Some businessmen have even suggested that the licensing trade is on a faster decline than any other industry in Britain.
However, entrepreneur Ian Clayton believes that: “now is as good a time as any to buy in to what many believe to be a dying trade.”
This is not coming from a man who has spent too much time propping up the wrong side of the bar with his umpteenth pint of beer is his hand. He first entered the licensing trade in 1992 when he bought a run down pub in Barnetby-le-Wold, near Brigg in Lincolnshire, for the fee of £90,000.
After many years of low turnover, he transformed the business into the heart of the village with people travelling many miles to enjoy the atmosphere and the excellent traditional food on offer.
In 2004, when Mr Clayton decided to sell the business, there was a great deal of interest. He eventually decided to sell the business for £625,000. This may not seem like a huge amount considering how expensive property has become over recent years.
However, the value of a pub is done very differently to the housing market. It is based on the turnover of the business and how idyllic the location, not the value of the buildings.
If the location is deemed perfect with for example, roses in hanging baskets on the daintily painted white walls, birds singing in the trees, children playing on the swings in the inviting beer garden overlooking fields that would not look out of place in any Countryfile programme then the value of the pub would be double the turnover.
This village pub for example would be worth double its turnover.
However, if the pub looks more like a Victorian work house with Mr. Gradgrind pouring you a pint of watered down ale, the value of the pub would be its turnover and only its turnover.
According to Mr. Clayton, the fact that a pubs value is based on its turnover works well for people trying to enter the trade.
He explains:
“Because of the ever-looming credit crunch, people have less money to spend so the first thing that the general public will cut back on is going to the pub. This means that pubs will be making less money and will therefore be cheaper to buy.”
Mr. Clayton also explained that it was not just the increase in taxes that have hit pubs in recent years. The introduction of the smoking ban in 2007 has generally led to a loss of custom.
Another government scheme to dent the pockets of licensees in recent years is the introduction of The Disability Discrimination Act of 1995. It was introduced to give people with disabilities access to public places, which includes pubs.
This led to a lot of pubs having to spend large sums of money to change the layout of their establishment so people with disabilities had complete access to the whole pub.
As the Act was introduced over ten years ago, all of these modifications will have been made by previous tenants so is one less thing to worry about if you were to consider entering the trade.
Mr. Clayton believes that another positive for entering the licensing trade is the UK economy. He said:
“Admittedly, we may be about to enter somewhat of a difficult period but it will not be long before the economy is thriving again and people will have money burning a hole in their pocket.”
Where better for people to spend those hot pennies in a subtly lit bar, a jazz band in the background sat in a comfy chair with a cold pint of lager or a cheeky drop of pinot, whichever is your vocation, with your friends soaking up the atmosphere?
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