Author: Stewart Hindley

What to Look for When Purchasing a B&B or Guest House

Posted on by Stewart Hindley

Many people dream of owning their very own bed and breakfast (B&B). Running a successful B&B business can be exciting, rewarding and profitable, but there are a number of other factors you should consider before taking the plunge.

With the average B&B business in the UK generating £70,000 a year, the B&B industry is thriving, making it a great business opportunity for those looking to earn a living doing something they love. But what should you consider when purchasing a B&B?

Do your research

First and foremost, before purchasing any property or business, you should always carry out extensive research into the property and the area surrounding your chosen B&B business.

Some of the questions you should be asking include when was the B&B established, its yearly turnover (if this is not disclosed, ask why!) and whether the business is currently active or not.

What’s included in the sale?

Before you sign on the dotted line, make sure that you find out what’s included in the sale price. For example, fixtures & fittings are usually included in the purchase price check that this is the case, how many employees does the business have, and is there any living accommodation?

The last thing you want is to be out of pocket before you even get the keys to your B&B.

Why is it being sold?

A lot of people are afraid to ask the question “why are you selling up?”

But this is one of the most important questions you should ask when looking to buy a B&B. After all, you don’t want to be investing in a B&B business that’s struggling.

Of course, many B&B owners sell for perfectly plausible reasons, such as for family or due to a change in circumstances. But it’s important to ask.

Where do you stand legally?

You should understand all of your legal obligations before investing in a B&B, including any food hygiene legislation you will need to adhere to, health and safety regulations, and any fire precautions that will need to be in place.

You should also be aware of your insurance and liability obligations, terms and conditions when it comes to bookings, property damage and cancellations, as well as small claims.

You may wish to attend a Bed & Breakfast course which will cover all aspects of owning and operating a bed and breakfast business.

How much deposit do I need to buy a bed and breakfast?

A deposit is required for commercial properties. With this in mind, if you’re looking at a minimum deposit for mortgage, you can expect to put down around 30– 40 percent of the asking price – this is standard for all commercial properties.

If you’re considering purchasing a B&B, we can help. Our expert team is perfectly placed to help you obtain the best financial solutions on the market, so get in touch today.

How Much Deposit Do I Need to Buy a Bed and Breakfast?

Posted on by Stewart Hindley

Opening a bed and breakfast (B&B) can be a great way to generate income while stepping back from the typical 9 to 5. It’s hard but rewarding work, and enables you to create a business that reflects your personality and passion as a hospitality business operator.

However, unless you live in a large property with a significant number of spare rooms, you will need to invest in a new property in order to set up a B&B business.

In most cases, that will mean taking out a mortgage. But what sort of mortgage will you need? And how much deposit will you be expected to pay when you buy your bed and breakfast?

As with any mortgage, different lenders will have different requirements when it comes to deposits for a B&B. The type of mortgage you will need will depend on a number of factors, including how much of the total space in the property will be used for commercial purposes.

Deposit for a commercial mortgage

In most cases, if you are using less than 40% of the property for personal use, you will require a commercial mortgage, or a semi-commercial mortgage.

Most commercial mortgages require a deposit of between 30% and 40%, depending on the level of risk they deem your business to come with and the type of commercial mortgage you have applied for.

Buying a B&B without a deposit

Whichever way you buy your B&B you will need a deposit.

If you don’t have a cash deposit for your bed and breakfast, you may be able to release equity from your existing property or another property to release the necessary funds for the purchase of the new B&B and Stewart Hindley can help with this.

If you’re considering buying a bed and breakfast, it’s important to speak to someone experienced in the hospitality finance sector to ensure that you are aware of all the funding options available to you. Get in touch to speak to one of our skilled and experienced team.

How To Turn Your Home Into a Guesthouse

Posted on by Stewart Hindley

Running a guesthouse can be rewarding and fun, not to mention a great way to make money from your property without having to sell it.

