Starting a Bed and Breakfast

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This guide examines possible steps to take and issues to consider when starting a bed and breakfast in Canada. Prepared by Canada Business, this document describes licence, permit and registration requirements that apply to the tourist lodging industry. The extent to which the information will apply to you will depend on the details of your project.

Because this document is only meant as a guide, Canada Business service centres will not accept responsibility for business decisions made based on the information provided.

For more information on individual topics identified herein, contact your local Canada Business network service centre.

TABLE OF CONTENTS

BASICS TO GETTING STARTED

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Before proceeding, reference should be made to the business start-up guide for your region for complete information applicable to all types of business.

Alberta: Business Start-up (Alberta) Info-Guide

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Starting a bed and breakfast can be rewarding but it comes with its challenges. Before starting a bed and breakfast in Canada, it is wise to do your research. Ask yourself if you are truly suited for entrepreneurship and if you understand the significant effort that may be required. You should thoroughly enjoy the field you are getting into and believe in your product or service because it may take up much of your time, especially in the start-up phase. Several aspects need to be considered such as regulations, financing, taxation, managing your business, advertising, and much more. Complete the Feasibility Checklist for Starting a Small Business to assess your level of readiness. Also, check out our upcoming learning sessions.

INDUSTRY OVERVIEW

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The Canadian bed and breakfast industry is made up of establishments primarily engaged in providing short-term lodging in homes. These establishments provide guest rooms in private homes or in small buildings converted for this use, and they often have a unique or historic character. Bed and breakfasts are characterized by highly personalized service, and the inclusion, in the room rate, of a full breakfast served by the owner or owner-supervised staff.

Questions to ask yourself before starting a bed and breakfast:

  • Is your home located in a desirable setting?
  • What makes your home unique or attractive?
  • Must the structure of your home be altered to function well for you, your family and your guests?
  • Will additional furnishings be needed?
  • Will you have the time, money, and skills needed?
  • Is your family prepared to have strangers stay in their house?
  • Have you consulted professionals with expertise related to the bed and breakfast industry?
  • Do you like being with people? Do you have good hosting, conversational and listening skills?
  • Do you enjoy maintaining a neat and clean home?
  • Are you well-organized (e.g., to maintain reservation schedules and prepare breakfast)?
  • Do you understand the basics of managing, accounting and bookkeeping?
  • Have you done your research (demand, competition, advertising)?
  • Do you have realistic expectations? (Do not expect big profits. These are not get-rich-quick operations.)

Choosing Your Location (see the document Store Location - "Little Things" Mean a Lot)
Choosing the right location for your business is important; for most businesses, an appropriate location is critical. A good location will depend on the needs of your business, where your customers and competitors are, and such things as taxes, zoning restrictions, noise and the environment.

LICENCES, PERMITS AND REGULATIONS

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All businesses must comply with regulations and obtain necessary licences and permits. When creating a business, you must contact your municipal government and your provincial/territorial and federal governments.

The question of licences, permits and regulations is very complex and there is no uniformity throughout the country. It is better for you to start with your municipal government (local city hall, town or village office or rural municipal office). Most of the time it has the authority to issue its own business licences. Verify with them also about local regulations, licensing requirements, and zoning by-laws that control property uses in their municipalities. Then contact your provincial/territorial government and the federal government. Contacts for these administrations can be found in the government listings of your telephone directory or on the Government of Canada Web site.

Examples of licences, permits and regulations:

licences

Permits

  • vendor permit
  • building permit

Regulations

  • health regulations and requirements
  • fire safety standards or regulations
  • hotel room tax
  • retail sales tax
  • Personal Information Protection and Electronic Documents Act (see the document Privacy Guide for Small Businesses: The Basics)
  • zoning by-laws
  • food regulations and requirements
  • on- or off-premise signage regulations
  • Competition Act
  • advertising

BizPaL

BizPaL - Business Permits & Licences provides Canadian businesses with one-stop access to permit and licence information from all levels of government. This online service is offered by Industry Canada in partnership with provincial, territorial, and municipal governments. Please note that BizPaL is not available for all provinces and all cities.

