business plan for b&b uk

How to start a bed and breakfast business

Our experts, written and reviewed by:.

Before the pandemic hit, domestic tourism contributed £237bn to the UK economy in 2019, according to Statista. And, although this figure was halved by the impact of the pandemic – with inbound visitor numbers just 18% of their 2019 levels by Q1 2021 – Visit Britain has predicted that domestic tourism spending will be up 51% on 2020 by the end of this year (2021).

Bed and breakfasts are ideally placed to capitalise on this domestic tourism footfall, and the industry is currently in excellent health. While many budget-conscious travellers have turned to platforms such as Airbnb, these systems have “yet to directly influence industry performance”, according to Statista.

If you like the idea of really being at home with your business, then running a B&B could be perfect for you. From a guest’s perspective, a well-run B&B can be more comfortable and more local than a hotel, offering a home-from-home, and a welcome respite for weary travellers.

In this guide, we’ll tell you all you need to know about launching your own bed and breakfast, including regulations, taxes and potential profits.

At Startups.co.uk, we’re here to help small UK businesses to get started, grow and succeed. We have practical resources for helping new businesses get off the ground – you can use the tool below to get started today.

What Does Your Business Need Help With?

Key areas to consider when starting a B&B (or airbnb) business are:

• 01 | Necessary skills
• 02 | Regulations
• 03 | Market research
• 05 | Potential earnings
• 06 | Useful contacts

What skills are required to start a B&B – Who is starting a B&B suited to?

A B&B is different from a hotel in that it’s generally more basic. You will offer a bed for your guests to sleep in, and a full breakfast before they check out. No gyms, no health spas and no concierge service. Of course you may provide some other basic facilities such as access to television but the main ethos behind the traditional B&B is that it’s not the kind of accommodation you expect the guests to spend much time in. It’s somewhere to sleep and have breakfast before setting off for a business meeting or exploration of the local tourist attractions. Most guests are aware of this, and are quite content with a more basic level of service as long as their accommodation is clean, tidy and functional.

Given that you are effectively opening your home to strangers, you are blurring the edges between your business and your home life so you need to be confident and happy with the arrangement. To a certain extent, it’s a creative profession: you have to enjoy cooking and making your accommodation as pleasant and welcoming as possible. It’s also something of a lifestyle business, a job that many people will undertake with their partners or perhaps later in life.

To run a successful B&B you have to be a real ‘people person,’ especially if your guests are sharing some of your own space, such as the lounge or dining room.

David Weston, chief executive of the Bed and Breakfast Association says: “You’ve got to consider if you’re the right type of person to run a B&B because you’re allowing strangers to come into your home. You also need to be someone who pays attention to detail, is house proud and keeps the place welcoming. If you’re not very neat and tidy it’s probably not a good business to get in to.”

However, if you do have the characteristics listed above you could find it’s the perfect way to make a living or supplement your income. Christine Williams, owner of the Drifters Lodge in Buckinghamshire and a recent BusinessLink advisor, says:

“I’m rushed off my feet and working harder than I ever did in my life, but it’s a wonderful way to make a living. While I’m not the mistress of my own time in the way I thought I’d be, I don’t mind because I love it.”

Rules and regulation for a B&B business

You don’t need a specific licence or qualification to open or run a B&B but there are areas of law you need to be aware of. It’s important to bear in mind fire regulations from the outset as you will need to carry out a Fire Risk Assessment and may have to make some adjustments to the property as a result.

Before you put any concrete plans in place, it’s best to consult with your local authority planning office. If your prospective B&B is situated in a tourist hotbed, it’s highly likely the local authority will have a tourism plan, and they may take a dim view if you attempt to start your hotel outside the designated tourist area; it’s prudent to check this at the outset, rather than waste thousands of pounds on a project which the local authority will never permit.

Furthermore, all extensions or significant alterations to your property need to be done by the book so make sure you have the appropriate planning permission from the local authority and adhere to building regulations before you start any work. Thankfully, you can apply for planning approval and building approval at the same time, so there’s no need to go back and forth.

You may also need to apply to your local planning office for a change of use of your property if you’re planning to have more than three guest rooms, or don’t plan to live at the B&B yourself. This can take several weeks to be processed so it’s important you make sure it’s one of your top priorities if it applies to your business.

As running a B&B involves serving food you will need to follow rules on food safety. It’s worth getting the environmental health officer round to inspect your kitchen very early on in the planning process as you may find you need to make some alterations which could affect your budget. David Weston recommends doing a food hygiene course which can be completed within a day or two. You can also obtain most of the information you need from the Food Standards Agency .

Depending on what kind of B&B you plan to run, there may also be some licences you need to apply for in order to provide certain services such as serving alcohol, playing music or providing a television in 15 or more rooms used by paying guests.

The big one you need to remember is registering with HMRC for tax purposes. You can run the business as a sole trader, which means you wouldn’t have to register as a limited company or open a separate business account. However, you must register as self-employed within 100 days of starting to trade, and you will need to keep meticulous records of all business-related income and outgoings.

Running a home-based business also requires a range of insurance covers, including public liability. Explore the policies you may need in our ‘Insuring your business’ channel.

Researching your market

You may be planning on giving up your existing career, moving to a picturesque location and starting your B&B. If this is the case you’ll have a choice when it comes to location. You can research the tourism trade in that industry and find out what leisure and business travel demand is like.

However, it may be the case that you simply want to rent out a few rooms in your existing home. Even so, it’s still just as important to consider all the factors mentioned above. Except instead of helping you decide where to locate your B&B, this research will tell you if there is even a demand for such a service where your home is. If there isn’t, you have to face facts, you’ll either need to move somewhere where this type of business is sustainable, or give up the dream.

“Just because you fall in love with a location it doesn’t mean there’s demand there,” warns David Weston of the Bed and Breakfast Association. “If it’s extremely rural or remote you need to be careful. If you go somewhere with lots of B&Bs like Bath or Bournemouth, you could argue there’s tonnes of competition, but that also means there’s huge demand. It’s about getting the balance right.”

Weston says it’s also important to evaluate what kind of amenities are within range and warns against locating your B&B somewhere that doesn’t have a few places to eat within walking distance as not everyone wants to drive.

Don’t automatically rule out an area just because it’s not popular with tourists however. Christine Williams,  who runs the Drifters Lodge, says that although her B&B isn’t located in a tourist hotspot, she gets a lot of business during the week from people on business trips, and at the weekends from people visiting nearby family.

Talk to other B&B owners in the area and find out what kind of occupancy levels they have. If others in the area are struggling, warning bells should be going off in your head.

The type of B&B you start should also fit the location. You need to think long and hard from the outset about whether you want your offering to be a luxury retreat, with high quality décor, facilities and design, or a more basic value proposition. Bear in mind that business travellers will have different requirements, almost certainly demanding internet access and often in need of a desk or quiet place to work within the residence.

Consider too the size of the property you’ll need. Think about this when deciding how much income you need to generate from the number of rooms you let out, but you also have to remember your own space.

Weston advises keeping a living area or lounge that’s just for you and separate form the one the guests use. “People often overlook the fact that other people will be in their home. You need to consider if this is something you’ll be happy with.”

Costs to start a B&B

How much you spend on setting up your bed and breakfast is really dependent on what kind of condition the property is in and how much work you need to do in terms of alterations. Take into account that you will need to install a decent fire alarm system and may have to make changes to your kitchen to conform with basic food hygiene requirements. Christine Williams said she didn’t have to spend too much as her and her husband had already made quite a few alterations, including making all the guest bedrooms en-suite, a few years earlier.

The bathroom issue is an important one. “Expectations are going up all the time,” says David Weston of the Bed and Breakfast Association. “People expect things like en-suite bathrooms even for cheap prices.”

You should also factor in the cost of any new furniture you need to buy. Tired old mattresses just won’t cut it, and while furnishings don’t have to be the latest designer offerings, everything in the guest rooms should be in good condition and maintained to a high standard. Room TVs and other entertainment, as well as tea and coffee making facilities also need to be added to the calculations in your business plan. You may want to consider a simple hotel phone system .

The look, feel, and level of service you offer will also determine your marketing strategy, and this is something you need to pay particular attention to even during the research stage. You can be running the most beautiful, quaint and charming B&B in the country, but if nobody knows about it, it’s doomed to failure.

Some kind of web presence is essential, but if all you want is a basic ‘shop window’ site, you don’t need to spend much, if any, cash on it. There are several free or low cost website options available. For more information on these check out our ‘Website building’ channel. Get some quotations for the cost of advertising in directories or listings magazines too, as these can be really useful methods of driving customers to you.

“I signed up to Visit Britain for an annual fee,” says Williams. “It’s a lot of money but it’s worth it. They send a ‘mystery shopper’ inspector round once a year and then give you a rating.”

It’s also advisable to meet local pub and restaurant owners, and suggest mutually beneficial deals; you might promise to recommend them, and vice versa, or team up with your fellow hospitality entrepreneurs for discounts and package deals. But, if you are going to team up with a nearby boozer or eatery, make sure your prospective partner is reputable; if you give a visitor a bad recommendation, your own reputation will suffer.

Of course, if you’re buying an entire new property then your costs are going to be substantially higher. If you’re taking out a mortgage on the premises you need to be realistic about your potential earnings. Do your sums, cross reference them with your research on similar businesses in the area, and then do them again! You cannot underestimate the importance of getting your estimated income as accurate as possible, otherwise you may find you’re not earning enough to pay back your mortgage, let alone make a living from it.

David Weston suggests working out average earnings for various levels of occupancy and seeing what level you need to maintain to cover your costs. “If you can survive on an occupancy rate of 30-40% then that’s very encouraging. However, if your budgeting says you need 80% occupancy just to break even, then it’s worrying and you need to rethink your approach.”

Potential earnings from running a B&B

In terms of exactly what you can earn depends on a number of factors including location, the amount you can reasonably charge, whether or not you need to employ staff, how much is required for marketing and whether you have significant costs to pay on the property, such as a mortgage. Weston says there is no standard profit margin or rule, as it’s just too dependent on variables.

However, as an example, Williams’ Drifters Lodge has a total of three guest rooms. Taking into account running costs she says it’s fairly easy to make a profit margin of around 50-60%. “I’ve done about £4,000 in revenue in July but in December/January it can drop to £1,500. There are B&B owners who’ve given up because they can’t make a living, even with 10 rooms. It has a lot to do with costs like mortgages and rent.” Williams, who does not employ anyone else, says it’s a lot of hard work for that level of income but it’s worth it because she enjoys it so much.

An average day running a B&B

Christine Williams who runs the Drifters Lodge gives an example of an average day running her three bedroom B&B:

“I get up at 7am and start to prepare breakfast. Once that’s done I usually have a chat with the guests and then clear the breakfast things up. Next job is to service the bedrooms, and then the laundry and ironing takes me up until about 12-1pm.

“I try to take a break in the afternoon and generally get 2-3 hours to myself. Then at about 4pm I check all the bedrooms before the guests arrive which is usually between 4-7pm. About once a week I’ll go through my accounts, do a check on stock and go through any emails.

“You must block out time in your diary for yourself. It’s very hard to take a day off so holidays have to be planned well in advance. This can be a very tiring job so you need to plan breaks and not move them.

“For anybody that works at home, especially if you work on your own, it can be quite isolating. You can be so busy that time whizzes by and before you even realise it, you haven’t been out of the door for a couple of days, much less had any social interaction. That’s something you need to watch out for because it’s easy to let the time get away from you and forget about your own peace of mind.”

Useful contacts for a B&B business

Bed and Breakfast Association: bandbassociation.org

Visit Britain: visitbritain.co.uk

Tourism Alliance: tourismalliance.com

Food Standards Agency: food.gov.uk

Written by:

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Win guests & investors: the ultimate B&B business plan guide (plus free template)

• 30th April 2024
• Expert advice

Thinking of transforming your charming space into a thriving bed and breakfast? Running a B&B can be an incredibly rewarding experience, allowing you to connect with guests from all around the world while sharing your local expertise. However, it’s also a serious business endeavour that requires careful planning and preparation. 

Whether you're a seasoned hospitality pro or a complete newcomer, a well-structured bed and breakfast business plan is your key to success. At Touch Stay, we know the importance of guest experience, and that starts with a solid foundation for your B&B. This comprehensive guide equips you with everything you need to write a winning B&B business plan and turn your dream into reality. 

We'll also provide a free downloadable template and a detailed bed and breakfast business plan checklist to help you get started. But first, let's explore why a B&B business plan is crucial… 

• Why a B&B business plan matters
• The essential B&B business plan template

Free B&B business plan template and checklist

Why a b&b business plan matters: a breakdown.

Beyond securing funding, a B&B business plan offers a roadmap for growth and long-term success. Here's how:

1. Clarity and focus: writing your plan forces you to really define your B&B. This means getting clear on:

• Unique selling points (USPs): what makes your B&B stand out from the competition? Is it an historic mansion, a stylish city apartment, or a pet-friendly atmosphere?
• Target market: who are your ideal guests? Are you targeting families, romantic getaways, or outdoor enthusiasts?
• Financial goals: how much revenue do you need to generate? What's your profit target?

By getting clear on these aspects from the start, you can ensure your B&B is heading in the right direction.

2. Funding: if you need financial backing to get your bed and breakfast off the ground, a well-written B&B business plan is essential. It acts as a persuasive document for lenders and investors by:

• Showcasing potential: your plan lays out the potential profitability of your B&B, with realistic projections and a clear strategy for success.
• Inspiring confidence: a well-structured plan demonstrates your professionalism and commitment to making your B&B a thriving business.

This can make a big difference in securing the funding you need.

3. Roadmap for growth: your B&B business plan isn't a static document. It's a living roadmap that should evolve with your B&B. Here's how it helps:

• Decision-making: when faced with challenges or new opportunities, your plan provides a framework for making informed decisions that align with your overall goals.
• Navigating challenges: the hospitality industry is dynamic. Having a clear plan helps you anticipate and navigate unforeseen obstacles that may arise.

By keeping your plan updated and referring to it regularly, you can ensure your B&B stays on track for long-term success.

The essential B&B business plan template: a deep dive

Your bed and breakfast business plan is like a blueprint for success. It outlines your vision, defines your strategies, and demonstrates the financial viability of your dream. Here's a detailed breakdown of the key sections you should include:

1. Executive summary:

This is your elevator pitch for your B&B. It should be a concise (typically 1-2 pages) overview that grabs the reader's attention and summarises the key points of your entire plan.

• Briefly introduce your B&B, its location, and its unique selling points (USPs). What makes your B&B stand out from the competition?
• Highlight your target market and the guest experience you aim to create.
• Briefly summarise your financial projections and future potential for growth.

2. Company description:

Dive deeper into the heart and soul of your B&B.

• Describe your property – its architectural style, historical significance (if applicable), and the number of rooms and amenities offered.
• Explain your B&B's theme or atmosphere. Are you a cosy country retreat, a luxurious urban escape, or something else entirely?
• Showcase the unique experiences you offer guests. Do you specialise in gourmet breakfasts, themed activities, or personalised local recommendations?

3. Market analysis:

Understanding your market landscape is crucial for success. Here's what to include:

• Who is your ideal guest? Define their demographics (age, income, interests) and psychographics (travel style, preferences).
• Competitor analysis: research other local B&Bs and similar accommodation. Analyse their strengths and weaknesses, pricing strategies, and target audience. How will you differentiate your B&B from them?
• Industry trends: stay informed about current trends in the B&B industry . Is there a growing demand for eco-friendly accommodation, pet-friendly stays, or unique experiences?
• Pricing strategy: determine your room rates based on competitor analysis, local market trends, and your B&B's unique offerings.

4. Marketing plan:

Now it's time to map out your strategies to attract your ideal guests.

• Booking channels: list the platforms you'll use to attract bookings. This might include your own website, online travel agencies (OTAs) like Airbnb or Booking.com, or direct marketing through local partnerships.
• Online presence: develop a strong online presence through a user-friendly website that showcases your B&B's charm and amenities, and is optimised for people searching for accommodation in your location. 
• Digital marketing : use social media platforms like Instagram or Facebook to connect with potential guests and share engaging content. Which social media channels you choose for your B&B will depend on which ones research tells you your ideal guests use most.

5. Management team:

Showcase the expertise behind your B&B. Briefly introduce yourself and any key team members, highlighting:

• Your hospitality experience: detail your background in hospitality, relevant skills, and passion for creating exceptional guest experiences.
• Team qualifications: if you have staff (housekeepers, chefs), mention their relevant experience and qualifications.

6. Operations plan:

This section outlines the day-to-day operations of your B&B, ensuring a smooth and seamless guest experience.

• Guest services: detail your check-in/check-out procedures, housekeeping standards, and guest communication protocols.
• Breakfast operations: outline your approach to breakfast service. Will you offer a self-serve continental breakfast, a hot breakfast cooked to order, breakfast room service, or themed breakfast options?
• Amenities and services: list the amenities you offer, like laundry services, in-room massages, or bicycle rentals. Explain how guests will access these services.

Touch Stay provides digital guidebooks designed specifically for B&Bs. Check out how The Maitland Manor Bed & Breakfast and Silverbow Inn use theirs to share essential info and local recommendations to ensure their guests have the best stay possible.

7. Financial projections:

Demonstrate the financial viability of your B&B here. It should be realistic and backed up by research.

• Startup costs: list all the one-time expenses required to launch your B&B, including furniture, renovations, permits, and marketing materials.
• Operational costs: detail your ongoing operational expenses like utilities, property taxes, supplies, and staff salaries.
• Revenue forecast: project your expected revenue based on occupancy rates, room rates, and any additional income streams like gift certificates or event space rentals.
• Profitability analysis: show how your projected revenue compares to your expenses, indicating your expected profitability over a set period (typically 3-5 years).

Ready to dive in? We've created a downloadable bed and breakfast business plan template along with a comprehensive B&B checklist to ensure you don't miss a single detail. These resources will guide you through each section of the plan.

Enter your details to receive your free bed and breakfast business plan template and checklist.

Touch Stay: your partner in B&B success

Starting your own bed and breakfast requires passion, planning, and this vital business plan document. By clearly defining your B&B’s value proposition, operations, finances, and more, you’ll be setting yourself up for startup success and delighted guests for years to come. 

At Touch Stay, we believe in empowering B&B hosts to create exceptional guest experiences. Our digital guidebooks for B&Bs provide guests with all the information they need at their fingertips. This frees you up to focus on what you do best – offering warm hospitality and creating a memorable stay.

Start a free 14-day trial with Touch Stay and create your B&B guidebook today

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Setting up a Bed & Breakfast Business

All you need to know about starting and running your business.

In this article

What is a Bed and Breakfast business?

Approximately 1.8 million people in the UK stay in bed and breakfast accommodation every year in the UK. Bed and breakfast accommodation, more commonly known as B&Bs, is a British institution and is found everywhere – in big cities, small villages and the middle of the countryside.

A B&B is a small type of guest accommodation that is usually run by a couple, a family or a small team of staff. The owners or staff usually live on-site, although their living area will be separate from the guest accommodation to ensure guests have privacy. B&Bs offer accommodation for sleeping, usually a private bedroom with or without an ensuite bathroom, breakfast the following morning and cleaning services, all included in the price.

Some people now call B&Bs boutique hotels or guest houses. The term B&B typically refers to the experience that appeals to people – guests can communicate directly with the owners and have a more personal, comfortable and intimate experience. B&Bs offer a more homely atmosphere with simple luxury. They are most popular for weekend breaks and romantic trips.

Many people convert and open their homes for paying guests, although that is not always the case. Some people purchase separate accommodation to use as a B&B. Most B&Bs offer 10 rooms or less, although there are also smaller and larger B&Bs.

There are different types of B&B accommodation available:

• Homestay/host home accommodation: This type of B&B is set up in the B&B owner’s home. It may include both ensuite and non-ensuite bedrooms.
• Country inns: These B&Bs are often connected to pubs or restaurants. The sleeping accommodation may be above the eating establishment or connected in another way.
• B&B cottages: These are usually detached cottages or other detached buildings that offer guests more privacy. They are usually situated on the owner’s land.
• B&B hotels: These offer the same services and experience as a traditional B&B but usually on a larger scale.

There are many different responsibilities associated with running a B&B business.

These could include:

• Cleaning guest bedrooms in preparation for their arrival.
• Changing bed sheets and making the beds.
• Preparing, cooking and serving breakfast each morning.
• Keeping communal areas clean and tidy.
• Handling bookings.
• Advertising and marketing.
• Ordering food supplies and cleaning materials.
• Providing advice and recommendations to guests.
• Ensuring the B&B complies with all legal requirements.

For your bed and breakfast to succeed, certain personal qualities will be extremely beneficial. If you are considering opening a B&B business, consider the following factors:

• Do you have good organisational skills?
• Do you remain calm under pressure?
• Are you good at cooking and cleaning and will you be happy to undertake these tasks daily? If not, do you have the means to hire someone to do these tasks?
• Do you have a friendly and personable manner? Will you be good at dealing with potentially difficult guests?
• Are you knowledgeable about your location?
• Are you willing to try new strategies, techniques and technology to make your business succeed?

If you answered yes to the above questions, it is likely that opening a B&B will be a good business decision for you.

Types of customers

Identifying your target market and the typical customers that your business is likely to attract is a key step when creating your business plan and setting up your business.

B&Bs tend to focus on one specific market, and this will be represented in their pricing, amenities, space, décor, food, service and the overall quality of the accommodation. The most popular markets are:

The budget market refers to the cheapest B&Bs. To account for lower income per guest, costs are cut elsewhere (in order to maximise your profits). For example, budget B&Bs usually offer a basic breakfast, may have less space, the furnishings and décor may be simpler and some or all of the bedrooms may not offer a private bathroom. A budget bed and breakfast may also have no communal spaces or outdoor space and there are less likely to be special ‘extras’ offered to the guests, such as a welcome drink. Budget customers usually want to spend as little money as possible while still staying in quality accommodation.

