A Home-Style Bed and Breakfast Business Startup

When my wife and I first began discussing the possibility of trying our hands
at running a B & B business, we wondered whether
there’d be problems with zoning laws and/or our homeowner’s
insurance, and we also worried a bit about whether we’d be
comfortable letting strangers “live” in our home.

However,
we went ahead and took the initial step of contacting a few
referral services. It wasn’t long before the directors of
those agencies visited our home and interviewed us . . . in
order to determine whether our accommodations were
suitable. All of our questions about the B & B process
itself were answered to our satisfaction at that time …
particularly those regarding the kinds of people who prefer
this mode of lodging.

Our concerns about allowing people to
stay in our restored nineteenth century farmhouse were
reduced when we learned that we’d always receive advance
information about the travelers–names, addresses,
occupations, references, etc.and could accept or refuse
their registration at that point without any further
obligation. We also discovered that we were free to set our
own rules. For example, my wife and I agreed that we didn’t
want to host folks with young children . . . because our
home’s long staircases would pose a hazard, and the
extensive woods surrounding the house are loaded with
poison ivy.

We decided to prohibit pets and smoking, too.
Now–having had some experience in the
matter–we’ve discovered that most people seeking a B
& B lodging tend to be friendly, well-traveled
individuals . . . folks who prefer atmosphere to amenities
and who practically tiptoe around the house to show their
respect.

Getting clear answers to our questions about
zoning and insurance matters was more difficult, but we
think we’ve arrived at satisfactory conclusions. It seems
that as long as one doesn’t attempt to open a full-fledged
guest house–complete with three meals a
day–most local zoning regulations won’t prohibit
operating an unlicensed, small-scale bed-and-breakfast
business. Furthermore, homeowner’s policies typically cover
liability for paying guests to some degree.

And at least a
few of the B & B organizations provide–as a
membership fee benefit–additional insurance to cover
any guests they refer. My wife and I explored the
possibility of adding coverage through our insurance
company, but the subject soon began to seem exceedingly
complicated (at first, understandably enough, our carrier
didn’t even know what B & B was). As a result, we
decided not to change our insurance, opting instead to
simply assume some risk ourselves.

BED AND BREAKFAST BUSINESS BASICS

We joined two B & B organizations in
the late summer of 1981, at a total yearly cost of $65.
(The money would have been refunded if no guests had been
referred to us.) Now that we look back, we realize that we
picked an ideal season to begin our enterprise . . . because
our “late” start allowed us time to get ready for a
moderately active spring and a busy summer.

However, those
living near ski resorts or other cold weather vacation
centers will possibly find that winter is the busiest
season. As we waited (with a mixture of anticipation and
nervousness) for our first guests to arrive, an important
question came up: What sort of records would we have to
keep? My experience as a writer, coupled with the knowledge
I picked up during a six-month stint in direct sales,
proved useful in helping me set up the necessary paperwork.
Basically, we employed a system of tracking income and
expenses.

Some of our first-year guests paid directly . . . others sent a deposit to the B & B referral service and
paid us the balance. (An organization making a referral
receives a percentage of that customer’s lodging fee . . .
in our case, 15% of either $30 per person per day or $35
per couple per day.)

We simply recorded our guest income in
an appointment book under that specific day, and
later–at the end of each month–transferred
those figures, along with all our itemized expenses, to the
income tax record book. Happily enough, we found–once
we got our business underway–that the expenses
weren’t great. As you’d imagine, some of our cash outlay
took the form of the normal costs of running a household . . . which were marginally increased by serving
bed and breakfast guests. In order to determine what
percentage of our home maintenance costs to deduct as B
& B business expenses, my wife and I
estimated–figuring from autumn to autumn–the
total guest-days we anticipated for the first year at 200
(which would be equivalent to one person staying for 200
days or one couple visiting 100 days).

After further rough
calculations, we planned to deduct 25% (which we later
reduced when the actual number of guest-days fell short of
our prediction) of the cost of household cleaners, paper
supplies, bedding, garbage pickup, electricity, fuel oil,
and insurance on the house. (Our telephone was rarely used
for business reasons, so we excluded its cost from our
deductions.) We didn’t attempt to claim depreciation on our
house, either . . . although if a profit had remained after
subtracting that–as well as our other
expenses–from our business income, it would have been
perfectly legitimate to do so. (It is true, however, that
if a dwelling is depreciated, for such purposes, the
process places limits on capital gains benefits if that
house is sold and a new home is purchased.) My spouse and I
also calculated $2.00 as our average cost per day to feed
each guest. This included a large country breakfast
(although that meal can be simple “continental” fare,
perhaps juice and rolls) plus refreshments in the afternoon
or evening.

Our other expenses included the cost of
advertising in nearby suburban newspapers (because we
eventually decided to promote our B & B biz ourselves,
to augment the efforts of the services we’d joined) . . .
money spent on postage, stationery, and a self-designed
brochure . . . and the cost of operating a car on B & B
errands (we deducted a flat 20 cents per mile whenever we
used our 1978 Buick for business purposes).

BUDGET BREAKDOWN

Our endeavor grossed $1,750 during the
first year . . . a figure which reflected the income from
100 actual guest-days. Our expenses for that period totaled
$1,100 . . . although that sum included part of the cost of
two room air conditioners (depreciated over five years), a
house sign for the main road, and about $300 spent on
promotional materials. The remainder went for food ($200),
travel ($180), electricity and fuel oil ($175), insurance
($90), and garbage disposal ($18). We figure that had we
reached our initial estimate of 200 guest-days, we would
have doubled our income to $3,500 while increasing our
expenses by only about $400. Of course, since we achieved
only 50% of our yearly goal, we deducted only 12,5010 of
our household expenses (rather than the 25% we’d originally
calculated). However, if our second year is as good as we
anticipate, the 25% rule of thumb can be applied.

