Sitting at the counter of your very own bar and sipping on a beer with friends is a dream for many of us. And for some, the job is the perfect fit.
But the reality of the job is often quite different from what the average entrepreneur imagines it to be, and the strict regulations placed on bars can be daunting.
If you’re considering opening your own bar and wondering how to get started, read on for a step-by-step guide.
Make A Plan
Before starting your journey, it’s essential to create a detailed business plan. You will need one to show it to the relevant liquor authority, which differs from state to state.
Opening a bar is different in this respect, as a business plan is generally only for the banks and potential investors. However, without a liquor license, you won’t be able to proceed.
So how do you create a business plan? First, you need to work out a detailed cash flow and profit-and-loss account that shows how you raised your startup funds.
Illegal activity is common in the industry as restaurants and bars are often a front for money laundering, so regulations are particularly stringent. You can check our business plan guide for more information on how to write a comprehensive business plan.
Know Your Audience
Deciding on the type of bar you’d like to run is often the most fun part for entrepreneurs. After all, this is where you get to visualize yourself in the situation.
With this in mind, will your bar be primarily for drinking or double up as a restaurant? Hiring a chef and cooking food comes with its own regulations, so it’s important to establish this early on.
Additionally, what kind of clientele are you looking to attract? Will your bar feature live music performances, or are you hoping to attract avid sports fans with TV screens?
Of course, you may choose not to focus on either and leave customers to chat at their leisure. Whichever you decide, take your location – and therefore the locals – into account.
Once this is decided (and you know where you’re looking to set up), take a look around to size up the competition. What food and drink do they offer? What is the atmosphere like? If there are varying styles, which is attracting the most customers? What is the atmosphere like in there?
Bear in mind that customers are often loyal to the bars they frequent, so simply creating a copy of the most popular place in the area won’t necessarily work.
Get Your Liquor License
This is essential, and you should make sure it’s possible to obtain a liquor license before getting too far along in your plans. The procedure for getting a liquor license varies according to your state, so rather than explaining the process here, we simply recommend that you get in touch with your local authority.
They will do a background check and grant the license if you pass. Bear in mind that the process can take around 60-90 days, which is why it’s important to get it done as soon as you can.
If you’re not granted a license right away, all is not lost. You can always apply again after making any corrections they require.
Create A Company
There are many different types of companies you can set up. It’s worth researching them so you can find one that suits you. This isn’t always straightforward, so it’s worth asking a professional accountant to help you.
Many bars in the USA begin by starting a limited liability company (LLC), which restricts their personal losses should the business fail.
After establishing what type of company you want to set up, you’ll need a name for it. Make sure your name is easy to spell, pronounce and remember to make it more attractive to customers.
You’ll also want to make it SEO (search engine optimization) friendly. You can use our bar name generator to find the perfect SEO-friendly name for your new business.
Social media is a powerful advertising tool, so having an active page on Facebook, Twitter or Instagram will greatly increase your bar’s following. This is particularly useful if you have new information to post regularly, such as any live acts you may be hosting or any offers you may have.
In addition to communicating with your clients, your posts may also get shared with others and help you get more customers. Finally, make sure you link back to your website to increase its traffic.
When it comes to the website, it should be visually appealing with detailed descriptions of the food and drinks on offer. Photos work wonders in increasing a page’s aesthetic, so make sure you include plenty of happy customers. If your website has a fun appeal, so will your bar, and you’ll soon become a go-to for the locals.
Bars are loosely classified as being part of the entertainment business, and although people’s tastes don’t change as quickly as they do in other parts of the industry, it’s still important to keep up to date.
Keeping an eye on current trends will help you stay one step ahead of the competition, but only if you’re marketed that way.
Remember to consider the types of clients you want to attract. Are they locals looking for a solid and reliable place to go after work, or are they more interactive clients, willing to pay more if the entertainment is good?
If it’s the latter, you can always introduce a ‘cocktail of the month’, or have special promotions on different food and drinks.
Use Digital Marketing
Advertising used to be limited to television or print, but these days there are so many options out there it can be hard to decide.
Digital marketing is great in the initial stages, as it will help raise the awareness you need to get your business up and running.
Spend some money on well-targeted FacebookAds in your area, or use GoogleAds and place them on relevant blogs and websites. These adverts don’t always need to go on a website relevant to yours – some quick research on what else your client base might be looking at will help you gain followers who might not have seen your bar otherwise.
Digital marketing is the most effective form of advertising for your business now and in the future.