Mid-market B&Bs usually offer more space than budget B&Bs. All bedrooms will likely have a private bathroom and the accommodation may be more stylishly designed. Mid-market B&Bs may also offer extras, such as free parking, free Wi-Fi and TVs in the bedrooms. This type of B&B will likely target customers who are happy to spend a little extra money on their accommodation.

The luxury market is usually the highest-priced accommodation. Customers will expect you to have a high guest rating, more spacious rooms and luxury furnishings and décor. Your guests will also expect more amenities, such as individual tea and coffee facilities in each room, premium bathing facilities and an outdoor area. Some luxury B&Bs offer amenities such as a swimming pool or hot tub, which allows them to compete with hotels. They will likely also offer a more extensive breakfast menu, with multiple choices and a range of beverages to choose from. The luxury market will expect food to be of a higher quality, for example, organic food from a local farm. If you open a luxury B&B, the service expectations will likely be higher, with some guests having specific demands. Luxury customers are usually happy to spend more money to stay in the best accommodation.

The type of customers your B&B business is likely to attract also depends on other factors, such as:

Your location

Are you located in a city, a town, a village, the countryside or by the coast? Are you close to a monument, an area of interest or another popular location? Does your property have good transportation links, for example, are you close to a train station? Bed and breakfasts in certain areas will automatically attract certain types of customers and this is an important factor to consider when planning your business. For example, a B&B near Lake Windermere in the Lake District is more likely to attract nature lovers and couples, whereas a B&B near the O2 Arena in London is more likely to attract concertgoers.

Your pricing

This is connected to the type of market you aim to target (e.g. budget, mid-market or luxury) but can also be connected to other factors, such as location, demand, competition, advertising strategy, advertising platform and amenities. Consider your target customers when determining your pricing policy.

Your guest reviews

This is an important factor that will persuade potential guests to book your property. B&Bs with a higher review score and a large number of reviews are more likely to attract mid-market and luxury customers who are willing to spend extra money.

Your advertising

Advertising includes the advertisement platform you choose and whether you have your own website. Most potential guests will look at many different properties before choosing which one to stay in and your property description and the photographs you choose will be key factors in their decision. B&Bs that employ professional photographers and a website designer may be more likely to appeal to higher-end guests.

Equipment You Will Need

Your equipment needs can vary, depending on the type of bed and breakfast accommodation you set up. Your required equipment can include furniture, accessories and other equipment that is essential to the running of your business.

You will likely need to purchase multiples of the same furniture, to equip each guest room. You may need more or less equipment, depending on the size of your B&B, the number of bedrooms and the number of guests you can accommodate at one time. You may not require or have the space for all of the equipment listed below; however, this is an extensive list that can be used as a guide.

The equipment typically required by a bed and breakfast business includes:

The type of equipment you will purchase for your guest bedrooms will depend on the type of B&B you are running and how much you are willing to invest. You can choose to purchase everything from the list below or opt to purchase only certain equipment and furniture.

• Beds (double beds, twin beds and/or king beds).
• Good quality mattresses.
• Mattress toppers.
• Duvets and pillows.
• Sheets, duvet covers and pillow covers.
• Additional blankets (particularly for winter).
• Curtains and/or window blinds.
• Wardrobes and drawers so guests can store their personal belongings.
• Bedside tables.
• Ceiling lights.
• A television.
• A kettle and/or coffee machine.
• Coat hooks.
• A desk and desk chair.
• A mirror or mirrors (you may opt for multiple mirrors of different sizes, e.g. a full-length mirror and a beauty mirror).
• Armchairs or other seating (if you have the necessary space).
• Slippers and dressing gowns.
• A rubbish bin.
• A door lock.
• A hotel phone system (for contacting reception and other guest rooms).

You will need to equip each bathroom individually. If your B&B has private, ensuite bathrooms, you will likely be able to store all equipment and accessories in each individual bathroom. However, if any of your guest rooms share a bathroom, you may have to place items such as towels and soap into the bedrooms for the guests to transport to the bathroom themselves.

The most common furnishings and equipment for a B&B bathroom are:

• A bath with hot and cold running water.
• A shower with hot and cold running water.
• A sink with hot and cold running water.
• Guest towels (you may need multiple sizes, e.g. bath towels, hair towels and hand towels).
• A towel rack.
• A bath mat.
• A toilet brush.
• A toothbrush holder.
• Soap dispensers.
• Toilet roll holder.
• An extraction fan or other ventilation system.
• An emergency call button.
• Toilet paper.
• Toiletries, such as hand soap, shampoo, conditioner and shower gel.
• Paper towels or a hand dryer (for communal bathrooms).

Kitchen equipment is a necessity for B&Bs as your guests will expect to be offered breakfast as part of their stay. You may offer a menu or provide a selection of prepared food for guests to help themselves to. Depending on the price of your B&B you may offer a variety of hot food or may offer cold, pre-prepared foods, such as cereals and baked goods. Your kitchen equipment requirements will depend on the type of food you will be preparing.

Some typical equipment required in a B&B kitchen includes:

Kitchen appliances: If you are using your existing kitchen as part of your B&B, you may be able to use your existing appliances (as long as they comply with all legal requirements). However, if you are setting up a new B&B business, you may need to purchase all of your appliances. Some kitchen appliances you may require are:

• Fridge and freezer.
• Oven, stove and grill.
• Kettle or other tea and coffee making facilities.
• Food processor/blender.

Cleaning equipment: A kitchen requires separate cleaning equipment from the rest of your property. This equipment should be stored separately and clearly labelled. You will need different cleaning materials for different parts of your kitchen and different tasks to prevent cross-contamination. See the list below for a list of cleaning equipment you may require.

• Cookware: This can include: – Saucepans and frying pans. – Baking trays. – Roasting pans. – Skillets.
• Cooking utensils: These can include: – Whisks. – Tongs and ladles. – Stirring spoons, wooden spoons and spatulas. – Measuring cups. – Graters, tin openers, and mashers. – Kitchen knives.
• Rubbish bins and food recycling bins.
• A handwashing sink.
• Kitchen accessories, such as: – Colour-coded chopping boards (for chopping different types of food). – Food thermometer. – Cooking timers. – Aluminium foil, greaseproof paper, baking paper and clingfilm. – Food labels.

Dining area

This is the area where your guests will eat their breakfast and any other meals your B&B offers.

Some of the equipment you may require are:

• Dining tables and chairs.
• Table cloths.
• Table settings, including mats and coasters.

Eating accessories: You will need to buy equipment and utensils for your guests to eat and drink from.

This will likely include:

• Plates and bowls.
• Glasses and cups.
• Knives, forks and spoons.
• Tea and coffee making facilities (e.g. a kettle and coffee machine).
• Jugs or drink dispensers (e.g. for water and juice).
• Serving platters and trays.
• Display platters and trays.
• Serving tongs.
• A speaker, music player or radio.

Communal area

Not all B&Bs have a communal area for their guests to spend time in, usually because they don’t all have the required space. Communal areas (usually a lounge or a place to relax) are more common in mid-range and luxury B&Bs.

The most common equipment requirements for a communal area are:

• Sofas, armchairs and other seats.
• A table or coffee table.
• A television and a radio or music system.
• A bookshelf and books.
• Board games.
• Magazines and newspapers.
• A computer or laptop: For marketing and advertising purposes, managing your website, handling bookings and checking in guests.
• A phone (for guests to contact you).
• A booking system or booking software.
• A reception desk and chair.
• Wi-Fi – You may also need boosters to ensure the Wi-Fi signal reaches all guest bedrooms and communal areas.
• A printer and ink: For printing out customer reservations and receipts.
• Hand sanitiser.
• Reception opening hours sign.
• Pricing signs (e.g. price of rooms per night).
• Guest information (e.g. local attractions, telephone numbers for local taxis).

Outdoor area

Outdoor signs: These signs will likely include the name of your business and that you are a bed and breakfast. You will likely attach these signs to your building or place them at the front of your building. Depending on your location, you may also put them on the road, directing your guests to your property.

• Parking signs.
• Outdoor seating areas.
• An outdoor seating area (e.g. tables and chairs).
• A BBQ and/or fire pit.

Other equipment requirements

• Paint, wallpaper and other wall décor equipment.
• Carpets, rugs, wooden floors and other floor-related equipment.
• A washing machine and tumble dryer.
• A CCTV system.
• A fire alarm system.
• A cash till and Point of Sale (POS) system.
• Welcome packs for your guests.

Cleaning products: You will need cleaning products that are suitable for cleaning the guest bedrooms and any communal areas, including hallways, lounges and the reception area.

The most common cleaning equipment you will require includes:

• A hoover and/or sweeping brush.
• Cleaning products, such as bleach, antibacterial cleaner, disinfectant, floor cleaner, glass cleaner, toilet cleaner, furniture polish, carpet cleaner etc.
• Cloths and sponges.
• Dusters and microfibre cloths.
• A fully stocked first aid kit.
• Personal Protective Equipment (such as protective aprons, gloves and facemasks).
• Business cards (for advertising).
• Business insurance.

As well as the equipment listed above, many B&Bs choose to purchase additional accessories and furnishings in order to create the desired atmosphere and design of their accommodation. This could include style accessories, such as vases, flowers and artwork. If you have a themed B&B, you will likely purchase accessories to match your theme.

Typical Costs

There are many different costs associated with setting up and running a bed and breakfast business. Some of these costs will be one-off, initial costs that you will need to pay when you are setting up your business. Other costs will be ongoing costs you will need to pay on a regular basis, usually weekly, monthly, quarterly or annually.

Some of the typical costs associated with a B&B business are:

The B&B building

Some people refurbish their homes or parts of their homes to run their B&B business. However, other people purchase a new property or build a detached property on their land to set up as a B&B. You may also choose to purchase an existing B&B business. The costs associated with purchasing your B&B can vary based on several factors, such as your location, the size of the land, the size of the property and the number of bedrooms.

Renovation, refurbishment and installation costs

You may need to convert or refurbish your property to make it suitable for guests. For example, you may want to extend your property to add more bedrooms, or convert existing rooms into bedrooms and install ensuite bathrooms. You may also need to install appliances, add plumbing and electricity and decorate your property to fit the aesthetic of your business or to make it more attractive to potential guests. Renovation and refurbishment costs can vary depending on the level and scale of work required, from £500 for more basic work to more than £100,000 for more extensive work. Prices can also vary depending on the types and number of contractors and tradesmen you require.

Exterior renovations

You may need to renovate the exterior of your property to ensure it complies with safety and legal requirements. For example, you will need to make sure your exterior is safe and hazard free and you may need to make the necessary changes to ensure your property is accessible. For example, installing a ramp and widening pathways. You may also want to landscape your property or pay a gardener to make your B&B more attractive from the outside. Expect to pay between £1,000 and £10,000 for exterior renovations.

Equipment and furniture

The type and amount of equipment you require (and the associated costs) will vary depending on the size of your B&B and the type of B&B business you want to set up. For example, a luxury B&B with higher prices will have more equipment requirements than a budget B&B. If you purchase an existing B&B business, you may be able to use some of the existing equipment and furniture. However, if you are setting up a B&B from scratch, you will likely have more equipment requirements. You can expect to spend between £2,000 and £50,000 on equipment.

Food and drink stock

Food and drink stock is an ongoing cost you will need to factor into your budget. You may need to order more or less stock at certain times of the year, depending on how busy your B&B is. Food and drink stock will include breakfast foods (perishable and non-perishables) and coffee, tea and related items for the breakfast area, guest rooms and communal areas. Some B&Bs also offer alcoholic drinks to their guests and provide other snacks, such as cookies. To keep your food costs low, plan your meals, research the costs and the providers and create a budget. You will also need to factor wasted or spoiled food into your budget.

Replenishing stock

As well as food and drink stock, there will be other stock you will need to replenish regularly. This can include stock such as cleaning products, batteries, printer ink, newspapers and magazines, first aid equipment, PPE and welcome pack products. Conducting a weekly or monthly inventory of your stock can ensure you replenish your stock as and when you need to.

Maintaining, repairing and replacing equipment

Repairs, maintenance and replacements are ongoing costs you will need to factor into your budget. Cleaning and maintaining equipment and ensuring it is used correctly can extend its life, but repairs and replacements are still inevitable, as using unsafe equipment could be dangerous. You will also need to replace items such as towels and bed sheets periodically (or if they become damaged or stained).

A business website

Your business website is an essential advertising tool as it allows potential customers to find your property online and view pictures, descriptions and additional information. Your website may also have a booking system, allowing guests to make a booking or view your availability. Your website will need regular monitoring, updating and upgrading. You also need to make sure your website is secure, particularly if you will be collecting any customer information or banking details. You could opt to set up and manage your website yourself or hire someone to do this. You may also want to pay someone for search engine optimisation (SEO) to ensure your website ranks highly on search engines.

Advertising and marketing

To ensure your B&B attracts guests and generates an income, you will need to spend money on branding, advertising and marketing. It is recommended that you spend between 1%-3% of your annual turnover on marketing. For example, if your annual turnover is £60,000, it is recommended you spend between £600 and £1,800 per year on marketing. You may need to invest more money in advertising and marketing when you initially set up your B&B, in order to ensure your B&B is well-known and potential guests are aware of you.

Branding can help you to establish your B&B business’s identity and help your business to stand out from any local competition. Branding could include creating your business’s visual identity and aesthetic, a logo, your business name and your business website. You can hire a professional to help you with branding or do some of the work yourself. Branding can cost between £500 and £5,000, depending on the amount of branding you require.

Unless you are running a family business, you may need to hire staff to handle the day-to-day running of your B&B. This could include kitchen staff, cleaners or reception staff. If you hire employees, you will need to account for this extra expense. You will need to pay your staff an hourly wage. The national minimum wage in the UK, as of 1st April 2022, is £9.50 per hour. When employing staff, you may also need to factor in holiday pay, sick pay, National Insurance and any company pension contributions.

Training costs

There are a number of training courses you may need to undertake, some of which may be legal requirements and some which may be optional. Training courses typically cost between £20 and £30 + VAT per person.

Running costs

These are the day-to-day costs associated with running your B&B. It includes overhead costs such as council tax, gas, electricity, water, TV licence and Wi-Fi. Most of your running costs will be paid monthly, although some may be paid quarterly or annually. Keeping your running costs as low as possible allows you to maximise your profits.

There are several types of insurance you may require for a B&B business. There are also some additional insurance options you may choose to give your business extra protection. The cost of your insurance can vary depending on your insurance provider and the level of coverage you choose.

The most popular coverage options for a B&B business are:

• Building Insurance.
• Public Liability Insurance.
• Product Liability Insurance.
• Contents Insurance.
• Malicious Damage Cover.
• Employer’s Liability Insurance (if relevant).
• Key Loss Cover.
• Guest Effects Cover.
• Business Interruption.
• Legal Expenses.

Permits and licences

There are several permits and licences you will need when setting up and running a bed and breakfast. These costs could be a one-off fee or may need to be paid and renewed regularly. Costs can range from several hundred to several thousand pounds. See the list below for the permits and licences you may require.

Typical Pricing for Customers

Once you have calculated the typical costs associated with setting up and running a B&B, you can then determine your pricing policy. Your pricing will depend on multiple factors, such as:

• Your location.
• Your typical customers.
• The number of guest rooms.
• Whether the rooms are single, twin, double, king, family, suite etc.
• The season.
• Your competition and competitor pricing.
• The type of B&B you are running (e.g. basic, mid-market or luxury).
• Your furnishing, facilities and equipment.
• Any local events that are occurring.
• Whether you offer breakfast.
• Your set-up and running costs.

The best way to determine your pricing is to test your target market. Focus on the typical guests you hope to attract and look at similar B&Bs that offer similar services as you do. Your prices will likely vary significantly depending on the season, for example, you may charge significantly more during the high season (such as school holidays). You may also offer a discount if your guests book for a certain amount of time (such as a weekly discount) or a loyalty discount for return customers.

Bed and breakfast pricing can vary significantly, with some B&Bs in the UK charging as little as £20 per night and the most expensive B&B in the UK charging nearly £1,500 per night!

Safely Running a Bed and Breakfast Business

Implementing safety practices in your B&B is an important responsibility. Safety practices help to protect the health, safety and well-being of you, your staff and your guests.

Some safety practices you should employ in your bed and breakfast business are:

Smoke detectors, carbon monoxide detectors and fire alarms

These should be installed throughout your B&B and should be checked regularly to ensure they are working. They can protect you and your guests in the event of a fire or carbon monoxide leak.

Obtain training

Health and safety training can help to ensure safe practices in your B&B and can ensure that all your staff are aware of and adhere to safety procedures. Some training you can complete includes First Aid, Health and Safety for Businesses, Fire Safety Awareness, Assessing Risks and Electrical Safety.

Properly maintain and set up equipment

If you supply any equipment for your guests to use (such as TVs, kettles, chairs and beds) or any equipment in areas that are accessible to your guests, you will need to ensure it is properly maintained, correctly set up and safe to use. You must protect your clients from accidents or injuries caused by equipment. You should also perform regular equipment inspections to ensure your equipment’s safety and help extend the lifespan of your equipment.

Carry out risk assessments

Although risk assessments are only a legal requirement for businesses with more than five employees, they are recommended to ensure the safety of you and your guests. Risk assessments can help you to identify any potential hazards and risks in your business and how these can be reduced or eliminated.

As part of your risk assessment, you should:

• Identify hazards.
• Determine who could be at risk.
• Evaluate any potential risks.
• Implement relevant safety measures.
• Record the results of the risk assessment.
• Review the risk assessment regularly.

Follow the Hazard Analysis and Critical Control Point (HACCP) guidelines

The HACCP principles help you to manage food safety hazards that could arise when storing, handling, preparing, cooking and serving food. You can identify potential risks and implement measures to ensure these risks are reduced or removed. You should also keep records of any actions you take in line with HACCP.

Check and maintain electricals, electrical outlets and plumbing

Not only can this save you money by avoiding damage, repairs and replacements, but checking and maintaining electricals and plumbing can help to protect your guests from harm. Implement a system for regularly checking outlets and plumbing and ensuring they are up to code.

Clean and wash equipment

Having effective cleaning procedures is essential to any business that sells or serves food. It is recommended that a cleaning schedule or cleaning policies are in place that cover the cleaning of equipment, surfaces, and food preparation and storage areas.

Safely store food and drink stock

You must ensure that perishables are stored at the correct temperature to prevent spoilage or deterioration. It is a legal requirement in England, Wales and Northern Ireland that chilled food must be kept at 8°C or below at all times. If chilled food is out of the fridge for more than four hours, it must be disposed of. You should also make sure cooked food is covered at all times to prevent spoilage or deterioration.

Keep clear and accurate records

If your business receives an inspection, up-to-date records of your business’s cleaning schedules, risk assessments, health and safety policies, allergen information, and temperature checks will likely be requested. Keeping such records not only helps to protect your business and improve the likelihood of you receiving a higher score, but it also ensures procedures are followed at all times.

Implement security measures

Security measures can help to protect you, your guests and your business. Ensure your stock and equipment are safely stored and your B&B is secure to help to protect your business. Installing a CCTV system, reliable locks, and an alarm system are just some ways you can protect your B&B business.

Keep a fully stocked first aid kit

If a guest or employee has an accident or injury, it may not be serious enough to warrant medical intervention. Instead, you may be able to offer treatment yourself. Having a first aid kit that is checked and replenished regularly and is easily accessible is recommended.

Ensure staff are aware of manual handling procedures

If manual handling tasks are performed incorrectly, this can result in injury. To protect the health and safety of your staff, ensure they are trained in manual handling regulations. You should also ensure they have the correct equipment to perform manual handling tasks safely.

Protect your staff from threatening or abusive behaviour

Threatening or abusive behaviour could come from guests, especially those who are under the influence of alcohol or are dissatisfied with your service. It is your responsibility to protect your staff and guests from threats or abuse. Implement procedures for dealing with threatening behaviour, record any incidents and ensure you support your staff as much as possible.

Legal Requirements

The hospitality and bed and breakfast industry is highly regulated. There are multiple legal requirements you must ensure you comply with. Failure to comply can result in a fine, the forced closure of your business or even a prison sentence.

Some legal requirements you should be aware of are listed below.

Adhere to food safety legislation

There are several pieces of legislation you must comply with if you run a business that serves or sells food. These can include:

• Comply with the Food Safety Act (1990 ).
• Comply with legislation regarding the 14 food allergens.
• Comply with food labelling guidelines.
• Obtain food hygiene training.
• Register with your local Environmental Health Officer (EHO).

Comply with fire regulations

As the business owner, you are responsible for fire safety measures on your property. There are multiple fire regulations you must ensure you comply with. For example:

• Perform a fire risk assessment.
• Inform your local fire authority that you will be opening a bed and breakfast.
• Comply with the Regulatory Reform (Fire Safety) Order 2005 .
• Implement any necessary fire safety measures.
• Implement emergency procedures and ensure these are clearly displayed in guest rooms.

Comply with gas safety regulations

You will need to have your gas boiler (if you have one) inspected by a gas safe engineer. If your equipment is deemed safe to use and complies with government requirements, you will be issued a Gas Safety Certificate. You will need to display your gas certificate clearly for your guests and other visitors to your business to see.

Comply with the Electricity at Work Regulations 1989

The Electricity at Work Regulations state that any workplaces that use electricals must construct electrical systems in a way that prevents danger, maintain electrical systems to ensure they are safe, ensure electrical equipment is checked by a competent person annually and conduct Portable Appliance Tests (PAT). This includes any electrical equipment in guest rooms, communal areas and staff-only areas, such as the kitchen.

Comply with the General Data Protection Regulations (GDPR) and the Data Protection Act (DPA)

You must comply with both pieces of legislation when storing or sharing personal information, such as your guests’ personal information, contact details and banking information. You must also apply for a Notification to Process Personal Data Licence. If you process or store personal information such as personal details and banking information, you will need to apply for a licence with the Information Commissioner’s Office and renew your registration every year.

Apply for planning permission

If you want to alter the layout of your property, make any structural changes, build an extension or create a new building, you may need to apply for planning permission from your Local Planning Authority (LPA). You will need to contact the LPA at your local council to apply for planning permission. Keep in mind that approval can take several months, so ensure you apply for planning permission in advance.

