Getting down to the nitty-gritty: banking & other money matters

There will come a point while setting up your micropub when all it feels like you’re doing is writing cheques while watching your bank balance plummet. Speaking of bank balances, I suggest early on that you set up a business bank account to help keep an eye on your finances. Even if you’re a sole trader, which means you are the business and the business is you, a business bank account will help keep your money matters tidy. This is especially important during that anxious period when money is going out and you’re sure yet when money is going to start coming in.

One of the disheartening things about business banking is the realisation that banks detest physical money and will do everything they can to discourage you from making them handle it. That means they will charge you for making change, depositing cheques and even depositing your hard-earned cash. They might not even be that keen on you using their counter in the bank: with my Santander business bank account I actually do most all my banking at the local post office (my one tip about queuing up in the post office is to never get in line behind the devil: Satan can take many forms).

Pretty much every new business bank account will offer a fee-free period for at least 12 months. If I recall correctly, I was entitled to 18 months of free business banking with Santander because I already had a personal account with them. Although I’ve not been paying a monthly fee during this initial period, I have been charged for their change giving service (more on that particular bugbear later).

The Santander business banking website has a price comparison feature, if you’re interested in seeing how the costs add up and whether Santander is more competitive than the other big players in the sector. Even better, they also have an extremely useful business start-up advice section with information specific to the pub sector which is available for anyone to peruse online. If you’re still in the initial stages and you’ve not got a business adviser or accountant, it will help a great deal with your business plan.

I found setting up the business account was quick and easy, although they will ask you to prove that you are going into business which can be tricky if you’re still at the planning stage. By the time I applied for the account I did have my personal alcohol licence off the council and a pre-lease agreement with the landlord to show them.

One thing which Santander did not provide to me automatically and which I had to apply for separately was a change-giving card. Although I had a debit card for the account clearly marked ‘business banking’, the post office was not interested in making change for me without the separate change-giving card. This is how the bank keeps track of how much change is being handed over, so that they can charge you accordingly for what they see as an inconvenience. It looks like a tiny surcharge percentage-wise, but it does mount up. And the reason why? No matter what you’ve heard, change does NOT come from within.

Just like your casks, you need to keep a constant eye on your change and make sure you have a steady supply. The first weekend we opened, I did have some bags of change lined up, but I assumed that since we were (hopefully) going to have customers giving us cash from the moment we opened our doors, that we wouldn’t need much change. What I didn’t realise is that people would be handing over £20 notes to pay for their pints. Even when their pockets were bulging with change, their first instinct when buying the next round was to pull another note out of their pocket. Cue several trips to local shops breaking notes and begging for change!

I don’t know what people do with all the pound coins we hand over. Maybe they eat them. And fivers?! We feel like fivers are our friends: our hearts lift when we are handed one and we feel said to see them go. We keep a stash of £5 notes handy (we never deposit them) and every time we get one as change at the shops we add it to the precious bundle. One way of modestly adding to your change supply is to run a raffle or a quiz and/or to keep a tip jar by the till (if you have a till!).

Cash is definitely king in this business, but you might consider getting a card machine. Many people walk around without cash in their pockets these days. If you don’t have a card machine, you might end up turning away customers, especially if there are no holes in the wall nearby. There’s a psychological benefit when customers use cards (it can feel like you’re not actually spending money, especially with contactless cards) and as the security consultant from the local police said to me, it’s earnings that a thief can’t walk in and try to steal.

If you do decide to get a machine to take card payments, I recommend that instead of contacting the payment service providers that you get in touch with Independent Merchant Services. They provide a free brokerage service and will review the market to find the best deal for your circumstances. You will need to pay a rental fee for having the card reader (around £15pm, more for a cordless model) and then the payment service provider takes a few pence and/or a tiny percentage from each transaction (although this can change at the whims of VISA, Mastercard, etc). In our case, we got a better deal from the same provider by going through the broker. You need a phone line on the premises for the card machine and will also need to commit to a minimum 12-month contract for the service (the shorter the contract, the better).

Although you may not feel the need for a card machine or a till, at the very least you need a recordkeeping system to keep track of your sales and inventory, plus a safe (this will probably be a requirement of your insurance). Simply keeping a tick list of how many pints you serve from each cask will be sufficient, as long as you can back up your deposits into the bank account with a record of your sales. As well as a sales record, you should keep a log of casks. My own cask log keeps track of the following:-

  • The name of the beer and the style so I can keep a good variety in stock;
  • The date the cask was tapped so I know when it’s reaching the end of its shelf life;
  • Any comments about the beer quality, settling time and wastage (some casks are whisper-quiet when they are vented, others will erupt and fill a bucket or two with foam. Some brewers can’t filter their beers so not only will their casks need to settle for 48 hours, but their casks will have more slops at the end. Some beer styles are more popular than others with my customers. I summarise these comments on a spreadsheet where I keep track of my inventory and margins, which allows me to factor in any wastage into my profit and see which brewers are giving me the best beer for the best price).

Which leaves us with that most important money matter of all: the question of price. We’ll talk more about that in a future post, in the meantime I hope I’ve given you some food for thought to chew on!


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2 Responses to Getting down to the nitty-gritty: banking & other money matters

  1. Pingback: How to run a pub: the definitive guide

  2. TheSASBrewer says:

    I’ve only just begun looking at your site as I’m thinking of getting into the MP game. I’m finding what you have to say very interesting. Many thanks.

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