Taking on a second leased pub is a well-established way for operators to expand, writes Star Pubs & Bars’ Chris Jowsey
TAKING on a second leased pub, or even a third or more, is a well-established way for licensees to build on their existing success, expand their business and build profits without the major financial outlay and borrowing involved in purchasing a freehold.
At Star Pubs & Bars we work with operators to help them be sure it is the right time and route for them. Answering the following questions can be a good starting point.
• Will you overstretch yourself?
You shouldn’t take on a second pub until your first is achieving its full potential. A good test is if you can take a holiday and leave your pub for a week without standards suffering.
• Have you got enough cash?
If you have cash flow problems in your first pub, don’t consider a second. You will need plenty of cash to fund your new business start up and all the associated costs from legal fees to stock purchases and staff wages.
• Have you thought through the commitment required?
Think about the time you spend managing your current business; not only practical jobs such as organising staff rotas or ordering stock but all the strategic decisions you have to make from planning your offer to deciding on marketing.
• Are you willing and able to delegate?
With more than one pub, you are not going to be centre stage in at least one anymore; this can be hard if you love the social side of the job. You also don’t have time to micromanage others so you need to be able to let go whilst having the reporting systems in place to give you a good handle on what is going on. And when you are not on site all the time, it is vital that you can communicate and motivate well, especially when you are employing managers who need to be enthused with your vision.
If you feel positive about these points, consider the following steps on the road to another pub.
• Prepare a full business plan.
This is essential to any successful business and doubly so for a second. You need a clear idea of your ambitions for every pub you operate in order to delegate successfully. Include your skills too as most successful second pubs replicate the profitable parts of the first pub. Fully understand what you do well and what you don’t and work out how you will capitalise on the former and deal with the latter.
• Be selective with your new pub’s location.
Location is always critical but with a second pub you need to consider the practicalities of travelling between the pubs you operate. One of the main reasons second pubs fail is that the licensee doesn’t have enough time to focus on the new business during the critical early stages. Being able to travel easily between pubs is key to maximising the time available in both businesses.
• Recruit your manager carefully.
In almost all cases you will need a manager or partner to look after the day-to-day running of your first pub whilst you launch the second. Make sure there is enough money in the business to pay for the best manager you can find. Recruit a person you trust and who shares the same values, work ethic and ambitions for your pubs as you.
• Put the proper controls in place.
The figures and stocks will naturally be more complicated for two businesses than one and your time will be less, investing in good accountants and stock takers who present the figures clearly, intelligently and regularly will help you stay on top.
• Get organised.
There will be more demands on your time than ever, so being well organised and planning how you will divide your time between your businesses up front is essential. Time out will prevent burn out, so allow for this too.
• Chris Jowsey is the trading director at Star Pubs & Bars.