Apply for a television licence

If you use any televisions on your property, you will need to apply for a TV licence . Because you are operating as a B&B business, if any TVs are accessible to your guests, you will need to apply for a specific TV licence that covers up to 15 separate accommodation rooms on your site.

Apply for a music licence

If you play any music (including on a TV or the radio) in your B&B, including in communal areas, or you offer activities such as karaoke for your guests, you will need to apply for a licence with Phonographic Performance Limited (PPL) and/or a Performing Right Society (PRS) Licence . You can apply for both a PPL and a PRS licence online.

Apply for an alcohol licence

If you plan to serve any alcohol at your B&B, whether this is complimentary alcohol (such as a welcome drink) or your guests purchase this alcohol, you will need to apply for an alcohol licence. You may need to obtain a BIIAB Level 2 Award or CIEH Level 2 Award. This licence teaches you about your responsibilities regarding alcohol sales, specific prohibitions, the strength of alcoholic drinks and how to protect children from harm. Without this licence, you cannot apply for your Personal Licence (which is a necessary licence to serve alcohol at your establishment). Depending on the requirements of your local council, you may need to send a copy of your licences to the Environmental Health Office (EHO) and your local police department. You should also clearly display your licences.

Implement a Food Safety Management System (FSMS)

Any business in the UK that serves food must implement a Food Safety Management System. An FSMS is a systematic approach to controlling food safety hazards. It ensures that your B&B is following safety protocols and will influence your food hygiene rating.

Handwashing sinks

In the kitchen and any other food preparation area, you will need separate handwashing facilities and cannot use the same sink for handwashing and food preparation or equipment. Each sink should have an adequate supply of both hot and cold water. All sinks will also need to have an operational drainage system.

Apply for a Waste Carrier Registration

If you need to transport any waste, you will need to register as a low-tier waste carrier in England, Wales or Northern Ireland or a professional collector or transporter of waste in Scotland.

Comply with the Manual Handling Operations Regulations 1992

Manual handling regulations can help to protect you and your employees from sustaining an injury or illness as a result of manual handling tasks. The regulations apply to the lifting or moving of any objects, bending down and reaching high and repetitive movements. You will likely be performing manual handling activities when doing tasks such as cleaning, making beds and serving food.

Comply with the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR) 2013

RIDDOR states that you must report all injuries, diseases and dangerous events that occur in your business. Reports must be made to the Health and Safety Executive (HSE) using an appropriate recording document. These regulations apply to any incidents that involve guests and staff.

Appoint a first-aider

All workplaces in the UK must have an appointed first-aider. In the event of an accident or injury, you will then be able to administer the necessary first aid. Although a first aid qualification or certificate is not legally required, it is the easiest way to demonstrate your first aid training.

Register your business

You must register your business with HMRC before you begin operating. You can register as a sole trader or as a limited company. You will need to register your business name and any other relevant information.

Register for self-assessment tax

This allows you to calculate and pay your own taxes each year. You will need to track your finances every month and submit any expenses as part of your tax assessment.

Positives of Owning a Bed and Breakfast Business

Owning a bed and breakfast business can be extremely rewarding and there are many potential positives to running this type of business.

These can include:

Design your perfect B&B

The majority of people who open a B&B are passionate about the hospitality industry, have dreamed about working in it for years or enjoy staying at B&Bs and hotels themselves. Opening your own B&B business allows you to design your dream business, from the atmosphere, décor and feel of your B&B, to the menu, your advertising strategy and your employees. You can add your own special touches to make your B&B more enjoyable for you to run and more enjoyable for your guests. For example, you could offer a guided tour of local landmarks, wine tasting or a cooking class. Designing your perfect B&B will make your business feel less like work and more like fun.

Choose your target customers

As you are designing your business yourself, you can create your business plan with your desired market in mind. This could be the customers you feel will maximise your profits, the customers you are most comfortable with or those who are most likely to fit your design aesthetic. Choosing your own target customers also allows you to design your accommodation with them in mind and set your pricing accordingly.

Work from home

Following the Covid-19 pandemic, many people now aspire to work from home. Because your entire business will be conducted from your home, a B&B business enables you to do everything from the comfort of your home and open your home to your guests. You will also have the flexibility to stop working and close bookings and choose not to offer accommodation at certain times, for example, if you want privacy, you want some time off or you have family or friends coming to stay.

Low start-up costs

If you already own a suitable property, a B&B business requires minimal investment. You may only need to pay for decoration and furnishings, any permits and legal requirements and your advertising costs. Low start-up costs, particularly compared to other businesses in the hospitality industry, allow you to begin turning a profit more quickly and can make your first year in business lucrative, even though many other hospitality businesses don’t begin to make a profit until after the first year.

Choose your schedule and workload

Many people think of a B&B as being a 24-hour job. However, as the business owner, you can choose your own schedule and workload. You could choose to only operate the reception for certain hours of the day or choose to close your B&B on certain days. Once your business is profitable, you could also opt to hire staff to handle the day-to-day running of your business, particularly cleaning guest rooms and working in the kitchen.

It can be rewarding

A bed and breakfast business can be emotionally, mentally and financially rewarding. It can help you to take a step back from the traditional 9-5 working hours and allows you to work from your home. You can also build positive relationships with your guests and get to know people from all over the UK and the world. If you are passionate about what you do, your business will likely not feel like work. For people who enjoy face-to-face interaction and spending time with other people, a B&B business can be very rewarding.

It can be lucrative

As your business grows and your bed and breakfast becomes more well-known and highly reviewed, you will have the potential to earn a higher income. A B&B business has a good opportunity for growth as you can expand your business, redecorate, install more amenities and charge higher prices. A B&B business can begin making a good profit almost immediately and with the help of a good business plan and correctly implemented strategies, these profits can continue to grow.

Easily gain exposure

The rise of social media and holiday accommodation sites makes it easier than ever for you to gain exposure. Particularly if you are able to take good photographs or are tech-savvy. Gaining exposure online is an easy and effective way of growing your business and increasing your profits.

Guest loyalty

B&Bs in the UK are particularly popular for staycations. This makes it more likely that people will return to the same B&B multiple times (if they had a positive experience) or will recommend your B&B to their friends and family. Guest loyalty is an effective way to grow your business and maximise your profits.

Be part of the local community

B&Bs are often staples of the local community and are well-respected as they help to bring footfall and business to the local area. For example, shops and cafes in a village that has a popular B&B are likely to see increased profits. Not only could you have a positive effect on your community and earn the respect of other businesses, but as a business owner, you will likely be an integral part of your local community. You can also build personal and professional relationships in your community, for example, by setting up a deal to purchase products from your local farmer.

Be part of big occasions

People often go to a B&B to celebrate big occasions, such as birthdays, anniversaries, weddings and other important milestones. As the B&B owner, you can be a part of your guests’ special occasions and know that your B&B was an important part of people’s lives. This can be extremely rewarding.

Be your own boss

You can make all key decisions yourself and steer your business in whichever direction you choose. You can choose how involved you want to be, the type of B&B you want to run, and whether you hire employees. You can make the best decisions for you and your business.

Negatives of Owning a Bed and Breakfast Business

Although opening a B&B business can be extremely rewarding, there are certain negative aspects to opening this type of business.

For example:

It can be time-consuming

Running a B&B can be a 24-hour job and even if you set specific front desk hours, guests don’t always comply with these. You may have guests trying to check in or out early in the morning or late at night or guests ringing the bell to request extra towels at 10 pm. Running a bed and breakfast can have a significant impact on your personal life. You always have to be available and may no longer feel able to spontaneously go out for the evening or away for the weekend. Even organised events may involve you cancelling or refusing reservations and may feel too stressful.

Your home is never your own

The majority of B&B owners run their businesses from their own homes, or the B&B staff live on-site. This can make it feel like your home isn’t your own and can make it extremely difficult to switch off from work. This is even more likely if you can hear any of your guests, or if you share any areas of your home or garden with your guests.

It can be difficult to take a holiday

If you run a B&B, particularly if you run a family business, any time off you take or holidays you go on will be lost income. Many B&B owners either refrain from going on holiday or don’t take time off during peak times of the year. This can mean you miss out on experiences with your family and friends and can make it feel like work is taking over your life.

Guests can be demanding

Some guests can be extremely demanding and may not understand that B&Bs operate differently than hotels. They may expect you to always be available to help them and may expect your B&B to have the same amenities that they have found in hotels they have stayed in. To avoid negative reviews, you may feel like you have to adhere to the demands of difficult guests, which can impact your own personal life.

Bookings can be inconsistent

It can be very difficult to plan your finances and predict your profits when you work in the B&B industry because bookings can be very inconsistent, with some times of the year being significantly more popular than others (for example, summer and Christmas). Although larger accommodation, such as hotels, can capitalise on busier times of the year, by accepting a larger number of guests, which allows them to make up for their lower profits at other times of the year, B&Bs don’t have the same luxury, as they often only have 5 to 10 rooms available. There could be certain times of the year when you have no or very few bookings and this can make it difficult to make your business a success long term. Occupancy rates usually hover around 50% for B&Bs, meaning that half of your rooms will be vacant and not making a profit.

Bad reviews

Although the majority of customers leave honest reviews, some customers are difficult to please and will leave a negative review because of the smallest complaint (even if it is something outside of your control). Some customers even leave negative reviews because they didn’t read the property description properly (for example, complaining about there being no parking even though that is clearly stated). It’s also possible for people to leave fake reviews, which can be extremely damaging to a business and can be very difficult to remove, even if you know they are fake. Negative reviews can be extremely damaging to your business, particularly to small B&B businesses that may have fewer guests and fewer reviews.

Complying with legislation

There are many different pieces of legislation and legal guidelines you will need to comply with. Not only can this be complicated and time-consuming, but any non-compliance (even if this is accidental) can be heavily punished with a fine, the forced closure of your business or even a prison sentence. Some types of legislation also require you to go through specific training and/or gain a qualification, which can be costly and arduous. A B&B business can have high liability which can be a lot of stress and pressure on a business owner.

Potentially high start-up costs

If you already own the perfect property that already has the correct facilities (such as ensuite bathrooms) installed, start-up costs can be low. However, for the majority of prospective B&B owners, they will either need to purchase a new property or make extensive renovations to their existing property. This can be extremely expensive and time-consuming and can not only make setting up your business a long process but can also result in you needing to take out expensive business loans, which can lengthen the time before you begin turning a profit.

If there’s a problem, you need to fix it

If there is an issue, no matter what time of the day or night it is, you will be responsible for fixing it. If a guest has a water leak, the electricity stops working or there is another major issue at 3 am, you will be responsible for fixing it to avoid a negative review from the guests or to avoid needing to give them a refund. It can be difficult to manage stressful situations and solve major issues yourself, especially if they occur on holidays or at nighttime.

It can be competitive

Not only are you competing with other B&Bs, but you are also competing with hotels, caravan parks, holiday parks and other private holiday rentals. Having multiple businesses to compete with can make it more difficult for your business to succeed.

It can be physically demanding

If you handle most of the day-to-day running of your business yourself, this can be physically demanding. You will be expected to clean bedrooms regularly, handle the laundry and cook and clean. You will also be on your feet for a lot of the day and be involved in manual handling activities. This can be physically demanding and can result in strain and even injuries.

It can be stressful

If you run the B&B on your own, the stress of it can feel overwhelming. A B&B owner can have a lot of responsibilities and it can be extremely demanding and stressful. Not only are you handling the day-to-day running of the business, but you are also responsible for tasks such as adhering to legal requirements, advertising, ordering stock and organising bookings.

Planning Your Bed and Breakfast Business

If you are thinking of starting up a bed and breakfast business, an effective and well-designed business plan is essential. A business plan can help you to focus on the specific steps that will help your business succeed, plan your short-term and long-term goals, determine your financial needs and help your business to grow.

Your business plan should contain information such as:

• Your company information.
• Your company description.
• The services you will provide.
• Your branding, marketing and advertising plan.
• The structure of your business.
• The operational plan for your business.
• The financial plan for your business.

Decide what type of B&B you are going to run

There are certain questions you should consider when creating your business plan, such as:

• Are you going to open a budget, mid-market or luxury B&B?
• Will your B&B have a theme or a certain design or aesthetic?
• How many bedrooms will your B&B have?
• What will the bed configuration be (e.g. double, twin, bunk beds, king-sized beds)?
• Will you offer breakfast? If so, what kind of breakfast will you provide?
• Will you have any communal spaces?
• What type of check-in experience will you offer?

Summarise your business

Your business plan should include a detailed overview of your business, including your location, the size of your business (e.g. how many guests you can accommodate) and your business goals. You should also consider who your target customers are.

Decide what services and amenities you will offer

What services and amenities will you offer at your B&B? What will be included in the price and what will be offered as optional extras? You may choose to offer additional tours and experiences that may be specific to your B&B or the local area, for example, a local tour, wine tasting or a pottery class.

Decide if you are going to hire any staff

You may opt to run a family business; however, it could be that you are not able to efficiently run your B&B without hiring staff. You may choose to hire staff to help you with cooking, cleaning, bookkeeping or managing your website.

Analyse your competition

Analyse your local competition, including B&Bs and other accommodation in the hospitality industry, such as hotels. You should also analyse your competition across the country, comparing your B&B with other B&Bs that operate within the same niche as you. Look at what they do well and what you think they can improve. You can also use competitor information to predict when booking numbers are likely to be higher or lower. Analysing your competition also allows you to investigate where most of your business will come from and how you can maximise on local opportunities and events.

Calculate your initial start-up costs and your approximate running costs

You need to determine your approximate start-up costs and running costs to enable you to calculate your initial investment and what your monthly or annual running costs will be. Creating a budget is a key part of your business plan. It can also help you to determine whether you can finance the business yourself or whether you require outside investment. Consult the list above to help you calculate the approximate costs associated with setting up and running your business.

Create your sales strategy

When creating your sales strategy, you will need to consider how many guests you can accommodate at one time and what your occupancy rate will need to be in order to turn an acceptable profit. As your business grows, your sales strategy may change. You should also calculate what your weekly, monthly and annual sales forecast will be.

Create a strategy for growth

Because the B&B industry is increasingly competitive, revenue management can help to increase your performance and grow your profits. There are several different key performance indicators (KPIs) that can increase your profits.

• Average room rate: This is the average rental income of each room for each occupied room during a specified period of time. The average room rate may differ during peak and off-peak times and for different rooms in your property. You can compare your room rates to your competitors and use this information to maximise and increase your income.
• Costs per occupied room: Monitor your costs by calculating the average costs incurred for each occupied room. For example, you will need to consider the breakfast costs, staffing costs, cleaning and laundry, utilities and booking fees and/or commission. By calculating the cost of guests staying in a room, you can ensure you set your room rates to ensure maximum profits.
• Room occupancy rate: This is the number of rooms that are occupied (as a percentage). Your room occupancy rate is likely to be higher at certain times of year compared to others. You can look at your room occupancy rate daily, weekly, monthly and annually. You may be able to increase your occupancy by monitoring and partnering with local events, being aware of your competition, adjusting your advertising and booking channels and adjusting your room rates.
• Total revenue per available room (TrevPAR): TrevPAR is frequently considered the most important factor when calculating your profits and how well your B&B is performing. You may calculate your TrevPAR at a specific time or compare it across time periods (for example, comparing different weekends across the year). Total revenue per available room includes your room rates and profits from the bar, food, room service etc. Look at factors that may be influencing your total revenue, the performance of certain amenities and whether revenue changes based on guest demographics (e.g. couples spend more money).

Create your marketing and advertising strategy

Your marketing and advertising plan should detail what your brand is, how you plan to promote your business and your business’s unique selling points (USPs). Consider how you will attract potential customers. You will need to create an effective advertising plan, for example, you may want to advertise your B&B on multiple channels and may list your property for let on multiple channels. You should also focus on optimising your website to make it user-friendly and attractive to potential guests.

Determine your business objectives

Determining your business objectives is an essential component when creating your business plan. Your business objectives highlight the targets and goals of your bed and breakfast business and help you to create a one-year, three-year, and five-year business plan.

Your business objectives should be SMART:

• S = Specific
• M = Measurable
• A = Achievable
• R = Realistic
• T = Time-bound

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BED AND BREAKFAST BUSINESS PLAN: Best Easy Guide in 2023

• by Folakemi Adegbaju
• August 9, 2023
• No comments
• 8 minute read

Table of Contents Hide

How important is a business plan, #1. executive summary ,  #2. company description, #3. organisation and management , #4. market research, #5. competitive analysis, #6. pick a theme, #7. set the menu, #8. create a strategy for promoting your products or services, #9. establish prices, bed and breakfast business plan template, how profitable is a bed and breakfast, do you need permission to run a bed and breakfast, are bed and breakfasts profitable, what is the weakness of a bed and breakfast, how do i start my own guest house, what zoning is required for a guest house, final thought, what type of business is a guest house, what is the legal definition of a guest house, what is the difference between a guest house and b and b.

If you have spare bedrooms in your house, you may turn them into a money-making venture by opening a bed and breakfast, commonly known as a B&B. It’s also a way to test the waters of the hospitality sector on a smaller scale and with less money. One of the keys to success is a love of people and a knack for hosting get-togethers. You also need to be a good cook so that you can make scrumptious breakfasts for your guests. An effective business plan for a bed and breakfast is all you need to boost the likelihood of your financial success. We came up with a ready-to-use bed and breakfast business plan template to guide you in writing a plan.

Let’s keep the dice rolling!

What is a Bed and Breakfast Business Plan?

Your bed and breakfast business plan is a road map for organizing your operations, marketing your offerings, and attracting new customers.

The ideal first step you can take to launch a bed and breakfast business is to write a business plan, because doing so will force you to be more explicit about your goals, consider the realities, and establish a clear course of action.

Despite the fact that the majority of people who prepare bed and breakfast business plans do so with the intention of obtaining money, the plans can actually have a lot more advantages. Until you put your concepts on paper, it might be difficult to have a distinct vision, which is where the business plan comes in.

According to the Small Business Administration, more than 21% of small firms fail in their first year and 50% fail in the first five. Issues are noted down during the business planning phase, which can assist in preventing costly blunders after starting. Having any difficulty writing a plan of your own? Our business writers at Business Yield Consult are always available to help you out with one.

How to Write a Bed and Breakfast Business Plan 

A business plan is necessary if you wish to open a bed and breakfast or grow your existing one.

The main components to include in a successful bed and breakfast business plan are provided in our bed and breakfast business plan template .

Its goal is to introduce your business to those who don’t have the time to read your whole business plan and persuade them to learn more.

It ought to contain details regarding:

• a brief summary of what your company does;
• the nature of your offerings;
• to whom you sell;
• what distinguishes you.

Don’t try to include everything in your executive summary; you can always go into these factors in more detail later. Include a breakdown of the sums here as well, if you’re using your mission statement to seek financing.

Although there are no specific word limits for any section of your business plan, your executive summary shouldn’t exceed one page. The term summary is crucial here. Make it brief, nice, and simple to read

This is the section where you should give specific information about your business and what you do.

The following essential components make up a company description:

• an objective assertion;
• your background;
• your objectives and goals;
• Your key personnel.

Here, you should describe the organisational structure of your business and the key personnel.

To help give readers a better understanding of your business, you might want to include the CVs of your key employees in this part.

Here are things to consider when you’re doing your market research:

• Look at the socioeconomic profile of the visitors you are targeting.
• Think about your preferences and what you will probably attract.
• Determine the size and location of the possible audience.
• How far are they willing to travel to stay at your place?
• Do a lot of tourists visit your area?
• Does the type of property you wish to have a market?
• Take into account the routes and distances to particular destinations near your bed and breakfast.
• Learn about the trends in the tastes of B&B visitors.

Competitive analysis is a very sensitive aspect of your bed and breakfast business plan, here are some important things to observe when doing your competitive analysis:

• Examine the availability and calibre of comparable bed and breakfasts and tourist destinations in the area .
• How lucrative are other nearby B&Bs?
• What patterns are there?
• Where do your competitors’ advertisements appear?
• How will you differentiate yourself from other B&Bs in the market?
• Who are you as a brand? Luxury, a tight budget, a getaway for two, an adventurer’s fantasy, etc.?

Themed room and common area decor are frequent bed and breakfast concepts. Bed and breakfast regulars want to stay in settings that are out of the ordinary and have a story to tell. Think about using a local or regional theme.

Cook up a menu . Make a choice between offering a simple continental breakfast with pastries, cereals, coffee, and juice, or a more elaborate offering with rotating hot items like omelettes and waffles. Those staying at B&Bs for multiple nights, as well as regulars, have come to expect a wide range of breakfast options. Spend some time thinking about what dishes, glasses, and table decorations your guests will like using each morning.

Create a marketing plan, decide how you’ll promote your bed and breakfast, and then set a budget. Start with social media marketing and gradually increase your spending as you can. There are marketing agencies that may assist you with a charge if you are unsure of how to approach your marketing. Find out how your rivals handle marketing and make use of their prior expertise.

Make a plan and a budget to publicize your bed and breakfast, taking into account the price of listing in regional online lodging directories and the price of running modest ads in travel periodicals. Figure out how much it will cost to work with a booking portal that will send customers your way. Take advantage of your B&B’s unique concept by having it included in lifestyle magazines for free publicity. Use social media to promote your bed and breakfast and to provide discounts.

After doing a market analysis, revenue and profit projections can be made. Take a look at the room rates of competing bed and breakfasts in the region. In general, the going fee for a bed and breakfast room is comparable to that of a mid-range hotel. While making your estimate, think about things like insurance, permits, and the price of food and cleaning supplies. Determine the minimum occupancy rate (at which revenues are at least equal to expenses) at which you will be profitable.

Think about the time commitment involved before opening a bed and breakfast. Cleaning the rooms, kitchen, and common areas of the B&B regularly is a must. Each morning, you will need to rise and shine bright and early to prepare and set out breakfast. The number of hours you expect to put in each week should be factored into your business plan, and you should check that the projected profit is enough to cover your expenses.

