Business ideas
8 min read

How to Start a Profitable Bed Breakfast Business [11 Steps]

Learn how to start a profitable bed and breakfast business with these 11+ steps. From location scouting to marketing strategies, we've got you covered.
Nick

By Nick Cotter
Updated Feb 05, 2024

image of a bed breakfast business
This page may feature products from our affiliate partners, which could influence the products we discuss due to potential compensation. Despite this, our evaluations are impartial, based solely on our independent analysis. The content here is intended for informational purposes and should not be seen as legal advice. For professional guidance, consulting with a legal expert is recommended.
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1. Perform market analysis.

Starting a bed and breakfast business requires a thorough understanding of the market to ensure your venture can compete effectively and attract guests. A comprehensive market analysis will help identify your target audience, gauge demand, and understand the competitive landscape. Follow these essential steps to perform an effective market analysis:

  • Research the local tourism trends to determine peak seasons, visitor demographics, and popular attractions that may influence demand for your bed and breakfast.
  • Analyze competitors by looking at their pricing, services offered, customer reviews, and market positioning to identify any gaps or opportunities for differentiation.
  • Understand your target customers' preferences and expectations through surveys, focus groups, or analyzing online behavior to tailor your offerings accordingly.
  • Assess the economic climate of your area, including factors like employment rates, disposable income levels, and any upcoming events or developments that could affect your business.
  • Examine local regulations and zoning laws that may impact the operation of a bed and breakfast in your chosen location.
  • Use data from tourism boards, business directories, and online platforms to estimate the potential market size and capture rate for your bed and breakfast.
image of a bed breakfast business

Are bed breakfast businesses profitable?

Yes, bed and breakfast businesses can be very profitable. According to a 2019 survey by the Professional Association of Innkeepers International, the average bed and breakfast reported a net profit margin of 36.4%. Additionally, revenue for bed and breakfast businesses typically grows year over year.

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2. Draft a bed breakfast business plan.

Creating a comprehensive business plan is a critical step in starting a bed and breakfast. This plan will serve as a roadmap for your business, outlining your vision, strategy, and the details of how you plan to operate and grow your establishment. Consider the following key components when drafting your business plan:

  • Executive Summary: Provide a brief overview of your bed and breakfast concept, including the business name, location, and the unique selling proposition that sets you apart from competitors.
  • Company Description: Detail the business structure, background, and the type of experience you aim to offer guests.
  • Market Analysis: Research and describe your target market, industry trends, and how you fit within the competitive landscape.
  • Organization and Management: Outline your business's organizational structure, detailing ownership, management team roles, and staffing requirements.
  • Services Offered: Describe the accommodations, amenities, and any additional services or experiences you plan to provide.
  • Marketing and Sales Strategy: Explain how you will attract and retain customers, including marketing channels and sales tactics.
  • Funding Request: If seeking financing, specify the amount needed, how it will be used, and proposed repayment terms.
  • Financial Projections: Offer an analysis of expected revenues, expenses, and profitability over the first few years of operation.

How does a bed breakfast business make money?

Bed and breakfast businesses make money by providing lodging and meals to travellers or vacationers. They may charge a fixed rate per night, or an all-inclusive fee to cover the room, meals, and amenities. A target audience for an 11 Steps To Starting a Successful Spice Business could include chefs in restaurants, hospitality venues, catering services, food stores, and individual gourmet cooks. Additionally, aspiring spice business owners who are looking to start their own venture could also be a part of the target audience.

3. Develop a bed breakfast brand.

Developing a brand for your bed and breakfast is a critical step that sets the tone for your business, attracts your ideal guests, and differentiates you from competitors. A strong brand conveys your unique value proposition and creates a memorable experience for guests from the moment they discover you to their post-stay reviews. Here's a concise guide to help you develop your B&B brand:

  • Define Your Unique Selling Proposition (USP): Identify what sets your B&B apart from others. This could be your location, history, themed rooms, or exceptional service.
  • Understand Your Target Market: Research the demographics and preferences of your ideal guests. Tailor your branding to appeal to their tastes and expectations.
  • Create a Brand Identity: Choose a brand name, logo, and color scheme that reflect your B&B's personality and USP. Ensure it's consistent across all marketing materials.
  • Develop a Brand Voice: Craft the tone and style of your communications, whether it's friendly and informal or elegant and professional, to resonate with your target audience.
  • Build an Online Presence: Establish a professional website and active social media profiles. Use high-quality images and engaging content to showcase your property and brand.
  • Gather Feedback: Listen to guest reviews and feedback to refine your brand and ensure it meets guest expectations.
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How to come up with a name for your bed breakfast business?

