by Heather T. | Oct 1, 2024 | Bed and Breakfasts, Business, Operations
The Importance of an Exit Strategy for B&Bs
I had written this up a few years ago. The Midwest Association of Independent Inns contacted me recently, asking for information, articles and other information I might have bookmarked, specifically for Bed and Breakfasts on exit strategies, to include in their newsletter. I found this in my archives and realized I had never shared it before.
While most of this is typical advice you can find in many exit strategy guides, I included some suggestions on how you can let guests and future guests know your inn might be, or is for sale, without being blatant about it which I have not seen in most checklists.
Our blog topic for the next post will be on questions to ask a business broker before engaging them to sell your business.
- Plan well in advance, ideally years before intended sale. The best time to start preparing for a sale is when you have the energy to start putting together the information for it, even if it is for years down the road.
- Regularly assess business and lifestyle goals to ensure alignment.
- Avoid burnout and declining property value, which can significantly affect the sale price. Keeping an eye on the interest rates and the market can give you a heads-up in advance about when it’s time to sell.
- An exit strategy may change over time, so revisit periodically. An exit strategy is not just about selling, but about preparing for your next phase of life. It allows you to maximize the value of your inn or B&B, and ensures a smooth transition for you, your staff, and your guests.
Establishing Goals
- Consider plans for the property (keep in the family, sell it outright, etc.) and discuss with family members if applicable.
- Evaluate personal career/lifestyle goals, including retirement plans or new ventures.
- Assess if innkeeping still meets your needs; consider if minor changes could reinvigorate your passion. Why did you get into innkeeping in the first place?
- Think about your ideal timeline for exiting and how flexible you can be. Goals should be SMART: Specific, Measurable, Achievable, Relevant, and Time-bound. Be honest with yourself about what you want and need, as this will guide your entire exit process.
Alternatives to Selling
- Hire managers or a management company to reduce your day-to-day involvement.
- Close the business, but keep the property if you have an emotional attachment to the building.
- Family succession requires careful planning and open communication, start sooner rather than later.
- Bring in partners to share responsibilities and potentially set up future buyout.
- Manage-to-own agreements can help transition to new owners over time.
- Leasing options allow you to retain ownership while stepping back from operations.
- These alternatives can provide flexibility and may be useful if market conditions aren’t ideal for selling.
- Each option has its own legal and financial implications, so consult with professionals before deciding.
Preparing to Sell
- Get financials in order; clean and up to date books are crucial for buyer confidence and accurate valuation.
- Prepare your property by addressing deferred maintenance and enhancing curb appeal. Even small fixes and improvements can make a huge difference when showing the property.
- Consider professional inspections to identify and address issues proactively.
- Prepare yourself mentally for the emotional process of selling and transitioning. For many innkeepers, their property has not just been their business but also their home of many years.
- Preparation can take months or even years, but it’s crucial for maximizing your inn’s value. Remember, potential buyers will scrutinize every aspect of your business, so attention to detail is key.
Valuing the Inn
- Use multiple tools like Capitalization Rate, Gross Revenue Multiplier, Price Per Guest Room**
- Consider hiring an appraiser for an objective valuation, especially for unique properties
- Understand that emotional value doesn’t always translate to market value
- Be prepared to justify your asking price with data and comparables. Valuation is both an art and a science. While formulas provide a starting point, factors like location, property condition, and market trends all play a role. Be realistic but don’t undervalue your years of hard work and goodwill.
** https://calculator.academy/cost-per-occupied-room-calculator/, https://www.cloudbeds.com/tools/adr-calculator/, https://www.siteminder.com/calculate-your-occupancy-rate/, there are many more if you browse Google for ADR, ALOS, RevPAR, GOPPAR, CPOR, NOI and more.
Marketing & Advertising
- Work with an experienced inn broker on a comprehensive marketing plan. (Questions to ask a broker coming next week)
- Advertise in industry-specific publications and venues where potential buyers look.
- Carefully consider how open to be about the sale to protect current business.
