The pub is part of British tradition; still as popular today as it was in the 'good old days'. And the licensed trade in 2006 is worth £16.3bn in turnover, making it a very inviting proposition for those looking to buy a business. Such is the appeal that the pub has become one of the most popular businesses to buy in recent years.
A booming yet stable market and the chance to be your own boss has ensured that buying a pub seems like a good bet for a growing number of adults wishing to turn their backs on the rat race. But before you make that leap and enter the licensed trade, there are some important things to consider.
Finding the right business
Think carefully about the kind of pub you are looking for: country idyll, gastropub, community drinking pub or city bar? Are you looking for something with letting rooms, a reputation for fine food or with living accommodation?
Consider realistically what you can afford and the location you are looking to buy in; this helps to narrow down the list immediately. Do you want to purchase a leasehold or freehold business? Leasehold is more affordable, involves no financial responsibility for the property itself and offers the option of cutting your losses, should the business not be successful.
However, you may be tied for beer and other products and returns are not as rewarding due to not owning the bricks and mortar.
Alternatively, you may consider buying a freehold business. With no rent to pay and the benefit of owning the property outright, freehold pubs are in huge demand resulting in high sale prices and quick transactions.
Now you know what you want, where do you find it?
Getting help
A large number of pub owners appoint a business broker to handle the sale of their business so naturally, the place to go to find a pub is a business broker. You can discuss what you are looking for and they will match your requirements to the ideal business and arrange viewings.
Then when you settle upon the right business, it is time to check out the background information.
Researching the business
When buying a pub, location is key! Look at the area: what price are similar pubs being sold for; is there much competition? Is it easily accessible? Check out the pub's reputation; people will travel far for one with a welcoming atmosphere or fine food. It can make the difference between a profitable business and a 'gold mine'.
There are other things to consider too. Could you increase profits, can costs be trimmed, can you branch out into other avenues? Does the pub have the facilities to cope with the effects of the smoking ban?
Think about staff. Good bar managers and chefs are often the reason for a pub having a good reputation and they can prove invaluable as you take the helm.
Check accounts, trading history, fixtures and fittings and any other aspects that may affect the selling price. Then consider your offer, formalising it in writing.
The final hurdle
You should already have a solicitor but if not, choose one who specialises in business transactions.
They will be able to offer invaluable advice that may save you financially later on. If your offer is accepted, try to get a written commitment from the vendor. If you are new to the industry, you may wish to negotiate some form of training or handover period.
Stay consistent and determined and you will achieve your aims and from there onwards, it is up to you!
- Andrew Coulter, director of business development at Redwoods Dowling Kerr. Tel: 0870 750 4958 www.redwoodsdk.com