important to have a “ Business Plan ”. Secondly : don ’ t be put off – this all boils down to three things :
Putting down in writing a comprehensive plan for your business , with both words and figures , forces you to think through all the key aspects , and forces you to quantify your financial expectations and commitments ; The written plan is something you can show third parties like your bank , should you want to borrow money ; and The Business Plan gives you a yardstick to measure your actual performance against .
It is as simple – and as important – as that . The financial sophistication of a Business Plan depends on ( a ) the scale and complexity of financial decisions which depend on it , and ( b ) the number and independence of the parties to your business plan .
Taking ( b ) first , companies floating on the stock exchange (“ IPOs ” or Initial Public Offerings ) have to put together very detailed “ Prospectuses ” ( basically , a Business Plan for prospective shareholders ), because they are dealing with people with no other connection with the business or source of knowledge . It all has to be spelt out , with every option and every caveat . Even smaller , private businesses will have to have a very thorough and detailed Business Plan if they are new ventures seeking millions from outside investors .
As someone starting a B & B , you will probably be buying the property with your own money ( perhaps with the help of a standard property mortgage ) – or you may own the property already . You will probably be using it as your home , and you will probably not be seeking outside investors . If this description fits you , then many of the most onerous demands of a Business Plan do not apply to you . The major financial decision – whether or not to buy the property – is in all likelihood separate from the B & B business itself . It has to be said too that , unless you have recklessly overpaid for a property in a declining area , the last 50 years would tell us that over the medium to long term ( 10 years plus ), it is hard not to gain on any investment in property in the UK .
This means that the scale of the financial decision you are taking is relatively modest – the conversion of your property for B & B use , and marketing costs – and the major financial commitment you are carrying ( ie your ownership of the property ) is in effect your investment in your own home , and is a safe bet in the long term unless the UK economy suffers a catastrophic setback .
All this is to reassure you and to set things in context , but we are NOT saying that your Business Plan doesn ’ t matter . It does . It all comes back to the word “ business ” – are you wanting to run a business , for your financial benefit ? If so , the business needs to be properly founded , your assumptions need to stack up , and the figures need to add up .
If you are not wanting to run a business , but simply want to play at hosting paying guests , without wanting to make money out of it , then don ’ t bother with a Business Plan . It would be a complete waste of your time . If however you are serious in wanting to go into B & B on a commercial basis , for financial gain , then you MUST write