This is a BIG topic – so big, in fact, that we are fleshing out an in-depth online class that will be available to our clients in the near future. I’ll do another post when the baking is done, but in the mean time, here are a few of the most important steps:
- Start planning early. How early? I’m not intending to be facetious when I say “Before you buy your Inn”. One of the first rules of investing that I learned the hard way is “You make your money when you buy, not when you put it in your pocket after you sell.” And let’s face it – no matter what other reasons you may have for buying and owning a B&B, it is a pretty major investment!
- Get an accurate understanding of what your Inn is worth on today’s market, from a professional that understands the specifics of our industry. Whether it’s an MA&V from us or somebody else, determining the value of a B&B or other boutique lodging property as a business is much more complicated than the simple “rule of thumb” estimate that is so often used…and that works both ways. If your asking price is too high, the property will be very difficult – if not impossible – to sell, and it will just stay on the market for way too long (which creates its own set of issues!). If it’s too low, then you’re leaving money on the table that you could have used for your next adventure!
- Work with a team you can trust. Of course, we would be happy to be that team – but if not us, then make sure that whomever is on your team understands not just the ins-and-outs of real estate and business transactions, but also things like how having a property on the market can effect your ongoing business operations; some of the trade-offs involved with capital expenditures; and how your online marketing presence will impact your sale. It also helps a LOT if your team has a nationwide reach, instead of just focusing on your local market.
- Understand the tax situation that surrounds your sale. Particularly if you have owned and operated your inn for a long time, the taxes due after the sale can sometimes make it feel like you have nothing left to show for all of your hard work. Talk with your CPA about this way in advance of putting your business on the market, because there are things you can do ahead of time to minimize the tax bill…if you PLAN for it ahead of time!
- Make a clean break after the sale. It’s perfectly natural to want to see how the next stewards are treating your baby (and yes, most innkeepers feel like they are selling a child!), but the new owners deserve the chance to make it truly theirs (mistakes and all). Plus you’ll sleep much better at night.
