Starting a Bed and Breakfast

The following guide provides an understanding of potential license, permit or registration requirements when considering the establishment of a bed and breakfast in Canada. Prepared by Canada Business, it contains a series of possible steps and issues to consider in carrying out your project. The extent to which the information will apply to you will depend on the circumstances related to your situation.

For further information on individual topics identified herein, contact your local Canada Business service centre. Because this document is only meant as a guide, the Canada Business service centres will not accept responsibility for business decisions made based on the information provided.

BASICS TO START A BUSINESS

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

• Alberta - Business Start-up (Alberta) Info-Guide
• British Columbia - Starting a Small Business in British Columbia (in PDF* format)
• Manitoba - Business Startup Checklist and Pathfinder
• New Brunswick - Business Start-up in New Brunswick
• Newfoundland and Labrador - Business Start-Up Info-Guide
• Northwest Territories - Business Assistance Programs Info-Guide
• Nova Scotia - Business Start-Up Info-Guide
• Nunavut - Business Start-Up Info-Guide
• Ontario - Business Start-Up Info-Guide
• Prince Edward Island - Business Start-up in PEI
• Quebec - Info-Guide - Start-Up and Expansion
• Saskatchewan - Business Start-up Info-Guide
• Yukon - Business Start-Up Info-Guide

Starting a business can be a rewarding undertaking, but it comes with its challenges. Before starting a business 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 which may be required. You should thoroughly enjoy the field you are getting into and believe in your product or service because it may consume much of your time, especially in the start-up phase. Several issues need to be considered such as regulations, financing, taxation, managing your business, advertising, and much more. For further details on issues to be considered before starting, see the fact sheet Checklists for Going Into Business.

STARTING A BED AND BREAKFAST

Questions to ask yourself before starting a bed and breakfast:²

• Is your home located in a desirable setting?
• What makes your home unique or attractive to prospective guests?
• Will the structure of your home have to 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 to accomplish what is needed?
• Are you and your family emotionally prepared to have strangers stay in your 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 a well-organized person (for example, to maintain reservation schedules and prepare breakfast)?
• Do you understand the basics of managing, accounting and bookkeeping?
• Have you done your research (services 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. A 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. For most businesses, an appropriate location is critical.

INDUSTRY OVERVIEW

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The Canadian industry of bed and breakfast comprises 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 possess a unique or historic character. Bed and breakfast homes are characterized by a highly personalized service, and the inclusion, in the room rate, of a full breakfast served by the owner or owner-supervised staff.¹

LICENSES, PERMITS AND REGULATIONS

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One area of rules and regulations that all businesses must comply with is that of licenses, permits and regulations. These can be issued at three levels of government: municipal government (local municipality); provincial government and federal government. When creating a company, the entrepreneur must contact each level.

The question of licenses, permits and regulations is a very complex one 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 licenses. Verify with them also about local regulations, licensing requirements, and zoning by-laws that control property uses in their municipalities.

Then contact your province/territory governent and the federal government. Contacts for both governments can be found in the government listings of your telephone directory or on the Government of Canada (http://canada.gc.ca/othergov/prov_e.html) Web site.

Examples of licenses, permits and regulations that could apply to you when starting your bed and breakfast may include, but are not limited to:

Licenses

• business license
• tourism establishment license
• food establishment license
• liquor sales license
• performing rights license Need a Music License?

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 Protection of Personal Information - Your Responsibilities)
• zoning by-laws
• food regulations and requirements
• on- or off-premise signage regulations
• Competition Act
• advertising.

BizPaL

BizPaL 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. 

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 a wise decision to ask other business owners in your area to recommend one.

The following is intended to remind you not to overlook the complex areas of business insurance. It is best, however, to discuss your specific requirements with an insurance agent. Adequate insurance coverage, particularly in the area of liability is a must.³

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. A satisfied customer is good 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.

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

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:

• Signs and Your Business;
• Plan Your Advertising Budget;
• Advertising Do's and Don'ts;
• Ways to Promote Your Product or Service;
• Marketing Plan Outline; and
• E-Business Info-Guide

The Online Small Business Workshop - Marketing Basics covers the basics from developing your customer profile to promoting your business.