However, it’s important to keep in mind that running a guesthouse is a big commitment, and there are rules to follow and standards to meet.

Here are just some of the things you need to consider if you’re thinking of turning your home into a guesthouse.

Starting a guesthouse business

What do I need to legally open a guesthouse?

Before you can open your guesthouse, you’ll need to acquire the relevant permissions, so your first step should be to contact your local council to see what is legally required.

If you’ll be carrying out building work on the property, you may need to apply for planning permission. Regulations change frequently and vary depending on where your property is located, so be sure to check in with your local planning office.

Even if you aren’t making any structural changes to the property, you might need to complete a change of use application before you can open your home as a guesthouse. Again, ensure you check these details with your local council.

You’ll also need to comply with fire and gas safety legislations, as well as food standards if you’re planning on serving any meals on the premises.  Find out more by contacting your local environmental health department.

Finally, make sure you contact your mortgage provider and insurer. You may need to update your policy and will need to switch your existing mortgage to a commercial mortgage.

Fit out the rooms in the guesthouse

Once all the relevant permissions are in place, you’ll need to ensure that your property is up to the job of hosting visitors. That means properly furnished bedrooms with facilities including WiFi, TVs, storage space, and tea and coffee making facilities. Today, most guests will also expect their room to come with an en suite bathroom.

If you’re offering breakfast or other meals at your guesthouse, you’ll need a dining room where your guests can comfortably enjoy their meals.

Finishing touches such as bathrobes, slippers, and washing products can go a long way to ensuring your guests have a memorable experience.

How to market your guesthouse

If you want to promote your guesthouse effectively, a good website is essential – make sure it’s responsive on all devices, appealing, and optimised for search engines such as Google. Social media platforms like Facebook and Instagram are also useful ways to market your guesthouse successfully.

Running your guesthouse

Running a guesthouse can be immensely enjoyable and rewarding, but you’ll also come up against several challenges.

One thing to always keep in mind is that this isn’t just a hobby, you’re running a business and it’s important to approach every aspect of your guesthouse with a business mind to ensure that it is a success.

That’s not to say you shouldn’t have fun! Part of the attraction of running a guesthouse is the interaction with guests, building lasting friendships and ensuring visitors get the most out of their stay.

Running a guesthouse is flexible – you can choose when you want people to stay and when you’d rather have the space to yourself. But it’s important to set boundaries if you want to avoid working 24/7 and burning out. Have house policies in place, including setting out the times breakfast will be available and when reception service will be provided.

Get in touch

If you’re thinking of turning your home into a guesthouse, get in touch. We can help you find the most effective way to re-finance or release capital to launch your guesthouse.

6 Things You Need To Know Before Buying Commercial Property

Posted on by Stewart Hindley

Guest Blog

In most circumstances, buying property can be considered a sound investment. This applies as much to commercial property as it does to a domestic property purchase. But in the same way that you would not buy a private house until you had gone through all the checks and put everything in place ready to make an offer, commercial property also requires that you attend to certain preliminaries before making any commitment. So here’s a list of six tasks which should definitely be on your to-do list.

  1. Does this property meet your business needs?

It’s true that a rental property may offer a business a certain extra degree of flexibility, but the downside is often that the business owner has little control over future rental costs. By comparison, a property owner agrees mortgage terms at the outset and therefore has much more control over future outgoings. In addition, where business tenants may have limited options to modify their premises, commercial property owners are free to make any alterations their budget (and the local planning laws) will allow.

It’s usually wise to invest in something slightly larger than you currently require. That means you have room for expansion when needed, and there’s always the option to rent out part of a building to generate additional income while leaving yourself some flexibility to make further changes as required.

Remember too to check ‘business basics’ like adequate parking facilities and good access to the transport links your business trading demands.

