How much will I earn?
How much you earn will in some ways depend on your financial situation upon going into the business. Simon Wells of Robert Barry hotel agents explains: “It depends on how much you borrowed, some people can have quite a bit of money swilling around from the sale of their property. They may want to be their own boss and top up the pension. You may be in the position where from time to time you can just put up your ‘No Vacancies’ sign and go away for a few days.” Wells has also found that in cases, bed and breakfasts can be sold for up to 11 times what you made with it.
Again though, a lot depends on where your business is based. According to Wells, there are certain ‘honeypot towns’ where all year trade is pretty much guaranteed. These are towns such as Bath, Stratford, Chester, Oxford, Cambridge, Edinburgh and Canterbury. Outside these towns it won’t be quite so good in the winter season.
Your pricing strategies may also depend on your location, the time of year and what day of the week it is. As Wells explains: “In Bath and Stratford, they may charge £75 for a double room during the week and £125 at the weekends.” This is largely because of their popularity as a weekend destination. In conference towns such as Harrogate however, the reverse may be true, as you'll be aiming to capture the week’s corporate trade.
Lindsay Edwards, director at Walbrook Commercial Finance adds: “At B&Bs in somewhere like Bath, which has an extended commercial base, they’re more like hotels with between 12 and 15 rooms, with very good returns. If you take anyone else on, your wages should be low.” For the sake of your health and sanity, if you have more than eight rooms you may want to advertise for extra help.
You will need to look closely at the B&B business' accounts. If the turnover has been going down you need to think about why you are buying it. You may be the one to turn it around, but it won’t be as easy as buying a healthy business.
“You can make up to a 50% return of the turnover. A major expense can be wages but if it’s just a husband and wife team then you avoid that,” Edwards says.
It's a good idea to contact the local tourist office, which should be able to advise you of the turnover levels and the visitor numbers for B&Bs in their area.