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  • FIRST POST
    • Old Ian
    • By Old Ian 7th Mar 17, 10:21 PM
    • 3Posts
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    Old Ian
    Selling a B&B
    • #1
    • 7th Mar 17, 10:21 PM
    Selling a B&B 7th Mar 17 at 10:21 PM
    Hello all
    First post here and I do hope it is in the correct section.

    The Background:
    The wife and I run a 6 bedroomed B&B. We live in part of it too. The building is really laid out for a business hence the wish to sell it as one. Website and various licences will be included, along with all of furniture and fittings. Garden equipment too.

    The reason for a sale:
    Quite simply the wife is at retirement age, I am getting near it and we are generally OK, we are certainly not in tip top condition, health wise.

    The dilemma:
    We have been lucky to have had a number of viewings and they are all asking, on the first visit, what is the turn over? And to be honest we do not know how to give a respectful answer that suggests that perhaps may not be question that should be asked at all. We feel that turn over can be influenced by whatever the new owner wants to make changes on. Plus as I have said above we are not in full health so when need be we take less guests in. Therefore turnover is not at the best level. I can confirm we are willing to show the books, but certainly not on the first visit.
    We would like to say something along the lines that the value is in the property and assets, the condition of the equipment included; the condition and the decoration of the property and furniture are the things that they should be looking at.
    Can anyone helps us with some ideas, please?
Page 1
    • davidmcn
    • By davidmcn 7th Mar 17, 10:36 PM
    • 6,077 Posts
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    davidmcn
    • #2
    • 7th Mar 17, 10:36 PM
    • #2
    • 7th Mar 17, 10:36 PM
    I've seen other B&Bs listed with something along the lines of the business is currently being run part-time so there's potential to develop it further etc. Don't think there's any harm in being honest about it.
    • G_M
    • By G_M 7th Mar 17, 10:46 PM
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    G_M
    • #3
    • 7th Mar 17, 10:46 PM
    • #3
    • 7th Mar 17, 10:46 PM
    Either you sell it as a residential property, or as a business.

    If you are selling a business it is normal for potential buyers to want to know about the business - turnover, profit etc. Indeed, they will want to see accounts at some stage.

    If you have been running it part-time, say so, but buyers might be concerned that you are giving an excuse for a low turn-over on a property with little potential for profit.

    You really should be taking advice from an estate agent who deals with commercial property.
    Last edited by G_M; 07-03-2017 at 10:49 PM.
    • anselld
    • By anselld 8th Mar 17, 7:24 AM
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    anselld
    • #4
    • 8th Mar 17, 7:24 AM
    • #4
    • 8th Mar 17, 7:24 AM
    You are selling a Business, of corse it is a question that should be asked. In fact it is one of the first questions that should be asked!

    Serious buyers will respect an honest answer including the reasons why turnover has scope for improvement, but any evasive answer will put them off.
    Last edited by anselld; 08-03-2017 at 7:27 AM.
    • agrinnall
    • By agrinnall 8th Mar 17, 9:08 AM
    • 18,541 Posts
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    agrinnall
    • #5
    • 8th Mar 17, 9:08 AM
    • #5
    • 8th Mar 17, 9:08 AM
    I'd suggest that you watch a few episodes of Dragon's Den on the iPlayer to see what the reaction is when applicants are either evasive about or just don't know their turnover figures.
    • caprikid1
    • By caprikid1 8th Mar 17, 9:08 AM
    • 473 Posts
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    caprikid1
    • #6
    • 8th Mar 17, 9:08 AM
    • #6
    • 8th Mar 17, 9:08 AM
    I'd almost expect to know the numbers before the first visit !. Every business I have ever looked at buying displays the numbers.
    • AdrianC
    • By AdrianC 8th Mar 17, 9:24 AM
    • 15,442 Posts
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    AdrianC
    • #7
    • 8th Mar 17, 9:24 AM
    • #7
    • 8th Mar 17, 9:24 AM
    The wife and I run a 6 bedroomed B&B. We live in part of it too. The building is really laid out for a business hence the wish to sell it as one. Website and various licences will be included, along with all of furniture and fittings. Garden equipment too.
    Originally posted by Old Ian
    So you are selling a business, not a residential property.

