Entering Innkeeping,…….. the Business Plan

Businesses with plans have a higher success rate. As you have gathered information, you have already compiled much of the information needed for a written business plan. Writing your business plan will help you make your intentions clear to yourself, and your business compelling to others. Among its other uses:
Financing
Organization method
Communication tool
Reminder of your focus

There are a number of business plan formats, even software programs designed specifically for the purpose. Generally, business plans include:

Mission Statement
General business description
Pro-forma balanced operating statement
3(aggressive) and 5 (conservative) year plans to a balanced pro-forma statement
Cash flow projections for the same period demonstrating cash needs for both
Marketing Plan
Management's background
Loan request

Your business plan is going to outline the business you are proposing and demonstrate first to you, and then to others that it is a sound financial investment. You will establish a balanced pro-forma financial statement, generally for the third or fifth year. You will then demonstrate the progression of financial improvements that will provide that balanced statement. It will serve you well to do an aggressive approach that will take your to solid financial footing in only three years and to do a more conservative approach to reach the goal in five years.

A Marketing Plan will be the second most interesting element of your plan for at least two reasons. First, you along with potential investors will want to see a documented plan for producing guests (customers) who will buy your product, that will provide money to pay back their investment. Second, people are often fascinated by all sorts of hospitality ventures. Many people have dreamed of owning their own restaurant, club, small hotel, or bed and breakfast. General discussions or your venture and its market base are part of the fascination.
Marketing is a fluid activity based on a well thought out and clearly defined plan. It's important to develop concrete lists of marketing activities complete with a time line. You will be well served to include task assignments, and to establish deadlines for many of the activities. Among other activities it will be important for you to:
Define your customer. Be as clear in establishing this profile as possible. This definition is your target market.
Define your product. Be brutal with yourself. Develop a concise definition of your product, and it must be something that no else is...or why bother?
Outline your marketing methods. Web based, print, hand to hand, advertising, public relations, and word of mouth are all important elements of a marketing plan. Determine each of their values to you in your marketing plan.
Develop a marketing budget. Once you determine the values of different marketing opportunities, how much to you plan to spend on each of them.
Be prepared to measure the results of your efforts, refine your plan, and to react to opportunities that are new to you.

With each passing day there are new web based opportunities for businesses of every sort. Many of us use the internet to research our airline reservations, car rentals, hotel rooms, vacation activities. Today's marketing plans include a great deal of web based activity. While there are a number of free web site design services available, you will be well served to enlist the services of a professional website designer with experiences specific to this industry. It's relatively easy to make a website look nice and compatible with the vision of your property. However, if key words, search engine optimization, pay per clicks, on line availability, and real time reservations are phrases that mean little or nothing to you, a professional designer is in your future. And let’s not forget social media. How will you integrate social media opportunities into your marketing plan and your daily list of activities?

At some time you will have to select a name for your new venture. If you are buying an existing property, you may elect to keep the name. There is a tradition to the name and hopefully a good reputation of product and service. However, if you are in the market for a name, don't just pick a name, any name. Here a few considerations:
• Classic wins out over clever: first time guest are always skeptical of cute names.
• Leave your ego at the door: don't name the Inn after yourself.....you will eventually sell.
• Pick a name that is short, and memorable with a matching, available web domain name.
• Be sure the name identifies you as a lodging property and not a flower bed.
• Properties are often listed alphabetically in guides
• Don't include "The" in your name unless you want to be listed with the "T"s.

What can you do right now? Take the time to discover this new and exciting life. Innkeeping is a wonderful life for yourselves and your family. You will meet terrific guests, become a part of peoples lives on a level unattainable in any other profession, and will provide wonderful times together.

Next we’ll talk about an Action Plan.

Entering Innkeeping, Part 5

As you explore the physical opportunities for entering the Inkeeping world, talking with realtors, chambers of commerce, current owners of B&Bs and Inns, even those who casually rent space in their homes, it will be important to begin to do some analysis. Careful analysis of the elements of your business as it develops is important to reaching the goals you've established for yourself and your business. I’ve organized the areas of analysis into these five categories:
• Site
• Market
• Size
• Competitive
• Supply & Demand

The site. Here we’re talking about the physical components of your potential new enterprise, and let’s not forget your new home. This business development is about you, your preferences, and your interests. Be sure the location and site are conducive to your interests. If, for example, you hate the heat, don't consider properties in the deep south. If you hate gardening, don't consider a property with acres and acres of lawns, fields, gardens.