The essence of a bed and breakfast business plan template checklist is to help you keep track of all the necessary processes you need to achieve while starting your new business.

However, we advise you to download our bed and breakfast business plan template to make sure you follow the right steps while writing your bed and breakfast plan. Here is a bed and breakfast business plan template checklist:

• Executive summary 
• company description 
• Market research 
• Organisation and management 
• product or service. 
• The marketing and sales strategy 
• Funding requests
• Financial forecasts 
• Appendix 

Outside of lean periods, guesthouses may be highly profitable due to their low fixed costs and ability to adapt to fluctuating demand.

You might not require planning permission to start your business if you intend to operate a small bed and breakfast out of your home. The main consideration for determining whether you require planning permission is if you want to change the house’s overall design.

However, there are several legal matters you should be aware of. It’s crucial to keep fire rules in mind right away because you’ll need to conduct a Fire Risk Assessment and could need to make some changes to the home as a result.

Is Running a Bed and Breakfast Hard Work?

Yes, Running any B&B is hard work. No exception applies whether you are starting a B&B or small hotel, especially if you are new to the hospitality business. It’s easy to get overwhelmed because there are so many things to think about before letting the public into a building and much more once your business is up and operating.

Profitability is the optimum outcome for any organisation and is, of course, achievable. Hopefully, by offering a top-notch visitor experience and growing in popularity, your property will be able to turn a profit with the appropriate management and tactics. You must create a reliable source of income before that can happen. This entails luring consistent reservations.

A stay at a B&B could require too much interaction for people who prefer to disconnect from society and enjoy some alone time. Some establishments might not provide certain amenities that are common in large hotels or resorts, like swimming pools, hot tubs, or fitness centres.

Here are some steps you need to consider when you’re starting your own guest house:

• Think carefully about what market segment you wish to attract
• Think about your location
• Budget planning and accounts are essential
• How will you market your business?
• Consider your competition
• Don’t forget the legal requirements
• Guest house insurance

Guest houses are only permitted as a permission use item in a small number of zoning types, including single residential, general residential, local business, agricultural, and rural.

You can create a bed and breakfast business plan in order to apply for loans or to help you choose your strategy and methods. Additionally, it can assist you in setting up some benchmarks to evaluate your company’s performance and generally aid in determining whether you actually possess the necessary elements for a successful enterprise.

You can download our bed and breakfast business plan template to ease you from overworking yourself to writing your own plan.

A guest house is a type of commercial lodging facility with four to sixteen bedrooms whose main source of income is the provision of lodging for tourists.

A guest home is a residence that goes beyond the confines of a bed and breakfast facility and is used for the purpose of renting out separate rooms for residential lodging, with or without meals.

Guesthouses are built specifically to meet the lodging needs of travelers, whereas B&Bs are private residences that have had rooms modified to serve as guest accommodations.

Related Articles

• TEMPORARY ACCOMMODATION: Definition, Types & Everything You Need to Know
• Guest House Insurance: Coverage And Policies In The UK
• HOTEL INSURANCE: Coverages, Top Brokers & Quotes
• MARKET MAPPING: How To Utilize It For Competitive Advantage

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How To Write a Business Plan for a B&B

Opening a bed & breakfast is a good way to convert unused bedrooms in your home into a moneymaking opportunity. It can also be a means to get into the hospitality industry on a small scale with limited investment. Researching and writing a thorough business plan for your B&B dramatically increases your chances of making the venture profitable.

Why is a Business Plan Important?

While many people write their bed and breakfast business plans for the purpose of funding, the business plan can offer many more benefits. It’s challenging to have a clear vision until you put your ideas on paper and that’s where the business plan comes in. 

The Small Business Administration shows that over 21% of small businesses fail in the first year and 50% fail in the first five years. The business planning process identifies issues on paper which can help reduce costly mistakes after opening.

What Goes into Your Business Plan?

When putting together your B&B business plan, you need to take into account some main factors, these factors will increase your chances of success.

A good B&B business plan needs to start with a good idea. Make a note of what you expect to achieve from your business and where you want to be in the short-term, mid-term and long-term. This will allow you to keep on track and make it easier to identify successes and losses, so you’ll be able to correct mistakes as you go along.

Getting your budget right will help everything else in your business slide into place. It’s more important if you are looking for financial backing of any kind. Underestimating your budget will result in a longer time trying to break even or nudge you into debt.

You need to consider the following monthly outgoings:

• The costs associated with financing your property
• Daily running costs associated with your property
• Marketing costs
• Employee wages
• Your personal living costs

Once you have your costs on paper, you need to try and work out the income earned by bookings. It is also essential to know the minimum booking requirements needed to say afloat. 

It is worth setting aside some funds to act as a safety blanket in the event of any unexpected costs or a slow month. 

B&B pricing structure

Once you have worked out your overheads and outgoings, you are in a good position to set the all-important pricing structure for your B&B business plan.

There are some essential considerations when working out your pricing structure:

• Market size – How many potential customers can you manage effectively?
• Competition – What will you charge in relation to your competition?
• Seasonal pricing – Will you adjust your pricing over busy periods?
• Special offers – Consider special offers or discounts for quiet periods
• Weekend to midweek rates – Will you change the pricing for the weekends?
• Single occupancy rates – Will you charge different rates for single travellers?
• Restrictions – Consider restrictions such as pets or children
• Cancellations – Consider your cancellation and refund policy

You will need to monitor and adjust your pricing structure on a regular basis.

Marketing strategy

Decide what you’ll do to promote your bed and breakfast, and work out a marketing budget. You can start with social media marketing and increase your budget when able. If you are unsure how to approach your marketing there are marketing agencies who can help you for a fee. Research how your competitors approach marketing and use their past experience to your advantage.

Define your Key performance indicators

Monitoring your performance is an essential part of running a successful business, and you will need to define how you will measure success when putting your business plan together. You will need to look at all areas of your business to be reviewed on a regular basis. 

When defining your KPIs you may want to consider:

• Total sales per month – How do they compare with your plan, and are you growing year on year?
• Occupancy percentage rate ­– This is the percentage of booked rooms, does this meet your plan?
• Average room rate – You should be seeing a number close to your per-night rate.
• Customer satisfaction – Reference your feedback and reviews, is there a way to improve?

For advice and information on business plan writing refer to our blog or read further information about our business plan writing services . CBM can also be contacted via the contact form on our website or call our expert team on 01604 420 420.

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Bed and Breakfast Business Plan Template

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What You Get

• A compelling & detailed pre-written Bed and Breakfast business plan template in WORD
• A full and automatic Bed and Breakfast financial plan model in EXCEL you can easily customize
• Customized text tailored to the B&B business
• The ability to paste advanced charts and tables within a click
• No accounting or specialized financial knowledge needed
• A cost-effective solution saving you time & money

Bed & Breakfast Business Plan Template Description

Our ready-made Bed and Breakfast business plan template is a cost-effective solution in case you need to plan, execute, fund and launch a successful B&B venture. Our B&B business plan package includes a pre-written business plan in Word and an automatic financial plan in Excel tailored to the Bed & breakfast business. All you need to do is spend a couple of hours customizing these pre-made documents to perfectly fit them to your own B&B project. Check below the full content of your ready-made B&B business plan package.

B&B Business Plan Document in Word

Our ready-made Bed and Breakfast business plan template is in Word format and includes 23 pages. The document is divided into multiple sections. Each section contains the essential points that are necessary to effectively present your Bed and Breakfast project. Each section and sub-section offers you a sample text that you can easily customize to make your business plan unique. Below is a small extract of your ready-made B&B business plan in Word.

Automatic Bed & Breakfast Financial Plan in Excel

Our pre-populated B&B financial model is in Excel format and includes multiples worksheets. You can easily edit the model’s inputs including changing costs and revenue assumptions to generate pro-forma financial forecasts including P&L, Cash flows and Balance Sheets. Below is a small excerpt of your customizable automatic financial plan in Excel.

This Ready-Made Bed and Breakfast Business Plan is For

• Entrepreneurs wishing to start a Bed and Breakfast business
• Aspiring B&B owners who want to create a business plan fast and easy
• B&B entrepreneurs who wish to pitch their project to investors
• B&B professionals who wish to better understand the potential of the opportunity

Immediate Delivery by Email

• Once you complete the order, you will receive an email with links to download your documents
• Your order will contain the full pre-written business plan in Word
• Your order will contain the full customizable financial model in Excel

Your Bed and Breakfast Business Plan Content

Executive Summary:  Our Bed and Breakfast business plan template starts with a compelling Executive Summary. This key section is very important as it summarizes in 1 page your Bed and Breakfast concept. It will introduce your business model, the key people behind the project as well as the unique selling proposition offered by your Bed and Breakfast concept. This section will also mention how market conditions and consumer trends are favorable for launching your project.

The Problem Opportunity:  Next, your ready-made Bed and Breakfast business plan will list a number of problems experienced by your prospects in your target market and will show how this presents a unique opportunity for your Bed and Breakfast business. These can include issues such as lack of a particular type of bakeries in a certain location, low or average bread quality offered by existing players, undifferentiated offering by current actors in the market…etc.

The Solution:  This section explains how your Bed and Breakfast will take advantage of the current problems in the market and will detail your innovative solutions.

Mission & Vision:  Your mission will explain in a couple of sentences your Bed and Breakfast’s business ethos. In other words, it will summarize your unique value proposition and will explain how you are different than the competition. Your vision will explain the long-term plans for your Bed and Breakfast concept. Are you planning to start with one branch today and expand to a multi-branch business model? Are you looking to transform your Bed and Breakfast business into a franchise model?…etc.

Business Model:  This section details your Bed and Breakfast concept using the business model canvas method. In a visually appealing table, we will detail your Bed and Breakfast’s key partners, activities, resources, value proposition, customer segments, customer relationship plan, marketing channels, cost structure and revenue streams.

Products & Services:  Next, we will talk in details about your various room options, breakfast, lunch and dining options as well as other services available at your B&B such as wedding venue booking. We will also provide information about your pricing by room type and other offerings.

Market Analysis:  This important section describes the various market statistics and consumer trends in the Bed and Breakfast industry and explains how they support your own Bed and Breakfast concept. The purpose of this section is to show that the market conditions are favorable for launching your new Bed and Breakfast concept.

Global Market Trends: In this sub-section of the market analysis, we will discuss the latest global market trends in the Bed and Breakfast industry. We will look at the global industry size, growth rate, growth diving factors and consumer trends.

Local Market Trends:  This sub-section explains the local market trends that are relevant to your specific Bed and Breakfast business.

Target Customers:  In this section, we will describe your various customer profiles by providing information about their demographics, behavior and purchasing habits.

Competitive Analysis:  We will analyze key competitors active in your target market and provide insights about their strengths and weaknesses.

Competitive Advantages:  After looking at the competitive landscape, we will then show how your Bed and Breakfast business is differentiating itself from the competition through a number of key advantages.

SWOT Analysis:  This section features a 4-quadrant table with explanations about how your Bed and Breakfast intends to leverage its key strengths, mitigate weaknesses, capture opportunities and thwart any future threats.

Marketing Plan : This chapter provides detailed information about your go-to-market strategy.

Branding & Awareness:  We will describe in this sub-section your choice of key marketing channels to build branding and awareness.

Customer Acquisition:  We will describe in this sub-section your choice of key marketing channels to acquire customers and increase sales.

Operating Plan:  This chapter provides information about your Bed and Breakfast’s opening hours, internal processes and describes the interactions between various key departments and teams.

Management Team:  It is very important to present the key people behind your Bed and Breakfast project and thus we have dedicated a section for this very purpose. It is also important to talk here about the founder’s vision, his past education and professional experience.

Hiring Plan:  No business can succeed without having on board the right team. This section lists all the key positions you plan to hire with information about their salaries and expected start dates.

Key Milestones:  To be able to launch and execute your Bed and Breakfast project, you need to follow a set of actionable tasks with target deadlines. This section serves this purpose.

Financial Plan:  Without a robust financial plan, your Bed and Breakfast business plan would be an incomplete document. This important section provides crucial information about your pro-forma financial projections and shows that you have really done your homework. The data mentioned in this and the following sections will be provided by the dynamic Excel financial model accompanying your Bed and Breakfast business plan.

Projected Revenue:  This module shows your Bed and Breakfast’s revenue projections over the next three years.

Projected Profit and Loss:  This module shows your Bed and Breakfast’s income statement (also called profit and loss statement) over the next three years. Your income statement includes detailed projections about your sales and expenses and shows how your Bed and Breakfast’s revenue is converted into a net profit.

Projected Cash Flows:  This module shows your Bed and Breakfast’s cash flow projections over the next three years. The first year of operation is even detailed on a monthly basis. Your cash flow statement will detail the various cash inflows your Bed and Breakfast will generate from its day to day operations and from funding sources, as well as the various cash outflows required to pay for operating expenses and business investments.

Projected Balance Sheet : This module shows your Bed and Breakfast’s balance sheet projections over the next three years. The balance sheet will provide a summary of your Bed and Breakfast’s short term and long term assets in addition to your short term and long term liabilities and capital.

Profitability Analysis:  In this section, we will provide information about your gross margin, net margin and discuss the profitability of your Bed and Breakfast business.

Funding Requirement:  This module states the amount of funding your need to be able to comfortably launch your Bed and Breakfast business. It also describes the planned allocation of the funds between Opex and Capex.

Conclusion : Finally, we will conclude your business plan by recapitulating the key points that make your Bed and Breakfast project compelling and reiterate the rationale behind your business opportunity.

Why Use our Ready-Made Bed and Breakfast Business Plan?

• Speed & Convenience:  Once you complete your order, you will receive the Bed and Breakfast business plan directly in your mailbox. Since it is already pre-written with fully customizable financials, you will only need to spend a couple of hours to edit it and adapt it to your own B&B project.
• High Quality:  Your Bed and Breakfast business plan has been written by our professional team of business plan writers and experts from the B&B industry. You will receive a professional Bed and Breakfast business plan template ideal for presenting to potential investors or banks.
• Low-Cost:  Our pre-written Bed and Breakfast business plan template is the most cost-effective solution in case you need to build a solid and professional Bed and Breakfast business plan. We are confident you will save hundreds if not thousands of dollars by ordering our premium business plan compared to hiring a consultant or subscribing to complicated and expensive software.

If you have any question regarding our ready-made Bed and Breakfast business plan package,  do not hesitate to contact us , we are here to help.

You Might Also Be Interested in

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Write a business plan

Download free business plan templates and find help and advice on how to write your business plan.

Business plan templates

Download a free business plan template on The Prince’s Trust website.

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Read example business plans on the Bplans website.

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Why you need a business plan

A business plan is a written document that describes your business. It covers objectives, strategies, sales, marketing and financial forecasts.

A business plan helps you to:

• clarify your business idea
• spot potential problems
• set out your goals
• measure your progress

You’ll need a business plan if you want to secure investment or a loan from a bank. Read about the finance options available for businesses on the Business Finance Guide website.

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How to Start a B&B or Guest House

• 19th February 2020
• Advice & Articles , Hospitality
• Stewart Hindley

Home / Blog / How to Start a B&B or Guest House

Whether it’s always been a lifelong dream of yours to open a bed and breakfast (B&B) or you’ve identified a great business opportunity, running a B&B can be incredibly rewarding and lucrative.

At the same time, the purchasing process can seem overwhelming. There are a number of factors to consider before opening your B&B doors to the public.

If you’re hoping to open a bed and breakfast and you don’t know where to start, you’ve landed in the right place. Here’s our guide to opening your very own B&B.

Is it right for you?

First and foremost, you must consider whether or not owning a bed and breakfast is right for you. This is something that takes a lot of hard work and commitment, so starting a B&B should not be a decision that you take lightly – your new business will require your time and attention day in, day out.

Consider the costs involved

Once you’ve committed to the idea of opening your B&B, it’s time to consider the costs involved. Whether you’re buying a B&B, transforming your own home into a B&B or purchasing an existing bed and breakfast business, the same running costs will apply.

From merchant services costs, food, personal expenses and linen costs, through to furnishings, business supplies, smoke detectors and fire alarms, there’s an awful lot to consider. Make sure you’re aware of all the costs involved and have calculated how much you will need to charge to cover these expenses and make a profit – is it achievable?

Familiarise yourself with the rules and regulations

Before opening a bed and breakfast, you’ll need to familiarise yourself with the rules and regulations associated with running a B&B business.

And, although you don’t need a qualification or licence to open a B&B, you will need to take into account fire regulations, consult with your local authority planning office before putting any concrete plans in place, gain planning permission for any alterations, obtain necessary alcohol and TV licences and make sure you register with the HMRC for tax purposes.

Know your market

Before you consider opening a B&B, it’s important that you understand the needs and expectations of your target market.

Depending on the location of your bed and breakfast, you’ll either be catering for business or leisure guests, or a combination of the two, and it’s important that there is a demand for your services in the area.

With this in mind, don’t fall into the trap of falling in love with a property, only for it to fail in the first few months due to there not being any customer demand.

How much money do you need to start a B&B or Guest House?

The amount of money you’ll need to start your new business venture will depend on a number of factors, including how much work needs done to the property, whether you already have an existing client base or not, and the level of service you are intending to offer.

All of these should be analysed in your business plan and marketing strategy before you even consider purchasing or converting a property.

Tourism is big business throughout the UK. But, if you’re thinking about starting a bed and breakfast, it’s crucial that you do your research to determine whether it’s the right decision for you.

If you’ve done your research and you’re ready to set up your own B&B, get in touch today to find out how we can help with your mortgage for a bed and breakfast business.

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A Guide to Starting an Airbnb Business in the United Kingdom

• Post author By Robyn Peña
• Post date July 11, 2022

Last updated on September 22nd, 2023

The United Kingdom is known as the home of both modern parliamentary democracy and the industrial revolution. It is the first industrialized country in the world and has an incredible source of historical, cultural, and culinary richness! 

UK’s economic forecast is projected to increase by 3.6% and the number of tourist arrivals is forecasted to increase by 21.1 million by the end of 2022. Relatively, cities in the UK have the highest occupancy rate along with whopping annual revenue of £26,937 according to Airbnb occupancy rates by city. With these facts provided, starting an Airbnb business in the United Kingdom is an ideal investment to earn money this year! 

In this article, we featured all the things you need to consider before starting an Airbnb business in the UK. This includes rules & regulations, different kinds of mortgages, upfront and ongoing costs, and the like. Continue reading to learn more!

UK’s Rules & Regulations 

Before starting an Airbnb business in the UK, it’s important to understand the certain rules and regulations that you have to consider. Here are some of the major short-term regulations that you have to follow in the UK: 

• The letting must NOT be for longer than 31 continuous days . (A period longer than 31 days is deemed to be a ‘long’ stay) 
• The let property needs to be made available for rent for at least 210 days in a tax year  
• The rental needs to be actually let for at least 105 days of that tax year , for periods shorter than 31 days at a time. 

If you would like to let your property for a number of months out of season, you can opt for an assured tenancy or an assured shorthold tenancy .

Rules & Regulations per city in the UK

Since there are various short-term regulations per city in the UK, you will also have to go through each law to make sure that your expectations are met. Learn more about the general legislation, short-term rental policies, Airbnb data, and other relevant info for each major city in the UK:

1. London Rules & Regulations 

London is the capital city of England & the United Kingdom and is known as one of the most visited cities in the world. Here are some of the Airbnb rules in London :

• 90 days (without a permit)
• No limit on renting out a portion of your home as long as you live there
• Liable to pay council tax 
• A planning permit is necessary for more than 90 days rent

2. Edinburgh Rules & Regulations

Edinburgh is considered the world’s best festival city filled with culture, comedy, and literary arts. Here are some of the Airbnb rules in Edinburgh :

• Planning permission is necessary to change their residential dwelling to short-term visitor accommodation
• Check to see if a Building Warrant is required to operate your Short Term or Holiday Let as a non-domestic use (more than 6 visitors) and/or alterations to the property.
• Ensure you have a v alid legal contract with the visitors staying on the property.
• Check the implications of renting your property for your mortgage and tax purposes and check your title deeds for any conditions that would prevent the property from being used for a Short Term Let
• Ensure you have the correct landlord insurance in place.
• Ensure you ha ve an Energy Performance Certificate (EPC) t hat has been issued in the last 10 years.

3. Cornwall Rules & Regulations

Cornwall is a seaside paradise located in southwestern England and is best known for its fishing harbors and lush countryside. Here are some of the Airbnb rules in Cornwall :

• Short-term rental arrangements in ‘residential zoning districts’ are NOT allowed
• Compulsory registration system

4. Manchester Rules & Regulations

• Manchester is the largest metropolitan area in the north of England and it remains an important regional city. Here are some of the Airbnb rules in Manchester : 90-day limit (without a permit)
• Compliance with Board of Health regulations and Fire 
• Name of a local authorized agent who can act on behalf of the owner in the absence of the owner in the case of any problems, violations or emergencies
• Agreement to maintain a guest registry showing the name of each guest and the night(s) of their stay. 

5. Birmingham Rules & Regulations

Birmingham is the largest city in the West Midlands conurbation and is one of England’s principal industrial and commercial areas. Here are some of the Airbnb rules in Birmingham :

• Prohibits short-term rentals of less than 30 days
• Prohibits short-term rentals of less than 90 days in low-density residential areas

Purchasing an Investment Property in the UK

You can purchase an investment property in the UK by considering the different kinds of mortgages, upfront and ongoing costs, and other expenses associated with your preferred property.

Source: RW Invest UK

Source: UK Government

Airbnb Rental Arbitrage in the UK

If you prefer to rent a property instead of owning one, then you can definitely do so through Airbnb rental arbitrage in the UK ! You can expect to spend around £2,500 to £4,000 . This cost consists of everything including the deposit, furnishing, amenities, legal paperwork, and LLC Incorporation. Learn everything you need to know through the ultimate rental arbitrage guide & start earning profit anywhere in the UK!

How to Find a Profitable Area in the UK

Location analysis must be one of your top priorities when deciding on a rental location in order to increase profitability during such volatile times, especially while the pandemic continues to impact the rental market. 