The Competition Act, administered by Industry Canada, 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 - 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."⁴ Participating properties are inspected and rated to ensure they meet consumer expectations. Ratings are based on extent and quality of facilities, services and amenities. 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, contact your local bed and breakfast association (see Association section below) for a listing of Canadian companies who offer this service in your province.

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 document Security Features for 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. There are many types of record books and bookkeeping systems available; for example:

• double entry bookkeeping;
• commercial bookkeeping systems;
• one-write systems;
• computerized systems; and
• single entry bookkeeping.

Selecting Professional Services
The use of professional services is essential to the success of a small business. Professionals can provide 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 areas of professional services with which you may consult:

• lawyer;
• insurance broker;
• accountant; and
• banker (for tips and pointers on dealing with your bank, see the document Dealing With Your Banker & Other Lenders)

Furnishings, Supplies and Equipment

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

Bedrooms

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

Linen

• have one bedspread, a throw blanket 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, hand towel, face cloth, wrapped soaps and drinking glass (paper cups in shared bathrooms) for each person;
• install towel racks and good lighting near bathroom mirror;
• remove or lock away all personal belongings, medicines, clearning solutions, toxis or hazardous substances, and
• put a name plate on the outside of a locked door.

Lighting

• Install wall outlets and lights near beds, mirrors, desks and chairs.

Flooring

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

Leasing Equipment - Another alternative is to lease equipment to help keep start-up costs down. To obtain financing for capital leasing for new or used equipment for the creation of your business, see the document Capital Leasing Pilot Project.

For more information on parts and materials, overhead, stock control and pricing, see the document Business Plan for Small Service Firms.

Setting Up a Pay System
Pay administration is a management tool that enables you to control personnel cost, increase employee morale and reduce work force 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 additional 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 in Canada - 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 these industry associations. 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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Resources which may help bed and breakfast owners include, but are not limited to:

Publications
You may find books, magazines and other relevant print material at any Canada Business service centre and/or business service organizations in your community that provide Canada Business information. Contact the Canada Business centre in your region for the location nearest you.

Statistics

• Canadian Tourism Commission - Research and Statistics
• Statistics Canada:
  • Arts, culture and recreation
  • Personal finance and household finance
  • 2001 Community Profiles
  • Provincial and territorial statistics offices

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

Industry Canada - E-commerce Overview Series: Tourism Accommodation Sector in Canada
This site will inform you about how firms in Canada's tourism accommodation sector are using the Internet and e-commerce to improve their business processes.

Canada 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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When seeking business information, feel free to visit the Web sites for the Business Start-Up Assistant and the Online Small Business Workshop. You may also want to 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 general business information you may contact your local Canada Business service centre by:

• Telephone: Call our toll-free telecentres and speak to a business information officer who will direct you to the best sources of information or refer you to programs and services relevant to your business situation. Some Centres have optional recorded answers to frequently asked questions to speed up service.

• E-mail: You can also send your questions via e-mail from the Web site.

• In-Person: Canada Business offers an extensive collection of business-related publications, directories, leading-edge business products (e.g., videos, CD-ROMs) and access to external databases. Business clients can use these materials on their own or with the help of a business information officer. The Canada Business service centres have arrangements with existing business service organizations in communities across Canada to provide Canada Business information. Contact the Canada Business service centre in your region for the location nearest you.

BIBLIOGRAPHY

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1. Statistics Canada; North American Industry Classification - Bed and Breakfast (1997) No. 721191
2. Running your own bed and breakfast guide; Elizabeth Gundrey; 1989 Tourism Educational Materials, Michigan State University
3. Insurance Bureau of Canada
4. Canada Select

*Note: To download publications in PDF format, Adobe Acrobat Reader is required (available free of charge).

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.

Links Policy
Some of the hypertext links lead to non-federal government sites which are not subject to the Official Languages Act and the material is available in one language only.