Bed, Breakfast And Beyond
Start your own bed and breakfast
Opinions expressed by Entrepreneur contributors are their own.
Making the leap from electrical engineer to innkeeper might seemlike a stretch to some people, but not to Shelley Nobile, 34,proprietor of the Deacon Timothy Pratt Bed & Breakfast in OldSaybrook, Connecticut. For her, it made perfect sense. Whileworking on submarine and surface ships for the Navy, Nobile fell inlove with the Colonial architecture that punctuates the towns alongthe Long Island Sound.
"My work as an engineer was challenging, but I wanted to dosomething I was really passionate about," she says. TheB&B she started in 1995 proved to be just the thing. Combiningher interests in antiquing, decorating and entertaining, Nobile nowmakes a living doing what she loves best.
She's hardly alone. The inn industry has never beenstronger. There are about 25,000 B&Bs operating in the UnitedStates today, compared with 1,000 in 1980, according to Pat Hardy,co-executive director of the Professional Association of InnkeepersInternational (PAII).
No Lace, Please
If you think of doilies and homemade bran muffins when you thinkof B&Bs, think again. You haven't been to a B&B in awhile. No doubt the old stereotype is out there somewhere, but thecurrent trend is decidedly modern and upscale.
"Don't even think about opening a place without privatebaths," warns Bobbi Zane, founder of Yellow Brick Road,a newsletter for prospective innkeepers, that she publishes inJulian, California. That's a bare minimum. In fact, rated amongthe top amenities by guests are hot tubs, fireplaces, quietambience and privacy. Things formerly unheard of in B&Bs, likeprivate telephones and fax machines, are becoming available tobusiness travelers as well.
Sound a lot like a hotel? Well, not quite. "Travelers wanta place where they aren't just a room number," saysHardy.
Providing conveniences while keeping your inn charming isn'teasy. Just ask Ted Kidwell, 39, and his wife, Eva, 31, who togetheropened an eight-room B&B, The Weller House Inn, in 1998. Helogs 90-hour workweeks--"and that's during the weeks Iactually sleep," laughs the Ft. Bragg, California,entrepreneur.
He's not exaggerating. According to PAII, innkeepers spendan average of 42 hours a week on innkeeping tasks, even when theyhave hired help. Those who go it alone are kept busy well over 100hours each week.
"It's a lot of hard work," agrees Bruce Libowitz,33, who with his wife, Anne, 35, launched The Inn On Crescent Lakein Excelsior Springs, Missouri, in 1996. "You're always`on.'"
"Usually when people first open, they do all the workthemselves, except during the busiest season, when it'simpossible," says Hardy. "Then, as the years go on andthey become more successful, they begin hiring staff to help outyear-round."
To get an idea of the time involved, consider just one aspect ofinnkeeping--the housekeeping. "It takes about 45 minutes toclean a room properly," says Zane. "Now multiply that bysix or eight rooms."
The Good Life
While innkeeping is hard work, it does provide a lifestyle thatmight otherwise be impossible. Take the Libowitzes, who have aninfant son. "There aren't many fathers who spend the wholeday with their kids. I get to do that," says Bruce.
Spending time with their baby daughter also attracted Andrew andLiz Evans, 34 and 25, respectively, to innkeeping. The couple ownThe Inn at Easton, located on Maryland's Eastern Shore."We got the idea to open an inn after the birth of ourdaughter," explains Andrew. "We both wanted to be home toraise her."
Increasingly, quality-of-life issues are attracting a newgeneration of innkeeper as more people step off the conveyor beltof conventional jobs at a younger age. "Family time in afamily business is what makes [innkeeping] so appealing to youngerpeople," Zane explains.
Even without children, owning a B&B enables you to meet newpeople and live in a beautiful home you might not otherwise be ableto afford. "I love the lifestyle. You have to be an oddcombination of homebody and people person, and that describesme," says Nobile.
But be prepared to sacrifice some privacy, adds Eva Kidwell."If you're alone in the house, you can't even take ashower in case potential guests come by, or worse, aninspector."
Most innkeepers say lack of privacy and zero downtime are thebiggest drawbacks. The solution? "You have to take timeoff," Nobile says. "Also be sure your living quarters arevery separate from the guest quarters."
For Love And Money
Few innkeepers go into the business for the big bucks. Inns withfewer than six rooms find it hard to turn a profit, find someexperts. The typical B&B grosses about $153,000 a year, whilean inn (more rooms, dinner option) has revenues of about $343,000.But don't expect that immediately, Hardy cautions. For thefirst three years, the average innkeeper grosses just over $70,000and nets less than $19,000, and even that number is calculatedbefore paying the mortgage, the owner's draw, depreciation andincome tax. Experts figure it this way: 73 percent of incomeusually goes to expenses, while the remaining 27 percent fillseverything else.
That's one reason Nobile kept her day job for three yearsbefore going full time as an innkeeper in 1997. For mostentrepreneurs, B&Bs are a part-time sideline. But thatdoesn't mean a full-time operation can't work. In fact,aside from Nobile, all the entrepreneurs we interviewed wentdirectly into full-time ownership. "We turned a profit in oneyear," says Bruce Libowitz, "and we've beenpleasantly surprised the second year: Business is up 60 percentover last year."
However, the rewards of innkeeping are more than financial."We earn in the mid-five-figures, which is what we made beforeopening the inn," says Ted Kidwell, "but we areincalculably richer in our lifestyle."