  1. Is this the most suitable type of property?

Unless you are an experienced investor, don’t buy a commercial property just because it’s an irresistible deal. Commercial property falls into distinct categories such as business offices, retail premises, industrial sites, leisure accommodation and special-function units like schools and petrol stations. As a novice, that means you should always go for purpose-built property and forget any ideas about conversions and/or complexities like possible ‘change of use’ applications.

  1. Have you set your budget?

Your pending commercial property purchase is a business acquisition and thus will need to feature in your business development plans. That in turn means exploring, and fixing, the budget you have available prior to searching the market. And given that this purchase is also a business investment, part of your planning should also quantify what return you would expect for this capital injection, and specify the period over which you will reap the rewards.

  1. Optimise the location

Most high-performing businesses will positively benefit from an optimum location chosen wisely. That means making relevant decisions e.g. about city-centre or out-of-town sites, the location of your potential market, how close you want to be to your rivals, as well as considering the future growth potential of the area.

This is one element where it will pay to speak to professionals such as estate agents and business brokers.

  1. Assess the local property market

To make an informed decision, you will need to check features such as: local commercial property values and pricing trends, property taxes, mortgage interest rates and rental values. This will give you detailed information about how much your proposed commitment might cost, and what returns you might expect. And as regards investment returns, your analysis will be more helpful if it can establish what your short-, mid-term and longer-term prospects will look like.

  1. Check commercial mortgage availability

There is, of course, little purpose in searching for a property if you are not eligible for mortgage funding. This should be considered as two separate issues:

  1. a) gaining acceptance ‘in principle’ for commercial mortgage funding up to a certain amount;
  2. b) securing a commercial mortgage on a property you intend to purchase.

Obtaining a mortgage in principle is largely a matter of having a good credit record and meeting a provider’s lending criteria, whereas agreeing a mortgage on a specified property is likely to involve detailed structural surveys and property assessments.

Here again, it is likely to be in your interests to seek specialist advice in each of these areas, especially given that commercial mortgage providers will require such detailed information to decide whether they wish to quote mortgage terms.

Finding a commercial property

You may find commercial properties listed on different online sites and perhaps be tempted to go it alone armed with your portfolio of information. However, just as in the domestic property market, the input of local professionals and/or those who specialise in your business sector can prove invaluable. They will ensure you find the best property for your needs and secure a good purchase deal which meets your business investment objectives.

By Matthew Hernon is an Account Manager at Dynamis looking after Business Transfer Agents, Franchises and Commercial Properties across BusinessesForSale.com, FranchiseSales.com and PropertySales.com.

What You Need to Know About Financing a Pub Purchase

Posted on by Stewart Hindley

Many people who run pubs start off as tenants or leaseholders before considering buying a freehold once they’ve built up their knowledge, skills and experience.

Buying a pub and running it as a free house means you will be an independent business without any ties to a specific brewery or company – so you’ll be fully in charge of every decision.

Of course, buying a pub will usually require some form of finance. If you’re thinking about buying a pub, here’s what you need to know about financing a pub purchase.

Commercial mortgage for pubs

Taking out a commercial mortgage is another way to fund your pub. Working in the same way as a traditional, domestic mortgage, a commercial mortgage will be secured against the property and can form up to 75 percent of the market value of the pub.

Commercial mortgages can be surprisingly affordable. Unlike residential mortgages, they do not have standard rates of interest, meaning the lending manager will look at each application on its own merits in order to determine the level of risk involved and set the rate accordingly.

Of course, securing a mortgage that allows you to buy a freehold or leasehold pub naturally involves several different steps to those required to finance a house purchase.

Merchant cash advance for pubs

While a merchant cash advance is not a suitable finance method for funding the initial purchase of your pub, it may well provide an effective solution for covering costs such as equipment or other unexpected expenses, as well as expansion, stock, or renovation.

If you have a sudden or unexpected need for finance to keep your pub running and your customers happy, a merchant cash advance could provide a quick and flexible solution. This type of pub financing works particularly well for pubs that accept credit and debit card payments, as the advance is repaid this way.

