Could I lose money if I take on a pub tenancy?

Starting any new business can be a scary prospect – especially if it is the first time you have done so.  Leaving behind the perceived security of full time employment to venture out on your own and run a pub is a big step for anyone to take.  The risk of failure and losing money is a real concern. Anyone thinking of taking on a pub tenancy or lease needs to weigh up the pros and cons, and manage this risk.

Your chances of making a great success of your pub business can be increased with careful planning preparation, and creating a robust business plan. In fact a business plan is a prerequisite for any pub operator working with Greene King. We want you to be successful and run a profitable business, and therefore we make sure your business plan is solid.

Pub Tenancies Have Great Potential

Every business has the potential for success if only it is operated correctly. Just watch a few reality TV programmes such as those of Alex Polizzi dealing with struggling restaurant or hotel operators. She never suggests that massive amounts of investment are needed but focuses on the bottom line, which is almost invariably the area that is causing problems in the business. 

When asked about their profit and loss margins per product, very few participants on these programmes can answer affirmatively.  They have to take a quick lesson in learning how to calculate those figures, and then spend all evening working on their accounts. The results generally reveal their ignorance of the real profits or, more likely losses, which are being incurred for every single product or service being provided.

Yet this is an avoidable risk.  For a new business, if those figures add up, the potential for success is much greater than the risk of failure.  You can do a tremendous amount to ensure your pub tenancy is a success. The more preparation that you do before taking on a pub, the more training that you undertake and your willingness to work co-operatively with associated business will make your chances of success far greater. 

Business Plan For Pub Tenants

Creating a viable business plan is crucial.  It is a requirement of every pub owner before taking on a Greene King pub.  Don’t worry if you’ve never written a business plan before; our Business Development Managers are on hand to help you and we have plenty of resources available such a downloadable business plan template, profit margin calculators; as well as all the financial information you need for a specific pub.

The business plan template covers everything you need to consider before starting the business from finance to marketing, location to products.  Our online profit margin calculators ensure you know the correct profit margins for each product. You don’t even have to do any calculations, since as soon as the prices are inserted, the system will provide the answers. 

As our business planning webpage says, “We’ve tried to make it as easy as possible for you to plan your new pub business with templates, Excel spreadsheets and useful calculators.”

Training For Pub Tenants

Another important factor in a pub tenant’s success is having the right skills to run a pub. Even if you’ve run a pub before, it can be invaluable to sign up for training to ensure you have up-to-date skills for running a pub in today’s competitive market.

Many pub companies run training courses for new licensees, and in many cases – certainly with Greene King – some of this training is compulsory. This is a great opportunity to get a really good foundation in running a business, reducing the risk of failure as you start your new venture.

We put a lot of emphasis on our training courses so we’re delighted that Greene King won the ‘Best Licensee Development & Training Programme (Leased and Tenanted Companies) at the National Innovation in Training Awards (NITA).  To find out more about our training course click here.

On-Going Support For Licensees

Many business owners employ a business coach or mentor to help them grow their businesses and be successful. They help them overcome any challenges, spot new opportunities, and run their businesses professionally.

Greene King licensees are assigned a Business Development Manager, who will have many years experience in the pub trade – often having run their own pub in the past. They are there to support our licensees and help them run a profitable pub business, doing many of the things a business coach does.

Another very valuable aid is the presence of online support 24/7. Operating pubs means that problems can occur outside normal office hours – the presence of continuous online support means that help is always there when needed

Put In The Effort And It Pays Off!

A key factor in ensuring success is the amount of effort you put into a business. People can lose their investment if they do not run their pubs professionally - as a business. Viewing the pub as a hobby, giving away too many free drinks to friends, providing poor customer service, or not giving your staff training and support, are factors that can lead to failure.

On the other hand, people who really make the effort to promote their pub, train staff, maintain high standards and offer great customer service while carefully paying attention to profit margins will create a highly successful business.

Always remember that any expenditure should never be greater than your income and your business model must be capable of making a profit at every point. Seeking the help of your Business Development Manager and listening to their advice will certainly benefit your business.

There is so much that a proactive licensee can do to bring in new customers and retain existing ones. From the type of events or amenities you offer, to the way you promote them and the pub experience your customers receive. Successful licensees are always on the look out for new ways to get people through the door, keep them coming back and improve on their experience every time.

So in summary, yes taking on a pub tenancy can be a risk and some people do lose out. However, those that approach running a pub in a professional, business-like fashion put themselves in an advantageous position to make their pub a great success. For inspiration have a look at some of our case studies here to find out how other people are doing it