- Consider advertising on social media or listing your business on niche groups where a potential buyer could be waiting as well as state and local groups. Some states have robust listserve newsletters that go out to thousands of people every day. In New Hampshire and Vermont for example there are several dozen town and area ones https://lists.vitalcommunities.org/lists/lists as well as regional ones https://vitalcommunities.org/new-uv-lists/.
- Prepare a detailed prospectus highlighting the inn’s strengths and potential.
- Effective marketing can significantly impact your sale timeline and price. A well-crafted narrative about your inn’s history, unique features, and growth potential can attract serious, qualified buyers.
- On your website, consider adding a subtle section that speaks to the future of the business: “Interested in joining our journey? Get in touch to learn more about potential opportunities to be a part of our continued story.” This can draw in people who may want to invest or inquire about ownership, without having an public or overt “for sale” message.
- Consider you may have guests that might be interested in being innkeepers. While many innkeepers are reluctant to advertise that their B&Bs are for sale because they are afraid guests might be reluctant to book, keep in mind, being open to selling and subtly putting out there you are open to offers if a good one came along has paid off for some business owners.
A few ways an innkeeper could subtly suggest a property for sale to guests.
When speaking with guests, you could emphasize exciting future opportunities for the B&B without directly mentioning a sale. “We’ve built such a strong business here, and we’re excited about the possibilities for the B&B to grow and evolve in the future.” This plants the seed that the business could be taken over by someone who shares your passion for innkeeping, without openly discussing a sale.
In conversations or marketing materials, frame the business as a “legacy” that could be carried on by someone with fresh ideas. “We’ve loved being a part of this community for years, and we’re excited to see how the next chapter for this B&B unfolds.” This approach communicates that a transition could happen, but focuses on the continuation of the guest experience rather than the sale itself.
You can present the idea of potential partnerships or expansion opportunities without saying it’s for sale. “We’ve been thinking about how someone could bring fresh energy or ideas to take this place even further.” This potentially opens the door for guests or acquaintances to inquire if they’re interested, but doesn’t sound like you’re making a direct sales pitch.
When writing newsletters or posting on social media, highlight positive guest experiences and mention how valuable and rewarding running the B&B has been. Subtly hint that it’s an ideal lifestyle for someone looking to build on what you’ve created: “We’ve loved creating memories here for guests, and this B&B has become such a beloved part of the community. We’re excited to see how it continues to bring joy to so many.” This sends the message that it’s an established, well-loved business, which could attract attention from prospective buyers who may follow up privately.
The Sale Process
- Understand regional differences in the sequence of transactions.
- Be prepared for a potentially lengthy negotiation process. Many months and some times a year plus long process.
- Consider tax implications early and consult with a tax professional.
- Explore various financing options, including potential seller financing.
- The sale process can be complex and time-consuming. Patience and flexibility are key, as is maintaining the quality of your inn operations throughout the process. Remember, the deal isn’t done until the closing documents are signed.
Transition to New Owners
- Provide detailed operations manual and hands-on training if agreed upon.
- Help with staff transition (if applicable) to maintain continuity and preserve institutional knowledge.
- Help with vendor transition (if applicable) to maintain continuity. You might have guests that love your L’Occitane or Beekman 1802 amenities. Introduce them to your sales rep to make the transition easier if they choose to continue with them.
- Introduce new owners to key community contacts to support their success.
- Be prepared for emotional challenges of letting go; consider personal counseling if needed. I’ve talked to so many innkeepers who don’t realize how much of a heartbreak it can be to sell a business (and home) that they have put their hearts into, sometimes for decades.
- A smooth transition benefits everyone: you, the new owners, your staff, and your guests. While it can be emotionally challenging, a well-managed transition can preserve your inn’s legacy and set the new owners up for success.
Key Professional Help
- Inn brokers or consultants with specific experience in hospitality properties
- Accountants familiar with hospitality businesses and related tax issues
- Lawyers experienced in business and real estate transactions
- Appraisers with hospitality industry expertise, if needed for valuation or financing. The right team of professionals can make the difference between a stressful, protracted sale and a smooth, profitable transition. Their expertise can help you navigate complex issues, avoid pitfalls, and maximize your inn’s value.
