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Have you got the right capital for a pub tenancy?

So, you’ve decided that a pub tenancy is for you – now you need to determine how best to fund it. Starting a pub business, whether you're building it from the ground up or taking over an existing venture, comes with a financial commitment and will mean you looking carefully at your own finances.

If you're fortunate enough to have access to your own funds, this can provide you with a unique advantage. Financing your pub tenancy independently allows you to channel your energy into the business without the constraints of bank loans or mortgage obligations. Bank loans often come with stringent eligibility requirements and the burden of debt repayment can put an unwelcome strain on your cash flow. The financial freedom of financing your own pub business enables you to focus on growth, innovation and establishing a steady income without the pressure of regular debt repayments hanging over your head.

What are the entry costs?

For every pub we offer, we provide an estimated entry cost - basically, what you'll need up front before you can begin trading. This figure covers essential elements such as deposits, legal fees, stock acquisition, fixtures and fittings from the outgoing licensee, licenses like PPL and PRS, marketing expenses and working capital to navigate those critical early months of operation. Understanding these costs is crucial as you explore various funding options for your pub dream.

With these costs in mind, let’s explore a few of the ways you can fund your dream pub venture...

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Do you have inheritance?

One of the most common ways individuals finance their entry into the pub business is through inheritance. Receiving a sum of money from a family member can be a transformative experience, presenting the perfect opportunity to invest in your aspirations. However, before you dive headfirst into pub ownership, it's vital to ensure that your inheritance is adequate for both the initial investment and the ongoing operational costs.

Running a pub involves rolling financial commitments for stock, staff wages and everyday operations, particularly during the initial phase before profitability kicks in. It’s wise to take your time and reflect on your plans rather than rush into any decisions. Seeking professional financial advice is a necessity, helping you navigate your options wisely and set yourself up for long-term success in the hospitality industry.

Have you been made redundant?

For many, the experience of redundancy can be challenging, but it can also open unexpected doors to new opportunities. If you've recently received a redundancy payout, this could be the ideal time to consider fulfilling your pub dream. The financial boost from redundancy can significantly ease your start-up expenses, allowing you to pursue your new business venture without accruing debt.
While challenges will undoubtedly arise, partnering with an established pub company, such as Greene King can provide invaluable support. These partnerships offer guidance and resources to help you navigate the complexities of starting your business, increasing your chances of achieving your goals.

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Are you thinking of selling up?

Another popular funding option that many aspiring pub owners consider is selling their current home. Selling your property to release equity can provide a significant influx of capital for investing in a pub business. By liquidating your asset, you unlock the value built up in your home, allowing you to access substantial funds. Recent figures show that the average UK property owner is sitting on a home equity of £111,081*.

It is essential to consider the implications of selling your home and it is a decision that requires careful consideration. You will need to evaluate whether your chosen pub's living accommodations will adequately meet your family's needs.

Key questions to ask yourself are: is the location suitable for your children’s schooling? Are there sufficient transportation options to maintain your family’s lifestyle with minimal disruption? Will you enjoy living in the pub's location? Additionally, consider whether the accommodation requires any renovations to create a comfortable home for you and your family. It's also essential to assess whether there is private outdoor space available, allowing your family to unwind away from the demands of running a business.

Have you considered a franchise arrangement?

If you’ve been bitten by the pub bug but are finding raising the necessary funds challenging, exploring a franchise arrangement could be an exciting and viable alternative. A franchise agreement enables you to operate a pub on behalf of the pub company, providing a turnkey solution with a lower exposure to risk. Franchisees may enjoy a guaranteed income alongside a percentage of the turnover, plus additional bonuses and profit-sharing tied to their performance. Furthermore, as a franchisee you will not pay any rent and are only responsible for covering staffing expenses, insurance, TV licensing and council tax for your personal accommodation. You will also be provided with all the essential food and beverage supplies necessary to operate your business - along with a pre-set menu to offer to your customers.

Another advantage of the Greene King franchise model is the support provided by your dedicated Business Development Manager. Additionally, you will gain access to our premium training packages designed for our partners, ensuring you are well-equipped to succeed.

I’m interested in running my own pub - how do I take the next step?

Why not watch our webinars for more information on running a pub with us?

Alternatively, get in touch today at 01284 843200 or send us a message via our contact form.

*Figures from St Mowden Homes