You will spend a great deal of time at your home/business and it will become a reflection of your tastes and interests. As you begin your search you might want to make a short list of specifications that starts somewhat like:
• In a skiing area for your love of all winter sports and the mountains
• A city population of no less than 20,000 with excellent schools
• With-in a two hour drive to major medical facilities

You'll also want to assess the amenities at the location that will meet your guests' needs. As examples:
If you're considering a beach resort community, will your business be convenient to the beach, shopping, dining, parking?
If food service is not nearby, are you planning to provide that service in-house?
If you are interested in a remote location, is there sufficient road signage for guests to physically find your property in the night?

Market analysis is a collection of economic data of the area. The local government or Chamber of Commerce collect and maintain records of the area's economic health. You'll want to have historical data to review the economic trends for your potential hometown, its present economic health, and projections for its future including any developments in the planning stages. The big question you want to have answered, Is there a market for your new venture in the location that you are considering? This is not the time to depend on anecdotal information, but rather cold, hard facts. This information isn’t sexy or romantic, but crucial for your success.

Size analysis is a matter of determining the number of guest rooms you will manage. This is another important analysis that will affect the outcome of your venture on a number of levels. If you plan for a B&B/Inn of 2-4 rooms, you may find you are completely comfortable working the business with no additional staff.
To the other extreme, if you plan for a 32 room property, you will rely on employees and you may find yourself more heavily involved in staff management than you would prefer. How are you planning your personal time each day?

Your financial goals are another consideration. If your goal is some additional income, then you may find a small property appropriate. To the other extreme, if your new business is to be your primary means of income, the sales potential of a larger property may be necessary to meet your goals.

Carefully consider the property size in relation to your interests and financial goals.
Real estate investment that will provide a specific (substantial) return in a specific projected time frame.
In and Out in 5-10, etc? You know your goals. Do they match the site you have in mind, the market you’ve selected?

So far, most of your focus as been on you, your wants, and how to get, it. Now we’re focusing on the community that will be around you.

• How many other lodging businesses are in the area and how many rooms do they constitute?
• What are their rates?
• Do they offer discounted pricing?
• Are there minimum stay requirements, which indicate they are busy enough to be selective?
• Are any of the properties similar to your property?
• What markets are being served by your competitors?

When you have the answers to these questions, you'll be able to determine where and how your property will fit in the lodging landscape of your area.

The last area of analysis is supply and demand. Much of this information will also be available from local government and Chambers of Commerce, especially in communities who rely on tourism for at least part of their economic health. However, in some areas you may have to make some assumptions on which to base your analysis because area hoteliers and innkeepers may not have or be interested in sharing statistical information.

However, a little well thought research can help you come to some good conclusions.

• Calculate the area's overall occupancy rate, OCC. This is a sum of all the potential rooms available in your market, compared to the number of these rooms that are occupied in a specific time frame.
• You'll also want to calculate an estimated average daily rate, ADR. You’re looking for the total room revenue collected in your market for a specific time frame. You will compare that number to the total number of room nights for the same period. You want to make some comparative calculations between the information you can gather from your market area, and what you have in mind for your own venture.
• Make a careful review of the different market segments being served and any known goals for market growth or expansion. For example, if you discover there is a 400 room hotel about to be developed in your area, that certainly changes your market and you may be uncomfortable competing for travelers in that market.
• Based on the information you have gathered it will be important for you to estimate your properties projected occupancy and average daily rate for year 1, year 2, and year 3.

I can’t stress sufficiently the value of this work. It will be the foundation for all that you do in developing your business venture. Just as in building any structure, no matter how pretty the interiors, it’s the foundation that supports all the pretty. Work to establish your business venture on the solidest of footings.

Once you’re worked through this analysis, it’s important to digest your work so that you can communicate your venture clearly to those around you. You may be talking with lenders, marketing professionals, artists, vendors, potential employees, neighbors, family, and friends. While I think the term is overused, and I avoid its use as much as possible, I’m talking about a Mission Statement.

You want to clearly know and understand the answers to these two questions:
• How will the Inn be different from other guest lodging opportunities?
• Why will the guest prefer your lodging opportunity?

What was once a cloudly “idea” for a potential business in your future, should now begin display itself as a clear vision. With all the information you have gathered, you’re ready to write your business plan.

Entering Innkeeping, part 3, Research

Research. Research. Research. Based on my own experiences, I strongly encourage anyone who’s exploring any business venture to do as much research as your financial, time, and energies allow. I can’t begin to count the number of people I’ve heard say, “if only” about six to twelve months after folks have entered into a new business. Granted, there will always be surprises in any new business, but don’t be sideswiped by something that could have, should have, been included in your business plan. Research will help you refine your goals, gain perspective on the lifestyle, help you find your comfort levels, and narrow your choices, as you pursue your enterprise.