Worth a read for more information about the following links. 8 Business Valuation Calculators from Small Biz Trends.
++2 of the calculators referenced in the original article are no longer online. The article doesn’t give all of the links to the calculators so including them below.
CalcXML
https://www.calcxml.com/calculators/business-valuation
EquityNet
https://www.equitynet.com/crowdfunding-tools/business-valuation-calculator.aspx
ExitAdviser
https://exitadviser.com/mob/value-calculator
BizEx
https://www.bizex.net/business-valuation-tool
Digital Exits
https://digitalexits.com/whats-your-business-worth/
Hadley Capital
https://www.hadleycapital.com/insights/business-valuation-calculator
MassMutual Financial Group
https://www.massmutual.com/financial-wellness/calculators/business-valuation-planner
National Life
https://www.nationallife.com/Financial-Calculators-Value-of-My-Business
by Heather T. | Aug 30, 2024 | Business, Marketing, Observations, Operations, Reputation Management
Back in February of 2020, I wrote a post about a crisis management plan for social media (A Social Media Strategic Plan for Crisis. An Outline for Bed and Breakfasts and Other Businesses) I had written it a few years back for a business client and yesterday did a workshop on Reputation Management and was going to share the checklist I had made up.
In reviewing it, a LOT has changed in just four years (Yikes!), so I updated it with some new information, and wanted to put the new version out there so if it’s useful to anyone, I hope it is of help.
My feeling is that with all the shoot first and ask questions later (i.e. “your business did this” and it’s a hot button for people, but that may not be actually the real story) that goes on in social media and online reviews and discussion, it’s better to be prepared in case something does happen, with the hope it never does, then try to scramble to regroup after the fact.
Please keep in mind the reference links to Facebook and other social links change every few years, but they are up to date as of now. In the future, if a link has moved, it’s best to go into every platform’s help section and search for the topic and you will typically find an updated link.
The Chess Piece
The horse chess piece image speaks to me about this topic because the piece is probably, in my opinion, one of the strongest and can be used the most strategically, and it moves the most unconventionally compared to the other pieces. Many chess players consider it as a key piece in winning a game, but can also be one of the weakest. Because knights are bound by a fixed number of movements, they are particularly vulnerable to traps.
When dealing with an online social media crisis, a business can be the knight that saves itself or it can fall into the trap of handling things not the right way, making things worse OR getting complacent and thinking a crisis has passed and stops monitoring, or stops being prepared to deal with if is not “done”.
You can download the plan in (PDF) Social Media Strategic Plan for Crisis or MSWord Social Media Strategic Plan for Crisis or Google Docs (make a copy or download) Social Media Strategic Plan for Crisis. This is an outline and checklist to be changed, or tweaked as needed, and to customize it to your own business.
by Heather T. | Aug 8, 2024 | Books, Business, Business Location, Starting a Business
Find a Location for Your Brick and Mortar Business was just published and one of the things that I thought might be useful to do was to go into a little more detail about some individual types of brick and mortar businesses, and some specifics on what to look for when doing a location assessment.
For example, scouting a location for a new hair salon has its own variables to consider above and beyond the information in the book, as does starting a auto detailing business and while most things (in the book) are applicable to any business, I wanted to elaborate more and drill down a bit for some additional things that can help any new or relocating brick and mortar business get started when doing a location assessment.
I originally had grand plans to do these as part of the book, but with all of the different types of brick and mortar businesses out there to go over, I probably would have finished it in the next century or so and at that point we might be talking about which planet to start a business on, not which street corner. 🙂
I take requests, so while I’m going to bounce around in between business types, if you are just starting a business and would like some pointers about what to look for when doing your location assessment please reach out. Information and feedback is free but I can’t promise to not make a blog post out of it, I promise to not share any personal/business information unless you are ok with it first though.
Now onto details.
