With the so-called “Airbnbust” destroying the short-term rental industry, you may be wondering if it’s still a good idea to start an Airbnb. Well, sure – if you have a solid Airbnb business plan to guide you.
You can prevent a short-term rental from going bust by making a well-written Airbnb business plan. It’ll outline your business goals, operational plans, and a schedule for when you want to achieve them.
Airbnbs have reached such a high saturation that competition has become very tough.
But if you have some experience in real estate investing, have worked with coaches, done research about Airbnbs, and have some cash onhand, or accessible financing, then short-term renting can still be a very profitable business.
If you play your cards right.
Having a plan is critical to any business – as it is to any important project or endeavor in life. It’s like traveling with a map or itinerary, or building a house with a blueprint.
Who would want to construct a building project without a blueprint?
You’ll want to have a business plan for several reasons:
So let’s go over the basics of creating an Airbnb business plan. That way, you don’t have to jump into short-term renting with a blindfold on your face.
In other words, you’ll have a higher chance of success.
Now, your Airbnb business plan doesn’t have to be lengthy and complicated. For starters, you can write up an Airbnb one-page business plan and then build on it as you go.
Why do you want to start an Airbnb business? What motivates you?
Do you live in a large city or tourist destination where visitors need a place to lodge in? Do you like hospitality and want to share your space with them? Or are you an avid traveler looking to offset your expenses by renting out your home while you’re away?
Whatever your reason for starting a short-term renting business, state them. Then, set a goal and vision of what you want to achieve out of the business.
Maybe you want to be the top Airbnb listing in your neighborhood or a particular market.
Maybe you want to reach an X-figure income by 6, 12, or 18 months down the line.
Read also: Don’t Start an Airbnb Without Answering These 8 Questions First
Describe the vacation rental landscape in your target area. Is there a strong demand for Airbnbs?
Ideally, you’ll want a place that has a lot of travelers, low seasonality, and relaxed Airbnb regulations.
Now, study the customers. Are they business travelers? Couples on honeymoon? Families on holiday? Traveling nurses looking to rent mid- or long-term?
Find out what products and services are being offered and NOT being offered by existing hosts. See how you might fit into the market and provide what isn’t available yet.
You could identify an underserved demographic and choose to focus on them, making them your target niche. Maybe you live in a college town or a place near a military facility – you could cater to parents visiting family there.
After you’ve zeroed in on a target, find out other Airbnb properties catering to that same demographic. Those listings would be your direct competitors.
Study their products carefully, find out the services they’re offering, and familiarize yourself with their rates.
Read also: Best Markets for Airbnb Investing: The 10 Hottest Places
By specializing in a target segment, you can now make your property more appealing by providing the amenities that they want and delivering a message that speaks specifically to them.
Come up with unique selling points that will outperform your competitors. This will be your branding. Branding is very important because it gives your business a unique identity that will resonate with your target niche, making you stand out from the crowd.
It could be better pricing, a special feature in your property, or additional services that will make guests choose you, instead of the others.
Does your listing have a parking spot? A washer-dryer? Then convenience is your selling point.
How about a spacious backyard or patio? A chef’s kitchen? A pool? Then creature comforts and small luxuries are the name of your game.
Can you offer a guided tour of your area? That personalized service would set you apart.
Think of ways to reach those target customers with your message.
Your channels should include both traditional and digital methods: handouts, email marketing, social media, and your local tourist information center.
You can also partner with local businesses, create your own website, and of course, utilize online booking channels like Airbnb, Vrbo, Booking.com, and the like.
Outline the day-to-day operations of your Airbnb business. These will include booking or calendar management, guest communication, housekeeping, maintenance, and accounting.
Then decide on how you plan to implement these processes. Are you going to do them yourself, outsource them to a professional management company, or employ cohosts and contractors?
This is also the place to state your planned legal structure. Find out the pros and cons of forming an LLC, an S-corporation, and a sole proprietorship, then decide which one will work best for you.
Make a projection of your rental income, expenses, and profit for the next 2 years. Make sure you include the upfront, ongoing, and any incidental but foreseeable expenses as well.
Don’t forget to consider how much of the year you want your space to be open. That’ll help determine how many people you can actually serve.
You should also think about seasonality. Will you charge more during holidays or special events in your area, or will you offer discounts around those times?
These will help you make forecasts for sales, costs, and cash flow. They’ll also give you an idea of how to price things, letting you predict if you can get your desired ROI or not within a certain time frame.
Finally, it’s important to draw up a financial growth plan for the next 3 to 5 years.
You’ll want to make projections for any need to upgrade your amenities, hire more staff, offer new services, or scale to the next property. In that case, you might need to get more financing.
It’s also smart to consider both optimistic and pessimistic scenarios. That way, you can anticipate the outcome of each while you have time to build credit and prepare – either for life’s contingencies, or for a family, a house, or a retirement fund.
As mentioned earlier, your short-term rental business plan doesn’t have to be long and exhaustive for now.
It’s exactly what it is – a plan. You’ll see how it may or may not be implemented as you go, and you can adjust it as needed. Treat it like a living document, evolving and expanding through the years.
Make it a point to consult it yearly, even every 6 months to keep your business in check.
With an Airbnb business plan in place, you’ll have the direction and confidence you need to act on your business goals.
Ready to learn how we built and operate a $2M/year short-term rental business, operate properties throughout the USA remotely, and acquired 70+ properties without owning any in just 2 years? Attend our free online master class to learn how you can do the same. Click here.