It may sound silly, but if you haven’t , be a guest. There are at least two primary reasons to stay in as many B&Bs as possible. First, there are as many ways to operate a Bed and Breakfast as there are innkeepers. By staying at a variety of B&Bs in different locations, you'll be exposed to a number of business models. There are operational differences based on location. Building code, fire safety code, zoning, and health codes differ by local and business models follow those location specific codes. There may be a business model that would particularly appropriate to your needs. Conversely, you may be exposed to a way of doing business that you find inappropriate. That exposure will help you immeasurably as you develop your own business model. Beginning to understand the lifestyle is the second reason it's important to visit B&Bs. This networking with experienced innkeepers will help you understand your best opportunities and the pitfalls you can avoid.

While talking with experiences Innkeepers is valuable, there are those who have taken that one step further and gotten first hand experience by working in an established business. Some have found fulfilling careers working for others, rather than owning their own business while enjoying the lifestyle.

There are generally three innkeeping career paths. Rarely do any of them offer income sufficient to invest in your own property, but they are terrific ways to network with innkeepers, understand the challenges firsthand, and develop your business model based on those experiences.

Interim Innkeepers are sometimes referred to as innsitters. Assignments generally fall into two categories. Short term assignments are of one day to three weeks. Long term assignments are more than three weeks and rarely go beyond six months. Interim Innkeepers get to experience a wide variety of properties, places, and people, which can be a very interesting yet challenging lifestyle. They generally have to be well versed in all elements of Innkeeping. In recent years, professional development of interim innkeepers has become more and more important. The Professional Association of Innkeepers International currently offers a certificate for interim innkeepers who have demonstrated their commitment to professionalism and guest safety.

Interim Innkeepers have to be well versed in all elements of general small business management and have a clear overview of innkeeping specifically. Among their bag of skills successful interim innkeepers are proficient in:
• time management
• communications
• food preparation and service
• housekeeping
• guest management
• staff management
• general building maintenance
• computer program knowledge
The longer term assignments require that interim innkeepers have even more honed people skills because of their on-going responsibilities for staff, guests, reservations, and their fellow business owners. Long term assignments may also take a toll on family relationships. Not everyone is comfortable spending large blocks of time far away from their loved ones.

Assistant Innkeepers can be part or full time and generally work along with the owner or general manager. Generally, they have specific management functions, but there are job descriptions that include similar descriptions to that of housekeepers with little management responsibilities. Assistant innkeepers generally have good command of:
• work flow of the specific property
• general policies and procedures
• reservation guidelines
• job descriptions of fellow employees
• management preferences

General Managers are usually full time management level staff who may work along with the owners, but are well equipped with all the skills to professionally manage the property in lieu of the owners. Many general managers operate properties for absentee owners, serving the function of full time Innkeeper. General Managers generally have command of skills including but not limited to:
• financial planning and management
• legal business responsibility
• time management
• communications
• food preparation and service
• housekeeping
• guest management
• staff hiring and management
• general building maintenance
• computer program knowledge

Weekend Audits can provide excellent opportunities to understand the work flow for a B&B/Inn operation. You might have wondered, how'd they do that. By developing relationships with Innkeepers, asking to spend time with them during operations, especially in the kitchen, you'll get a feel for the flow of work, and personal responsibilities of innkeepers and staff.

There are a number of organizations around the country that offer working vacations, or workshops specific to innkeeping. They are a great way to yet again, get specific experience. It's important to note here, that those who find little satisfaction in their innkeeping career are generally those who didn't carefully research the specifics of this business model.

There are also “boot camps” offered by a number of Inns. You get to pay to work for them for a short period of time.

There are a number of books on the subject of Innkeeping that are excellent reference material. So read, read, and read, again. But be sure to check publication date. This industry changes dramatically and quickly, try to use information that is as current as possible.

The standards for amenities like shared baths, the availability of online reservations, global distribution, marketing sites, social media have all changed over the years. Base your business model on current or next generation business practices.
Reservation Services
Web based reservations
You'll find a number of books about opening your own B&B. "So.....you want to be an innkeeper?" is a widely recognized publication, as is “Bed & Breakfasts for Dummies”. Reading a couple of these titles will help you learn from others mistakes.