Suppose you want to start an Auto Detailing business?
Here are a few tips in addition to our recent book that might be helpful in looking for a location.
Ensure the site is easily accessible for customers and provides ample parking and parking spaces are wide enough so that people with higher end cars won’t be afraid to park in your lot. Your target market is typically going to people with a bit of disposable income who can afford to have their car detailed and tight parking which can cause door dings and other body damage can be a detractor especially for repeat customers.
Opt for a location that allows you to maintain a clean, professional appearance to attract clients. Your service is cleaning/detailing cars, a brick and mortar location that offers easy clean-up and a facade with bright colors and lots of large clean windows can help appeal from a visual standpoint plus showcase any luxury or antique cars you might have detailed while they are waiting for customers to pick them up. Don’t forget about what the neighboring buildings and businesses look like as well.
Ensure good signage opportunities to promote your detailing services. While car detailing isn’t typically a walk in proposition, you do want to make it easy for customers who have made appointments to find you and depending on your location, traffic speed on the road and other factors, how far away can people see your sign, read it and then have time to pull into your business comfortably?
Consider locations near complementary businesses, like car dealerships (new and used) or service centers, to attract more clients. Depending on your location (near water bodies or tourism areas), you may also want to consider a lot size and entrance that can accommodate customers bringing in boats (which may be detailed prior to or after winter storage) and RVs.
Auto detailing requires large amounts of water for detailing vehicles. The location must have a reliable and adequate water supply to support the business operations. The location should have access to a consistent and high-volume water source and be able to properly manage and dispose of the wastewater generated from the business, either through connection to a municipal sewer system or the ability to install an on-site wastewater treatment and disposal system.
We would suggest doing a water quality test as well, hard water can leave spots and mineral deposits on vehicles. If the location checks all the boxes but has hard water, make sure you estimate what a water treatment system will cost you to install and upkeep when doing your business plan and projected financials.
Don’t forget to check zoning regulations to make sure the location allows for this type of business.
One additional tip, additional markets to promote to that may be good customer bases are car sellers who want to get their vehicle in tip top shape prior to selling private sale, or to a dealer, so it has better eye appeal. If this is a market you want to want to pursue, an value add on would be a service taking professional pictures of the vehicle for sale and assisting with a good sales writeup for people considering private sales of their vehicles.
by Heather T. | Jul 12, 2024 | Books, Business, Observations, Operations
Are you interested in being an ARC Reader (ARC stands for Advanced Review Copy) for new books? These will primarily be business books, but we do have one fiction book in the works as well.
Our next book, Location? Location! Finding a Location for Your Brick and Mortar Business, will be ready to read in mid to late September 2024, with another book on marketing to follow in midwinter.
Signing up to be an ARC reader is an opportunity to read new books before they are “officially” published online and before anyone else.
In return, you agree to provide an honest review on Amazon to help others decide whether the book is worth reading or not. You need to be a current Amazon customer who has spent at least $50 previously to be able to leave a review. If you don’t have an Amazon account or have never used it, we also appreciate reviews on Goodreads. Amazon review guidelines.
I ask that reviews be honest, while I appreciate that people (especially ones that know me) might feel reluctant to leave anything critical on a review. Real reviews do help. And you can be kind AND be constructive at the same time. There is a great post on leaving reviews (positive and not so much) which is worth a read. Constructive feedback IS a gift.
ARC reviews should focus on what makes the book enjoyable or hopefully, in the case of most of my books, educational and valuable to new and existing business owners, while avoiding spoilers or major summaries (since most people reading the review won’t have read the book yet).
Talking about things like: was the information useful, easy to understand and did it give actionable tips or information can help new readers decide if the book suits their tastes and more importantly their informational business needs.
The Book will be sent in PDF format digitally by email about 3 weeks before official publication.
If this is of interest, please fill out the form to sign up! And THANK YOU!
Other Ways You Can Help:
- The #1 way you can help is to leave a review!
- Post a picture or quote from one of my books and tag me on Facebook or LinkedIn.
