Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Updated on May 17, 2023
$75,000 - $300,000
$150,000 - $230,000 p.a.
Time to build
$110,000 - $160,000 p.a.
How to Start a Bed & Breakfast
Decide if the Business Is Right for You
Hone Your Idea
Brainstorm a Bed & Breakfast Business Name
Create a Bed & Breakfast Business Plan
Register Your Business
Register for Taxes
Fund your Business
Apply for Bed & Breakfast Business Licenses and Permits
Open a Business Bank Account
Get Business Insurance
Prepare to Launch
Build Your Team
Run a Bed & Breakfast - Start Making Money!
Bed and Breakfast Business FAQs
Despite the rise of home rental apps like Airbnb, traditional bed and breakfasts, or B & Bs, remain a popular choice for romantic getaways and weekend vacations. If you like hosting guests and live in an appealing area, starting a bed and breakfast could be a great way to make a living or add another income stream, while giving people memories they’ll never forget!
Starting a bed and breakfast will have challenges, so it’s wise to understand what’s involved before you jump in. Fortunately, you’ve come to the right place: this step-by-step guide is full of insights that will help you develop and launch your own B & B and put you on the road to entrepreneurial success.
Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.
Starting a bed and breakfast has pros and cons that you should consider before deciding if the business is right for you.
Express Yourself – Design your B & B however you like
Good Money – Profit margins tend to be high
Fun! — Everyday is a holiday for your guests
Startup Costs – The property and renovations could be costly
Crowded Home – Very little alone time if you live in your B & B
Bed & breakfast industry trends
A major trend today is the rise of the multi-billion-dollar home-stay lodgings market, led by Airbnb and VRBO. Learn more about this booming industry in this article on starting an Airbnb. It’s probably a good idea to list your B & B on those sites, as well as on your own website, to boost awareness, customer reviews, and occupancy rates.
Industry size and growth
The bed & breakfast and hostel accommodations industry in the US is well on the way to a rebound after the pandemic dip of 2020.
How much does it cost to start a bed and breakfast business?
Starting a B & B costs anywhere from $75,000 to $300,000 or more. The largest expenses are a down payment on the house, renovations, furniture, and décor. A home in a good location with enough space and bedrooms is going to be pricey. It may not need renovations and could even come fully furnished, but you should expect a down payment of at least $50,000.
Setting up a business name and corporation
$150 - $200
Licenses and permits
$100 - $300
$100 - $300
Business cards and brochures
$200 - $300
$1,000 - $3,000
Large home down payment
$50,000 - $200,000
Renovations, furniture, decor
$25,000 - $100,000
$76,550 - $304,100
How much can you earn from a bed and breakfast business?
The average B & B room costs $170 per night, and you should be able to achieve a profit margin of about 70%.
So if you have five rooms and average 50% occupancy your first year, you’d bring in over $150,000 in annual revenue. This would mean almost $110,000 in profit, assuming that 70% margin. As your brand gains recognition, you could increase occupancy to 75%. With expected annual revenue of over $230,000, you’d make over $160,000.
What barriers to entry are there?
There are a few barriers to entry for a bed and breakfast. Your biggest challenges will be:
A down payment on a large home in a good location will be $$$
You’ll likely need to uproot your life and move to a new area
Related Business Ideas
If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.
Now that you know what’s involved in starting a bed and breakfast, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Why? Identify an opportunity
Research bed and breakfasts in the area to examine their services, price points, and customer reviews. You’ll want to come up with a concept that will be in demand, but you also should look for a good location with few B & B options.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as a B & B for romantic getaways, or a B & B for older couples.
This could jumpstart your word-of-mouth marketing and attract clients right away.
What? Determine your products or services
In addition to a room and breakfast, you could offer:
How much should you charge for a bed and breakfast?
Prices for bed and breakfasts range from $85 to $250 per night, with an average of $170. Your main expenses will be your mortgage, taxes, food and cleaning supplies. Your labor costs will be minimal if you do the work yourself or have family members help you.
Once you know your costs, use the Step By Step profit margin calculator to determine your price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Who? Identify your target market
Your target market is probably going to be more established people with higher incomes. You’re most likely to find these people on Facebook or LinkedIn.
Where? Choose your Bed & Breakfast location
Selecting the right location is vital for the success of your bed & breakfast. Look for a charming and desirable area that attracts tourists or business travelers, such as a popular vacation destination, scenic countryside, or a bustling city center.
Consider proximity to attractions, amenities, and transportation hubs to ensure convenience for your guests. Additionally, assess the competition in the area and aim to offer a unique experience or cater to a specific niche market.
By strategically choosing a location, you can create a welcoming and memorable bed & breakfast that appeals to travelers and sets you apart from the competition.
You can find a house or building to rent in your area on sites such as Craigslist and Crexi.
