Commercial lease - scary, don't know what to do

bonbon1527

Okay this is my first posting and I'm looking for advice. There is a publican in my area that has been offered for me to lease. My hang ups are that she used to have a manager that when he left stole all her books and reciepts. She has tried trading but without much success (for many identifiable and easily changed reasons). If i took over the business part could I be liable to HMRC for lack of books e.t.c.? Although note that I would be opening a new business account, new books, new staff proper licensing e.t.c. Secondly is that unfortunately she has incurred a lot of debt. She owns the pub outright but I'm wary of spending the money to transfer license and other legal matters for creditors to then seize the pub and I would be left having spent the money and lost the business. Do I have any rights or am I just a sitting duck, hoping that she will able to manage her debts? As far as I know the debt is on credit cards. I'm not sure if the debt is secured or unsecured. It is a great opportunity and the rent is cheap but there would need to be immediate remedial works to be completed before I could start trading. I'm happy to take the risk in business...just not if I risk losing the business due to no fault of my own and something in which I have no control of. HELP Please!!!

paddyrg

bonbon1527 wrote: »

Okay this is my first posting and I'm looking for advice. There is a publican in my area that has been offered for me to lease. My hang ups are that she used to have a manager that when he left stole all her books and reciepts. She has tried trading but without much success (for many identifiable and easily changed reasons). If i took over the business part could I be liable to HMRC for lack of books e.t.c.? Although note that I would be opening a new business account, new books, new staff proper licensing e.t.c. Secondly is that unfortunately she has incurred a lot of debt. She owns the pub outright but I'm wary of spending the money to transfer license and other legal matters for creditors to then seize the pub and I would be left having spent the money and lost the business. Do I have any rights or am I just a sitting duck, hoping that she will able to manage her debts? As far as I know the debt is on credit cards. I'm not sure if the debt is secured or unsecured. It is a great opportunity and the rent is cheap but there would need to be immediate remedial works to be completed before I could start trading. I'm happy to take the risk in business...just not if I risk losing the business due to no fault of my own and something in which I have no control of. HELP Please!!!

Honestly, it sounds too complex to be a good idea! You will have no problems finding a pub to rent cheaply at the moment, find another, simpler one and don't get involved in her dramas.

jexygirl

Have you ever wanted a pub, have you been endlessly searching for one and have a few years experience of the trade?
I think it is likely that the answer to all of the above is No, I think it's simply "it seems like a good deal, I can give it a go"?

There are hundreds of leases and tenancies up, often at nil premium, with very attractive packages, have you even compared the deal you are being offered?

How do you know the rent is cheap? Have you a business plan with projections /cashflow / initial costings? It isn't cheap rent if you cannot pay it, and it takes a while to build trade up, particularly if it has gone down over a period of time.
You also seem to know very little about book keeping / accounting / creditors etc., and whilst you don't need to know that much, your accountant will look after that side of it , you should have at least the basics of how things work.

You should also be prepared to work 18 hour days, often 7 days a week, especially in this climate.

I would suggest you think VERY carefully, and then get a good solicitor and accountant if you think you want to go ahead. Lease agreements can be a minefield, and you will need to be properly secured if the building changes hands or whatever.

I also assume you have around 15k in the bank to pay the solicitors, do the licensing course, pay for the transfers (5k), as well as SAV plus F&F (average 5k) . You need to tide yourself over in wages and stock until you get credit with your suppliers, which often takes a month - sometimes 2 dependant on trade references (5k minimum), and many leases require 3 months rent in advance as standard so add that to the 15k.

I would also add a contingency, when we bought our first pub our contingency went in the first 2 weeks, and it wasn't a minor amount.

If you still decide to go for it, good luck.
Jex

bonbon1527

Hi everyone,

Thank you for your replies. I have experience of working in the trade. I know this sounds mad but hard work really appeals to me but then I was an auxiliary nurse used to 12 1/2 hour shifts day and night. The business plan is completed. My fiancee is a live events, commercial music organiser and the thought was to turn it into a live music venue. I have got the licenses needed i.e. personal licence e.t.c. and have costed everything from employers liability insurance to coffee cups. The rent is cheap extremely cheap (£500 a month). See the woman who took it on was the person you described as above and found herself in deep water and literally wants to just wash her hands of it to get back to a quiet and peaceful life. She bought it outright as a repo for a very small amount. The problem that I have is the unknown of what could happen to us if her finances fall by the wayside. I guess it's one of those ones where it is a double edged sword. For info I live in a very small town on an island where work just doesn't exist and we thought it would be a good way of providing an income for ourselves. You'll never work harder than for yourself.