Is now a good time to acquire a B & B Business?

Is now a good time to acquire a B & B Business?

For some, running your own B & B business could be a dream come true, however the reality could be a bit more difficult. It therefore really pays to identify your market and plan ahead to ensure that you achieve your goals.

One consideration may be what you are prepared to sacrifice rather than the benefits you will receive. The sector is characterised by long hours and restricted free-time. However, the working day can be a rewarding experience for those that embrace this lifestyle.

If this is your dream, can it happen? The answer is a definite “yes”, but within parameters.

5 indicators that the time is right:

• The market for tourism in Scotland is increasing. Visit Scotland statistics show that domestic tourism numbers increased by 4% in 2015 but the spend increased by 17%.
• Your High Street bank is again looking to back good propositions. Typically banks are looking at an annual cash-run surplus that covers 1.75 times the annual debt repayment commitment.
  Interest rates. These are low and anticipated to remain low.
• The new pensions freedom. If you are over 55 your pension fund may be a source of unlocking cash and managing any debt profile, however, this should be viewed with a financial health warning. If you are under 55 and can’t access your pension fund, you can use the fund to acquire commercial property instead.
• The current strength of the domestic rental markets. Funding an acquisition utilising equity in your current residence may be another source of funding, if the debt can be financed by a sufficient rental stream.

Successful B & B businesses spot the opportunities where there is the potential for above average occupancy that can command the requisite bed night rates.

So, knowing what you are looking for and assessing your financial and personal capabilities in advance may help you achieve these goals.

Over the past few weeks we are delighted to have successfully assisted two clients through the credit application process with one of our contacts that specialises in B & B lending.

In both cases, the purchasers were new to the short-break holiday business and had a distinct offer to the public.

If you have identified a specific proposition and believe you have the credentials to acquire and operate a B & B business, why not give us a call to discuss how the application process works.

At Johnston Smillie we support and guide clients through buying a business on a regular basis.