Word of advice

Michelle Perrett offers tips on how to invest your money in the right pub.

People often dream of being a landlord and running their own pub. The reality is rather different to the image most have of roses round the door, chatting to your locals and serving up good pub grub, as experienced licensees are well aware. The pub game is hard work but with the right approach, training and support from your employer it can be a rewarding career.

But the fact that recruitment companies are asking for people to part with thousands of pounds for the promise of training and a placement in a pub of their dreams - and are failing to come through with the goods in many cases - is causing upset and distress. In an industry that has a skills shortage, with pub companies constantly on the lookout for new operators, this is blacklisting the trade as a career option.

For an existing licensee or anyone looking to get into the trade there are easier and more cost effective ways to get started in a new pub than to pay out large sums of money simply to be a manager in a rundown boozer.

Here, The Publican gives its advice:

Getting into the pub trade​ There are a variety of routes. Most licensees have worked their way up from being a barperson to running their own pub. This is the most effective career structure and should mean the manager will have experience and have had the chance to develop strong business and management skills.

There is a wave of business people moving into the trade from other industries, with widespread business and management experience. Pub companies are keen to hear new ideas.

Don't forget that running a pub is a business decision - when you buy a pub you are buying a business not just a home. New entrants to the trade must consider whether they have what it takes to run a pub. The hours are long and you need to be sociable and energetic.

With the big pub-owning groups buying most of the good freeholds around the country, the most likely option for an independent licensee these days is a leasehold, tenancy or franchise. Most pub companies and brewers offer a range of agreements - so it is important to be sure it is one you can afford and are happy with.

Franchise​

This is designed to attract pub managers and newcomers to the industry with skills but little cash to invest.

The franchise agreement is different to a standard lease as it is "open book", that is, the company sees your accounts and gives you a high level of support, financial services and stocktaking. The franchise package, which is a non-repairing lease, has start-up costs from as little as £10,000. (This is mostly offered by one company - Scottish & Newcastle Pub Enterprises)

Tenancy​

The traditional tenancy is favoured by most regional brewers. Licensees sign up typically for three to five years and are tied to buy beer and other products from the company.

Leases​

These are for longer periods, usually from 10 to 25 years, although they are assignable. Depending on your agreement this means that you can sell your lease after an allotted period - usually two years.

Most leases are "fully repairing" which means you have responsibility for the fabric of the property. If you are worried about getting tied into a lease, some pub companies offer shorter terms and a "cooling off" period for people who realise they have made the wrong decision.

Freehold​ The licensee owns the bricks and mortar and is responsible for everything related to the property.

Training​

Under the new Licensing Act, which comes into force in November 2005, all licensees will have to be "fit and proper". Anyone new to the trade will have to hold the National Certificate for Licensees (NCL), or an equivalent qualification, or they will not be granted a personal licence.

However, for a leased or tenanted pub many pub companies will be happy to train you as a publican if they feel you have potential. The cost of this training is usually well under £1,000.

Financial​

Potential licensees should be aware that getting a mortgage to buy a business such as a pub is not the same as walking into a building society or bank when buying a house.

Purchasing a pub requires a much more specialised type of funding and even though there are many banks which are willing to give mortgages, there are a wide range of other funding sources, such as private lenders, where you could get a better deal.

It is advisable to use a broker registered with the National Association of Commercial Financial Brokers (NACFB).

Your chance​

• If you are looking to get into the trade all the advice and help you need is free on this site - click here​ to find out more.
• Sign up with local property agents and contact the leading pub companies to check out what pubs are available.

When buying a pub for the first time​ What to remember:

• Assess your financial position
• Get initial advice from a financial adviser or bank manager - this should be free
• Decide what you want to buy and where
• Investigate the area and what pubs are available in your price range
• Get professional training, for example the National Certificate for Licensees
• Get sound professional advice from a lawyer who is experienced in licensed property.

The Publican says:​

The complaints coming into The Publican newsdesk about training companies are from people who have lost anything up to £7,000. A licensee would be better investing that money into a tenancy agreement.

• Never pay money up front to a company offering services such as training and recruitment
• Ask to see lists of the pubs they have available. Many people calling The Publican say the lists they have been given by placing companies are not pubs that are available
• Speak to people who have been through the procedure and check they are happy
• Get a solicitor to look through the agreement you are about to sign.