What should you consider before taking on a pub? Here's a rough guide…

I want to run my own pub. How do I go about it? Whatever you do, make sure you're not just acting on impulse. In the case of a husband and wife team it's no good if one of you is enthusiastic and the other one isn’t. If you're expecting a life of gentle contentment and a few social pints with the locals – think again. Running a pub isn’t easy. It involves hard work and total commitment, but the rewards can be substantial if you're successful.

No, I'm sure it is for me. What's my next move? First, choose the type of business you want. There's a world of difference between the social atmosphere of a rural pub and a busy, inner-city bar.

Who should I ask for advice? Find people who have run a pub and ask them about their experiences. Try working in a pub for a while to get a feel for how it works day-to-day. You also need to get some formal training. The British Institute of Innkeeping runs courses. The most important qualification is the National Licensee’s Certificate, which outlines basic licensing laws and the social responsibility of selling alcohol. Qualifications like this will not only help you run your pub, but help convince officials that you are worthy of a license.

What's the best sort of pub to buy? There are three different types of pub business:

Freehold - This is the most expensive choice. You are buying the property outright and are in total control of the business. This means you are free of any ties to one supplier or brewer and you control all the profits. But good pubs are very expensive and you also have to pay for the continued cost of repairs.

Leasehold - This is the mid-range price option. These are available in either tied or free-of-tie formats from brewers and landlords. (With tied leases you have to buy their beers and maybe use certain food suppliers.) With most leases, you have to pay for all repairs to the property and all the insurance costs, so the condition of the property is important. The value of the lease is judged by the profit made by the business and how many years are left to run on the lease. The main benefit of acquiring a leasehold is that all records of the business are available before taking over. But rents are high and, as with a freehold, there will be continuing repair costs.

Tenancies - This is likely to be the cheapest option, and for a first-timer it is probably the most attractive. Your brewer or landlord is responsible for the building repairs, and you don't have to pay the previous owner or leaseholder for any goodwill the business has built up. This makes tenancies cheaper, but just as profitable if they are run well.

How much money do I need? Obviously, financial considerations are crucial. Spending months finding the right property only to discover it's out of your price range can lead to bitter disappointment. It's best consult a specialist licensed property agent, finance broker, bank or accountant to get an idea of what you can afford. Most of the major banks see both freehold and leasehold pubs as a good lending proposition, provided individual status requirements can be satisfied. But they won’t usually lend you the lot. For freehold purchases the buyer usually contributes at least 30% of the price, and for a leasehold it increases to 50%.

If you have to sell your house to raise this part of the capital, be realistic and allow time, particularly in a sluggish market. Many deals fall through because the residential property doesn’t sell quickly enough.

How do I find the right pub? Once you've sorted out the finances and decided what kind of pub you want to take on, it's time to start searching for the right site. Have a look in our Property search section. You can also try specialist property agents or look in the properties-for-sale sections of trade publications such as Caterer & Hotelkeeper.

And what do I do when I've found my pub? Don't choose a place just because you like the look of it. Think about, for example, what's happening in the local economy. Are there, say, any local factories closing or opening? Are there any new houses or roads being built that could affect trade? Take a close look at the area, particularly the rival pubs and restaurants. Is it the sort of place were you would like to live and work?

Arrange through the property agent to meet the current licensee. A full understanding of the strengths and weaknesses of the existing business is crucial. Has the seller got a strong personal following? Have they maximised the full potential of the business? Are there any lurking dangers?

How do I go about drawing up a business plan? It’s vital to examine the accounts to see how the business has performed over the past three years. To create your own financial plan, make sure you adjust the figures to reflect any lost opportunities and inefficiencies, and factor in the future potential of the business. The plan should cover at least the next three years.

The budget should include any capital you're going to need to put into the business, as well as the purchase price. If you need to arrange funding, get expert advice on who you should get it from, the best sort of loan to get and how much it will cost you. After you've pulled together all the financial information, you'll need to draw up a profit and loss statement. The aim of this is to ensure there is an adequate return on the investment.

What sort of money is the pub likely to make? The amount of profit you're likely to bring in will depend on the so-called "trade mix" of the business. On average, you can achieve 47% gross profit and 22.5% net profit if drink accounts for the majority of your sales. This rises to 63% gross profit and 25% net profit for a business where most of the sales are of food.

Anything else I need to remember? It’s a good idea to consult a solicitor or legal expert who is fully informed about licensing laws to find out if there are likely to be any changes to the law that could affect the way you intend to run your pub.

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