    No doubt you're asking more for it as a viable ongoing business, including goodwill, than you would be asking just as a residential property?

    We have been lucky to have had a number of viewings and they are all asking, on the first visit, what is the turn over? And to be honest we do not know how to give a respectful answer that suggests that perhaps may not be question that should be asked at all.
    <speechless>
    You. Are. Selling. A. Business. Not. A. Residential. Property...

    Remember?

    We feel that turn over can be influenced by whatever the new owner wants to make changes on.
    Of course it is, in part.

    Plus as I have said above we are not in full health so when need be we take less guests in.
    And that's a factor that you can easily and credibly explain, and show the effect that's had on the turnover.

    We would like to say something along the lines that the value is in the property and assets, the condition of the equipment included; the condition and the decoration of the property and furniture are the things that they should be looking at.
    Yes, some of it is. But not all of it. If ALL the value was in that, then you would be selling the place as a straight residential property, without all the other aspects of the business. As a business, the value - especially the premium over the straight residential value - is also in the viability of the business. And that's quickly demonstrated by the turnover. Most businesses for sale have the turnover as a headline item, for fairly obvious reasons.

    It's far less likely to raise the suspicions and hackles of a potential buyer if you give the turnover, and explain why it's lower than it could have been, than if you try to obscure it.
    • Brock_and_Roll
    • By Brock_and_Roll 8th Mar 17, 9:30 AM
    • 769 Posts
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    Brock_and_Roll
    • #8
    • 8th Mar 17, 9:30 AM
    • #8
    • 8th Mar 17, 9:30 AM
    Hello fellow B&B owner here....


    I recall when we bought our B&B the owner was very cagey about giving us any figures....turns out he thought we might be from the HMRC! That was a very good sign!


    The very nature of most B&Bs is that the owners are "live in" and the extent to which they trade depends entirely on their personal circumstances - for example we could easily fill all our rooms at a premium price at Xmas and other dates, but we choose not to. In some years when we needed the money we sweated the business, in other years we have taken it easy and given ourselves lots of time off.


    Any serious purchaser will understand this - they should have a good idea of the area, the competition and be able to work out the income they can expect from the level of trading that they wish to pursue.


    I have also noticed that many B&B's that are advertised use a very common euphemism when referring to turnover - "trading at just below the VAT threshold". I think that everyone in the business knows what this means!


    One thing to watch out for is capital gains tax - has the price of the property/business risen substantially since purchase? The tax rules are that the proportion of the property that is used for business purposes is liable to CGT - for this reason, some B&B owners cease the business a year or two before selling up to reduce the chance of problems.
    • sheramber
    • By sheramber 8th Mar 17, 11:23 AM
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    sheramber
    • #9
    • 8th Mar 17, 11:23 AM
    • #9
    • 8th Mar 17, 11:23 AM
    I have seen adverts saying books are available from the solicitors. That may deter non serious buyers.
    • Old Ian
    • By Old Ian 8th Mar 17, 5:16 PM
    • 3 Posts
    • 1 Thanks
    Old Ian
    Thank you all for your advice. The responses have been heartening. It is nice to find an open and quick responding forum.
    The point made above about prospective purchasers thinking we were not being honest is something we both thought about. We do feel that could be why have not had a sniff of an offer. Sometimes we get the feeling the viewers are simply dreaming about getting away from the 9-5. ----That is why we purchased the property in the first place.
    The filling of rooms can vary on time of year, weather and if folks feel financially confident to have a few days away.
    We have already given our questions about taxes and advisor with whom have known a long time and we trust.
    • AdrianC
    • By AdrianC 8th Mar 17, 5:24 PM
    • 15,442 Posts
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    AdrianC
    Sometimes we get the feeling the viewers are simply dreaming about getting away from the 9-5. ----That is why we purchased the property in the first place.
    Originally posted by Old Ian
    Entirely likely - as you say, it's how you got there...