MANAGING YOUR OPERATION

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Insurance
Insurance needs for businesses vary greatly. It is best to choose an insurance agent or broker familiar with your size of business and, in particular, an agent familiar with your type of operation. If you don't have an insurance agent, it could be wise to ask other business owners in your area to recommend one. Bed and Breakfast associations may have information on available insurances. You can also contact the Insurance Bureau of Canada.

Examples of insurances:

Basic insurance

  • fire insurance (extended coverage on buildings and contents)
  • liability insurance (depending on type of business)
  • burglary protection (theft coverage)
  • dishonesty insurance (covers thefts by employees)

Important: It is your responsibility to contact your insurer and advise them of your intention to provide bed and breakfast for paying guests. Failure to do so could result in the voidance of your homeowners' policy. Request written confirmation that you have proper coverage.

Marketing / Advertising

Word-of-mouth advertising and good public relations are often the best ways of promoting a bed and breakfast. Remember that a satisfied customer will naturally serve as advertising. Brochures are often distributed in local businesses and in visitor information centers. Networking, including an open-house day for the various tourism operators of your area is also a good way to promote your establishment. Remember that local businesses may be asked for accommodation referrals by tourists.

Internet
Advertising on the Internet is highly recommended. If you cannot afford your own Web site, there are businesses, and sometimes tourism departments, who, for a fee, may host a Web page for you. Shop around to make sure you find a site that attracts a lot of traffic in order to maximize your exposure.

You will want to ensure your establishment is listed in as many directories as possible. There are many online directories for bed and breakfasts and small inns.

Examples of directories:

For other cost-effective advertising, consult your provincial/territorial government or tourism association because they may be aware of cooperative advertising or promotions opportunities. A referral in a tourism guide of the area or the province could lead tourists to your location. In some regions, highway signage may be an option.

To determine your future advertising strategies, it might be wise to track how your guests found or heard of your establishment.

For more information regarding advertising and marketing, see the following documents:

The Competition Act governs misleading advertising and deceptive marketing practices for all businesses in Canada. The Act defines which marketing practices are illegal and the process of complaint investigation. For more information, visit the Competition Bureau Web site or consult the Competition Act - Misleading Advertising and Deceptive Marketing Practices.

Canada Select - Accommodations Rating Program
An accommodations rating program is defined as "the rating of like accommodations based on the basics of cleanliness, comfort and safety, as well as the extent and quality of facilities and amenities." Participating properties are inspected and rated to ensure they meet consumer expectations. The higher the star rating, the more extensive are the facilities, guest services and amenities. (Note: The majority of lodging properties are in the 2 to 3 star range; there are only a handful of 5-star properties in all of Canada.) If you wish to have your establishment rated, see the Contact Us section of the Canada Select Web site for a participating association in your area.

Guide to Market Research and Analysis
Successful businesses have extensive knowledge about their customers and their competitors. Acquiring accurate and specific information about your customers and competitors is a critical first step in market investigation and development of a marketing plan. The success of companies, new or existing, depends on the precise evaluation of the market and on the development of an effective business plan. The market influences and directs all the aspects of the activities of the company and will contribute to the success or to the bankruptcy of this one.

In developing a marketing plan, your primary functions are to understand the needs and desires of your customer, select or develop a product or service that will meet customer needs, develop promotional material that will make the customer aware, and ensure product or service delivery.

Basic Bookkeeping
A good record keeping system should be simple to use, easy to understand, reliable, accurate, consistent and designed to provide information on a timely basis.

Note: All staff working with cash should be trained to recognize counterfeit currency (see the web page about Canadian Bank Notes).

The legal requirement concerning financial records specify only that they be a permanent, accurate and complete record of your daily income and expenses.