- Recommend one of my books on Goodreads.
- Pin or tweet your favorite of my books.
- Share one of my books on Facebook, Instagram or LinkedIn.
- Refer a friend that might find one of the books useful, especially if they are starting a business or in business and might need some help.
Location? Location? Finding a Location for Your Brick and Mortar Business overview:
Ditch the guesswork and navigate the key factors every aspiring business needs to consider before they sign on the dotted line for a property.
Finding a Location for Your Brick and Mortar Business is your roadmap to a thriving business reality. Order your copy today and turn your entrepreneurial dreams into brick-and-mortar success!
Whether you’re dreaming of opening a hair salon, a fitness center or a garden supply center, Finding a Location for Your Business offers the tools and knowledge to find a location that meets your needs and maximizes your businesses potential for success. Discover the secrets to making informed decisions and turning your entrepreneurial dreams into reality.
This comprehensive book covers essential topics such as community assessments, competition research, zoning and planning considerations, traffic counts, crime and safety, parking and traffic flow, employees and housing and much more.
Whether you’re a seasoned business owner or a newcomer to business ownership, this book provides valuable insights, and a detailed location and assessment checklist to help you make informed decisions.
by Heather T. | Feb 12, 2024 | Business, Food, Marketing, Observations, Operations, restaurants
Recently there was an article on Eater. “Why not bring takeout containers to restaurants?” and I thought, wow this is such a great idea (not rocket science obviously) but I should start doing this. What a great way to save the environment and, by the way, save our favorite restaurants a few bucks in the bargain.
Which, of course, led to the inevitable 2 AM neurodivergent thought, OH!, how can a restaurant leverage this? There must be restaurants doing this already, and of course, there were and there are. Restaurants give discounts to diners who bring their own dishes (2019) and many more. One thing that I noticed though about the restaurants and other food service operations that offered this is there didn’t seem to be a ton of thought into “targeted” getting people back in the door. Some offered discounts off of a future meal, some off of a current meal, some free refills (for beverages) but not much real upselling.
From a customer funnel point of view, if you want to think about getting repeat customers back in the door, what’s the incentive to get them back in PLUS the incentive to spend more money?
I’d love to see a restaurant out there (and maybe there is, let me know!) who would offer the incentive “BYOC (Bring Your Own Container)” and get a voucher/coupon for a free coffee or tea and our signature dessert.
Why that? Coffee or tea doesn’t cost most to provide and if you created the incentive wisely a signature dessert could cost a few dollars or less to make. Tiramisu is cheap to make, so is a scoop of homemade (or a good prepared) mousse with some flavored whipped cream to zip it up. Dessert has a much higher profit margin on it typically than an entrée or appetizer.
If you just give them a discount or small incentive, it doesn’t do much for repeats, it can help, but what’s the upsell part of it?
If you get them to come in and get drinks, maybe an appetizer and a couple of entrees (make the must order an entrée as part of the small print on the coupon), it’s an incentive to get people in the door and spent money first.
Even if it’s a couple who come in regularly and they bring two takeout containers, give them two vouchers. If you look at it from the perspective of how is any different from giving them a $10 off coupon their next meal, it is different because your incentive is to give them something for free but they have to spend money first. Even without a couple ordering appetizers, if a couple’s tab is a couple of entrees (mid-priced restaurant average) 17.99 X 2, plus a couple of soft drinks (up the take if it’s beer or wine) 2.50 X 2, and the regular check average is $50.00 and you just “gave away” $3.50 in product, when it boils down to it that’s pretty inexpensive marketing. If your price points for your menu items are higher, the ratios are even better.
You actually get three birds with this: promoting eco-friendly practices, saving money on your own to go containers and getting people in the door for repeat dining. Even if you encourage regulars to give them to others, that’s not a bad thing, it increases brand awareness and you get the same result; you get more people in the door and they order the big-ticket items like entrees (and if your waitstaff is good at the in-person upsell, high profitably drinks).
If you are going to try any incentives like this, make sure they contribute to your bottom line.
