Selling a B&B

Old_Ian

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?

davidmcn

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

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.

anselld

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.

agrinnall

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

I'd almost expect to know the numbers before the first visit !. Every business I have ever looked at buying displays the numbers.

AdrianC

Old_Ian wrote: »

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.

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

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

I have seen adverts saying books are available from the solicitors. That may deter non serious buyers.

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

Old_Ian wrote: »

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.

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.