Cut Your Losses & Run
Admitting you got it wrong is probably one of the most difficult things you can do in business, especially one in which you’ve invested time, money and emotion. Only you can make this admission, so you have to be brutally honest with yourself and should you have them business partners or fellow directors.
Certain pub tenancy and lease agreements allow “early termination” whereby the tenant can give notice to the landlord to leave the pub before the natural end of the agreement. Some landlords call it a “cooling off” period, my grandma would have called it the “suck it and see” clause. If, after careful analysis and an honest appraisal of your new pub business you come to the conclusion the particular pub business you have embarked on isn’t working (either financially, personally or even emotionally) then you must seriously consider ending the business and moving on. If you have serious doubts about the sustainability of your business discuss the matter with your accountant and listen to their advice. After all the only thing you get from flogging a dead horse is a sore arm.
For freehold owners there is no such thing as an early exit clause, however, the same applies, if your business simply isn’t working then bite the bullet and put it on the market as soon as possible.
In either case leaving an unviable business sooner than later means you increase your chances of starting up a new business once you’ve regrouped or changing direction entirely and trying a new career in another industry. The longer you leave making the decision to leave the greater the potential of losing everything to creditors such as landlords, HMRC or suppliers.
Top Tips from Licensees Supporting Licensees:
Mark Dodds: Do a detailed questionnaire for customers – ask them what they want what they expect what they don’t get when they go to pubs that they would like and a lot of other things to find out what “ticks their boxes”. Ask them if they would like to get involved in events at the pub and if they have suggestions for anything.Ask what kind of products they like, food and drink. Build up an understanding of who your customers are, how close by they are, how far they come to visit
Nicola Brunton: Get your pricing right. If you price too low, it’s very difficult to put prices up once you’ve “set your stall out”. Make sure you vet employees properly and don’t overlook interviews and references because you’ve got too much other stuff going on otherwise you could be stuck with people you don’t really want. Negotiate and get good deals on utilities from the off. We got a horrible bill shock 5 months in having never had a bill. When you take on a pub lease, all the dingbats who were previously barred out will start coming in again because they know you don’t know them or their past behaviour. Be prepared for to deal with this for a couple of months and expect to have to bar a few idiots out.
David Fulcher: Setup as big a line of credit as you can before you need it.
Paul Salvadori: Think twice before buying anything. Be aware of oral contracts, never speak to anyone trying to sell you something over the phone, tell them to write to you. Negotiate the price of everything to rock bottom. Buy nothing unless you need it, justify every purchase by what it will earn for you. Successful business is about receiving money, not parting with it. Never confuse receipts and profit. Analyse all your overheads and know your breakeven figure from day one. Be mean basically.
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