Brainstorming is a great way to come up with a name for your bed breakfast business. Start by making a list of words and ideas that relate to the type of bed and breakfast you plan to run. Think about the location, theme, amenities, services and specials you offer. You can also look for inspiration from local landmarks or attractions or even something traditional or unexpected. Use this list to help you brainstorm potential names that capture the essence of your business and make you stand out from the competition. With the right combination of words, you can create a memorable name that will grab the attention of potential guests.

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4. Formalize your business registration.

Formalizing your bed and breakfast business registration is a crucial step in legitimizing your venture and ensuring compliance with local laws and regulations. This process will vary depending on your location, but there are some common elements you'll need to address. Follow these guidelines to ensure your business starts on a solid legal foundation:

  • Research the specific registration requirements for bed and breakfasts in your area by visiting local government websites or contacting the appropriate regulatory body.
  • Choose a legal structure for your business, such as a sole proprietorship, partnership, limited liability company (LLC), or corporation, and file the necessary paperwork with your state or local government.
  • Obtain an Employer Identification Number (EIN) from the IRS for tax purposes, especially if you plan on hiring employees.
  • Register your business name with your state's business registry, ensuring it is unique and not already in use.
  • Apply for the necessary permits and licenses, which may include a general business license, a food service license, and a lodging license.
  • Reach out to an insurance agent to discuss the types of insurance you will need, such as property insurance, liability insurance, and workers' compensation.

Resources to help get you started:

Unlock valuable knowledge to enhance your bed and breakfast venture with key resources offering market trends, operational best practices, and strategic growth advice:

  • The American Bed & Breakfast Association (ABBA): Offers comprehensive guides, industry news, and networking opportunities for bed and breakfast owners. Visit ABBA
  • Bed & Breakfast Magazine: This publication features articles on improving guest experiences, marketing tips, and the latest trends in the B&B sector. Explore Bed & Breakfast Magazine
  • Professional Association of Innkeepers International (PAII): Provides advocacy, education, and networking for innkeepers for operational excellence. Discover PAII
  • BnBFinder.com's Industry Blog: Offers insights into marketing, management, and industry-specific news for B&B operators. Access the Industry Blog
  • Bed and Breakfast.com’s Innkeeper Resources: A collection of marketing tools, reservation software insights, and strategies for growth and profitability. View Innkeeper Resources

5. Acquire necessary licenses and permits for bed breakfast.

Starting a bed and breakfast is an exciting venture, but it's crucial to ensure you have all the necessary licenses and permits to operate legally. This step is critical as it helps to protect you, your business, and your guests. Below is a guide to help you navigate this process:

  • Research Local Zoning Laws: Check with your local zoning office to ensure that your property is zoned for use as a bed and breakfast.
  • Business License: Apply for a general business license with your city or county business licensing office.
  • Health Department Permits: Contact your local health department to find out about necessary health and safety inspections and permits, especially if you'll be serving food.
  • Building and Safety Codes: Have your property inspected for compliance with state and local building and fire safety codes.
  • Special Permits: Depending on your location and services, you may need additional permits such as liquor licenses or entertainment permits.
  • Signage Permits: If you plan to put up any signs for your business, you might require a sign permit from your local government.

What licenses and permits are needed to run a bed breakfast business?

In order to run a bed and breakfast business, you will need several types of licenses and permits, depending on your location. Generally, you will need a state or local business license, a food service license if you plan to prepare and serve food, a health certificate that certifies the facility is in compliance with local health regulations, an occupancy permit that limits the number of guests allowed in your building at any one time, and a zoning permit which gives permission for the property to be used for commercial purposes. Additionally, you may need other special permits depending on the nature of your business and the regulations in your area.