Step 3: Brainstorm a Bed & Breakfast Business Name
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your business name:
Short, unique, and catchy names tend to stand out
Names that are easy to say and spell tend to do better
The name should be relevant to your product or service offerings
Ask around — family, friends, colleagues, social media — for suggestions
Including keywords, such as “bed and breakfast” or “B & B”, boosts SEO
Choose a name that allows for expansion: “Tranquil Retreat B&B” over “Beachside B&B”
Avoid location-based names that might hinder future expansion
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Step 4: Create a Bed & Breakfast Business Plan
Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:
Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
Product and Services: Describe your offerings in detail.
Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
Appendix: Include any additional financial or business-related documents.
If you’ve never created a business plan yourself before, it can be an intimidating task. Consider hiring an experienced business plan writer to create a professional business plan for you.
Make Logos, Business Cards, Social Designs and More!
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Choose where to register your company
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to bed and breakfasts.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Choose your business structure
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your bed and breakfast will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
Limited Liability Company(LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
Federal regulations, licenses, and permits associated with starting your business include doing business as, health license and permit from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You need to make sure that the house that you choose is zoned for short-term rentals as a B & B. If not, you’ll need to apply for a variance with the local government. You may also need state-level licenses and local county or city-based licenses and permits.
The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your bed and breakfast business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Step 10: Get Business Insurance
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
Business Property: Provides coverage for your equipment and supplies.
Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
Worker’s compensation: Provides compensation to employees injured on the job.
Property: Covers your physical space, whether it is a cart, storefront, or office.
Commercial auto: Protection for your company-owned vehicle.
Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.
Step 11: Prepare to Launch
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Essential software and tools
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.
Develop your website
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Some of your business will come from the casual passerby or online visitors, but still you should invest in marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.
Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products:
Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area.
Instagram: Same benefits as Facebook but with different target audiences.
Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Book Now”. This can sharply increase purchases.
Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.
Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:
Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as 20% off your first night.
Signage – Put up eye-catching signage at your store and website.
Flyering – Distribute flyers in your neighborhood and at industry events.
In-Person Sales – Offer your products/services at local markets, trade shows.
Sponsor events – You can pay to be a sponsor at events that are relevant to your target market.
Post a video – Post a video about your bed and breakfast. Use humor and maybe it will go viral!
Start a blog – Start a blog and post regularly. Change up your content and share on multiple sites.
Seek out referrals – Offer incentives to generate customer referrals to new clients.
Focus on USPs
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your bed and breakfast meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your bed and breakfast business could be:
Our home is your home away-from-home
Bed, breakfast, and live music!
Lively B & B in the arts district
Optimize calls to action. Experiment with text, color, size, and position of calls to action such as “Book Now”. This can sharply increase purchases.
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a travel agency, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in the tour industry for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
Step 12: Build Your Team
If you don’t live at your B & B, you will need workers to fill various roles. Potential positions for a bed and breakfast business would include:
Desk Clerk – Check-ins and check-outs, customer service
Housekeepers – Cleaning rooms, bathrooms, and kitchen
Cook – Prepare breakfasts and other meals
Marketing Lead – SEO strategy, social media
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Step 13: Run a Bed & Breakfast – Start Making Money!
Many travelers love the coziness and warmth of a B & B over a stale hotel. It’s a billion-dollar industry that you can tap into and make a healthy profit. Running a bed and breakfast also offers a unique lifestyle in which you constantly serve as host to a steady stream of interesting people.
You’ve educated yourself with the right information, and now you’re ready to start your entrepreneurial journey into B & B life.
Bed and Breakfast Business FAQs
Is a bed and breakfast profitable?
Profit margins for a bed and breakfast are high if you live in it and run it yourself. The average price for a B & B room is $170 per night, so if you have 5 rooms to rent, you can make a sizable income.
What’s the best place to start a bed and breakfast?
You can start one anywhere, but it’s best to be in an area that has some appeal as a tourist destination, such as a lively city like Nashville or a beautiful natural area like the Smoky Mountains. People want a trip that’s an experience, not just a place to stay.
What is the difference between a Bed & Breakfast and Airbnb?
A Bed & Breakfast (B&B) is a type of lodging establishment where guests stay in a private room within the host’s home or on the same property as the host’s home, and are typically served a breakfast in the morning. B&Bs are typically smaller in scale than hotels and offer a more personalized experience, with hosts often providing recommendations for local attractions and activities.
How many rooms do most bed and breakfasts have?
The number of rooms in most bed and breakfast establishments can vary significantly. Some may have as few as three rooms, while others can have more than 20. The size of a bed and breakfast is typically determined by factors such as the property’s size, local regulations, and the owner’s preferences.
How can I increase my bed and breakfast revenue?
To increase bed and breakfast revenue, focus on strategies such as optimizing occupancy rates through effective marketing and promotions, offering additional services or experiences to guests, improving amenities to attract more guests and justify higher room rates, and targeting specific niche markets to attract clientele with specific needs or preferences.
What is the difference between a Bed & Breakfast and Airbnb?
B&B is typically a small lodging establishment operated by the owner or a host who lives on-site. It offers personalized service, includes breakfast in the room rate, and often provides a more intimate and home-like experience. On the other hand, Airbnb is an online platform that allows individuals or property owners to rent out their entire homes, apartments, or rooms to guests.