The perfect way to find the best places to buy Airbnb property UK is by looking at an accurate Airbnb Market Dashboard & start comparing the profit of your competitors in your preferred location.

Essential Airbnb Data in the UK

The majority of cities in the UK have been recognized from all over the world for perfection & their primary impact on tourism & economic standing. This includes the cities of London and Edinburgh based on recent research about occupancy rates by city .

What are the Most Profitable Boroughs in London? 

Airbnb occupancy rates in London have provided profitable results over the past few years. Here are the top 5 highest & lowest boroughs in London based on their respective annual revenues:

1. Hounslow – £46,308 

2. Lewisham – £32,9523 

3. Islington – £25,584 

4. Kingston upon Thames – £24,936 

5. Camden – £22,968

LOOKING FOR OTHER PROFITABLE AIRBNB AREAS IN LONDON?

Check out the best London property investment areas !

5 Excellent Airbnb Hosting Tips in the UK

1. learn about startup costs.

To begin with, it’s important to have an overview of Airbnb Startup Costs in order to prepare for the total expenses. Here’s a summary of the overall expenses per amenities:

Relatively, it’s important to learn about the process of Airbnb investment, legal considerations, and key metrics for successful Airbnb hosting. With the help of the Airbnb Investment Guide , you’ll be able to get started and have professional knowledge in starting an Airbnb business in the UK!

However, if you are on a limited budget, you can still fulfill your dreams of starting an Airbnb! Start by choosing the right location, creating a business plan, and being able to properly start an Airbnb with a minimal budget .

2. Utilize the Best Hosting Tools

Whether you are a newbie or a pro in the Airbnb industry, there’s no denying that Airbnb hosting tools play a huge role in the overall success of your business. Not only will these tools help you save time and energy, but they will also help you get better reviews and earn more revenue. This includes property management tools, message automation, and market research software.

Managing Airbnb listings alone can already be a difficult task especially if you don’t have much time to focus your attention on the properties that you’re handling all at the same time. 

Utilizing short-term rental data analytics such as Airbtics, Mashvisor, AirdDNA, and AllTheRooms can help you present & analyze data to create a strategic analysis for your Airbnb market research. You can also look at the 5 Best AirDNA alternatives in 2022 with vast free & paid options. 

3. Essential Airbnb Amenities

Once you have set your eyes on a particular property in the United Kingdom and successfully went through all the necessary documentation, don’t forget to add the essential Airbnb Amenities ! 

Although it’s not necessary to add High-End Airbnb Amenities , you’d be surprised to know that there are affordable ones with great quality on the market. Relatively, there are also suitable amenities for vacation rental homes including a sweet welcome package & a local guidebook. 

Finally, if you’re simply forgetful and need a summarized checklist of Airbnb Amenities , feel free to download it in PDF!

4. Effective Strategies for Promoting Airbnb Listings

It’s a given fact that constantly improving your listings will help to maximize your Airbnb revenue & get the highest occupancy rates. The best way to showcase the details of your Airbnb listing is through the power of advertisement! Some of the effective strategies for Promoting Airbnb Listings are:

• Prioritize Booking Channels
• Promote Airbnb listings by ranking on SEO (Search Engine Optimization)
• Learn how to take the Best Airbnb Photos
• Coordinate with your Local Tourism Council
• Ask your Recent Guests to Leave Feedback

5. Know the Right Words to Say with Airbnb Message Templates

It could be a struggle to know what to say when your property is fully booked with guests!  Earn their trust & win your guests’ hearts by sending out the perfect Airbnb Welcome Letter Templates .

Most importantly, once your listing is up on the Airbnb platform, hosts will be evaluated according to their response rates. This means that the faster you respond to inquiries or concerns, the better!

By looking at Airbnb Message Templates for Hosts , you can easily prepare the saved replies according to their inquiry, and will automatically be sent to your guests.

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Bed and Breakfast Business Plan Template

Written by Dave Lavinsky

Bed and Breakfast Business Plan

You’ve come to the right place to create your Bed and Breakfast business plan.

We have helped over 10,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Bed and Breakfast companies.

Below is a template to help you create each section of your Bed and Breakfast business plan.

Executive Summary

Business overview.

Walton House is a new bed and breakfast business located just outside of Omaha, Nebraska. It is a charming two-story rustic farmhouse that contains several rooms for guests to enjoy. Every room is decorated with pictures, adornments, and knick-knacks that transport guests to a simpler, more rustic time. The bed and breakfast will offer daily housekeeping, high-speed wifi, cable, and complimentary breakfast every morning.

Walton House is run and owned by Mary Walton. She inherited the house from her grandparents and decided to renovate it and run it as a bed and breakfast. Though Mary has never run a bed and breakfast before, she holds an MBA and has worked in upper management of several other small businesses. Therefore, she has an in-depth knowledge of the operations, marketing, and management sides of running a business.

Walton House will offer all of the standard bed and breakfast services, including daily room cleaning, cable TV, a free wireless network, and various other amenities. Additionally, the bed and breakfast will include complimentary breakfast every morning as well as free snacks all day long in the common areas.

Customer Focus

Walton House will primarily serve leisure travelers who seek comfort, basic amenities, and simplicity of services. We will target both Omaha residents who need a short getaway and travelers who are coming to Omaha for a short stay.

Management Team

Walton House is run and owned by Mary Walton. Before Mary took ownership of the house, it belonged to her grandparents and was transferred down through generations. Due to its rustic charm, Mary realized the house offered a great atmosphere that guests loved. Therefore, she decided to renovate the home and turn it into a bed and breakfast.

Though Mary has never run a bed and breakfast before, she holds an MBA and has worked in upper management of several other small businesses. Therefore, she has an in-depth knowledge of the operations, marketing, and management sides of running a business.

Success Factors

Walton House will be able to achieve success by offering the following competitive advantages:

• Location: Walton House’s location on the outskirts of Omaha adds to the rustic, rural feel that guests will enjoy. However, the city is still close enough to easily access the airport, tourist attractions, downtown, shopping, and restaurants.
• Business Amenities: Wi-fi throughout the bed and breakfast will make working remotely simple for business visitors.
• Management: Our management team has years of business and marketing experience that allows us to market and serve customers in the same manner as our most sophisticated competitors.
• Relationships: Having visited the community for a number of years, Mary Walton knows many of the local leaders, newspapers, and other influencers. As such, it will be relatively easy for us to build the brand and awareness of the bed and breakfast.

Financial Highlights

Walton House is seeking $300,000 in debt financing to launch the bed and breakfast. The funding will primarily be used to pay for renovations. Funding will also be dedicated toward three months of overhead costs, including payroll and utilities. The breakout of the funding is below:

• Renovations: $150,000
• Three months of overhead expenses (payroll, utilities): $50,000
• Marketing costs: $50,000
• Working capital: $50,000

The following graph below outlines the pro forma financial projections for Walton House.

Company Overview

Who is walton house, walton house history.

Mary Walton incorporated Walton House as an S-Corporation on November, 202X. The bed and breakfast development operations are currently being run out of Mary Walton’s home office. Once the renovations are finished, all operations will run from Walton House.

Since incorporation, the company has achieved the following milestones:

• Developed the company’s name, logo, and website
• Found contractors to help renovate the home
• Taking bids from construction crews and electrical engineering firms
• Determined equipment leasing and financing requirements
• Began recruiting key employees with customer service or bed and breakfast experience

Walton House Services

Industry analysis.

The bed and breakfast industry has grown substantially over the past decade and is expected to continue that growth over the next several years.

This growth is due to several factors. First of all, when cities are flooded with tourists for special events, hotels often can’t keep up with demand. When hotels are out of rooms, travelers have to look elsewhere, with many heading to bed and breakfasts. Bed and breakfasts are a great option when hotels cannot accommodate an influx of tourists.

Secondly, hotels, Airbnbs, and other accommodations are becoming increasingly expensive, which prices out most travelers. Most travelers expect extra services if they are forced to pay higher prices, but this is a rare occurrence in hotels. Bed and breakfasts are moderately priced and offer more services and atmosphere than most hotels can provide.

Finally, many travelers don’t want to sit in a bland hotel room throughout their stay. They want an accommodation with more atmosphere, personality, and charm. Very few hotels offer this. However, this is exactly what makes bed and breakfasts unique. Every bed and breakfast location offers a unique charm and atmosphere that makes it a more enjoyable and personable experience for guests.

All of these factors have helped the bed and breakfast industry boom. With hotel and Airbnb prices continuing to rise and travelers wanting a more enjoyable and unique experience, bed and breakfasts will only continue to increase in demand.

Customer Analysis

Demographic profile of target market.

Walton House will primarily serve leisure travelers who seek comfort, necessary amenities, and simplicity of services. We will target both Omaha residents who need a short getaway and travelers from other locations that are coming to Omaha for a short stay.

In general, the market for the bed and breakfast segment tends to be relatively affluent and well-educated. The single largest segment which uses bed and breakfasts are guests on vacations/pleasure trips. These tend to be short weekend breaks to relieve work-related stress. Special events, such as weddings, are important revenue drivers. Therefore, we expect many of our customers to be travelers who are on vacation or coming to Omaha for a special event.

Customer Segmentation

We will primarily target the following three market segments:

• Locals looking for a simple getaway
• Leisure travelers
• Business travelers

Competitive Analysis

Direct and indirect competitors.

Walton House will face competition from other companies with similar business profiles. A description of each competitor company is below.

The Omaha Concourse Bed and Breakfast

The Omaha Concourse Bed and Breakfast is Omaha’s leading bed and breakfast and has been in business for 20 years. The bed and breakfast offers a wide array of services and amenities that you typically find at a bed and breakfast.

The Omaha Concourse also offers luxury amenities, many of which are not necessary for travelers, and charges a high price for those amenities ($200-300 per night). Additionally, this bed and breakfast does not offer wireless internet in sleeping rooms.

The Edgewater Bed and Breakfast

The Edgewater Bed and Breakfast has been in business for 15 years. The Edgewater Bed and Breakfast offers a variety of services and amenities, all typical of the bed and breakfast and hospitality industry. However, Edgewater is highly priced due to its waterfront location. Furthermore, Edgewater’s rooms are aging and in desperate need of renovation.

Doubletree Bed and Breakfast Omaha

Doubletree Bed and Breakfast Omaha has been in business for the past ten years and is part of the Hilton family of bed and breakfasts. This allows it to use centralized booking with Hilton and the Hilton loyalty points system. However, the Doubletree is not located in a convenient location, nor does it have nearly as many amenities and services as Walton House. Travelers will get more atmosphere and bang for their buck when they book with us.

Competitive Advantage

Walton House enjoys several advantages over its competitors. These advantages include:

Marketing Plan

Brand & value proposition.

The Walton House brand will focus on the company’s unique value proposition:

• Offering rooms suited for families and business travelers and services
• Providing a historic and rustic charm
• Offering an enchanting location on the outskirts of Omaha
• Providing excellent customer service

Promotions Strategy

The promotions strategy for Walton House is as follows:

Social Media

The Walton House will have Instagram, Twitter, and Facebook business profiles where Mary will post frequently about the bed and breakfast. The posts will have pictures of the house and provide information on upcoming special events nearby. The posts will be appealing with professional photographs and will engage customers with discount opportunities and special promotions.

Website & SEO Marketing

Mary will utilize the website and SEO to attract new customers. The website will be easy to navigate and provide all the information and pictures needed to show the house’s charm. The SEO strategy will also be managed to ensure that anyone searching “bed and breakfast near me” or “bed and breakfast Omaha” will see Walton House listed at the top of the Bing or Google search engine.

Advertising

Walton House will initially advertise on travel websites, which are frequently being used these days to book travel due to their ease of use and reviews. These travel websites may offer slight discounts or promotions to further incentivize travelers to book with Walton House.

Pre-Opening Events

Before opening the bed and breakfast, Walton House will organize pre-opening events designed for prospective national customers, local customers, and press contacts. These events will create buzz and awareness for Walton House in the area.

Walton House’s pricing will fluctuate based on the season and occupancy percentages using a computerized yield management system. However, pricing will always place the Walton House in the mid-range, below luxury offerings, and above bed and breakfasts and motels in the area. Customers will feel they receive great value when patronizing our bed and breakfast.

Operations Plan

Operation Functions:

The following will be the operations plan for Walton House.

• Mary will be the Owner of Walton House. She will be in charge of much of the operations and management aspects of the business.
• Mary is assisted by her cousin, Christine Walton. Christine has a background as a marketing manager, so she will be in charge of all the marketing efforts.
• Mary will also hire a small crew to help with cooking and cleaning the rooms every day.

Milestones:

Walton House expects to achieve the following milestones in the following six months:

11/202X          Hire contractors and start renovations

12/202X          Finish renovations

1/202X            Kickoff promotional campaign

2/202X            Hire and train initial staff

3/202X            Open Walton House

4/202X            Reach break-even

Financial Plan

Key revenue & costs.

The key revenue of Walton House will come from charging nightly rates for each guest that stays with us.

The major costs for the company will be the salaries of the staff and the cost of maintaining the bed and breakfast. In its initial years, the company’s marketing spending will be high as it establishes itself in the market.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.

• Number of guests per month: 20
• Annual overhead costs: $20,000
• Average nightly rate: $100

Financial Projections

Income statement.

Balance Sheet

Cash Flow Statement

Bed and Breakfast Business Plan FAQs

What is a bed and breakfast business plan.

A bed and breakfast business plan is a plan to start and/or grow your bed and breakfast business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Bed and Breakfast business plan using our Bed and Breakfast Business Plan Template here .

What are the Main Types of Bed and Breakfast Businesses?

There are a number of different kinds of bed and breakfast businesses , some examples include: Home Stay, B&B, Country Inn, or Cottage.

How Do You Get Funding for Your Bed and Breakfast Business Plan?

Bed and Breakfast businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

This is true for opening a bed and breakfast business plan or a plan to grow an existing bed and breakfast.

What are the Steps To Start a Bed and Breakfast Business?

Starting a bed and breakfast business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Bed and Breakfast Business Plan - The first step in starting a business is to create a detailed b&b business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your bed and breakfast business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your bed and breakfast business is in compliance with local laws.

3. Register Your Bed and Breakfast Business - Once you have chosen a legal structure, the next step is to register your bed and breakfast business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your bed and breakfast business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Bed and Breakfast Equipment & Supplies - In order to start your bed and breakfast business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your bed and breakfast business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

Learn more about how to start a successful bed and breakfast business:

• How to Start a Bed and Breakfast Business

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A business plan is essential for reaching financial success. Download our business plan template and use it to help you achieve your goals.

Whether you’re starting a business or planning to expand, having a business plan can help to get you on track and get some detail behind your ideas.

However, research from Barclays shows that one in four businesses don’t have a business plan.

There are a number of useful tools worth having at your disposal if you want your business to succeed. While one of those is accounting software , so you can keep track of your business admin (forecast your cash flow, manage your invoices , and more), another is a business plan.

So what are the advantages of business planning and how could it help your business to succeed? Read this article to find out more.

What is a business plan?

There are numerous reasons why you might want to start a business .

You might have a great idea. Perhaps you’ve always wanted to run your own company. Or maybe you’ve been made redundant – perhaps due to the coronavirus (COVID-19) outbreak – and you’re ready to take the leap to entrepreneurship.

But for your business to be a success, your passion, enthusiasm, hard work and skills should be built on a practical framework. And that’s the case whether it’s a new business or an existing one.

This is where your business plan comes in.

A key part of that practical framework, a business plan is a document that maps out the purpose of your company, what it does and its strategic goals, among other things.

Creating a business plan for your company will guide you in defining your unique selling proposition (USP), and give you clarity of the marketplace you wish to operate in and the competition your business will be up against.

You’ll use your business plan to work towards a series of milestones that will help you to grow your company.

But your business plan shouldn’t be a static document – you should update it regularly as your company evolves, so you can ensure things are moving in the right direction.

Benefits of writing a business plan

Jennifer O’Toole, Senior Partner at accountancy firm Thomas R Dixon, says: “A business plan is like a flight path. It lets you know where you want to go, what you want to achieve, what you have in order to achieve your goals and probably most importantly what problems you can expect along the way.

“Being able to identify potential threats, problem areas that could affect the business, and to be able to develop coping strategies in a proactive manner rather than in a reactive stance, is key to business survival.”

It’s also a great way to share information about your business, to develop your thinking and test scenarios before you make any changes (like leaving your job and going it alone), and it gives you a way to measure how things go when you do start up.

And if you’re looking for finance, then a business plan can make a difference.

Rebecca McNeil, MD for Business Lending and Enterprise at Barclays, says: “A strong plan can help applications for finance from a business loan to alternative forms of finance and investment.”

Reasons people skip business planning

If it’s so helpful, why don’t more people choose to have one? Here are some of the common challenges:

• Time.  If you’ve thought through your business, it shouldn’t take long to create your business plan. Keep it short and simple and choose a format that works for you.
• Uncertainty. It’s true that you can’t know what will happen until you start a business but a plan can help you spot potential pitfalls and helps you to understand the finances behind your idea. Read our advice on ways to get more accurate figures in your business plan.
• Lack of agility. Some people think business planning stops businesses evolving, but a good business plan should be current and adapt as you test and learn. It needs to be part of the business, not left in a drawer.

Read more about business plans

• Business plan template for food and drink companies
• Business plan template for shops and retail companies
• Business plan template for online retail and ecommerce companies
• Business plan template for professional services companies

The best format for your business plan

Many people assume that a business plan will be a hefty document containing lots of facts and figures, but it doesn’t have to be. The key thing is to choose a format that will work for you and your business. That would be:

• One you’ll use.  Something that can become part of your day-to-day business rather than something you’ll never refer to. Have your business plan on the wall as a manifesto or mind map, make a presentation or create a visual guide – whatever works for you.
• One that makes it simple to express your views. If you’re a writer, you may be happy with a document, a designer might like a more visual medium. Your business plan should excite and inspire, so pick a format that lets you do that.
• One that’s shareable.  A business plan will be seen by lots of people, from your bank manager and accountant to prospective investors or employees, so pick a format that makes it easy to share.

What to include in your business plan

What should a business plan include? Every plan is likely to be different but there are some common pieces of information that are often included:

• An overview of the business.  What does it do and what makes it different?
• Goals.  What does the business want to achieve? This should set some SMART objectives that will quickly show if the business is succeeding.
• Your audience and the market.  Who will your business supply and how will it reach them? How big is the market and who are your key competitors?
• Products and pricing.  What will you be selling and how will your prices be set? How does this compare with your competitors?
• Who is involved.  Many investors say they invest as much in the people as they do in the business. Share some information about people’s roles, experience and passions.
• Financials.  Provide details about sales, costs, break-even points and where investment will come from. If you’re looking for people to invest, you should include information about likely returns. If you’re looking for ways to finance your business, crowdfunding , alternative finance and government funding are a good place to start.

Some business plans will include other sections, like a SWOT analysis or a full marketing plan. You might find these useful for your business, so feel free to include them too if you wish.

How to use your business plan

Many business owners invest time in producing a business plan and then never look at it again.

While it’s valuable to get your ideas clarified and to test your thinking before you launch your business, it’s even better if it’s embedded into your day-to-day business too.

As O’Toole says: “Business planning is a continuous process – from the initial start up of any business to stage two of developing and growth of existing sales and developing new income streams.

“As established businesses mature and diversify, business planning continues to play a fundamental role in ensuring that the company’s long-term strategies are being met.”

Here are some ways your business plan can work for you:

• Take the sales, cash flow and expense predictions and measure them against your actual figures. This helps you spot whether you’re on track and if things need to be revised.
• Revisit your goals every month to see how you’re progressing.
• Keep updating it to include customer input and quotes. Real feedback is essential for keeping a business on track.
• Revisit it once a year to see if changes to the market, technology or competition has had an impact. Businesses need to continue to evolve to survive in the longer term.

Where to get help with your business plan

Sometimes you’ll need additional information to pull together your plan. You could:

• Speak to your accountant. They don’t just help you with financials or accounting software , they can also offer advice about planning your business.
• Talk to your bank . Many have small business experts who can help.
• Use business planning templates. Our free, easy-to-follow Word template will help to make the process easier.

Editor’s note: This article was first published in October 2017 and has been updated for relevance.

Business plan template

Thinking of starting a business or looking for investment but need help putting a plan together? Get our free, easy-to-use business plan template.

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Comments (2)

Business plans should be flexible and imbibe SMART goals for both short term and long term. Objective oriented plans would fetch results in stipulated time period.

I’ve started a transportation company I’m growing and would need some help with a small loan /grant as I would need a bigger van etc is this something I would be able to get help with?

Sure, there are loans and grants you could apply for. We cover some of them in this article: https://www.sage.com/en-gb/blog/government-grants-for-small-businesses/

Thanks, Stacey

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How To Start a Dropshipping Business: A Detailed Step-by-Step Guide (2024)

Starting a dropshipping business is an excellent way to dip your toes into the world of entrepreneurship . It allows you to sell products without needing to stock inventory or make upfront payments. And with dedication and hard work, this business model can lead to a steady income over time.

This complete dropshipping guide details essential business and financial steps to consider. Some steps are necessary from the beginning, while others are beneficial. Considering them early on will save you time and headaches down the road.

What is a dropshipping business?

Dropshipping is a business structure that allows you to operate your store without holding any inventory. Once you’ve made a sale, your supplier will ship the products from their warehouse directly to your customer’s doorstep. This eliminates the hassle of storing, packaging, and shipping products yourself.

How does the dropshipping business model work?

Dropshipping is an order fulfillment model that enables online stores to sell products to consumers without holding any inventory. When a customer buys a product from their catalog, a third-party supplier ships it directly to them.

The selling process involves setting a retail price higher than the wholesale price you pay the supplier, with the difference being your profit. There’s no need to handle products directly or invest in inventory.

To start selling, you only need to set up an account with a supplier.

