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The first thing you should do when considering buying a pub is establish your budget.
With bank funding still difficult to achieve, knowing what you can afford is essential. Unless you have other assets to secure a loan, you will probably need 40% of the purchase price. In addition, you will need funds for fees, stock, repairs/refurbishment and working capital.
The most important things to consider when buying a pub are:
a) Are you suited to the life of a publican? It’s a brilliant business but it doesn’t suit everybody.
b) Trade — you must fully understand what trade the current owners are achieving and why — ie, are they very good operators? Are they discounting? Do they have local business connections? Then consider what it will do under your operation including any effects of local competition?
c) Repair — you don’t want any unexpected costs so make sure you understand what you are taking on.
Three questions to ask the agent:
1. Why is it being sold? A genuine reason is easy to accept, but beware of an uncertain or incomplete response.
2. What is the level of interest and have there been any other offers? This can help establish the balance of power when it comes to negotiating a deal.
3. Have any issues or concerns been raised about the business or repair of the property? An agent is obliged to disclose information that he is aware of.
- The one thing you should never do is make an offer and, in the same breath, say that you will increase it. This leaves the agent no option but to advise his client to reject the offer knowing that you will increase it.
- What happens next? Once you have an offer accepted on a property you will need to appoint a solicitor. They will guide you through the legal process up to completion. You will need to put your funding in place, ready for exchange and you will want to get ready to implement your business plan. Keep doing your research both on the business you
- are buying and also the competition.
- And my final piece of good advice is to be prepared to work hard, pay attention to detail, especially customer service, and enjoy the ride. There’s nothing better than running a successful pub.