B&Bs most expensive small business to purchase

By Liam Garrahan contact

- Last updated on GMT

Image credit: Thinkstock
Image credit: Thinkstock

Related tags: Small business

Research by Direct Line for Business has shown that B&Bs are the most expensive small business to purchase, while pubs are among the least expensive.

On average investment in a B&B will return £1 for every £4.49 spent on the business whereas a pub will sell for 96p per £1 of turnover.

Nick Breton, head of Direct Line for Business, told BigHospitality that start-up costs add up quickly for the B&B industry, but that with the growing staycation trend the businesses have a bright future.

“B&Bs will include the purchase of expensive assets such as property, property contents, website and domain registrations, social media feed access and good will which all add up. Indeed coupled with the rise of the ‘staycation’, the future is strong for B&Bs,” he said.

Breton said that although pubs have a high turnover, their numbers are in decline and landlords should assess the profitability of any new pub ventures before purchasing while also taking into account other costly factors.

“The number of pubs and consequently their value has, in recent years, steadily declined. Whilst the high turnover of pubs can be seen as a positive marker it isn’t the whole story. Current and future profitability need to be thought about when assessing the potential value of a business as well as the assets that come with the business,” he said.

“There are many different models for valuing a business so it is important potential purchasers analyse the valuation price using a range of metrics. As such, ensure that you have undertaken thorough due diligence and recognise that you are not just taking on a business, you are potentially taking on staff, stock and property, and as such all of this needs to be protected.”

Related topics: Trends & Reports

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