To find suppliers for your dropshipping business, you have three main options:

• Supplier databases. Platforms like Alibaba or AliExpress enable you to find a diverse array of suppliers.
• Integrated supplier directories. Tools such as DSers directly integrate with your store’s back end, simplifying the process of browsing and selecting suppliers.
• Print-on-demand services. Services like Printify give you access to a network of print-on-demand suppliers who can customize products with your designs upon order.

The simplest dropshipping method for Shopify store owners is using DSers. It lets you find and add millions of AliExpress products to your store with one click.

In dropshipping, your tasks include developing your website and brand, selecting and promoting your products, handling shipping costs, and setting prices that ensure profitability.

What are the advantages of dropshipping?

A dropshipping business is a profitable business model where you only pay for the products that you sell. This means you’re not burdened with the cost of creating products or carrying inventory. As such, the startup costs of running a dropshipping store are quite low compared to those that come with operating a standard ecommerce business.

In this business model, you also avoid the costs of maintaining unsold inventory and employing staff for packaging and shipping products. While it will require daily work when it comes to processing orders, most of the order processing steps are automated and only require the click of a button. The dropshipping business opportunities are endless—you just need to take the first step.

How to start a dropshipping business: The 8-step dropshipping business plan

1. choose a dropshipping business idea.

The first step in launching a dropshipping business is comprehensive market research. It’s akin to evaluating different aspects like location, competition, and market trends when opening a retail store. Your aim should be to explore a niche that not only interests you but also holds profitability potential.

Products catering to specific niches often attract a dedicated and passionate customer base. As such, it’s easier to sell them and generate higher profit margins for your dropshipping business.

Examples of niche dropshipping products include:

• Handcrafted leather wallets for minimalist enthusiasts
• Organic skin care products for eco-conscious consumers
• Customized meal prep containers for health-conscious individuals
• Sustainable fashion accessories for trendsetting shoppers

By focusing on niche and trending items, you can catch the eye of potential customers and gain momentum without facing off against larger, more established ecommerce brands.

There are a few tools and tactics you can use to validate your dropshipping business ideas:

• Google Trends . Google Trends is a valuable tool for learning about product trends. It provides insights into whether an item is trending upward or downward over time, as well as the seasons when it tends to be most popular. Although you don’t see the search volume for a specific term, you get enough data to conduct keyword analysis and assess the product’s popularity in search.
• DSers order volume. DSers lets you search for products based on order volume. A higher order volume indicates a stronger demand and potential success for your business idea.
• Keywords Everywhere . Keywords Everywhere reveals monthly search counts and competition level for your products. This data helps you understand your dropshipping idea’s popularity and can spark ideas for future products.

2. Do competitor research

Once you have decided what to sell, you now need to educate yourself on who your competitors are, what they sell, and how they sell their products. Market research is an essential part of this step, and there are many ways to do it.

• Run a Google search. Search engines are a clear starting point for mapping out your competition. Enter key terms related to your niche to see who you’re up against. For example, if you’re selling eco-friendly water bottles, enter terms like “sustainable water bottles” into Google. Examine the companies that appear in the search results and study how they promote their products. If targeting a specific geographical area, utilize tools such as Ahrefs or Semrush to get keyword data related to those regions.
• Browse social media. Look for Facebook ads related to what you sell and note the top brands. See how they talk to customers, how they design their pages, and how much people interact with them. You might even follow them to keep up with their posts. Use what you learn to make your business more visible and improve your approach to social media marketing.
• Use competitor spy tools. Online tools like Similarweb are invaluable for tracking your competitors’ online presence. Use them to get a detailed snapshot of competitor website information, including their visitor counts, main traffic sources, social media engagement, and main competitors. This information can help you strategize and position your business more effectively.

Study your main competitors thoroughly: website, pricing, marketing strategies, product details, and reputation. Organize this research in a spreadsheet for quick reference when deciding on your store’s strategy.

3. Find a dropshipping supplier

Suppliers are the backbone of a successful dropshipping business. They ensure the store has a steady supply of products, handle shipping directly to customers, and maintain the quality and availability of merchandise.

Ecommerce platforms like Shopify make it easy to find dropshipping suppliers . Once you’ve created an online store, install the DSers app to find potential suppliers for your business.

DSers is a marketplace for dropshipping suppliers to showcase their products. It features a wide range of items, including toys, electronics, and women’s apparel. You can add any product to your store with one click and benefit from automated order forwarding to suppliers. Best of all, getting started is completely free.

The DSers app connects to AliExpress to give you easy access to a wide range of products for your store. On the DSers product page, you can find detailed information on product quality and shipping times, or learn more about a supplier.

Clicking on a supplier’s link redirects you to their AliExpress page. There, you can find customer reviews and their top-selling items.

On the DSers suppliers page, remember to select products with ePacket shipping if your supplier is based in China.

ePacket is an efficient and affordable shipping method from China to countries like the US, the UK, and Canada. Instead of waiting months, your customers can receive their packages in up to two weeks, for just a few dollars.

4. Set up your dropshipping store 

There are a few components to building a dropshipping business store the right way:

Domain name

Your domain name is especially important if you’re building a long-term brand. You can use a free business name generator to simplify the process. Always opt for a .com domain , regardless of your niche. If you want your niche to be a keyword in your new domain, make sure it’s broad—like “beauty,” “jewelry,” or “fashion”—rather than specific. This way, you won’t need to change your domain name down the road.

Ecommerce platform

Shopify is the most comprehensive ecommerce platform on the market. With new features, tools, resources, and apps being added regularly, you’ll find it easy to run a business on the platform. Plus, Shopify connects with print-on-demand services, should you choose to diversify your dropshipping approach

As a Shopify user, you get access to free themes . One of these is Minimal Motion . It offers a clean and user-friendly interface, perfect for those just starting out with store design. As your store begins to generate revenue, consider upgrading to a premium theme to further improve your store’s appearance.

Dropshipping app

To manage your inventory and place orders efficiently, you’ll need a reliable dropshipping app. DSers is a solid choice that allows you to explore products in a variety of popular niches. When starting out, it’s advisable to focus on 10 to 25 products, as writing descriptions for a larger inventory can become overwhelming. If you have questions or need guidance, you can turn to the DSers blog, its social media pages, or Shopify’s own support line.

5. Decide on a business structure

If you’re dedicated to your project, consider creating an official business entity. Though we aren’t legal advisers and cannot give legal guidance, we can outline three common types of business structures for you:

Sole proprietorship

This is the simplest form of business structure, but it lacks personal liability protection. If your business is sued, your personal assets could also be at risk. The filing requirements are minimal, and you just include your business’s income on your personal tax returns. There are no additional state or federal business filings required.

Limited liability company (LLC)

Most dropshipping companies prefer forming an LLC. This structure better protects your personal assets by recognizing your business as a separate legal entity. Although the liability protection isn’t perfect, it’s stronger than that of a sole proprietorship. You’ll need to meet more filing requirements and pay both incorporation and ongoing fees.

Related:   Sole proprietorship vs. LLC: A Breakdown

C corporation

Most major corporations are established as C corporations, which offer the greatest liability protection when set up correctly. However, they are more expensive to start and C corps face double taxation, where the business’s income is taxed at both the corporate level and again as it is distributed to shareholders.

You’ll want to consult with a lawyer before making any incorporation decisions. These professionals know the ins and outs of each structure and can help you choose the ideal one for your dropshipping business.

Request an EIN number

You’ll need an employer identification number (EIN) number, which the IRS requires every business to have one. It works like a Social Security number, but for your business. You need it to file taxes, sign up for wholesale dropshipping accounts, open a bank account, and do other business tasks.

The good news is, getting an EIN number is simple and doesn’t cost anything. You can apply for it online .

6. Market your dropshipping business

You’ve selected your products and set up your store. The next step is to market your dropshipping business.

This is a crucial component of any dropshipping business plan. For those just starting out and likely on a tight budget, it’s worth noting that effective marketing doesn’t have to be expensive. Here are some methods to explore:

Facebook and Google ads

Facebook ads tap into the impulse to buy, are scalable, and can highlight your products well. Google Shopping Ads allow targeting of long-tail keywords to attract ready-to-purchase shoppers. You can test both platforms to see which advertising method leads to better results for your business.

Influencer marketing

If you’re just starting and have a tight budget, influencer marketing is a cost-effective way to reach your audience. People often trust influencers more than traditional ads. Instead of paying influencers a fixed amount, consider a deal where they earn for every sale they bring. This method is more affordable for you and rewarding for them.

Content creation

To keep visitors coming to your store, start creating content. Launch a blog focused on your niche. Aim to both entertain and educate your audience. Other options include making YouTube videos, creating infographics, or starting a podcast to raise awareness of your brand.

Community engagement

Join groups passionate about your niche. Start discussions with potential customers on Reddit, Facebook groups, or forums. Focus on being helpful, not just selling. This approach builds trust and makes people more likely to buy from your brand.

Email marketing

Email marketing is a powerful tool for building long-lasting relationships with customers and driving repeat purchases. Consider sending personalized content, such as product recommendations, promotional offers, and informative newsletters, to increase engagement and boost sales.Shopify Inbox is available at no cost for managing these communications in your Shopify store.

7. Streamline your finances

Starting your own dropshipping business comes with a crucial financial management step: separating personal and business finances. Mixing these can lead to confusion, complicate accounting, risk personal assets, and attract IRS scrutiny during audits.

Creating distinct accounts for your business is the best practice. This includes:

Business checking account

This account should handle all your business transactions. All business income goes in, and expenses come out, streamlining your accounting processes.

Business credit card

Opt for a credit card dedicated to business expenses, especially useful for buying dropshipping inventory. Choosing a rewards card can earn you significant benefits from frequent supplier purchases.

Sales tax collection

You need to collect sales tax if your state requires it and you sell to someone in your state. For sales outside your state, current laws may exempt you from collection, but keep an eye on potential legal changes.

If collecting sales tax is necessary, register with your state’s department of commerce as an online retailer to understand your obligations.

Local business licenses

Many places require a business license, which might vary for home-based businesses . Research your local requirements to ensure compliance.

Incorporating outside the United States

For international merchants aiming to enter the US market, setting up a business in the United States is possible but requires understanding and fulfilling specific legal requirements. This might involve traveling to the US, partnering with someone in the country, or hiring an agency to manage the setup.

8. Test and optimize

Once you’ve spent time building your website, brand, and marketing, you can start to analyze the results of your hard work. You may find that certain marketing activities are hugely successful, while others not as much. You can also compare your prices to that of your competition and see if you could make things more competitive.

You can use tools like Google Search Console or Google Analytics to evaluate your online traffic and make sure it’s increasing, not decreasing. If you’re using third-party tools for email marketing or social media reporting, set up weekly or monthly automatic reports to remind you to analyze this information regularly. Even a quick snapshot of data from a tool can be enough to decide if a campaign is working or not.

Overall, the most important part of a successful online ecommerce store is to test and optimize. This ensures that your website will not fall behind best practices and keeps you ahead of your competitors.

Where to find dropshipping businesses for sale?

If you don’t want to build a Shopify dropshipping business from scratch, you can easily find a dropshipping business for sale on Flippa .

Flippa is a marketplace of websites for both people looking to invest in a fully functioning business and those who want to skip the building phase and start directly with marketing. Flippa has a great collection of online stores, including dropshipping ecommerce businesses, of varying price ranges and niches that you can choose from depending on your budget and interests.

So, if you’re looking for a dropshipping business for sale, Flippa has got you covered.

Factors to consider when buying a dropshipping store

When choosing to buy a store, take into account the cost, the design, the age of the website, how much money it has made, the popularity of the niche, penalizations, and the type of business.

Type of business

If you plan on buying a dropshipping business, you need to select the ecommerce filter on Flippa. Other options may require you to buy and hold inventory, which can cost more money over the long term, especially in unsold inventory.

Do you have a budget that covers not just the cost of a premade store but also allows for its growth? If so, you need to work out what your budget looks like. What price are you willing to pay for a business? Is there room to negotiate a better deal?

Does the store look like it was designed by a professional or by a new entrepreneur who’s looking to make a quick sale? If the store design looks professional, clean, and easy to navigate, it may be worth pursuing.

Age of website

On Flippa, you can choose an ecommerce business based on its age. An older website will typically have a better chance of ranking online than a newer one.

Sometimes you’ll see that a store made a lot of money. However, a question you need to ask is, “How much money was it making at its peak, and how much is it making now?” This will help you understand if the dropshipping business is growing or dying.

Niche popularity

You probably don’t want to be selling fidget spinners anymore, or any trending product. However, if a store is within an evergreen niche and sells trending products , it could work out well. Broad topics (beauty) tend to perform better than stores focused on a specific type of product (makeup brushes).

Penalizations

Before buying a dropshipping business, you need to double check that the website hasn’t been penalized (removed from Google’s search index). You can use a tool like Is My Website Penalized to determine if a website has been penalized by Google. If a store has been penalized it may be harder for you to rank in search engines. You also want to ask, “Were any of the business’s Facebook ads banned?”

Getting started with dropshipping

Whether you’re new or seasoned in business, dropshipping with Shopify is your low-risk gateway to online sales. Sign up, choose your plan, add DSers, and select your niche products. Customize, import, and sell—your ecommerce journey begins now.

How to start dropshipping FAQ

What are the benefits of starting a dropshipping business.

• Easy to start
• Wide selection of items to sell
• Flexible location
• Highly scalable

How do I start a dropshipping business?

• Choose a dropshipping business idea.
• Research your competitors.
• Find a reliable dropshipping supplier.
• Establish your online store.
• Market your dropshipping business.
• Assess and optimize your store.

Do I need to incorporate a dropshipping business?

Incorporating a dropshipping business has clear benefits. It separates your personal and business finances, protecting your money if the business runs into debt. Additionally, incorporating gets you an employer identification number (EIN), which makes it easier to file and pay sales tax. So if you’re planning for long-term success, think about incorporating. It’s a good way to manage your finances and taxes.

Is dropshipping really profitable?

Dropshipping can be a highly lucrative business, as it allows you to avoid the substantial overhead associated with traditional wholesaling. You bypass the costs of bulk purchases, storage, and shipping logistics—and can earn a good profit margin with the right suppliers.

Many dropshippers earn up to $50,000 per year as a side hustle. To hit such figures, you’ll need to pick the right suppliers and build a strong brand.

Keep in mind that dropshipping can be highly competitive. Because the barrier to entry is low, you may encounter numerous brands offering similar products at competitive prices.

Is dropshipping worth it?

The value of dropshipping depends on the time and money you invest in it. If you dedicate time to growing your online business, you are more likely to reap the rewards. Setting up a dropshipping business involves multiple steps: You need to set up a store, import products, decide on your pricing strategy, and start selling. All of this requires effort and commitment for your business to be successful.

Want to learn more?

• How to Start a Photography Business
• Bootstrapping a Business: 10 Tips to Help You Succeed
• Seven Dropshipping Secrets Discovered on TikTok [VIDEO]
• 9 Best Free Online Courses You Can Start Today

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Superdry wins reprieve as M&G drops challenge to rescue plan

The struggling fashion chain has been boosted by news that the landlord of its flagship store will not formally seek to block a restructuring proposal, Sky News understands.

City editor @MarkKleinmanSky

Friday 31 May 2024 20:20, UK

Superdry, the struggling London-listed fashion chain, has received a reprieve after the owner of its flagship store towed back from a challenge to its rescue plan.

Sky News understands that M&G, the asset manager which had been contemplating a formal objection to Superdry's restructuring plan, has decided not to proceed with the move.

M&G owns Superdry's Oxford Street store and had engaged lawyers from Hogan Lovells, the City law firm, to scrutinise the proposals.

City sources said that British Land, which owns a handful of Superdry stores, would abstain on the restructuring plan, but had also opted against a formal challenge.

Read more from business: Fancy dress brand Smiffys on the brink House prices 'rebound' Britons put record amounts into ISAs

The rescue deal, which will incorporate steep rent cuts for a number of landlords but avoid store closures in the UK, will be accompanied by a multimillion pound funding injection from founder Julian Dunkerton.

The property groups are believed to have been alarmed by the absence of their participation in a mechanism to allow creditors to benefit from any future recovery in the retailer's performance.

In a statement, a spokesman for the retailer said: "We continue to engage with our landlords regarding our proposed Restructuring Plan, which is vital for the future of the business."

Shares in Superdry were trading in London at jut 4.45p, giving the company a market capitalisation of less than £40m.

If the restructuring plan is successful, its shares will be delisted.

M&G and British Land declined to comment.

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Zoom pricing starts at $13.32 per user, per month for Zoom Workplace, which includes Zoom Meetings of up to 30 hours in length, Team Chat, and 5GB of cloud storage. Zoom also offers a free forever plan, allowing users to host 40-minute video calls with fewer than 100 people.

Zoom has come a long way since its days as your go-to virtual hangout during the pandemic. The company has developed a wide range of business-facing tools that can help you stay in touch with your team, including VoIP service, webinar functionality, and contact center platform. You can also grab a quick VoIP service quote if you’re in the market right now.

Whether you’re here to get started with Zoom, find a new plan that works for you, or are looking to switch to Zoom from another video conferencing provider, we’ve got you covered. Keep scrolling for more information about all of Zoom’s business offerings, and check out the Zoom Workplace pricing in the table below:

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In addition to Zoom pricing plans, Zoom offers a free Basic plan for individuals that allows up to 100 participants and 40 minutes of meeting time per call. This plan includes many of the same features as the paid plans, such as virtual backgrounds, breakout rooms, and improved security. However, it does not include streaming, reporting, or live support.

Zoom does have a number of paid plans which may be more suitable for your needs, including the Zoom Workplace Pro plan, which costs $13.32   per month per license , and the Business plan, which costs $18.32   per month per license .

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The main video chat screen for Zoom Image: Tech.co testing

The Zoom we all know and love used to be called Zoom Meetings – the video conferencing software that facilitates everything from business meetings to socially distanced social gatherings. However, Zoom has now consolidated its Meetings, Team Chat, Whiteboard, and Zoom Phone products into a single package called Zoom Workplace .

All Zoom Workplace paid plans support 1080p video and HD voice , offer TLS encryption for security, and provide a wide range of features, like virtual backgrounds , breakout rooms , and screen sharing , among other features previously included on Zoom Meetings that have now been carried over to Zoom Workplace.

Zoom Workplace comes in five different pricing plans: Basic , Pro , Business , Business Plus, and Enterprise . It’s worth noting that these plans all offer a discount if you pay annually – these are the prices we’ve included below. If you don’t want to commit to paying annually, you can expect to pay slightly more per month.

Zoom Workplace Basic costs nothing for individual users hosting 40-minute meetings with fewer than 100 people and includes Zoom’s Team Chat function. Zoom Workplace Pro is $13.32 per license, per month and includes Zoom Meetings, Team Chat, and 5GB of Cloud Storage. Zoom Workplace Business costs $18.32 per license, per month and will let you host meetings with up to 300 attendees, while the more expensive Zoom Workplace Business Plus plan costs $22.49 per license, per month and includes Zoom’s VoIP phone solution with unlimited regional calls. Both the Business and Business Plus plans come with a ten-user minimum , while Basic and Pro do not.

The Zoom Workplace Enterprise plan has no public pricing, a 500-attendee limit on meetings, and a slightly more expansive VoIP phone plan.

You can also purchase Zoom Phone as a standalone VoIP plan, starting from $10 per user, per month for the US & Canada Metered plan .

Check out our web conferencing comparison tool to compare deals tailored to your business’s needs or find out how Zoom Phone VoIP plans compare to other business phone systems with our VoIP comparison page .

Zoom Workplace Basic – Free

If you’ve used Zoom before, you’re likely familiar with the Basic plan, as it’s the free plan offered to everyone. Our research found it to be the best free conference call service on the market too, even beating massive names like RingCentral and Google Meet to the punch. This is largely due to the fact that Zoom is incredibly easy to use, while still offering robust business-facing offers.

Zoom Workplace Basic offers users the ability to host unlimited meetings for up to 100 participants . All meetings are capped at 40 minutes, however, and only one license is allowed per account. Zoom used to allow meetings with more than three participants to run up to 30 hours, but this functionality was reigned in as of May 2022 .

Zoom Workplace Basic also offers a limited support option in the form of a help center. There’s also a Team Chat function for collaboration and file sharing, as well as three editable whiteboards and a little bit of storage so you can keep your work for next time.

Despite being free, this plan still gives you access to all the Zoom features you love, including virtual backgrounds and breakout rooms, the latter of which are key tools for running great team workshops. This makes it one of the more robust free plans available on the market today, which is why we consider it one of the best web conferencing platforms you can use.

What’s New: As of our December 2023 update, Zoom Workplace Basic has added a few new features: Clips Basic , which allows short-form video recording and editing (capped at five videos with a two-minute maximum length), and Notes , which lets users share editable documents within Zoom (great for internal business communication).

The Zoom whiteboard tool in action Image: Tech.co testing

Find the best web conferencing provider for your specific business needs, with our free quote comparison tool.

Zoom Workplace Pro – $13.32 per user, per month

While the Zoom Workplace Basic plan is decidedly robust for a free plan, it does have some notable limitations, like time caps and limited support options. With Zoom Workplace Pro, you’ll be able to get a little more flexibility for your team for only $13.32 per license, per month.

Zoom Workplace Pro comes with all the features listed above while allowing for 100 meeting participants and up to 9 licenses . You’ll also essentially get rid of the meeting cap, moving it to a full 30 hours , which no reasonable person would ever need to exceed. But don’t worry if you have a tendency to host really long meetings – you’ll get 5GB of cloud storage per license for storing meeting recordings. Additionally, you get access to live chat support options, so you can actually get any help you need quickly and effectively.

Zoom Workplace Pro adds some features that could be beneficial to your business as well, including analytical reporting and social media streaming to Facebook Live and YouTube. You’ll even unlock interoperability with Skype for Business , in the event that your team is transitioning from another platform.

Zoom Workplace Pro pricing is right in line with the industry, with other options like RingCentral ($11.99 per user, per month) and GoTo Meeting ($12 per user, per month) costing almost exactly the same. Google Meet ($6 per user, per month) and Microsoft Teams ($4 per user, per month), on the other hand, are notably more affordable, but you’ll want to be sure that you’re up for all the additional bloat that comes with those platforms.

