid for a bed and breakfast business
  • If there's a significant renovation, you need to insist on a new CO

If you intend to build your business premises:

  • It is your responsibility to obtain a valid Certificate of Occupancy (CO) from your nearest government local authority in compliance with the local laws
  • To ensure that your business complies and gets a CO, you need to check the zoning requirements.
Permit document

Step 7: The Business Must Be Insured

Businesses, like all others, require insurance to function legally and securely. This is true of both permits and licenses.

Business insurance will cover your business's financial well-being when you experience a covered loss. There are different insurance policies meant to cover other types of risks; if you are unsure which one best suits you, start with General Liability Insurance.

Another equally important policy for businesses is the WCI (Workers’ Compensation Insurance).

Step 8: What Does Your Brand Represent?

A strong brand helps your business stand out from its competitors. Your brand delivers what the company represents. It is your own business. It is what helps you attract guests. 

Additionally, it would help if your marketing strategy targets leisure travelers looking for a vacation rental. At a minimum, you need to have social media pages and your own website. Have the business listed on bed and breakfast websites and offer bookings on websites, online travel agents who offer direct bookings, and local tourism organizations that feature hotel deals.

You need to offer an over-the-top lodging experience to attract potential guests and keep them coming back. Therefore, you can choose a property in a prime location. Alternatively, you can create an enticing space using antique decorations with your target customers in mind.

Step 9: Create Your Business Website

Once you have defined your brand and created a logo, you need to get your business online by creating a website.  Here's why you need a website ASAP:

  • To make your business legitimate, you need a website. The industry or size of the company does not matter. What matters is that you need to get your business visible.
  • Social media sites like Instagram and Facebook do not replace the need for a website.
  • Tools like GoDaddy Website Builder make basic website creation extremely easy. You do not need to get the services of a web designer or developer for a great outcome for your website. Other popular sites include Shopify, Squarespace, Weebly, Wix, and WordPress.
Laptop cartoon

Step 10: Set Up the Business Phone 

Installing a business phone system keeps your business and private life independent. Additionally, it makes your business legitimate, and your potential customers find it easy to contact you.

Biggest Mistakes to Avoid When Running a Bed and Breakfast

Before opening your doors, ensure you haven't committed the mistakes below. Any of these rookie bed and breakfast pitfalls can check you out of business before it even takes off.

  • Not creating a unique brand
  • Opening for business before you’re fully ready
  • Ignoring to write out policies
  • Not doing proper research on the business
  • Not hiring employees such as a breakfast coach to help with the business's day-to-day running.
  • Being too generous with the services you offer rather than charging for extra services or amenities such as the swimming pool
  • Not understanding your intended market
  • Using the wrong business software
Room with a bed

What Are the Benefits of Starting a Bed and Breakfast?

  • Meeting new people
  • The bed and breakfast business has a structured environment
  • You create a personalized experience for your customers
  • Delicious home-cooked breakfast for the guests
  • You get local advice

FAQs

Q: How profitable are bed and breakfast?

A: A bed and breakfast business is enjoyable and profitable to run once you've set realistic expectations. You'll enjoy meeting new people while avoiding the daily commute to work. You also get to enjoy valuable time off during the off-season.

Q: What do you need to open bed and breakfast?

A: Steps to open a bed and breakfast business:
  • Evaluate the market
  • Secure your best location
  • Get permits and licenses
  • Customize your space
  • Create a list of daily tasks
  • Evaluate your cash flow
  • Have a list of your guest rooms
  • Encourage guests to leave reviews of your services

Our Take Away for a Prospective Bed and Breakfast

If you enjoy hosting people, you may need to start a bed and breakfast business. Guests visit bed and breakfast to enjoy a level of hospitality that motels and hotels don't provide. As a bed and breakfast business owner, you should prioritize making your new guests feel comfortable.

With the right personality and drive, you will run your business successfully. You need to follow the helpful tips above without trying to cut corners. Put in a little extra work, and you're sure going to stay ahead of the park.

Need more insight? Talk to our bed and breakfast coach in the comment section below.

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