Selecting Professional Services
The use of professional services is essential to the success of a small business. Professionals can have knowledge and expertise in the areas where you may have little. They can round out your management team to ensure your business is operating efficiently.

As an entrepreneur, there are four main types of professionals whom you are likely to consult:

Furnishings and Equipment

When furnishing a bed and breakfast, here are some items to consider:

Bedrooms

  • guest rooms should have a double, queen or twin bed(s), bedside tables, a dresser or writing table or a combination, a mirror, easy chair(s), a desk chair, a bedside rug, window screens and coverings, a closet, a smoke detector, a wastebasket, a locking door and a posted rate card;
  • invest in good quality mattresses; and
  • consider extras such as a clock radio, a full-length mirror, luggage racks, a local newspaper, free wireless connection.

Linen

  • have one bedspread, and two each of: blankets, sheets, pillow cases and allergy-free pillows for each bedroom; and
  • if you send laundry out, have at least three times the amount of linen in use.

Bathrooms

  • consider if you will have shared or private bathrooms;
  • provide a bath towel, a hand towel, a face cloth, wrapped soaps and a drinking glass (paper cups in shared bathrooms) for each person;
  • install towel racks and good lighting near the bathroom mirror;
  • remove or lock away all personal belongings, medicines, cleaning solutions, toxic or hazardous substances, and
  • put a name plate on the outside of a locked door.

Lighting

  • install electrical outlets and lights near the beds, mirrors, desks and chairs.

Flooring

  • ensure the floors can withstand heavy traffic;
  • use penetrating seals on wood floors and opt for inlaid instead of printed vinyl;
  • use rug underlays to prevent skidding; and
  • choose thick and heavy scatter mats so that they lie flat.

Used furniture - Consider buying used furniture as a cost-saving measure. Sources of used furniture could be a bed and breakfast that is closing or dealers in second-hand furniture. The drawback to this approach is that, often, there are no guarantees with the purchase.

Leasing furniture - Another alternative is to lease the furniture or buy-now-pay-later to help keep start-up costs down.

Setting Up a Pay System
Pay administration is a management tool that enables you to control personnel cost, increase employee motivation and reduce workforce turnover.

Checklist for Profit Watching
Making a profit is the most important -- some might say - the only objective of a business. Profit measures success. It can be defined simply: revenues - expenses = profit. So, to increase profits you must raise revenues, lower expenses, or both. To make improvements you must know what is really going on financially at all times.

You can find more information on managing your operations, by viewing our index of Popular Business Topics.

ASSOCIATIONS

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There are many bed and breakfast associations - several of which are at the local or regional level. Although it is not necessary to join a bed and breakfast association, there can be advantages in becoming a member. In general, bed and breakfast associations will:

  • promote bed and breakfasts as an accommodation choice;
  • promote and exchange marketing and promotional ideas among members;
  • promote and encourage cooperation on vacancy referrals among members;
  • establish and encourage high standards of quality and professionalism;
  • represent and advocate on behalf of members.

RESOURCES

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Other resources which may help bed and breakfast owners include, but are not limited to:

Publications
You can find books, magazines and other relevant print material at the Business Link Business service centre, business service organizations in your community that provide Canada Business information, or your public library.

Statistics

Related Web Sites
Canadian Tourism Human Resource Council
The Canadian Tourism Human Resource Council is a national non-profit organization that promotes and enhances professionalism in the Canadian tourism industry.

Canadian Tourism Commission (CTC)
The CTC provides Canada's tourism industry with the tools and strategic information it needs to succeed. The Commission coordinates the trade relations and marketing activities of all the key players in Canada's tourism industry to help them capitalize on this country's potential as a high-demand travel destination.

ADDITIONAL INFORMATION

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Check with your local library, the major chartered banks, your local Chamber of Commerce, educational institutions and business development organizations — some of which offer courses, seminars and workshops.

For business information contact The Business Link. Also check out: Learning @ The Link

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DISCLAIMER
Information contained in this document is of a general nature only and is not intended to constitute advice for any specific fact situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.