6. Open a business bank account and secure funding as needed.

Starting a bed and breakfast business requires careful financial planning and management. A crucial step in establishing your business's financial foundation is to open a dedicated business bank account and secure the necessary funding. Below are the key actions to consider:

  • Research banks and credit unions that offer business banking services. Compare fees, features, and customer reviews to choose the best fit for your bed and breakfast.
  • Prepare the necessary documentation, which typically includes your business registration papers, EIN (Employer Identification Number), and personal identification.
  • Open your business bank account, ensuring it has the functionality you need, such as online banking, debit cards, and check-writing capabilities.
  • Develop a comprehensive business plan to outline your financial projections and funding requirements. This will be essential for securing loans or investment.
  • Explore funding options, including traditional bank loans, Small Business Administration (SBA) loans, grants, or investors. Consider the pros and cons of each funding source.
  • Maintain a clear separation between personal and business finances to simplify bookkeeping and tax preparation.
  • Regularly review your bed and breakfast's financial performance and adjust your funding strategies as necessary to ensure sustainable growth and profitability.

7. Set pricing for bed breakfast services.

Setting the right pricing for your bed and breakfast is crucial to attract guests and ensure profitability. Consider the following guidelines to establish a competitive and fair pricing structure that reflects the quality and uniqueness of your accommodations.

  • Analyze the market: Research local competitors' rates to understand the going prices for similar services in your area. Adjust your rates based on your offerings, such as a premium for unique experiences or discounts for less popular times.
  • Cost-based pricing: Calculate your operating costs, including mortgage, utilities, supplies, staff wages, and maintenance. Ensure your prices cover these expenses and allow for a reasonable profit margin.
  • Dynamic pricing: Consider implementing dynamic pricing strategies that fluctuate based on demand, seasonality, and local events. High demand periods can warrant higher rates, while discounts can be offered during slower times to encourage bookings.
  • Value-added packages: Create attractive packages that include additional perks like meals, tours, or activities. This can justify higher prices and enhance guest experiences.
  • Transparent fees: Clearly communicate all fees, including taxes and any additional service charges, to avoid surprising guests and maintain trust and satisfaction.

What does it cost to start a bed breakfast business?

Initiating a bed breakfast business can involve substantial financial commitment, the scale of which is significantly influenced by factors such as geographical location, market dynamics, and operational expenses, among others. Nonetheless, our extensive research and hands-on experience have revealed an estimated starting cost of approximately $480000 for launching such an business. Please note, not all of these costs may be necessary to start up your bed breakfast business.

8. Acquire bed breakfast equipment and supplies.

Setting up a bed and breakfast requires careful selection of equipment and supplies to ensure your guests have a comfortable and memorable stay. From cozy bedding to a well-equipped kitchen, each item plays a critical role in creating a welcoming atmosphere. Below is a guide to help you acquire the essential equipment and supplies for your bed and breakfast.

  • Bedding & Linens: Invest in high-quality mattresses, bed sheets, comforters, pillows, and towels. Opt for durable and easy-to-clean materials that provide comfort and luxury.
  • Room Amenities: Include furniture such as bedside tables, lamps, wardrobes, and chairs. Don't forget alarm clocks, hairdryers, and toiletries to enhance the guest experience.
  • Kitchen Equipment: Ensure your kitchen is stocked with commercial-grade appliances, cookware, utensils, dishes, and glassware suitable for preparing and serving breakfast.
  • Cleaning Supplies: Maintain a stock of cleaning agents, laundry detergent, brooms, mops, and vacuum cleaners to keep the premises neat and hygienic.
  • Safety Equipment: Install smoke detectors, carbon monoxide detectors, fire extinguishers, and first aid kits to prioritize guest safety.
  • Miscellaneous Supplies: Remember to have items like guest information booklets, maps, snacks, and beverages to offer that extra touch of hospitality.

List of software, tools and supplies needed to start a bed breakfast business:

  • Accounting Software: $20/month
  • Website Builder: $100–500, depending on plan and features
  • Point of Sale System: $150–500 depending on the system
  • Security Cameras: $150–1,000, depending on the system
  • Breakfast Supplies: $50–200 per month for ingredients and supplies for daily breakfast buffet
  • Guest Supplies: $50–200 per month for bath and kitchen supplies
  • Cleaning Supplies: $30–200 per month for supplies to keep the bed & breakfast clean
  • Linens & Towels: $50–400 per month for bedding and towels for guest rooms
  • Marketing Materials: Varies, costs depend on required materials
  • Gardening Supplies: $50–100 per month for flower beds and landscaping maintenance