    So sell 'em the sizzle, not the sausage. Give them the figures, and explain how their time/effort/enthusiasm/skill could so easily add value for them.
    • gingercordial
    • By gingercordial 8th Mar 17, 6:50 PM
    • 1,026 Posts
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    gingercordial
    The filling of rooms can vary on time of year, weather and if folks feel financially confident to have a few days away.
    Originally posted by Old Ian
    As I'm sure you know the turnover of the business will be based essentially on two sets of factors:

    1. The ones inherent in that business, ie the things you can't control. That's your list above - weather, the economy and so forth. Added to that are the ones specific to your location - popularity of your town for holidays, number of rooms you have, and the local market for B&B prices (you can't be charging double what other local B&Bs charge if you're offering the same level of facilities).

    2. The ones which are under your control, ie the ones where you've said maybe you weren't pushing so hard. How much advertising you're doing, whether you're going all out to really fill the rooms, how much time off you've wanted, could you upgrade the rooms to get a higher price and so on.

    A potential purchaser will need to understand both elements - what's the "baseline" from set 1, and what can they do to enhance that from set 2.

    You should absolutely be disclosing your turnover from the outset - it is a completely normal first question for them to be asking. But, along with that, explain as you've done here with an honest and credible answer that there are lots of ways that could be improved by the right new owner. Essentially give them the turnover from set 1 and sell them on what they could do from set 2.
    • Old Ian
    • By Old Ian 11th Mar 17, 8:39 PM
    • 3 Posts
    • 1 Thanks
    Old Ian
    Just wanted to thank you all for the answers on my question about selling the B&B.
    Reading back it looks as if we (the wife and I) had lost track of what we was trying to achieve.
    I cannot think just how we got there but unfortunately we did.
    • mchale
    • By mchale 11th Mar 17, 8:53 PM
    • 1,638 Posts
    • 924 Thanks
    mchale
    Why not quote any interested parties your occupancy rate.
    Last edited by mchale; 12-03-2017 at 7:40 PM.
    ANURADHA KOIRALA ??? go on throw it in google.
    • Thrugelmir
    • By Thrugelmir 11th Mar 17, 10:36 PM
    • 55,848 Posts
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    Thrugelmir
    Who valued the property/business? Did you give them access to your accounts?
    "Wide diversification is only required when investors do not understand what they are doing." - Warren Buffett
    • MobileSaver
    • By MobileSaver 12th Mar 17, 9:09 AM
    • 1,266 Posts
    • 1,746 Thanks
    MobileSaver
    we do not know how to give a respectful answer that suggests that perhaps may not be question that should be asked at all.
    Originally posted by Old Ian
    If you are selling a business (which you are) then turnover is one of the fundamental pieces of information that you should make available.

    By all means give the figure and then explain the reasons why it is low and how you think a new owner can significantly increase it but anything other than a truthful, unequivocal turnover figure is wasting your viewer's time and energy and yours.
    Respect to 3 of the greatest actors of all time; amazing people who are totally believable as the characters they play & almost single-handedly make the shows they starred in:

    Peter Dinklage as Tyrion Lannister in Game of Thrones
    Daniel J. Travanti as Frank Furillo in Hill Street Blues
    Claire Danes as Carrie Mathison in Homeland
    • martindow
    • By martindow 12th Mar 17, 11:16 AM
    • 7,255 Posts
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    martindow
    Do the agents you are using normally sell commercial properties? If they are selling flats and houses most of the time they might be inexperienced or even clueless about how to market your B&B. Normally turnover would be included in the listing.
    • PasturesNew
    • By PasturesNew 12th Mar 17, 11:22 AM
    • 60,673 Posts
    • 354,714 Thanks
    PasturesNew
    Turnover is THE key question for anybody buying it as a business - as that's where the value can be calculated.

    If, say, you said "we have 6 bedrooms and the turnover each year is £90k and they're mostly repeat customers so we don't advertise. We have automated online booking and our facebook page is full of shared images from happy past customers" then a buyer will see that as different to "well, we have a turnover of £8k because we rely on people passing and being able to see the wonky sign from the road; we have no website, no facebook page, no IT systems and no online booking provision"

    In the first instance they know they can move in and run it as a business.

    In the second instance they know they'd have a LOT of work ahead of them to turn it into a £100k T/O business ... which is what they were really looking for as they figure that'd make them £20k/year each.
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