FINANCE is one of the most important aspects of running any business, and it can often be one of the most complex for pub and bar operators to deal with.
Specialist finance firms told SLTN there are a number of financial decisions, from managing cash flow to applying for additional funding, that operators should pay particular attention to.
Philip Brown of RBS highlighted employment and tax as two of the “key pitfalls” for the trade.
“These are integral to any licensed trade business and therefore it’s vital that operators have advisers who can keep them aware of changes and how they will impact on their business,” said Brown. “Understanding cash flow processes within your business is also important. I’ve seen leisure businesses fail simply because they did not have cash available at the right time.”
Paul Mildenstein, chief executive of Liberis, said cash flow can be a particular problem for new operators.
“Not managing cash flow efficiently is one of the biggest mistakes made by first time operators,” said Mildenstein.
“Many just don’t understand cash flow and find they’ve got a host of bills to pay before they’ve recouped the revenue for them.”
There are also issues when operators apply for finance, according to Ian Morrison at Liquid Finance, who said applications can often be made late, and contain too little information.
“Weaker applications state ‘general cash flow’ or ‘ongoing requirements’ as the need for funding,” he said. “It is less attractive to the funder when the business people applying for a loan or an advance can’t identify exactly what they need money for and provide evidence to this effect.”
The answer, said Adrian Foster of Christie Finance, is to work with professional advisors.
“Some people see the use of a professional as another expense that they can save on but I would suggest that by doing this we have found time and time again that it can ultimately end up costing a client more,” he said.