Business plan for a sustainable bed and breakfast startup

Business Startup

Business Plan

Company Overview

The new business will be a service business that operates as a small scale bed and breakfast. The hotel will consist of one large single family house that is rented by the room in a major metropolitan area that operates in a few independent niches. The first is that the house will rent a room to visitors on the emerging online platforms such as www.airbnb.com. This service allows homeowners to rent out their extra space to anyone that is interested online. Therefore users can actually stay with an individual or a family as opposed to staying at a hotel for a significantly reduced rate. There are many advantages to this model for both the customers and the room providers.

Another niche that will be targeted is that the house will represent a carbon neutral house that practices fully sustainable practices. The house will generate electricity through both solar and its own wind turbine. It will recycle everything and make sustainable purchases. This will serve a unique niche because many people are becoming more interested in sustainability as ecological problem and climate change are becoming more salient to the general population. Not only can the consumers feel good about spending money on a room that operates sustainably, but there will also be an opportunity for the operator to provide educational services to anyone that might be interested in incorporating some of the designs and practices into their own homes.

Business Case

Climate change, which is also often commonly referred to as global warming, is a phenomenon is probably humanities most critical issue of the future. The emission of greenhouse gases though pollution is responsible for a warming trend that will change how Earth's climate systems operate. As the science has steadily progressed over the last few decades, it has become increasingly clear that humans must change the way that they interact with environment and reduce their carbon footprints.

Another factor is that the population is a driver of pollution since more people emit more consumer more resources such as oil, gas, and red meat which are all substantial contributors to the trend. Furthermore the world population recently climbed to over seven billion people and is still climbing to roughly nine billion people by mid-century which has led many researchers to fear that we are surpassing the limits of how many people our planet can support (Roberts, 2011). New models must be developed for how we share resources to meet the challenges of future generations. One of the models that have been recently introduced is known as the "sharing economy."

"LAST night 40,000 people rented accommodation from a service that offers 250,000 rooms in 30,000 cities in 192 countries. They chose their rooms and paid for everything online. But their beds were provided by private individuals, rather than a hotel chain. Hosts and guests were matched up by Airbnb, a firm based in San Francisco…. Just as peer-to-peer businesses like eBay allow anyone to become a retailer, sharing sites let individuals act as an ad hoc taxi service, car-hire firm or boutique hotel as and when it suits them (The Economist, 2013)."

This platform has allowed many individuals to generate extra income when they the time and many of them focus on their own homes to provide the bulk of their personal revenue. I believe that there is a large opportunity for sustainable operations to dominate a portion of this new trend. There are many different target markets that would find such a service valuable. Many consumers, especially in the younger generations, consider ecological impacts in their decision making process and can actually hold these as a more important factor than luxury accommodations. If fact, many people will actually boycott the luxury industry and prefer more humble accommodations. Airbnb, the website and app that makes it easier than ever for people to rent out rooms or whole apartments for short periods of time which gives small businesses an opportunity to generate rental incomes from their own houses (Benjamin & Westin, 2014).

Net Profit

The budget for the properties should be one million dollars even. The owner will have to put down at least one hundred thousand dollars as collateral to obtain the business which will represent the initial owners' equity in the business. The mortgage was calculated using an online mortgage calculator for thirty years at 6% interest and the monthly payment was estimated to be sixty-five hundred dollars a month (Mortgage Calculator, N.d. ). The property will have 3 bedrooms in the main building and 3 bedrooms in the secondary building. However the owner will live onsite and use one of the rooms for personal space and thus there will be five rooms available to the public and each one will average being rented out 20 days per month. The mortgage and an estimated maintenance amount comes to about eight thousand dollars a month and the rental income, The average expected revenue generated per month from leasing activities will be twelve thousand thus giving the business a gross profit of about four thousand dollars. In addition to the gross revenues, the business will also generate equity as the mortgage is paid down which is illustrated below.

Figure 1 - Mortgage Repayment (Mortgage Calculator, N.d. )