Starting a pub business

27 April 2005
Starting a pub business

Running a pub is the dream job for many people; but anyone with even a little experience of working in a pub will know it is NOT an easy option and should not be embarked upon lightly. Have a good hard think about what it takes to be a publican and what will be asked of you.

Couples sometimes consider it the ideal way to run a business together, but be aware that often you'll be working opposite shifts, so you may spend less time together than you imagined.

The good news is that running a pub can be less financially risky than starting your own restaurant or hotel. It is possible to take on the tenancy of a pub, which still means being your own boss but with less financial responsibility for the actual premises. Leasehold and freehold pubs require considerably more financial investment.

A word of advice: if you've never run a pub before, don't run before you can walk. Consider applying to be a manager with one of the large pub companies. This is particularly advantageous if they also have a tenanted estate. They will train you to run a pub and, once you are confident, they may help you take on one of their tenanted pubs.

The big picture

Location, location, location

If you've decided to go down the tenancy route, your choice of pub may not be up to you, but where the brewery feels you'll be best suited. But do have an idea whether you're an inner-city or a country-walks type of person. This is also true if you're buying your own pub - you'll be running the business, so it's vital that it fits in with the lifestyle you lead and want.

If you're planning to have a food-led pub, you'll need to do some market research on the population around the pub and whether it can sustain your plans. Ask local estate agents about the demographics of the area for a start.

There's plenty of good, basic advice on what to look for when buying a pub, along with some pointers and tips on other matters to consider.

The big idea

In many cases, taking on a pub will not require you to have a strong "theme" in mind. If it's a successful business, you may be more than happy to tweak it a little and keep it running as is. If you're taking on a tenancy for a brewery or pub company, you'll have to sell the idea to them first; but if they like it, they may help you finance it.

However, if you're buying a pub with an eye to making a complete change in its style, food or atmosphere, you'll need to have thought it all through carefully.

See if your idea has what it takes to become reality by road-testing it at

Financing your dream

Again, your cheapest option will be to take on the tenancy of a pub where the brewery or company is responsible for the repairs and maintenance of the building. A leasehold pub is more expensive, and a freehold pub is the most expensive, as you own it outright and the business is truly yours.

If you need to raise finance to buy the leasehold or freehold, you'll need to write a business plan to show you've really thought about the business.

There's some helpful hints and good advice on writing a business plan on the Bank of Scotland's website

Who's paying for this?

On the whole, the major banks see both freehold and leasehold pubs as a good lending proposition; but before you get too excited, they don't lend that much. For freehold purchases the buyer usually contributes at least 30% of the price, and for a leasehold the share increases to 50%.

So you'll still need to come up with some of the finance. Armed with your business plan, here's our guide to the types of finance available.

For some other ideas on who might be interested in financing your idea check out

If you're still struggling for financial assistance, there are grants and advice from a variety of bodies.

Information on the Small Firms Loan Guarantee can also be found at

Down to the detail

Legal eagle

From 7 February 2005, an important legal change to being a publican came into being in England and Wales. Rather than the old system of premises being licensed and a person being deemed fit by a justice to run those premises, now you as the licensee must also hold a personal licence - rather like needing a drivers' licence to drive a car.

For more information check out the following:

Info on the Licensing act 2003

To apply for that personal licence you will need an accredited licensing qualification. The awards body of the British Institute of Innkeeping,, has developed the National Certificate for Personal Licence Holders in order to meet this requirement.

There are other matters that could cause you trouble with the law if you're not aware.

Food hygiene

This will depend on whether you've got a kitchen and do food at the pub. If you do, or are planning to have one, call the environmental health officer to come in for a chat and tell you what work needs to be done before you meet the appropriate standards. EHOs are there to help, and on the whole are very happy that you're consulting them early before a situation gets out of hand.

The Food Standards Agency produces a downloadable booklet on things to be considered when opening a new catering business.

There are food hygiene requirements for anyone handling food, and you must make sure any staff you employ are trained to the correct standard.