What’s New: As of our December 2023 update, Zoom Workplace Pro has added the same new Clips and Notes features that Basic has added, but with one upgrade. Pro users will get Clips Plus, for unlimited shortform video creation, with no cap on video amount or length.

Zoom Workplace Business – $18.32 per user, per month

If you’re hoping to find a video conferencing plan that caters to medium and large-sized businesses, Zoom Workplace Business has got you covered. This plan offers more features, more participants, and more licenses, all at the low cost of $18.32 per license, per month , billed annually.

Zoom Workplace Business comes with all the features we’ve already mentioned while allowing for up to 300 participants and up to 99 licenses . Naturally, you’re still without the meeting time cap, and you’ll get live chat support, as well as an added phone support option and a service ticket tool for even more comprehensive customer service.

As you’d expect, you also get more business-focused features when you shell out the extra money for the Zoom Workplace Business plan, such as single sign-on , an admin portal , and company branding features. It also expands on features that Pro offers: For example, Pro offers three editable whiteboards, but Business removes the cap entirely, allowing for unlimited whiteboard use. The extra capability makes this a great plan for a remote or hybrid company, in which team-building workshops must function just as well on a screen as in-person.

What’s New: As of our December 2023 update, Zoom Workplace has raised its price for Business, making it $18.32 per month per host, up from $16.66 per month. It also added the same Clips Plus  and Notes features that Pro added.

Zoom Workplace Business Plus – $22.49 per user, per month

Zoom Workplace Business Plus is the first Zoom Workplace plan that includes the Zoom Phone VoIP system. There’s also caption translation on this plan, plus a single sign-on feature and workspace reservations for $22.49 per license, per month , billed annually. The storage space for your meeting recordings is doubled to 10GB too.

Zoom Phone includes unlimited internal calling , native apps for Windows and macOS, 3-way ad hoc conference calls , call recording, toll-free numbers, and specified call blocking , among other useful business phone functions. There’s also 24/7 global customer care on the Business Plus fan for Zoom Phone users.

What’s New: As of our December 2023 update, Zoom Workplace has raised its price for Business Plus to cost $22.49 per month per host, up from $20.83 per month. Business Plus added Clips Plus and Notes .

If you’re interested in purchasing Zoom Phone as a standalone product, check out our Zoom Phone review .

Zoom Workplace Enterprise – Custom quote

Globally-renowned companies need enterprise-level video conferencing solutions, and that’s where Zoom Workplace Enterprise comes in. There’s no public pricing available for this plan, but it does require you to sign up for at least 250 licenses.

As you can imagine, Zoom Workplace Enterprise comes with all the features listed above, while allowing for 500 meeting participants  and unlimited cloud storage . Plus, you get access to the same live chat and phone support from the Business and Business Plus plans, so you’ll have help on-hand whenever you need it.

Zoom Workplace Enterprise is the second Zoom plan with Zoom Phone included, but it’s a bit more advanced than what you get on the Business Plus plan. Features include metered outbound calls, call queues & IVR, and a Common Area Phone .

Outside of the increased meeting participant limit, Zoom Workplace Enterprise also offers some other enticing features for enterprise-level organizations. For one, you’ll get a dedicated Customer Success Manager to help you improve your communication across your business. Additionally, you’ll get advanced reporting tools in the form of executive business reviews  to truly understand how Zoom improves your business.

How Do I Switch to Zoom?

If you’re unhappy with your current video conferencing platform, the process for getting started with Zoom is pretty straightforward. Switching is the easy part, but it’s important to consider some questions before making the transition from another video conferencing platform to Zoom.

For starters, understanding how much Zoom costs is vital. Compared to competitors, it’s a relatively conservative price, with Zoom landing right in the middle of the $10-15 range for the majority of other video conferencing tools at $13.32 per month. If you’re looking for a full-on business suite, though, Zoom isn’t going to cut it. You’ll likely do better with Google Meet or Microsoft Teams in that case, which come with vast functionality and much lower prices, starting at $6 per month.

As far as how good Zoom is to the best video conferencing tools , our research found that GoTo Meeting is the best solution, with excellent audio and video quality and plenty of features. Still, Zoom is generally more helpful for beginners, given the easy-to-use interface and helpful customer support.

Zoom Rooms is the specifically business-facing version of the Zoom video chat function. This software-based video conferencing system is compatible with third-party hardware for cameras, speakers, and monitors, allowing for a flexible transition with your existing video conferencing setup.

Every plan below supports 720p HD video and audio quality , 1,000 meeting participants, and 10,000 webinar viewers , and allows you to join, book, and schedule meetings with a single click . You’ll be able to integrate meetings with Google Calendar and Microsoft Outlook, and meetings can be recorded and transcribed in real time. You can even use whiteboard and annotation features, as long as you have a touch-enabled display.

Rather than different plans with increasing features, Zoom Rooms offers all features with every plan, with licenses available for each.

Zoom Rooms Licenses

A single Zoom Rooms license will cost you $49 per month per room . You’ll be able to purchase up to 49 rooms at that price, giving you access to all the features listed above. If you pay the annual fee, it works out to $41.58 per month per room .

Zoom Rooms Enterprise

In the event that you need to purchase more than 49 licenses for Zoom Rooms, the Zoom Rooms Enterprise plan can help. You’ll have to contact Zoom’s sales department in order to be assisted with this, so that they can guide you through the large-scale deployment of an enterprise-level solution like this one.

If you aren’t sure about whether or not these Zoom pricing plans are the right fit for your business, Zoom Rooms does come with a 30-day free trial , which gives you access to all the features listed above, at no charge to your business.

If you’re just looking for a VoIP system and don’t need the other features included in the Zoom Workplace Business Plus and Enterprise plans, then you can buy Zoom Phone as a standalone product .

Zoom Phone offers you the ability to consistently monitor call quality and manage user accounts with a centralized management system, as well as integrate with popular software including Salesforce , Microsoft Office 365, and Google’s G-Suite.

When it comes to VoIP security , Zoom offers 256-bit TLS encryption for all users, but there are instructions here that will show you how to enable end-to-end encryption for Zoom Phone. If you’re looking for your calls to be as secure as possible though, we found that most VoIP competitors to Zoom offer superior security features, such as multi-factor authentication.

In our VoIP research, Zoom Phone scored quite highly overall, netting a score of 4.4/5 in our testing , the third highest score in our roundup of the  best VoIP service providers . In fact, given the low price of plans and the robust nature of the service, our research found that Zoom Phone is the best value option across the VoIP industry.

Zoom Phone comes in three different pricing plans that are pretty self-explanatory: US & Canada Metered , US & Canada Unlimited , and Pro Global Select .

The best part of the Zoom Phone pricing plan breakup is that each plan still offers all the features you’ll find with the others. This means, no matter what you pay, you’ll get industry-leading HD call quality , voicemail with transcription , and access to native mobile apps for Android and iOS , among other things. The only tangible difference between each plan is where and how often you’ll be able to call.

If you’re interested in getting started with Zoom Phone today, check out our handy comparison tool to get a Zoom VoIP quote right now, as well as custom quotes from top competitors.

Alternatively, check out our full guide to VoIP costs and pricing.

US & Canada Metered

With the US & Canada Metered plan, you’ll be able to call – you guessed it – people based in the US and Canada, with no international capabilities. This plan isn’t unlimited, either – it provides metered calling to the US and Canada, so make sure you don’t need the extra minutes before you commit to this one.

The US & Canada Metered plan will cost you $10 per month per user .

US & Canada Unlimited

Again, as you can likely determine from the name, the US & Canada Unlimited plan allows users to call within the US and Canada without a metered rate. This means no international calls, but also no worrying about how long you’re calling, which might be worth the additional $5 per month. You’ll even have the option to add international calling to 18+ countries for only $10 more per month.

The US & Canada Unlimited plan will cost you $15 per month per user .

Pro Global Select

If you’re running an international business with locations across multiple countries, the Pro Global Select plan might be the way to go. It offers unlimited domestic calling within 40+ different countries and territories. You’ll also get a direct dial number for each license, making calls even easier for everyone. This plan also allows you access to the international add-on, opening up outbound international calling to 19 countries for only $10 more per month.

The Pro Global Select plan will cost you $20 per month per user .

Zoom Webinars Pricing

If you find yourself using your Zoom account for all-hands meetings, employee onboarding, product announcements, or other large virtual events more often than actual video calls, it might be worth looking into Zoom Webinars . This product is specifically catered to webinars so that you can enjoy specific features designed to make these larger events easier and more engaging.

Zoom Video Webinar allows for up to 100 live participants , which can include panelists or just engaged viewers, and up to 50,000 webinar attendees . You’ll be able to live stream to Facebook Live and YouTube Live, and it even integrates with customer service platforms. You can also record webinars (with auto-generated transcription) to save for later or provide in online forums.

Zoom Video Webinars is also a helpful tool for management, as it provides analytic reporting tools and event assistance to make sure you run the best webinar every single time. Zoom even offers online event consultations , so you can improve throughout your webinar journey.

Zoom Webinar License Prices

Rather than offering specific pricing plans with differing features, Zoom Video Webinar offers all its features across the board, with the license price being based on a maximum number of attendees for your webinars. Here is the breakdown of the prices:

• 500 attendees: $79 per month per license ($57.50 on annual plan)
• 1,000 attendees: $340 per month per license ($283.33 on annual plan)
• 3,000 attendees: $990 per month per license ($825 on annual plan)
• 5,000 attendees: $2,490 per month per license ($2.075 on annual plan)
• 10,000 attendees: $6,490 per month per license ($5,408.33 on annual plan)

For more than 10,000 attendees, you’ll have to contact Zoom’s sales department to get a catered price for an enterprise-level solution.

Some websites just throw aggregated information in an article and hope that readers don’t need any more data to make the right decision. At Tech.co, though, we know that knowledge is power, which is why we’ve dedicated hours of our time to do in-depth research on business software.

For web conferencing platforms like Zoom, we took a lot of criteria into consideration when it came to rating and ranking providers, including features, pricing, ease of use, third party integrations, and help and support options .

If you want to learn more about how we evaluate business software, check out our research guide to peak behind the curtain of our process.

Since our last update...

Zoom is just like any popular business software, in that it is frequently updated in response to customer feedback. This means that when you update your software, you’re getting access to a myriad of new features, many of which dramatically improve the experience for you and your team.

In an August 2023 update , Zoom has added a unique feature that could help protect your team’s delicate sensibilities. The feature is a profanity filter for transcription , which will allow users to “report and suggest words that they think should be added to the profanity list,” so they don’t show up in meeting transcripts going forward.

Zoom Pricing Alternatives

While we believe that Zoom is one of the best web conferencing solutions on the market today, that doesn’t mean it’s the only one. Here are how top competitors like Webex , RingCentral, and many others compare from a pricing perspective — view the table below to get a clear picture of what your options are.

If you’ve been comfortable with taking advantage of the free Zoom plan for a while now, the thought of paying for it might seem a bit foolish. Even with Zoom pricing being competitive, moving on from a free plan can be daunting.

However, the reality – particularly for businesses looking to get ahead – is that   Zoom’s wide range of paid options can truly improve the productivity and efficiency of your company . From advanced features to improved reporting, Zoom’s paid offerings are designed to make business communication easy and reliable across the board.

If you aren’t feeling it, though, there are plenty of Zoom alternatives to choose from.

The home dashboard for Zoom Image: Tech.co testing

Who Can Benefit from Zoom?

With the pandemic in full force, the reality is that pretty much everyone can benefit from using Zoom . Need to host a work meeting? Zoom has got you covered. Want to enjoy the holidays while socially distancing from family and friends? Zoom is on the case. Require virtual events for pretty much any reason? That’s what Zoom is built for!

Not everyone needs to pay for Zoom, though. In this instance, the businesses that benefit the most from Zoom’s paid offerings are larger companies with lots of meetings . In most cases, smaller businesses with few meetings can get by with the Zoom Basic plan, which is free, and you won’t notice a big difference. However, if you’re consistently on calls, trying to manage multiple teams, and require a bit more control over your video conferencing, paying a little bit per month could make a big difference for you, enabling more effective video meetings .

Best Features for Value

If you are considering paying for Zoom, you probably want to know exactly what you’re getting. Checking out the product plan descriptions above can help, but the main reason you would pay for Zoom is to eliminate meeting limits , add sharing features for social channels , and improve your reporting capabilities (if you even need them).

Zoom Security

You may have heard that Zoom security isn’t very good. After all, during the height of the pandemic, Zoom was experiencing some serious problems due to the sudden influx of users. Breached meetings, stolen data, and “Zoom-bombing” became all too common, resulting in some serious consequences .

Fortunately, those days are mostly behind them. Zoom has since established end-to-end encryption as a standard for all users, including the free ones, making it one of the more secure web conferencing platforms on the market today. Additionally, the company has generally owned its previous mistakes and been transparent about efforts to secure users’ data. Simply put, don’t let old news ruin a great video conferencing platform for you.

How to Get & Set Up Zoom

Perhaps the most important point to understand about Zoom setup, particularly compared to other popular options like Google Meet , is that you will be required to download it before use. Whether it be the mobile app or the desktop platform, you’ll need to download Zoom ahead of time if you want to take part in a meeting.

Once you’ve done that though, conference calls should be smooth sailing, as Zoom is famous for its intuitive interface and general ease of use. To simply set up a meeting, all you have to do is create an account , launch a meeting , and invite guests , either by sending them a link or relaying a meeting code. For security purposes, you’ll have to allow guests in from the waiting room, and then you’ll be ready to go.

Next Steps for Zoom

If you feel like one or more of these Zoom products is going to be a good fit for your business, that’s great news! We’d be happy to help you get set up with a video conferencing solution, as we’ve done with thousands of businesses in the past. Simply use our web conferencing price comparison form , and you’ll be on your way to better communication for your team.

What's the difference between Zoom Rooms and Meetings?

Is zoom secure, who is a licensed zoom user and who is a participant, is zoom better than skype.

Saying all this, one option we think is better than both Zoom and Skype is GoTo Meeting. This little-known competitor could be your secret to success. Find out more in our Zoom vs GoTo Meeting review .

Find the best web conferencing provider for your specific business needs.

If you click on, sign up to a service through, or make a purchase through the links on our site, or use our quotes tool to receive custom pricing for your business needs, we may earn a referral fee from the supplier(s) of the technology you’re interested in. This helps Tech.co to provide free information and reviews, and carries no additional cost to you. Most importantly, it doesn’t affect our editorial impartiality. Ratings and rankings on Tech.co cannot be bought. Our reviews are based on objective research analysis . Rare exceptions to this will be marked clearly as a ‘sponsored’ table column, or explained by a full advertising disclosure on the page, in place of this one. Click to return to top of page

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550+ Business Plan Examples to Launch Your Business

Need help writing your business plan? Explore over 550 industry-specific business plan examples for inspiration.

Find your business plan example

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Business plan template: There's an easier way to get your business plan done.

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View all sample business plans

Example business plan format

Before you start exploring our library of business plan examples, it's worth taking the time to understand the traditional business plan format . You'll find that the plans in this library and most investor-approved business plans will include the following sections:

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages. You should also plan to write this section last after you've written your full business plan.

Your executive summary should include a summary of the problem you are solving, a description of your product or service, an overview of your target market, a brief description of your team, a summary of your financials, and your funding requirements (if you are raising money).

Products & services

The products & services chapter of your business plan is where the real meat of your plan lives. It includes information about the problem that you're solving, your solution, and any traction that proves that it truly meets the need you identified.

This is your chance to explain why you're in business and that people care about what you offer. It needs to go beyond a simple product or service description and get to the heart of why your business works and benefits your customers.

Market analysis

Conducting a market analysis ensures that you fully understand the market that you're entering and who you'll be selling to. This section is where you will showcase all of the information about your potential customers. You'll cover your target market as well as information about the growth of your market and your industry. Focus on outlining why the market you're entering is viable and creating a realistic persona for your ideal customer base.

Competition

Part of defining your opportunity is determining what your competitive advantage may be. To do this effectively you need to get to know your competitors just as well as your target customers. Every business will have competition, if you don't then you're either in a very young industry or there's a good reason no one is pursuing this specific venture.

To succeed, you want to be sure you know who your competitors are, how they operate, necessary financial benchmarks, and how you're business will be positioned. Start by identifying who your competitors are or will be during your market research. Then leverage competitive analysis tools like the competitive matrix and positioning map to solidify where your business stands in relation to the competition.

Marketing & sales

The marketing and sales plan section of your business plan details how you plan to reach your target market segments. You'll address how you plan on selling to those target markets, what your pricing plan is, and what types of activities and partnerships you need to make your business a success.

The operations section covers the day-to-day workflows for your business to deliver your product or service. What's included here fully depends on the type of business. Typically you can expect to add details on your business location, sourcing and fulfillment, use of technology, and any partnerships or agreements that are in place.

Milestones & metrics

The milestones section is where you lay out strategic milestones to reach your business goals.

A good milestone clearly lays out the parameters of the task at hand and sets expectations for its execution. You'll want to include a description of the task, a proposed due date, who is responsible, and eventually a budget that's attached. You don't need extensive project planning in this section, just key milestones that you want to hit and when you plan to hit them.

You should also discuss key metrics, which are the numbers you will track to determine your success. Some common data points worth tracking include conversion rates, customer acquisition costs, profit, etc.

Company & team

Use this section to describe your current team and who you need to hire. If you intend to pursue funding, you'll need to highlight the relevant experience of your team members. Basically, this is where you prove that this is the right team to successfully start and grow the business. You will also need to provide a quick overview of your legal structure and history if you're already up and running.

Financial projections

Your financial plan should include a sales and revenue forecast, profit and loss statement, cash flow statement, and a balance sheet. You may not have established financials of any kind at this stage. Not to worry, rather than getting all of the details ironed out, focus on making projections and strategic forecasts for your business. You can always update your financial statements as you begin operations and start bringing in actual accounting data.

Now, if you intend to pitch to investors or submit a loan application, you'll also need a "use of funds" report in this section. This outlines how you intend to leverage any funding for your business and how much you're looking to acquire. Like the rest of your financials, this can always be updated later on.

The appendix isn't a required element of your business plan. However, it is a useful place to add any charts, tables, definitions, legal notes, or other critical information that supports your plan. These are often lengthier or out-of-place information that simply didn't work naturally into the structure of your plan. You'll notice that in these business plan examples, the appendix mainly includes extended financial statements.

Types of business plans explained

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. To get the most out of your plan, it's best to find a format that suits your needs. Here are a few common business plan types worth considering.

Traditional business plan

The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you'll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or in any other situation where the full details of your business must be understood by another individual.

Business model canvas

The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

The structure ditches a linear format in favor of a cell-based template. It encourages you to build connections between every element of your business. It's faster to write out and update, and much easier for you, your team, and anyone else to visualize your business operations.

One-page business plan

The true middle ground between the business model canvas and a traditional business plan is the one-page business plan . This format is a simplified version of the traditional plan that focuses on the core aspects of your business.

By starting with a one-page plan , you give yourself a minimal document to build from. You'll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan.

Growth planning

Growth planning is more than a specific type of business plan. It's a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, forecast, review, and refine based on your performance.

It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27 minutes . However, it's even easier to convert into a more detailed plan thanks to how heavily it's tied to your financials. The overall goal of growth planning isn't to just produce documents that you use once and shelve. Instead, the growth planning process helps you build a healthier company that thrives in times of growth and remain stable through times of crisis.

It's faster, keeps your plan concise, and ensures that your plan is always up-to-date.

Download a free sample business plan template

Ready to start writing your own plan but aren't sure where to start? Download our free business plan template that's been updated for 2024.

This simple, modern, investor-approved business plan template is designed to make planning easy. It's a proven format that has helped over 1 million businesses write business plans for bank loans, funding pitches, business expansion, and even business sales. It includes additional instructions for how to write each section and is formatted to be SBA-lender approved. All you need to do is fill in the blanks.

How to use an example business plan to help you write your own

How do you know what elements need to be included in your business plan, especially if you've never written one before? Looking at examples can help you visualize what a full, traditional plan looks like, so you know what you're aiming for before you get started. Here's how to get the most out of a sample business plan.

Choose a business plan example from a similar type of company

You don't need to find an example business plan that's an exact fit for your business. Your business location, target market, and even your particular product or service may not match up exactly with the plans in our gallery. But, you don't need an exact match for it to be helpful. Instead, look for a plan that's related to the type of business you're starting.

For example, if you want to start a vegetarian restaurant, a plan for a steakhouse can be a great match. While the specifics of your actual startup will differ, the elements you'd want to include in your restaurant's business plan are likely to be very similar.

Use a business plan example as a guide

Every startup and small business is unique, so you'll want to avoid copying an example business plan word for word. It just won't be as helpful, since each business is unique. You want your plan to be a useful tool for starting a business —and getting funding if you need it.

One of the key benefits of writing a business plan is simply going through the process. When you sit down to write, you'll naturally think through important pieces, like your startup costs, your target market , and any market analysis or research you'll need to do to be successful.

You'll also look at where you stand among your competition (and everyone has competition), and lay out your goals and the milestones you'll need to meet. Looking at an example business plan's financials section can be helpful because you can see what should be included, but take them with a grain of salt. Don't assume that financial projections for a sample company will fit your own small business.

If you're looking for more resources to help you get started, our business planning guide is a good place to start. You can also download our free business plan template .

Think of business planning as a process, instead of a document

Think about business planning as something you do often , rather than a document you create once and never look at again. If you take the time to write a plan that really fits your own company, it will be a better, more useful tool to grow your business. It should also make it easier to share your vision and strategy so everyone on your team is on the same page.

Adjust your plan regularly to use it as a business management tool

Keep in mind that businesses that use their plan as a management tool to help run their business grow 30 percent faster than those businesses that don't. For that to be true for your company, you'll think of a part of your business planning process as tracking your actual results against your financial forecast on a regular basis.