Expert advice

If you’re looking for funding to finance a pub purchase, one of the first things you should do is consult a specialist broker who will be able to provide further information about the options available to you, and search the market for the best possible offers.

At Stewart Hindley, we are experts in this sector. Get in touch to find out more or to arrange a completely free, no-obligation consultation.

4 Tips for Appliance Safety in Your B&B

Posted on by Stewart Hindley

Beckie Hatton is a Product Manager at Home Appliance Care, so she understands exactly how important it is to have safe and efficient electrical appliances. Here, she offers her advice to B&B owners who want to follow the rules and keep guests safe.

All B&B owners have a legal responsibility to safeguard the public and their employees from harm (legislation.gov.uk). More specifically, you must make sure your electrical appliances are well-maintained and fit for purpose to prevent fires, gas leaks, electric shocks, and other disasters.

Small hospitality businesses that fail in their legal obligations can face serious consequences, from penalties and lawsuits to property damage and fatalities. So, it’s important to stay on top of maintaining the electrical appliances in your kitchen, guest rooms, and communal areas to keep your guests safe.

Below, I’ll be sharing some of my tips for making sure the appliances in your B&B are safe to use.

Which appliances to check

Any utensils and appliances that are battery operated or can be plugged into the mains must be well maintained and regularly reviewed. You should check them for signs or wear or damage at least once every month as part of your fire risk assessment (gov.uk), and they will have to be serviced or PAT tested every 6-12 months to be declared fit for use (pat.org.uk).

When you first think about which appliances in your B&B could be considered high-risk, most people rightly think of ovens, toasters and straighteners that are designed to heat up. But washing machines and tumble dryers account for more than a third of domestic fires, significantly more than cookers (11%), so it’s crucial that you keep on top of the maintenance of these appliances in particular (Which?).

Should I call an engineer?

You should contact an electrical engineer if you have any concerns about the internal wiring of your appliances rather than attempt to fix them yourself. Tampering with electrical systems can cause injuries or fatalities, and if you don’t have the right tools or knowledge you could put yourself and everyone else on the premises at risk.

Plus, tampering with your appliances usually voids their warranty and your insurance policy, so you’ll have to cover the cost of repairing and replacing any damaged machines. It’s safer and cheaper overall to let the professionals deal with it instead.

Common faults to watch out for

External issues like loose plugs, switches and outlets can often be amended by a quick screw retightening, and you can also replace any broken casings yourself using just basic tools and knowledge — but you must switch off and unplug everything first so there’s no electrical current.

If you notice your plugs, outlets and switches are getting warm, it could be a wiring issue that can cause a fire if not immediately fixed. In this case, these will need to be repaired or replaced as soon as possible and you should not attempt to use the appliance while you wait for the electrician.

Flickering lights or displays on your appliances, as well as your bulbs burning out too quickly, can be indicators that there is a loose connection somewhere inside the machine. If you notice any of these problems, you should stop using the appliance and call a professional immediately.

How to look after your appliances

Never skip your monthly fire risk assessments, annual services, or scheduled PAT tests. Fires and other electrical dangers don’t just happen as the result of faulty products — appliances that aren’t properly maintained pose a risk too. Failing to clean them properly, check them over regularly, and take care of small problems can lead to huge disasters, so you must have adequate maintenance strategies in place to tackle all these issues.

Encourage your kitchen staff to clean appliances at the beginning and end of each day to prevent build ups of food crumbs, grease and other debris — just be sure that they follow the manufacturer’s instructions for doing this safely. Cleaning in a way the manual suggests will also protect your appliances from corrosive damage which can lead to electrical issues, such as loose wiring. So, hang onto your user manuals and double check all their cleaning practices are compliant with the manufacturer’s suggestions.