I’ve seen too many restaurant coupons that just give a discount with no stipulations on use or no incentive to get people to buy more.
So if you create an initiative to bring in customers, track through what you get out of it. Is it a onetime sale, something that will get people to come in many times or something that will make people spend more money because of the incentive itself?
There were a couple of good articles I came across in searching for restaurants that did have to go container incentives that I think would be worth a read.
How can restaurants take advantage of sustainable packaging?
What Are Reusable Food Container Programs?
By the way, my first book just got released on Amazon this weekend in Paperback and on Kindle! Check it out! Finding a Location for your Restaurant: How to Scout the Perfect Location for your Dream of Opening a Restaurant or other Hospitality Business.
by Heather T. | Feb 7, 2024 | Business, Observations, restaurants
There are three main types of people who want to open a restaurant.
Those who have been in the industry, usually chefs and cooks (but not always, sometimes it’s front of the house people), those who grew up in a restaurant environment, (i.e. parents or other family members owned or ran a restaurant), and the folks who have fallen in love with the “idea” of owning their own restaurant.
All of them have, and can run and own a successful restaurant, but I have found in 40 years of working in and with the hospitality restaurant that’s it the first two types that have better success and better success long term with running a restaurant.
I’ll be blunt and I am really not trying to talk people out of owning a restaurant, but to be realistic about what someone is getting into if they have never worked in a commercial food service establishment before.
For fans of, “The Bear” TV series while it has many realistic parts to it for at least the back of the house, apart from some glaring errors, (pretty much everyone in the industry knows what ServSafe is, whether or not your state requires it). IMO It’s still not a great representation of actually “owning” a restaurant and ALL that it entails. I think it hits the marks pretty high on the stress, the dynamics and many other things that happen in real life in a kitchen though and it’s worth a watch if you want to open a restaurant and not had ANY prior experience. But it still doesn’t cover many of the realities of the actual operations of a real restaurant, front of the house, back of the house, the day-to-day operations, the financials and the struggles with financials on a constant basis, checking in orders, employee theft, doing inventory on a frequent basis, dealing with difficult customers both online and off literally every day, dealing with vendors, scheduling staff, dealing with seasonal or economic slowdowns, the marketing online and offline, etc. etc. etc……………
While there have been some terrific food movies out there, mainly from the kitchen perspective, I have yet to see a restaurant movie that really truly reflects REAL life running a restaurant and I suspect it’s because no one “really” wants to see what’s behind the scenes on a real day-to-day basis.
It’s scary how much work, how much stress, and how much slog an owner has to get through daily, especially if they are a hands-on owner. Many chefs who become chef owners spend more time managing and dealing with day-to-day problems than cooking and I had several jobs before I got out of the business where I spent more time pushing paper than behind the line. Not fun, take my word for it. My passion is food and while I love excel spreadsheets, I got into the food business because I loved to cook, not because I wanted to become an accountant.
My first book is coming out shortly (Finding a Location for Your Restaurant) and with that I created a series of real life or lets call them, “lets get a reality check”, quizzes, so that people thinking about owning and operating a restaurant (regardless of whether they have experience in a restaurant industry or not) can get an idea of what they know, they need to know and what they WILL run into as an owner or lessee of a restaurant property.
I want to thank several hundred of my friends (both from the industry and from many other walks of life in other industries) for being guinea pigs to test these and get a baseline for the scoring.
Again, these quizzes are not meant to discourage people from wanting to run their own restaurant, but rather to provide some insight into the reality of it and many of the things that you, as an owner, WILL encounter.
I mention this in my book, but it bears mentioning here. Back in the mid 1990’s I considered buying and running a restaurant and in hindsight, I am so very, very, VERY glad I did not. It would have failed in under a year. With all that I know now, I look back at that person, who had a lot of cooking experience and some management experience and I can snark at myself honestly and say, “oh you foolish, foolish child”. because I had no clue at all about what running and owning a restaurant and doing it successfully really entailed.
Interested in trying the quizzes out?