9. Obtain business insurance for bed breakfast, if required.

Running a bed and breakfast entails certain risks that can be mitigated through proper insurance coverage. It's essential to understand the types of insurance policies available and determine which ones are necessary to protect your business, assets, and guests. Here are some steps to help you obtain the right business insurance for your bed and breakfast:

  • Assess Your Risks: Consider the specific risks associated with your bed and breakfast, such as property damage, guest injuries, or business interruption.
  • Research Insurance Providers: Look for insurance companies specializing in hospitality businesses, and compare their coverage options and premiums.
  • Consider Mandatory Policies: Determine if there are any legal requirements for insurance in your area, such as liability or workers' compensation insurance.
  • Review Coverage Options: Evaluate different types of insurance, including property insurance, general liability, commercial auto, and umbrella policies.
  • Get Professional Advice: Consult with an insurance broker or agent who understands the bed and breakfast industry for personalized advice.
  • Obtain Quotes: Request quotes from multiple insurers to find the best coverage at a competitive price.
  • Review Policy Details: Carefully read the policy documents to ensure you understand the coverage limits, deductibles, and exclusions.
  • Purchase Insurance: Once you've selected the right insurance, complete the purchase and keep your documents accessible for future reference.

10. Begin marketing your bed breakfast services.

Marketing your bed and breakfast is crucial for attracting guests and building a strong brand presence. A well-thought-out marketing strategy will help you stand out in a competitive market and showcase the unique experiences your bed and breakfast offers. Here are some effective steps to begin marketing your services:

  • Develop a Website: Create a professional website with high-quality photographs of your rooms, amenities, and local attractions. Ensure it's user-friendly, mobile-responsive, and optimized for search engines (SEO).
  • Utilize Social Media: Engage with potential guests by creating profiles on platforms like Instagram, Facebook, and Pinterest. Post regular updates, special offers, and events to generate interest.
  • Connect with Local Businesses: Partner with local attractions, restaurants, and event planners to offer packages and promote each other’s services.
  • Online Travel Agencies (OTAs): Register your bed and breakfast on OTAs such as Booking.com, Airbnb, and Expedia to reach a wider audience.
  • Encourage Reviews: Ask satisfied guests to leave positive reviews on TripAdvisor, Google, and other review sites to build credibility and attract new guests.
  • Email Marketing: Collect email addresses and send out newsletters with promotions, news, and personalized offers to keep your bed and breakfast top-of-mind.
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What licenses and permits are needed to run a bed breakfast business?

  • Accounting Software: $20/month
  • Website Builder: $100–500, depending on plan and features
  • Point of Sale System: $150–500 depending on the system
  • Security Cameras: $150–1,000, depending on the system
  • Breakfast Supplies: $50–200 per month for ingredients and supplies for daily breakfast buffet
  • Guest Supplies: $50–200 per month for bath and kitchen supplies
  • Cleaning Supplies: $30–200 per month for supplies to keep the bed & breakfast clean
  • Linens & Towels: $50–400 per month for bedding and towels for guest rooms
  • Marketing Materials: Varies, costs depend on required materials
  • Gardening Supplies: $50–100 per month for flower beds and landscaping maintenance

11. Expand your bed breakfast business.

Once your bed and breakfast has established a solid foundation and a steady stream of guests, it's time to think about expansion. Growing your business can take various forms, from increasing the number of rooms to offering new services. Here are some strategies to consider for expansion:

  • Renovate or Add Rooms: If your property allows, you can expand by renovating unused spaces or building new rooms to accommodate more guests.
  • Offer Packages and Specials: Create themed packages or seasonal specials that include local attractions or events to attract different types of guests.
  • Enhance Guest Experiences: Introduce premium services such as spa treatments, guided tours, or cooking classes to increase revenue and guest satisfaction.
  • Partner with Local Businesses: Collaborate with nearby restaurants, tour operators, and event planners to offer your guests exclusive experiences and discounts.
  • Invest in Marketing: Boost your online presence with professional photography, an updated website, and active social media profiles to reach a wider audience.
  • Encourage Repeat Business: Implement a loyalty program or offer special rates for returning guests to encourage repeat visits.
  • Host Events: Consider hosting events like weddings, conferences, or retreats to utilize your space differently and attract a new clientele.