Consider this:
In a typical week a successful Bed &Breakfast or Inn with 18 rooms, the staff will:
• prepare 210 guest breakfasts and 60 staff breakfasts
• serve up to 4 cases of eggs per breakfast
• spend 50 hours cooking
• attend to 30 guests per day
• deal with 100 loads of laundry
• clean rooms for 60 hours
• receive 350 phone calls
• log 100 office hours
• prepare 50 special guest requests
• use 21 gallons of afternoon refreshments
When the week is all over, you get to do it again, and again, and again, in perpetuity. So, it’s always good to be prepared!

Now is the time to do a self-assessment. Determine:
• If you’ve visited B&Bs and came away with a good feeling about the environment.
• That you’ve met current Innkeepers and can see yourself in their positionsT
• That you’ve done other research in the way of auditing operations, reading quality current publications on the “How to’s”of operating your dream business

Are you going to be an Innkeeper? Is so, look for next week’s blog post on Acquisition Options. We’ll look at the ways most folks have found their property, how to do the analysis of a property, and which option fits your list of goals.

Now that’s NOT what I’m talking about.

I can’t get the concept of delighting and surprising my customers, guests, or members out of my thoughts. Every day as a customer I hear how I’m going to be delighted or surprised. Just yesterday the message recording from a vendor went on and on about how important I was to them, about excellent customer service being the core of their value statement, how I would receive premium service from the next available customer service operator and that my wait was estimated at six minutes. Later in the day I was reading classified employment ads and a hospitality company is using as their marketing tag “committed to delighting customers every day”. I’ve visited a number of this chain’s outlets. Trust me when I say, I’m not a difficult customer. Life is too short to get my boxers all up in a bind over a meal out. But you can also trust me when I say, I’ve never been delighted by this company’s product or their customer service.

When I talk about delighting and surprising customers, I don’t think we have to go to some obscure level of attention. I think we need to simply treat others as we would like to be treated. I’ve had to occasion to go to a bar where bar snacks are served at the actual bar, but are not provided at the tables. I love it when my server brings a bowl of snacks to my table or at least asks if they could bring some to the table. When I’m in line at the hardware checkout, I love it when the owner/manager opens the second register and tells his customers that he’d gladly take care of them. When I go to pick up an order at a local company, if I have more than one bag, a clerk always at least offers to carry the packages to the car for me.

What I’m NOT talking about is corporate mumbo jumbo marketing tags with no substance. Don’t tell me you care and then send my call to a non-English speaking rep after I wait 2 minutes listening to your propaganda and then to crappy loud music for six more minutes. Anyone can put that crap on the letterhead or job posting. What I AM talking about is genuine care for their fellow human being, and taking care of one another. That delights me. Let me put it another way. If you’re gonna show up to the dance, don’t stand there and tell me about your years of dance lessons, be prepared to dance!

To Surprise and Delight

So every Sunday for years I’ve listened to public radio’s Krista Tippett’s interviews. First when I was doing breakfast for guests at my Inn. It was a very casual laid morning, with a buffet of coffee cakes, muffins, sweet butter, house jam & jellies, juices, and coffee as a first course, there was always time between making the next set of omelets. Since leaving that life, on Sunday mornings I’m more able to focus on the entire program and now appreciate them even more. Last Sunday she interviewed Seth Godin. Now I knew of Mr. Godin, but only vaguely. He was that internet guy, writer, thoughtful…yeah yeah yeah. However, since listening on Sunday, I’ve gone to his website, signed up for his daily blog updates, because there are a few of his remarks that just stick. You know those ideas that come into your mind, and for some reason, your mind won’t let go!

He described the change from a small business economy some decades ago, to that of big business where my parents and others of their generation went to work. They enjoyed the stability of a big brother employer, steady job, steady income, steady benefits, unheard of health benefits!, just do as told, when as told, and expect to enjoy the golden years. And it worked. There are lots of retirement communities, many in warmer climates, where folks enjoy their later years.

My 85 year old mother shared an interesting story Sunday while we were listening. She was a factory worker for some 30 years. At a meeting with management she and others were told to understand how lucky they were to be working all those years at one job, because the future generation would certainly not have that luxury. They would work an average of 14 jobs in that time. Hmmmm….everything makes me think.

As Mr. Godin shared, times are again changing, as there are fewer and fewer big business employers and we are once again left to our own to create our own futures. How frightening is that! But here we are…..many trying to earn a living, at some enterprise that will earn them at least sufficient money to put food on the table and a roof over their family’s heads.

Here’s the part that has caught my attention. In this new world order, we can’t just show up. From Seth Godin’s Sunday blog, just “Showing up and taking notes isn't your job. Your job is to surprise and delight and to change the agenda. Your job is to escalate, reset expectations and make us delighted….” Surprise and delight; that’s what I have stuck in my mind. It’s a tall order, well worth pursuing, but how on earth?