Ask An Expert: Taking a tenancy

I've heard that taking a tenancy is a low-cost route to running my own pub. Is there a catch?

If you want to run your own pub a traditional tenancy normally requires the lowest initial outlay of cash. Even so, an average 'ingoing' is likely to set you back £25,000. So what do you do if your own funds are limited?

Unfortunately, traditional lenders are reluctant to advance money to prospective tenants. Having collateral and an excellent business plan can improve your chances. Other lenders may be able to help - but beware of high fees and rates of interest. Speak to a financial adviser to see what options are available to you.

Talk to brewers and pubcos to see if they will accept limited ingoings. There may be deals available to defer payment of fixtures and fittings (normally the biggest outlay) or deposits. Rent concessions may also be available.

Landlords will be much more flexible with pubs that are difficult to let. Do your homework. The pub may be best avoided, even if there is a great deal on the table.

When other options have failed many people borrow money from friends and family. Be aware that relationships can change. If you intend to borrow money from someone close to you, be business-like and insist the agreement is made in writing - preferably through a solicitor. Don't be embarrassed about this, it can save a great deal of future heartache.

A final option is to seek employment as a pub manager and gain valuable experience and qualifications while you are saving money for your own pub business.

Finally, remember that borrowing money adds cost and risk to your business. Think carefully before taking on a loan and make sure the business can pay it back.

Mark S Elliott spent 26 years working in various management roles within the tenanted and leased divisions of the UK's largest brewers and pubcos. He is author of How to Run a Successful Pub - a comprehensive guide to acquiring and running your own pub​