Your key performance indicators for your business plan are:
Something called REVPAR which means revenue per available room
Which simply means the amount of money you can realistically make in any given period by each room
Once you’ve established this, then you can look at your profit
Your profit is your REVPAR minus the costs of the room being occupied
These costs must be kept in check as it is so easy to keep adding little touches without paying attention to the cost to your bottom line – your overall profit
Your costs need to take into account the cleaning, laundry, light maintenance such as replacement of light bulbs or tea and coffee supplies, cost of breakfast or anything else that has to be paid when someone puts their head on one of your lovely pillows.
You should include any taxes and commissions to booking agents in this calculation too
This is where most people die of shock
Many smaller bed and breakfast owners don’t do this exercise and so have no real idea how much profit they make, and keep in mind this is still only the gross profit stage.
Let’s now come to net profit
After you’ve taken out the variable costs (those costs that only need to be taken into account when someone occupies a room) we need to look at fixed costs.
These are costs that happen regardless of whether a room is occupied or not
Costs such as home loan, gas, electricity, water, website hosting, online booking software, payment processors etc.
The gross profit you make every time someone sleeps in one of your beautiful rooms becomes a contribution to your fixed costs.
Remember to include payment to yourself in your fixed costs too
No-one can work for nothing
Good luck with everything, and if you need help with working out these numbers, then go ahead and download my 5 key spreadsheets with video tutorials by CLICKING HERE All the spreadsheets are formulated for you, so you just have to drop in your numbers to get the whole picture
Yvonne Halling is the leading consultant, coach and mentor for the small hospitality industry. CLICK HERE to start with her free report “Make More, Work Less While Adding Huge Value to Your Guests (and your bank account)”