Do you dream of opening your own bed and breakfast? A common misconception among aspiring innkeepers is that you will need a lottery winner's amount of money in order to open your business.
While having a large amount of liquid assets will no doubt give you more freedom and peace of mind, it is still possible (though unlikely) to start a bed and breakfast without a major capital investment.
One major factor in determining how much capital you will need is whether or not you already own a suitable building for your bed and breakfast.
The physical space, no matter if you are renting or considering purchasing the property will always be your biggest cost. This is why many homeowners choose to utilize their current living space for their bed and breakfast. This not only keeps initial operation costs down but also adds a level of warmth and authenticity only found in a home.
Eleanor Ames, who is a Certified Family Consumer Sciences professionals, and a retired innkeeper that ran the Bluemont Bed and Breakfast in Luray, Virginia along with her husband, warns new innkeepers that no matter how well you anticipate costs, you should always budget more money than you expect to spend, especially in the first year of operation.
Estimated Costs for Essential Items
While there is no way to determine exactly what your costs will be, it's essential to determine a rough estimate of what you can expect to spend on essential items for your business.
Aside from the building and food costs, which are impossible to estimate given the dichotomy of real estate and food prices across the nation, other expenses, such as mattresses and room furnishings prices vary very little state to state and can be calculated using the information below. You should be aware, however, that personnel costs (such as maids) are not included because they are optional, and salary is determined by their state of employment.
- Room Furnishings and Renovations. The first step to achieving your bed and breakfast opening is to make sure that all of the electrical outlets, plumbing, and landscaping are up to code and aesthetically pleasing. You will also most likely have paint, at a minimum, each guest room, you will also have to foot the bill for any building repairs.
- $10,000 - $15,000 is a good estimate to start, but it could be substantially more depending on the condition of the building and grounds.
- Even if you take great care of the building, you can expect a minor renovation every ten years or so.
- Mattresses, Linens, Pillows, and Blankets. You will want to make your guests feel as comfortable as possible, and this is easily achieved with soft sheets and a variety of pillows (it's best to have a combination of firm and soft options for guests).
- This estimate depends on the number of guest rooms your inn will have, as well as the size of the beds, but you should anticipate spending $500 (or more) per guest room.
- Hotel sheets should feel crisp and new to guests, so make sure you replace the bedding (particularly the sheets) every five years.
- Smoke Detectors and Fire Alarms. These items are mandated by law and can save not only your life but your property as well.
- Your area's fire marshall will determine the number of detectors and alarms needed for your business. $200 is a generous estimate for six detectors and an alarm.
- You will have to replace the batteries on the detectors frequently but won't have to purchase new ones for about five years.
- Front Entrance Sign. Obviously, you will want to let your guests know that they have arrived at your bed and breakfast with a sign.
- You can have a sign made for as little as $500, but if you want it to be lit, large, or have an elaborate design, that can cost upwards of $5,000.
- Depending on the type of sign (lit signs will need more maintenance), you should a minimum of five years of usage without major signs of wear and tear.
- Promotions and Advertising. Yelp reviews and word of mouth are great, free resources for promoting your business, but you will no doubt have to spend money (especially in the beginning) on advertising in order to debut your business to the local community.
- $1,500 for the initial campaign is a great place to start.
- After your first year, you will still want to run ads and promotions, but you can drop your budget to $1,000 if you have an influx of guests.
- Business Supplies. In order to manage reservations, update your website, and even print your guests' receipts, you will have to invest in a computer, and all-purpose printer (that includes a scanner and fax machine). Printer paper, pens, and ink cartridges are all essentials as well.
- A reliable computer can run between $1,000 and $3,000, and printers (depending on your needs) are usually priced between $500 - $1,000.
- We all fear computer viruses and an inevitable crash, but barring any dramatic incidences, you will want to update your equipment every three years or less.
- Kitchen Equipment. You will need plates, glasses, and cutlery for your guests.
- Anticipate $400 or more for these items,
- If you're not prone to breaking things, a good dining set can last well over a decade.
- Petty Cash. If you run into a situation where you need cash immediately (perhaps for a last minute repair or a grocery store) you will need to have some stored away.
- $500 should be enough for most emergency situations.
- How often you have to replenish the petty cash depends on your usage, but expect to add to it at least once a year.
Estimate Your Own Startup Expenses
In order to determine your actual projected costs, utilize the guide above, along with the information you've collected to complete this startup cost estimate:
- Building Costs:
- Food Costs:
- Furnishings and Renovation:
- Mattresses, Sheets, Pillows, and Blankets.:
- Smoke Detectors and Fire Alarms:
- Front Entrance Sign:
- Legal Fees, Permits, and Licenses:
- Promotions and Advertising:
- Business Supplies:
- Kitchen Equipment:
- Petty Cash:
- Personnel (maids, cook, front desk staff, etc.):
- Miscellaneous Expenses: