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