AND THE BEST PART OF ALL . . .

Our guests
began arriving in late October. On the first weekend two
couples (the wives were sisters) drove from Buffalo, New
York and Detroit, Michigan to stay at our home in southern
Maryland for three days. We charged each couple $38 per day
(the service that referred them had set that price), and we
received a full fact sheet of information on each couple
before they arrived. The service took a 15% commission
($34.20), and we received the remaining $193.80 . . . which
much more than compensated us for our annual B & B
membership fees.

When our visitors showed up, we placed cut
flowers in the bedrooms, offered maps and tourist
information, and –after they’d settled in–tried
to be generally accessible for conversation without being
intrusive or bothersome. (Such little touches, we believe,
hell) assure our travelers a pleasant stay.)

As the year
went on, we discovered that our guests would typically send
us warm letters of thanks, and we even exchanged greeting
cards with some of them during the holiday season.

Now, as
we approach our second year as hosts, we understand the
business much better. We’ve developed good working
relationships with the referral groups arid become better
at promoting the service ourselves.

Setting up our home as
a bed–and–breakfast retreat for travelers
has–my wife and I agree–been one of the best
(and most gratifying) decisions we’ve ever made. It’s
brought a lot of satisfaction into our lives, and we hope
into the lives of our guests as well.

EDITOR’S NOTE: Robert
Bensen of Burlington, Vermont has published a directory
that lists 90 bed-and-breakfast referral services located
throughout the United States, Canada, and the British
Isles. The compendium sells for $3.95 and can be
ordered–from Robert R. Bensen, Dept. TMEN, Burlington, Vermont. As an alternative, you can
contact the Bed and Breakfast League, Ltd., Dept. TMEN,
Washington, D. C. for
membership, information and listings. (Please include a
self addressed, stamped envelope.

MOM’s staffer Mary Jo Padgett shares her summer experiment in hosting B & B guests.

IT’S A SMALL BED AND BREAKFAST WORLD AFTER ALL

Although we were aware of
the national and local bed and breakfast organizations that
have sprung up in the last few years, my husband and I
decided to go the independent route when trying our luck at
the “extra room”business.

I had stayed in bed and breakfast
cottages in the British Isles during previous summers and
had loved the low cost arid casual atmosphere they provided
. . . and the chance to mix with the local citizens. I
guess I felt a sort of obligation to return tire favor to
fellow travelers when our fancily acquired a 100-year-old,
two-story Victorian house that had an extra room we almost
never used.

My husband–being a gregarious sort and an
excellent breakfast cook–was delighted to take on the
“hospitality” part of the job during the summer. (He’s a
high school teacher and has those months “off”, while I
work throughout the year.)

We began our adventure by
placing art ad in the classified section of MOTHER EARTH NEWS. We felt
that this periodical would speak to the type of people we’d
like to have visit us (and who’d be likely to try an
unfamiliar form of travel accommodation). The advertisement
cost about $50 . . . and was published in early summer We
received six responses almost immediately after the
magazine hit the newsstands.

My husband and I had composed
a letter of introduction, which we sent to each of the
respondents. In tire note we described our arrangement, our
location in relation to tourist attractions (in our case
these included the World’s Fair, the Great Smoky Mountains,
and MOTHER’s own Eco-Village), and our charges ($18.50 for
a single adult, $32.50 for two adults, and special rates
for children).

About half the folks replied to our letter.
We requested a one-night deposit to confirm any reservation
(with the promise of a full refund if we were notified of
cancellation at least seven days before the scheduled
visit, and a return of all but $10 if we were notified less
titan a week before).

When the flurry of inquiries and
letters died down, one couple–a mother and her 15
year-old daughter-made a confirmed reservation for three
nights’ lodging. We were delighted . . . their visit would
cover the cost of the ad and then some, and we’d get a
chance to meet some interesting people while giving them a
comfortable, friendly place to sleep and have breakfast!
Furthermore, this one-time venture would also give us art
opportunity to see how we’d like having strangers in the
house . . . and to decide whether we might later want to
tackle a booked-solid summer of guests.

I sent a map
directing the pair to our home, and my husband and I spent
a lull Saturday cleaning the room . . . putting in fragrant
flowers . . . sprucing up the large old-fashioned bathroom
(complete with a claw-footed tub) . . . and stocking up on
eggs, cereal, and milk. When our guests arrived late
in the afternoon of the following Saturday, we were sitting
on the front porch ready to greet them. Our visitors turned
out to be most pleasant . . . they were neat, ate a light
breakfast (and were thrilled by our homemade bread and jam), left early in the day for sightseeing, and returned
in the evening to have a soak in the tub, read a bit, and
retire early. During their three-day stay, they sometimes
joined us in the rockers on the porch and chatted.

We
learned that their visit was an experiment also, since
they’d never stayed in a B & B home before . . . and we
all agreed that the arrangement was well worth continuing.
(They even offered to let us leave similar accommodations
at their home on the Florida coast!)

The venture did snake
us a little money, but more important, it gave us the
opportunity to be hospitable to “strangers in a strange
land” . . . and reminded us that we’re all just neighbors
in a small, small world.