Nobile agrees: "I'm doing something I really enjoy, soit doesn't seem like work--yet my income is now twice what itwas as an electrical engineer."
The cost to enjoy this lifestyle? Start-up investments varywidely, depending on real estate values in your region. Suitablehouses can be bought for as little as $40,000 or as much as a fewmillion.
Buying a place that's already up and running gives youimmediate cash flow. Existing businesses also have track recordsthat help sell your plan to the bank. The downside: Initialexpenses can be costly, with the average existing inn being morethan $559,000.
That's why many first-time innkeepers buy houses that needrehabbing. Some B&B properties, if also used as primaryresidences, qualify for conventional mortgages.
"Banks know innkeepers tend to be responsibledebtors," says Zane. "Lenders are very receptive toB&B loans these days."
While the norm is still 20 to 30 percent down, it's not ahard-and-fast rule. "All we could afford was 5 percent down[on a $500,000 property]," Liz Evans says. Though the coupledid have to put up some stock as collateral for the first 12months, the bank accepted the small down payment.
If the cost is still too high, consider getting a silent partnerto help. Says Kidwell, "We couldn't have done it withoutour partner."
Fixing It Up
Once you've got your mortgage in place, there's stillanother hurdle to clear: renovation. While the Evanses, who boughttheir property in 1999, financed it through a local bank, a gapfinancing program run by the state provided the loan for rehab."Without it, the bank probably wouldn't have given us the[mortgage], and we couldn't have opened the business,"says Andrew.
Even with financing in place, renovation can hit your pocketbookhard. "It always costs more than you expect," Andrewadds. The Evanses hired experts for some of the work, like plasterand plumbing, but they stripped wallpaper, ran phone wire and didwhat Andrew calls "the nitpicky nitty-gritty" themselvesto keep within budget.
The Kidwells also did most of the work on their propertythemselves. Ted, a former contractor, knew his way around a rehab,but he still had to hire a crew to assist with some of therenovations.
Likewise, the Libowitzes acted as their own general contractor."I know more about septic systems than any sane personshould," says Bruce. And because they were strapped for cash,the couple lived in the inn during renovations. "You have tohave a very strong marriage," he jokes.
Because rehab always costs more and takes longer than expected,many innkeepers open only a few rooms at a time as the projectmoves along. To offset the costs of renovations and pay themortgage, Nobile booked one bedroom at a time and kept her job asan electrical engineer. "I couldn't have afforded to payfor [the inn] if I hadn't," she says.
The Kidwells opened with four rooms initially. "We justkept the doors shut on the rooms that weren't done yet,"Eva says.
Furnishing can also take a bite out of your budget. Whiledecorating might seem like the fun part, if you haven'tbudgeted for it, it's no fun at all. The Evanses estimate theyspent about $10,000 per room. To keep within budget, they oftenbought wholesale. Nobile couldn't afford high-end antiques, soshe bought pieces that needed refurbishing, which she didherself.
Innkeeping is not for everyone. "We see people whoaren't prepared to fail all the time," says Zane."That's just the reality."
But there are also a lot of success stories. The proof is in thenumbers: The industry is growing by 5 to 10 percent every year.What's the key to success? Hardy sums it up: "Provide whatpeople want, and you'll have them coming back again andagain."
Thinking about opening an inn? These resources can help:
Professional Association of Innkeepers International, http://www.paii.org
Bed & Breakfast Inns Online/INNkeeper INNformation, http://www.bbonline.com
The Innkeeping Internet Course, http://www.bbonline.com/innkeeper/consult.html
Oates & Bredfeldt; Brattleboro, Vermont; http://www.oatesbredfeldt.com
Innkeeping newsletter ($85/year for non-PAII members;free for members), http://www.paii.org
Yellow Brick Road newsletter ($45/year), (800) 792-2632,http://www.yellowbrickroadnl.com
How to Start a Bed & Breakfast, Entrepreneur businessstart-up guide #1278, (Entrepreneur Media, $59, http://www.smallbizbooks.com)
Open Your Own Bed and Breakfast, by Barbara Notarius,Fredrick G. Harmon & Gail Sforza Brewer (John Wiley & Sons,$17.95)
So--You Want To Be An Innkeeper, by Mary E. Davies, PatHardy, Jo Ann M. Bell, & Susan Brown (Chronicle Books,$14.95)
The Upstart Guide to Owning and Managing a Bed &Breakfast, by Lisa Angowski Rogak (Upstart Publishing,$15.95).
The Internet is a strong marketing tool for B&Bs. Just askTed and Eva Kidwell, who say as much as 80 to 90 percent of theirbusiness comes from the Web. That may be because of their locationin tech-savvy Northern California. However, industry-wide, 22percent of all bookings come from the Net. That's up from 6percent in 1996. In fact, 60 percent of all B&Bs now own anInternet domain name.
Where does the Internet bring in the most business? Here'sthe percentage of bookings that come from the Net in differentregions:
Southeast: 28 percent
Northeast: 22 percent
West: 22 percent
Midwest: 17 percent
Source: 1998 B&B/Country Inn Industry Study, PAII
Don't skimp on breakfast. here's what B&Bs regularlyserve their hungry patrons:
Fruit, juice and baked goods: 99 percent
Cheese and egg entrees: 90 percent
Waffles and pancakes: 87 percent
Source: 1998 B&B/Country Inn Industry Study, PAIIhttp://www.wellerhouse.com
Andrea Poe is a freelance writer specializing in businessissues. A nomad by nature, she's never met an inn shedidn't like.