Advertise For Free
For those who are less tech-savvy, the old-fashioned methods can still be effective. Try your local newspaper or radio station to see if they’d like to write a piece on your bar, or interview you.
You can also use pamphlets and flyers to make your presence known. This way of reaching out to locals is great because people will see your bar when they’re out and about – or potentially even through the letterbox. Added to this, it’s free!
Set Achievable Goals
As with any other business, goal setting is essential. What are you hoping to achieve, how are you going to get there, and is your current approach working?
By setting goals, you’ll be able to judge how well you’re doing and where you may need to make changes. Of course, it’s good to aim high, but make sure your goals are realistic. After all, setting up a business is challenging enough as it is, particularly for a first-time entrepreneur, and you don’t want to get discouraged. However, with a practical and realistic approach, you’re sure to see the benefits.
If you’re regularly setting and achieving your goals, the next logical step is to think about increasing your profit.
While the most obvious solution is to increase your prices – particularly if your bar is popular – this can lead to a drop in sales. Instead, you could opt to hire an extra member of staff and stay open for longer if your license allows it.
If you keep on reevaluating and readjusting your goals, you will have a very successful business.
Unlike many other businesses, when you own a bar, you get paid right away. This is a good thing in an industry where start-up costs are high, and if you have enough customers, you’ll soon see a return on your investment.
The highest costs involved will be the lease of the premises and the subsequent building of the bar and kitchen. You should get quotes from a construction company and a kitchen supply company to estimate how much everything will eventually cost you.
Try to have a contingency fund as the building projects might not come in on budget. Organize a line of credit with your bank in the event of the project going over budget. This will guarantee that it will be finished, and you can open your bar.
Get Your Paperwork in Order
As discussed earlier, the regulations on opening a bar are strict, and the authorities will perform rigorous checks on your start-up capital.
Make sure you have all the relevant paperwork to hand, including any contracts you may have signed with a brewery. This will show you in a much better light and may make you eligible for loans in the future.
Get In The Zone
The social side of bar ownership is probably a big part of its appeal. For many people, the idea of sitting with the locals and chatting while at work is a dream job.
If you’re an outgoing character and you intend to get behind the bar, you should definitely make this a selling point in your marketing plan. If you’re local yourself, you may already have a client base ready and waiting, but if you’re new in town, spreading the word is a great way of getting to know people.
Why not get in touch with the local football club and see if they are interested in club nights? Are there offices around that may be interested in after-work drinks or more official events? When it comes to attracting custom, the sky is the limit.
As the bar owner, you lead by example. As the saying goes, work hard, play hard and above all else, be friendly but firm.
Your actions will filter down to your employees, and also limit your customers to the ones who will behave in a respectable manner.
Other Things To Consider
Above all else is the liquor license. The local authorities will advise you on how to get one of these, so arrange a meeting with them.
Speak to your accountant about which type of company to set up as, and consider the name of your bar carefully before you commit to it. You can use the bar name generator at the top of this page to find the right name for your company.
If you’re looking to live above your bar, you’ll need to confirm this is legal as well.
Keep Your Eye On the Books
Besides high start-up costs, there’s plenty more to consider. Alcohol purchases are the main consideration after your rent and staffing requirements, and food follows from there.
You may find you end up with several suppliers, particularly if you have a contract with a local brewery, so you’ll have to monitor your accounts for each.
While alcohol doesn’t tend to spoil, food wastage is common, so you’ll have to be very careful when deciding how much to order. It’s better to sell out than to end up with a large amount of wasted food and money.
Remember to set your prices realistically. Naturally, a new business will want to offer a great deal to its customers but set the bar too low, and you’ll either lose money or have to hike prices substantially later, potentially losing customers.
Setting food at a reasonable price will help you plan ahead and get a realistic idea of how many customers you’re likely to attract.
Many apps on the market can help your day-to-day bookkeeping, and Quickbooks is one of the best. Start using it from the beginning, and you will have good control over the bar’s finances.
Choose Your Staff Carefully
Much like owning a bar, working at a bar requires a friendly and outgoing personality, so make sure the staff you hire all share your vision.
Your staff should work hard and enjoy their jobs, and the chef should negotiate with suppliers and be creative with the menu.
If you can start with employees like this and take care of them, you’re well on your way to success.
Although fun factor is a big part of opening a bar, try to run your business with a head-over-heart approach.
A personal dream is one thing, but you’ll need to be professional if you want to succeed. Plan carefully to ensure you’ve targeted the right audience, research your competitors and build solid partnerships with potential customers.
After all, everything depends on you, and it’s you who will be the driving force to make the bar better and more profitable.
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