These are just some of the ways you can make sure the appliances in your B&B are as safe as possible. By giving them a quick look over as often as you can and promptly reporting any issues to an electrician, your appliances can be safe for use and you can get on with managing your guesthouse.

Everything You Need to Know About Commercial Mortgages

Posted on by Stewart Hindley

Whether you’re thinking of investing in a property for your business or you want to free up equity from an existing property, a commercial mortgage could be the answer.

Here’s our guide to everything you need to know about commercial mortgages.

What is a commercial mortgage?

A commercial mortgage is a mortgage that is specifically designed for buying or refinancing land or property for business purposes.

Commercial mortgages are typically available to cover 70 – 75 percent of a property’s value, and usually last between three and 25 years. Business mortgage plans differ from standard residential mortgages in several ways.

You’ll likely have to pay a higher interest rate than a residential mortgage and there aren’t generally any fixed rates available. However, in comparison to business loans, commercial mortgages do tend to offer better rates as they are secured against the property.

Is a commercial mortgage right for you?

If you’re a business looking to purchase a property or release value from an existing building, which can then be re-invested into the business, a commercial mortgage could be for you.

There are several benefits to taking out a commercial mortgage, for example:

  • The interest paid on a commercial mortgage is tax deductible
  • If the property increases in value, your equity could also increase

Is it hard to get a commercial mortgage?

Anyone can apply for a commercial mortgage, from small start-up businesses through to large, well-established enterprises.

Of course, like any mortgage, to qualify for a commercial mortgage, you’ll need to pass your lender’s eligibility checks and meet certain criteria. These checks typically analyse:

  • Cash flow and any debts
  • Projected income
  • Your ability to pay a deposit, usually ranging between 20 – 40 percent of the loan amount
  • General income, credit and assets

Just like a residential mortgage, it’s important to search the market for the best possible deal available. What’s more, commercial mortgages are generally quite complex, hiring a specialist broker can help make the application process far easier, while ensuring that you get the best deal on the market.

At Stewart Hindley Commercial Finance, we’re experts when it comes to commercial lending. With extensive market experience and knowledge, we can provide information and advice, and source the best possible deals.

Get in touch for a free, no-obligation consultation to discuss your commercial mortgage requirements.

The Definitive Guide on How to Market Your Hotel

Posted on by Stewart Hindley

You’ve set up an incredible hotel, with comfortable, stylish rooms, all the very latest amenities, and a great team.

But what use is having the best facilities, location, and customer service if no one knows you exist? That’s where marketing comes into play.

Building an effective marketing strategy for your hotel will help you to reach out to potential customers, maximise bookings and boost revenue.

Here’s our definitive guide to successfully marketing your hotel.

Get Online

Today, being online and present in the digital space is everything in the world of marketing. With at least 95 percent of consumers carrying out research online before the make any travel purchases, it’s vital that your hotel has a website if you want to effectively market it.

Your website is your shop front, and should be professional, credible, and show your hotel in the best possible light. Include plenty of high-quality images, video content, and details about the rooms and amenities.

It’s also well worth considering integrating an online booking system into your site to make it as seamless, quick and easy as possible for potential guests to arrange their stay.

Ensure You’re Easy to Find

Having a website isn’t enough. If you want to ensure your hotel is receiving as many enquiries as possible, it’s vital that your audience can successfully locate you online.

This means ensuring that your website is optimised for search engines (Google) – so, when guests search for hotels in your area, you come up as high as possible in the rankings.

Make The Most of TripAdvisor

While your website and social media platforms will allow you to tell everyone just how great your hotel is, TripAdvisor allows your guests to tell them – and that can be significantly more powerful.

Before booking a room at your hotel, most guests will check your reviews, so managing your online reputation is crucial.

TripAdvisor is the world’s largest travel review site, with approximately 390 million unique visitors each month. This presents a huge marketing opportunity for hotels.

So, make sure you set up your free TripAdvisor profile, populate it with as much useful information as possible, regularly check reviews and engage with your guests.

