Why is the B&B owner selling? B&B Advice for buying a B&B.
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So, why is your B&B for sale?
Chris Parkin
Before you buy that new B&B business, or Guesthouse here's eight questions you will want to put to the current owners.
1. Why are you selling?
A simple question to start but one which can reveal some surprising answers.
If the sellers are nearing retirement age then they have an understandable reason for saying 'we're retiring' if however they are younger than you there must be another reason. Is it plausible?
2. What are you going to do next?
Obviously linked to the first question and it may be answered with the first question but what you are trying to establish is that they are not buying the bigger, grander and better B&B next door and then charging you for 'goodwill' in their sale price. If they're leaving the area OK but if they are staying local and staying in business your offer needs to reflect this.
3. Do you have all the necessary permissions and licenses to operate?
Its no good buying a business and finding you don't have all the bits of paper you need to operate it. A comprehensive list of what you will need to consider is here. Your Solicitor will help but the onus is on you to make sure you have what you need. If your buying a property as a B&B with six beds or under you will escape some legislation but if you are going to expand you will need more bits of paper not counting the 3 mandatory pieces you need what ever size of B&B you have.
4. If you were staying what would you do next to improve the business?
A new broom sweeps clean BUT an old broom knows where the dirt is!
If someone has been running the business for some time why wouldn't you want to use their experiences to help shape your future plans. If it doesn't fit in with your plans that's OK but there will be a reason for them saying what they say and you should at least consider it.
5. What turnover does the business achieve?
This is something any business seller should have at his fingertips. If your seller doesn't know or hesitates or they are unsure whether it includes Value Added Tax, if paid, what are they trying to hide? Naturally there will be accounts presented with any sale but if you are buying a small operation they can be questionable. You also need to know if the business you are thinking of buying is their sole income source.
6. Do you know your breakeven point?
This is when any business starts to make money. All your allowable expenses in running the business are calculated and set against your sales. This is your breakeven point and every business should have an idea of when the business starts to make money.
7. Where do most of your customers come from?
There will be two answers to this question: Geographically where do the present customers come from and which marketing/advertising works best for you? Its no good advertising in Basingstoke if most of your customers come from the Wirral! Likewise don't go for a full page in the Sunday Times when a lineage add in the Daily Mirror works.
8. Have you ever been refused insurance?
And/or had special conditions imposed by any insurance company? If there are any special conditions you need to know about them before you buy, it might just change your mind.
There will be many more questions you will need answers to prior to making an offer to buy any B&B but if you get satisfactory answers to the those above you will have made a start.
Good luck.
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