6 tips for startups looking to launch a new hospitality business

There are over 140,000 hospitality businesses in the UK, making it one of the country’s biggest industries and the third largest employer. If you’re considering starting a hospitality business, you’ll be entering a thriving market.

It can’t be ignored that with so many existing businesses, though, you’ll be up against a lot of competition. So, how do you ensure your hospitality start-up is built to succeed? To help you navigate this challenge, we've created a comprehensive guide looking at some seven steps to get started.

1. Register your business

When starting a business in hospitality, UK laws must be followed. 

To ensure legal compliance, we recommend first looking into business registration. This is done with HM Revenue and Customs (HMRC) and dictates how you’ll pay tax and your financial liability.

When you need to register depends on the sort of hospitality business you’re building. You can choose from:

• Sole trader

• Limited company

• Partnership

There are additional registrations that can apply in the hospitality industry, too. For example, any business that cooks, sells, or handles food needs to register as a food business at least 28 days before opening.

It’s smart to look into the ins and outs of how to register a business as you plan your start-up. This will give you plenty of time to prepare.

2. Applying for licences

Whether you’re opening a hotel business, pub, or club, you’re likely to need various licences to operate legally. These can include a:

• Premises licence

• Alcohol licence

• Music licence

• TV licence

• Pavement licence

To learn more about the licences you’ll need, we recommend speaking to your local council. They’ll be able to guide you on the licence regulations specific to your area.

3. Employment laws

If you’re hiring staff, make sure you’re up to date with UK employment laws.

For example, it’s your responsibility as an employer to ensure all of your team have a Right to Work before hiring them. You also need to:

• Pay your employees the Minimum Wage or above.

• Provide the legal amount of leave for your employees.

• Ensure none of your team is working more hours than they’re legally allowed to or skipping breaks.

• Provide maternity and paternity leave.

For a comprehensive look at employment laws, the Employments Rights Act 1996 covers all legal regulations and requirements.

4. Carry out market research

In the world of business, hospitality is always competitive. Give your start-up a headstart by carrying out thorough market research.

This helps you identify your competitors, spot gaps in the market, and adjust your ideas to suit demand.

For example, if you’re opening a pub you might notice a lack of pub gardens in your town. After surveying your target audience, you identify a high demand for a pub garden, clarifying that an outdoor space would give you a competitive advantage.

Start market research by:

• Visiting your competitors in person (if possible)

• Using social media to learn more about competitor businesses and your target audience

• Exploring industry trends using online research and market reports

• Checking online reviews for competitors to learn more about what’s important to your target audience

It’s important to remember that market research should continue after you’ve opened your doors. Stay ahead of the trends and demands in your market for a long-lasting business.

5. Write a business plan

When it comes to how to start a hotel business, restaurant, cafe, or bar, you need a business plan.

This is a comprehensive, formal document that outlines your key ideas. It will include:

• An executive summary and mission statement

• Description of the business

• Hospitality sector analysis and market research

• Marketing strategy

• Organisation and management details

• Financial plans and projections

You’ll use your business plan to clarify your vision and align the focus of your team. It’s also essential if you’re applying for start-up loans or seeking investors.

Not sure where to start? Take a look at our free business plan template to make this a simple task.

6. Understand your business finances

Getting to grips with your finances is essential when creating a start-up. It helps you meet financial obligations, maintain predictive budgets, and invest in growth strategies for a flourishing business.

As you plan your start-up, keep an eye on expenses. Track quotes, record spending, and identify your fixed and variable costs.

Once you know more about your expenses, you can plan how much revenue you’ll need to earn to break even. This is also a smart time to explore loan and investment opportunities, bringing the benefits of funding to your start-up.

Launching a hospitality business is an exciting prospect, but one that comes with its fair share of hurdles. Hopefully, this article has given you plenty of useful advice to get started.

For plenty more tips from our experts, be sure to check out more of our start-up guides.