By 2006 it will be a legal requirement to demonstrate tangible systems - ie, documentation, rotas and schedules - for HACCP (hazard analysis, critical control points) procedures. So it's best to put the systems in place while setting up the business.

Health and safety

Any premises open to the public need to conform to fire regulations, so contact the local fire officer for advice and to arrange the final inspection.

And don't forget, there is now the Disability Discrimination Act, which affects access to all public buildings by the disabled, so be sure that any plans for alterations take these new requirements into account.

Info on the act

Disability Rights Commission

Hiring staff

Don't fall foul of employment laws - eg, discrimination. This is an area that is constantly evolving. From 2006 it will be illegal to discriminate on the basis of age. Candidates can take you to an industrial tribunal if they feel they've been discriminated against at the recruitment stage, so be aware of your obligations and their rights. And if the employee isn't working out, know the correct way to go about firing them.

For more info on writing job ads, writing a job description, hiring staff, writing job offer letters, setting up employee appraisal schemes and, if it all goes wrong, firing them, click on HR.

Music licences

While you're thinking about licences, you'll also need two licences if you play music in public - one from the Performing Right Society and the other from Phonographic Performance . Expect to pay about £90 for the former and £42 for the latter.


Dull, maybe, but essential. Think buildings, contents, fire and liability insurances, and that's just to get you started. Don't forget to think about the conditions of your kitchen equipment insurance.

Money matters

If finances aren't your thing, acknowledge the weakness and hire in the experts - the brewery, if you are a tenant, may be able to help with recommendations. Accountants are worth their weight in gold if you find one that is on your wavelength. If you can find one that has a few other pub clients, all the better, as they are likely to have some knowledge of the business.

You'll need to have a PAYE system set up for your staff and ensure national insurance contributions are met. You may want to have a bookkeeper to help tally the invoices and the daily takings.

Depending on the turnover, you particularly need to know about VAT registration and all the paperwork involved, although you can now do VAT returns online as well as pay an annual flat fee if your business turnover is less than £150,000.

Making it look pretty

Refurbishing your property is important in defining what you want your pub to be. Again, the pub company of a tenanted pub may be willing to help out here and, crucially, may have done market research already to help guide you.

If it's your own pub, keep a tight rein on the financial side of any refurbishment. Problems seem to arise that are rarely predicted - although having a decent survey during the purchase process can help avoid this. Make sure builders submit new quotes if the job changes, and be certain the work is necessary before giving the go-ahead.

Shout about it

If you're lucky, there will be existing trade; but if you've had to close for some time to refurbish, or the previous owner ran a completely different style of pub, you'll need to think seriously about marketing the pub.

This isn't just about advertising, which can be expensive and may not target your market accurately.

Sit down and write a marketing plan to help keep you focused and on track, rather than responding ad hoc to opportunities that may or may not present themselves.

Here are just a few ideas for marketing your new pub:

Even if you can't afford someone to do publicity for you, know the basics yourself and put them into action.

Network locally, joining business associations and local chambers of commerce. This includes supporting local activities. Maybe you could agree to support the local football side in some way, which can win you valuable publicity and goodwill.

Try to find an unusual angle to get your pub featured in the local newspaper's editorial section - whether it's a large collection of unusual liquors or the Thai take-away that you've opted for as a food offering.

Think of promotional offers - two for ones; happy hours; buy a meal, get a free bottle of wine - as incentives to bring in the punters.

Create your own website to showcase your menus, themes, special events and evenings, and to highlight your star chef - it's a relatively inexpensive way of advertising.

Look for any guides on the internet that offer free listings for your premises.

Having an official opening can help generate local interest and awareness of your pub - invite any of your financial supporters, friends, family, local journalists, dignitaries and anyone who has helped out in the start-up process. In addition to being a good way of thanking them for their help, they are all potential customers and are also likely to tell their friends about your pub.

If you specialise in real ale, get in touch with Camra for information. It supports National Pubs Week and other beer festivals, and you could get some good publicity by linking up with them.

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