If things are going well, your plan will help you think about how you can re-invest in your business. If you find that you're not meeting goals, you might need to adjust your budgets or your sales forecast. Either way, tracking your progress compared to your plan can help you adjust quickly when you identify challenges and opportunities—it's one of the most powerful things you can do to grow your business.

Prepare to pitch your business

If you're planning to pitch your business to investors or seek out any funding, you'll need a pitch deck to accompany your business plan. A pitch deck is designed to inform people about your business. You want your pitch deck to be short and easy to follow, so it's best to keep your presentation under 20 slides.

Your pitch deck and pitch presentation are likely some of the first things that an investor will see to learn more about your company. So, you need to be informative and pique their interest. Luckily we have a round-up of real-world pitch deck examples used by successful startups that you can review and reference as you build your pitch.

For more resources, check out our full Business Pitch Guide .

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Technology’s generational moment with generative AI: A CIO and CTO guide

Hardly a day goes by without some new business-busting development related to generative AI surfacing in the media. The excitement is well deserved— McKinsey research estimates that generative AI could add the equivalent of $2.6 trillion to $4.4 trillion of value annually. 1 “ The economic potential of generative AI: The next productivity frontier ,” McKinsey, June 14, 2023.

About the authors

This article is a collaborative effort by Aamer Baig , Sven Blumberg , Eva Li, Douglas Merrill, Adi Pradhan, Megha Sinha, Alexander Sukharevsky , and Stephen Xu, representing views from McKinsey Digital.

CIOs and chief technology officers (CTOs) have a critical role in capturing that value, but it’s worth remembering we’ve seen this movie before. New technologies emerged—the internet, mobile, social media—that set off a melee of experiments and pilots, though significant business value often proved harder to come by. Many of the lessons learned from those developments still apply, especially when it comes to getting past the pilot stage to reach scale. For the CIO and CTO, the generative AI boom presents a unique opportunity to apply those lessons to guide the C-suite in turning the promise of generative AI into sustainable value for the business.

A quick primer on key terms

Generative AI is a type of AI that can create new content (text, code, images, video) using patterns it has learned by training on extensive (public) data with machine learning (ML) techniques.

Foundation models (FMs) are deep learning models trained on vast quantities of unstructured, unlabeled data that can be used for a wide range of tasks out of the box or adapted to specific tasks through fine-tuning. Examples of these models are GPT-4, PaLM 2, DALL·E 2, and Stable Diffusion.

Large language models (LLMs) make up a class of foundation models that can process massive amounts of unstructured text and learn the relationships between words or portions of words, known as tokens. This enables LLMs to generate natural-language text, performing tasks such as summarization or knowledge extraction. Cohere Command is one type of LLM; LaMDA is the LLM behind Bard.

Fine-tuning is the process of adapting a pretrained foundation model to perform better in a specific task. This entails a relatively short period of training on a labeled data set, which is much smaller than the data set the model was initially trained on. This additional training allows the model to learn and adapt to the nuances, terminology, and specific patterns found in the smaller data set.

Prompt engineering refers to the process of designing, refining, and optimizing input prompts to guide a generative AI model toward producing desired (that is, accurate) outputs.

Through conversations with dozens of tech leaders and an analysis of generative AI initiatives at more than 50 companies (including our own), we have identified nine actions all technology leaders can take to create value, orchestrate technology and data, scale solutions, and manage risk for generative AI (see sidebar, “A quick primer on key terms”):

• Move quickly to determine the company’s posture for the adoption of generative AI , and develop practical communications to, and appropriate access for, employees.
• Reimagine the business and identify use cases that build value through improved productivity, growth, and new business models . Develop a “financial AI” (FinAI) capability that can estimate the true costs and returns of generative AI.
• Reimagine the technology function , and focus on quickly building generative AI capabilities in software development, accelerating technical debt reduction, and dramatically reducing manual effort in IT operations.
• Take advantage of existing services or adapt open-source generative AI models to develop proprietary capabilities (building and operating your own generative AI models can cost tens to hundreds of millions of dollars, at least in the near term).
• Upgrade your enterprise technology architecture to integrate and manage generative AI models and orchestrate how they operate with each other and existing AI and machine learning (ML) models, applications, and data sources.
• Develop a data architecture to enable access to quality data by processing both structured and unstructured data sources.
• Create a centralized, cross-functional generative AI platform team to provide approved models to product and application teams on demand.
• Invest in upskilling key roles—software developers, data engineers, MLOps engineers, and security experts—as well as the broader nontech workforce. But you need to tailor the training programs by roles and proficiency levels due to the varying impact of generative AI.
• Evaluate the new risk landscape and establish ongoing mitigation practices to address models, data, and policies.

Creating value beyond the hype

Let’s deliver on the promise of technology from strategy to scale.

1. Determine the company’s posture for the adoption of generative AI

As use of generative AI becomes increasingly widespread, we have seen CIOs and CTOs respond by blocking employee access to publicly available applications to limit risk. In doing so, these companies risk missing out on opportunities for innovation, with some employees even perceiving these moves as limiting their ability to build important new skills.

Instead, CIOs and CTOs should work with risk leaders to balance the real need for risk mitigation with the importance of building generative AI skills in the business. This requires establishing the company’s posture regarding generative AI by building consensus around the levels of risk with which the business is comfortable and how generative AI fits into the business’s overall strategy. This step allows the business to quickly determine company-wide policies and guidelines.

Once policies are clearly defined, leaders should communicate them to the business, with the CIO and CTO providing the organization with appropriate access and user-friendly guidelines. Some companies have rolled out firmwide communications about generative AI, provided broad access to generative AI for specific user groups, created pop-ups that warn users any time they input internal data into a model, and built a guidelines page that appears each time users access a publicly available generative AI service.

2. Identify use cases that build value through improved productivity, growth, and new business models

CIOs and CTOs should be the antidote to the “death by use case” frenzy that we already see in many companies. They can be most helpful by working with the CEO, CFO, and other business leaders to think through how generative AI challenges existing business models, opens doors to new ones, and creates new sources of value. With a deep understanding of the technical possibilities, the CIO and CTO should identify the most valuable opportunities and issues across the company that can benefit from generative AI—and those that can’t. In some cases, generative AI is not the best option.

McKinsey research , for example, shows generative AI can lift productivity for certain marketing use cases (for example, by analyzing unstructured and abstract data for customer preference) by roughly 10 percent and customer support (for example, through intelligent bots) by up to 40 percent. 2 “ The economic potential of generative AI: The next productivity frontier ,” McKinsey, June 14, 2023. The CIO and CTO can be particularly helpful in developing a perspective on how best to cluster use cases either by domain (such as customer journey or business process) or use case type (such as creative content creation or virtual agents) so that generative AI will have the most value. Identifying opportunities won’t be the most strategic task—there are many generative AI use cases out there—but, given initial limitations of talent and capabilities, the CIO and CTO will need to provide feasibility and resource estimates to help the business sequence generative AI priorities.

Providing this level of counsel requires tech leaders to work with the business to develop a FinAI capability to estimate the true costs and returns on generative AI initiatives. Cost calculations can be particularly complex because the unit economics must account for multiple model and vendor costs, model interactions (where a query might require input from multiple models, each with its own fee), ongoing usage fees, and human oversight costs.

3. Reimagine the technology function

Generative AI has the potential to completely remake how the tech function works. CIOs and CTOs need to make a comprehensive review of the potential impact of generative AI on all areas of tech, but it’s important to take action quickly to build experience and expertise. There are three areas where they can focus their initial energies:

• Software development: McKinsey research shows generative AI coding support can help software engineers develop code 35 to 45 percent faster, refactor code 20 to 30 percent faster, and perform code documentation 45 to 50 percent faster. 3 Begum Karaci Deniz, Martin Harrysson, Alharith Hussin, and Shivam Srivastava, “ Unleashing developer productivity with generative AI ,” McKinsey, June 27, 2023. Generative AI can also automate the testing process and simulate edge cases, allowing teams to develop more-resilient software prior to release, and accelerate the onboarding of new developers (for example, by asking generative AI questions about a code base). Capturing these benefits will require extensive training (see more in action 8) and automation of integration and deployment pipelines through DevSecOps practices to manage the surge in code volume.
• Technical debt: Technical debt can account for 20 to 40 percent of technology budgets and significantly slow the pace of development. 4 Vishal Dalal, Krish Krishnakanthan, Björn Münstermann, and Rob Patenge, “ Tech debt: Reclaiming tech equity ,” McKinsey, October 6, 2020. CIOs and CTOs should review their tech-debt balance sheets to determine how generative AI capabilities such as code refactoring, code translation, and automated test-case generation can accelerate the reduction of technical debt.
• IT operations (ITOps): CIOs and CTOs will need to review their ITOps productivity efforts to determine how generative AI can accelerate processes. Generative AI’s capabilities are particularly helpful in automating such tasks as password resets, status requests, or basic diagnostics through self-serve agents; accelerating triage and resolution through improved routing; surfacing useful context, such as topic or priority, and generating suggested responses; improving observability through analysis of vast streams of logs to identify events that truly require attention; and developing documentation, such as standard operating procedures, incident postmortems, or performance reports.

4. Take advantage of existing services or adapt open-source generative AI models

A variation of the classic “rent, buy, or build” decision exists when it comes to strategies for developing generative AI capabilities. The basic rule holds true: a company should invest in a generative AI capability where it can create a proprietary advantage for the business and access existing services for those that are more like commodities.

The CIO and CTO can think through the implications of these options as three archetypes:

• Taker —uses publicly available models through a chat interface or an API, with little or no customization. Good examples include off-the-shelf solutions to generate code (such as GitHub Copilot) or to assist designers with image generation and editing (such as Adobe Firefly). This is the simplest archetype in terms of both engineering and infrastructure needs and is generally the fastest to get up and running. These models are essentially commodities that rely on feeding data in the form of prompts to the public model.
• Shaper —integrates models with internal data and systems to generate more customized results. One example is a model that supports sales deals by connecting generative AI tools to customer relationship management (CRM) and financial systems to incorporate customers’ prior sales and engagement history. Another is fine-tuning the model with internal company documents and chat history to act as an assistant to a customer support agent. For companies that are looking to scale generative AI capabilities, develop more proprietary capabilities, or meet higher security or compliance needs, the Shaper archetype is appropriate. There are two common approaches for integrating data with generative AI models in this archetype. One is to “bring the model to the data,” where the model is hosted on the organization’s infrastructure, either on-premises or in the cloud environment. Cohere, for example, deploys foundation models on clients’ cloud infrastructure, reducing the need for data transfers. The other approach is to “bring data to the model,” where an organization can aggregate its data and deploy a copy of the large model on cloud infrastructure. Both approaches achieve the goal of providing access to the foundation models, and choosing between them will come down to the organization’s workload footprint.
• Maker —builds a foundation model to address a discrete business case. Building a foundation model is expensive and complex, requiring huge volumes of data, deep expertise, and massive compute power. This option requires a substantial one-off investment—tens or even hundreds of millions of dollars—to build the model and train it. The cost depends on various factors, such as training infrastructure, model architecture choice, number of model parameters, data size, and expert resources.

Each archetype has its own costs that tech leaders will need to consider (Exhibit 1). While new developments, such as efficient model training approaches and lower graphics processing unit (GPU) compute costs over time, are driving costs down, the inherent complexity of the Maker archetype means that few organizations will adopt it in the short term. Instead, most will turn to some combination of Taker, to quickly access a commodity service, and Shaper, to build a proprietary capability on top of foundation models.

5. Upgrade your enterprise technology architecture to integrate and manage generative AI models

Organizations will use many generative AI models of varying size, complexity, and capability. To generate value, these models need to be able to work both together and with the business’s existing systems or applications. For this reason, building a separate tech stack for generative AI creates more complexities than it solves. As an example, we can look at a consumer querying customer service at a travel company to resolve a booking issue (Exhibit 2). In interacting with the customer, the generative AI model needs to access multiple applications and data sources.

For the Taker archetype, this level of coordination isn’t necessary. But for companies looking to scale the advantages of generative AI as Shapers or Makers, CIOs and CTOs need to upgrade their technology architecture. The prime goal is to integrate generative AI models into internal systems and enterprise applications and to build pipelines to various data sources. Ultimately, it’s the maturity of the business’s enterprise technology architecture that allows it to integrate and scale its generative AI capabilities.

Recent advances in integration and orchestration frameworks, such as LangChain and LlamaIndex, have significantly reduced the effort required to connect different generative AI models with other applications and data sources. Several integration patterns are also emerging, including those that enable models to call APIs when responding to a user query—GPT-4, for example, can invoke functions—and provide contextual data from an external data set as part of a user query, a technique known as retrieval augmented generation. Tech leaders will need to define reference architectures and standard integration patterns for their organization (such as standard API formats and parameters that identify the user and the model invoking the API).

There are five key elements that need to be incorporated into the technology architecture to integrate generative AI effectively (Exhibit 3):

• Context management and caching to provide models with relevant information from enterprise data sources. Access to relevant data at the right time is what allows the model to understand the context and produce compelling outputs. Caching stores results to frequently asked questions to enable faster and cheaper responses.
• Policy management to ensure appropriate access to enterprise data assets. This control ensures that HR’s generative AI models that include employee compensation details, for example, cannot be accessed by the rest of the organization.
• Model hub , which contains trained and approved models that can be provisioned on demand and acts as a repository for model checkpoints, weights, and parameters.
• Prompt library , which contains optimized instructions for the generative AI models, including prompt versioning as models are updated.
• MLOps platform , including upgraded MLOps capabilities, to account for the complexity of generative AI models. MLOps pipelines, for example, will need to include instrumentation to measure task-specific performance, such as measuring a model’s ability to retrieve the right knowledge.

In evolving the architecture, CIOs and CTOs will need to navigate a rapidly growing ecosystem of generative AI providers and tooling. Cloud providers provide extensive access to at-scale hardware and foundation models, as well as a proliferating set of services. MLOps and model hub providers, meanwhile, offer the tools, technologies, and practices to adapt a foundation model and deploy it into production, while other companies provide applications directly accessed by users built on top of foundation models to perform specific tasks. CIOs and CTOs will need to assess how these various capabilities are assembled and integrated to deploy and operate generative AI models.

6. Develop a data architecture to enable access to quality data

The ability of a business to generate and scale value, including cost reductions and improved data and knowledge protections, from generative AI models will depend on how well it takes advantage of its own data. Creating that advantage relies on a data architecture that connects generative AI models to internal data sources, which provide context or help fine-tune the models to create more relevant outputs.

In this context, CIOs, CTOs, and chief data officers need to work closely together to do the following:

• Categorize and organize data so it can be used by generative AI models. Tech leaders will need to develop a comprehensive data architecture that encompasses both structured and unstructured data sources. This requires putting in place standards and guidelines to optimize data for generative AI use—for example, by augmenting training data with synthetic samples to improve diversity and size; converting media types into standardized data formats; adding metadata to improve traceability and data quality; and updating data.
• Ensure existing infrastructure or cloud services can support the storage and handling of the vast volumes of data needed for generative AI applications.
• Prioritize the development of data pipelines to connect generative AI models to relevant data sources that provide “contextual understanding.” Emerging approaches include the use of vector databases to store and retrieve embeddings (specially formatted knowledge) as input for generative AI models as well as in-context learning approaches, such as “few shot prompting,” where models are provided with examples of good answers.

McKinsey launches new product suite to help clients scale AI

7. create a centralized, cross-functional generative ai platform team.

Most tech organizations are on a journey to a product and platform operating model . CIOs and CTOs need to integrate generative AI capabilities into this operating model to build on the existing infrastructure and help to rapidly scale adoption of generative AI. The first step is setting up a generative AI platform team whose core focus is developing and maintaining a platform service where approved generative AI models can be provisioned on demand for use by product and application teams. The platform team also defines protocols for how generative AI models integrate with internal systems, enterprise applications, and tools, and also develops and implements standardized approaches to manage risk, such as responsible AI frameworks.

CIOs and CTOs need to ensure that the platform team is staffed with people who have the right skills. This team requires a senior technical leader who acts as the general manager. Key roles include software engineers to integrate generative AI models into existing systems, applications, and tools; data engineers to build pipelines that connect models to various systems of record and data sources; data scientists to select models and engineer prompts; MLOps engineers to manage deployment and monitoring of multiple models and model versions; ML engineers to fine-tune models with new data sources; and risk experts to manage security issues such as data leakage, access controls, output accuracy, and bias. The exact composition of the platform team will depend on the use cases being served across the enterprise. In some instances, such as creating a customer-facing chatbot, strong product management and user experience (UX) resources will be required.

Realistically, the platform team will need to work initially on a narrow set of priority use cases, gradually expanding the scope of their work as they build reusable capabilities and learn what works best. Technology leaders should work closely with business leads to evaluate which business cases to fund and support.

8. Tailor upskilling programs by roles and proficiency levels

Generative AI has the potential to massively lift employees’ productivity and augment their capabilities. But the benefits are unevenly distributed depending on roles and skill levels, requiring leaders to rethink how to build the actual skills people need.

Our latest empirical research using the generative AI tool GitHub Copilot, for example, helped software engineers write code 35 to 45 percent faster. 5 “ Unleashing developer productivity with generative AI ,” June 27, 2023. The benefits, however, varied. Highly skilled developers saw gains of up to 50 to 80 percent, while junior developers experienced a 7 to 10 percent decline in speed. That’s because the output of the generative AI tools requires engineers to critique, validate, and improve the code, which inexperienced software engineers struggle to do. Conversely, in less technical roles, such as customer service, generative AI helps low-skill workers significantly, with productivity increasing by 14 percent and staff turnover dropping as well, according to one study. 6 Erik Brynjolfsson, Danielle Li, and Lindsey R. Raymond, Generative AI at work , National Bureau of Economic Research (NBER) working paper, number 31161, April 2023.

These disparities underscore the need for technology leaders, working with the chief human resources officer (CHRO), to rethink their talent management strategy to build the workforce of the future. Hiring a core set of top generative AI talent will be important, and, given the increasing scarcity and strategic importance of that talent, tech leaders should put in place retention mechanisms, such as competitive salaries and opportunities to be involved in important strategic work for the business.

Tech leaders, however, cannot stop at hiring. Because nearly every existing role will be affected by generative AI, a crucial focus should be on upskilling people based on a clear view of what skills are needed by role, proficiency level, and business goals. Let’s look at software developers as an example. Training for novices needs to emphasize accelerating their path to become top code reviewers in addition to code generators. Similar to the difference between writing and editing, code review requires a different skill set. Software engineers will need to understand what good code looks like; review the code created by generative AI for functionality, complexity, quality, and readability; and scan for vulnerabilities while ensuring they do not themselves introduce quality or security issues in the code. Furthermore, software developers will need to learn to think differently when it comes to coding, by better understanding user intent so they can create prompts and define contextual data that help generative AI tools provide better answers.

Beyond training up tech talent, the CIO and CTO can play an important role in building generative AI skills among nontech talent as well. Besides understanding how to use generative AI tools for such basic tasks as email generation and task management, people across the business will need to become comfortable using an array of capabilities to improve performance and outputs. The CIO and CTO can help adapt academy models to provide this training and corresponding certifications.

The decreasing value of inexperienced engineers should accelerate the move away from a classic talent pyramid, where the greatest number of people are at a junior level, to a structure more like a diamond, where the bulk of the technical workforce is made up of experienced people. Practically speaking, that will mean building the skills of junior employees as quickly as possible while reducing roles dedicated to low-complexity manual tasks (such as writing unit tests).

9. Evaluate the new risk landscape and establish ongoing mitigation practices

Generative AI presents a fresh set of ethical questions and risks, including “hallucinations,” whereby the generative AI model presents an incorrect response based on the highest-probability response; the accidental release of confidential personally identifiable information; inherent bias in the large data sets the models use; and high degrees of uncertainty related to intellectual property (IP). CIOs and CTOs will need to become fluent in ethics, humanitarian, and compliance issues to adhere not just to the letter of the law (which will vary by country) but also to the spirit of responsibly managing their business’s reputation.

Addressing this new landscape requires a significant review of cyber practices and updating the software development process to evaluate risk and identify mitigation actions before model development begins, which will both reduce issues and ensure the process doesn’t slow down. Proven risk-mitigation actions for hallucinations can include adjusting the level of creativity (known as the “temperature”) of a model when it generates responses; augmenting the model with relevant internal data to provide more context; using libraries that impose guardrails on what can be generated; using “moderation” models to check outputs; and adding clear disclaimers. Early generative AI use cases should focus on areas where the cost of error is low, to allow the organization to work through inevitable setbacks and incorporate learnings.

To protect data privacy, it will be critical to establish and enforce sensitive data tagging protocols, set up data access controls in different domains (such as HR compensation data), add extra protection when data is used externally, and include privacy safeguards. For example, to mitigate access control risk, some organizations have set up a policy-management layer that restricts access by role once a prompt is given to the model. To mitigate risk to intellectual property, CIOs and CTOs should insist that providers of foundation models maintain transparency regarding the IP (data sources, licensing, and ownership rights) of the data sets used.

Generative AI is poised to be one of the fastest-growing technology categories we’ve ever seen. Tech leaders cannot afford unnecessary delays in defining and shaping a generative AI strategy. While the space will continue to evolve rapidly, these nine actions can help CIOs and CTOs responsibly and effectively harness the power of generative AI at scale.

Aamer Baig is a senior partner in McKinsey’s Chicago office; Sven Blumberg is a senior partner in the Düsseldorf office; Eva Li is a consultant in the Bay Area office, where Megha Sinha is a partner; Douglas Merrill is a partner in the Southern California office; Adi Pradhan and Stephen Xu are associate partners in the Toronto office; and Alexander Sukharevsky is a senior partner in the London office.

The authors wish to thank Stephanie Brauckmann, Anusha Dhasarathy, Martin Harrysson, Klemens Hjartar, Alharith Hussin, Naufal Khan, Sam Nie, Chandrasekhar Panda, Henning Soller, Nikhil Srinidhi, Asin Tavakoli, Niels Van der Wildt, and Anna Wiesinger for their contributions to this article.

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