Respond to Reviews

Once you’ve started receiving reviews, it’s important to monitor them and respond accordingly.

It’s only natural that you’ll receive a less-than-perfect review from time to time, but the nature in which you respond to those reviews will make all the difference.

Make sure you respond to any negative reviews as quickly as possible and try to resolve or address the guest’s feedback or complaint in a useful manner.

Remarketing is Essential

Abandonment rates for booking hotels online are high, meaning plenty of potential guests will visit your site, start the booking process, and then get distracted and not complete the booking. This is where remarketing comes in.

A remarketing campaign will allow you to remind your guests about your hotel, provide them with extra incentives to book, and make completing the process as easy as possible.

Reward Customer Loyalty

Marketing isn’t just about targeting new customers – it’s just as important to reach out to existing customers and encourage them to revisit your hotel.

A customer loyalty scheme is an effective way to get your guests to return time and time again, by offering discounts and rewards to regular visitors.

Get in Touch

For more information about the hospitality business, and in particular hotel finance, please don’t hesitate to get in touch.

Is Short Term Finance Right For You?

Posted on by Stewart Hindley

Many businesses will find themselves in a position where they need to secure additional funds in order to cover expenses or take the next steps in growing their enterprise.

Of course, with finance, it’s important to carefully consider which type is right for you.

Here’s our guide to short term finance which will help to establish whether it’s right for you.

What is short term finance?

Short term finance is any borrowing that is paid back over a shorter period, typically in under one year.

What are the types of short term financing?

The main types of short term finance include:

Merchant cash advances

For companies receiving payments via credit or debit card, merchant cash advance usually relatively easy to secure and quick to fund.

Merchant cash advances are one of the most expensive types of short term finance, with the APR potentially reaching triple figures, depending on total sales each day.

The benefit of this short term funding method is that repayments are directly tied to sales, so if the business has a quiet month, the repayments will be lower in response.

Short term loans

Short term loans are typically less expensive than merchant cash advances. You’ll receive capital from your lender, which you’ll pay off with interest following an agreed schedule – just like a regular loan.

The key difference with a short term loan is that it is paid back over a much shorter period. A further benefit is that funding can usually be provided quickly (sometimes within 24 hours). However, there are also several disadvantages involved in this type of short term lending – you’ll be required to pay the loan back relatively quickly, make frequent payments, and the interest rate will usually be high.

Business line of credit

Business line of credit is one of the most affordable types of short term finance available.

Working in a similar way to a business credit card, if you qualify for a business line of credit, you’ll have access to a line of credit, from which you can pull working capital. You only have to pay back what you spend.

The benefits of business lines of credit is that they typically come with lower APRs than business credit cards, making them a great back up to have on hand ready to cover quieter spells or temporary cash flow issues. This short term finance method can be accessed in as little as one day.

Invoice financing

Invoice financing provides an advance payment for your business’ outstanding invoices.

This is a relatively quick and affordable form of short term finance, allowing with rates of around 3 percent plus 1 percent for each week the invoice remains unpaid. An advance can cover anywhere from 50 – 90 percent of an outstanding invoice. When the customer pays, you’ll receive the remaining amount minus the interest incurred.

What are the advantages and disadvantages of short term finance?

If you’re considering applying for short term finance, it’s important you’re aware of the pros and cons that come with this type of lending.

First, let’s take a look at the advantages of short term finance:

  • Access to quick capital when you need it most
  • Relatively easy to quality for, even with a low credit score or short business history
  • Shorter term means finance typically accumulates less interest

Of course, there are also disadvantages to consider:

  • Higher ARPs
  • Shorter payment terms, which can put strain on small business
  • Frequent payments
  • Arrangement fees and Exit fees may be applicable

Find out more

With extensive market knowledge, we’re experts when it comes to short term finance for businesses. To find out more about short term finance, the options available, and whether short term financing is right for you, please get in touch.

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