Open a Bar

Opening a bar can be a very risky business. But with great risks usually come great rewards. In order to be a successful bar owner, dive head-first into your business and stay organized. Build a budget and stick to it. Be prepared for disaster and work swiftly. More than anything, be a people-person. If you want to open a bar, here are some steps to help you out.

Steps

Starting Off

1. Know that being in the bar business entails stiff competition. You'll be competing with other bars in the area, as well as other entertainment and retail options. It used to be that when people wanted a drink, they had to go to a bar to get it. Nowadays, people can easily pick up alcohol at the local corner store or neighborhood grocery store without much hassle. So being in the bar business is no piece of cake. By some estimates, 3 out of 4 bars fail in their first year.
2. Be prepared for a different sort of work schedule. Especially in the first year of operation, owners of bars will need to be managing staff and closing down until 4 or 5 a.m. every night, and then heading straight back at 11 in the morning. This can take a toll on family life; talk with your family about how owning a bar will affect them.
3. Look for a liquor license. Every watering hole depends on being well-stocked with liquor; if you can't sell liquor to your patrons because you don't have a liquor license, your little oasis is going to dry up pretty quickly.
   • Liquor licenses can be prohibitively expensive. In places such as New Jersey, liquor licenses can cost anywhere from $400,000 to $1.5 million. Liquor licenses aren't usually this expensive, but expect to pay a pretty penny for the privilege.
   • Some cities, such as San Francisco, have issued moratoriums on liquor licenses for certain neighborhoods, meaning that you have to purchase it from someone who is willing to sell it to you. Obviously, this can make it more difficult to find liquor licenses.
   • Once you've obtained your liquor license, make sure you've got every local, city, county, state and federal license up to date.
4. Create a detailed business plan. Know the demographics of the neighborhood, and the audience you're trying to attract. Having a business plan will help you to secure financing, which banks are reluctant to fund and which the SBA will not help with.
   • If the locale you're serving has a lower number of drinks per ticket, consider offering food along with liquor. This may be helpful in areas where patrons don't stop by immediately after work, or in places where patrons leave earlier on in the night.
   • Don't be under capitalized. Many bars fail because they are under-capitalized. In an ideal world, you'd have a year's worth of expenses in the bank. At the very least, have 4 to 6 month's worth of rent and expenditures covered before you dive into business.

Choosing Location and Theme

1. Look for the right location. Don't jump at a closed bar. Bars close for a reason. Look for the right area to be in. Preferably, find one that has a higher proportion of young adults, who — unsurprisingly — hang out in bars. The more bars/nightclubs there are in the vicinity, the more competition you'll face.
   • When choosing a location for your bar, remember this:
     
     • Highway access is crucial if you want to attract crosstown business.
     • Parking is essential if you're in an area where people don't tend to walk.
     • Street visibility is a good thing. Being noticeable from the street is important in attracting foot traffic.
2. Generally, pick a location closer to patrons' workplaces than their homes. It's no secret that stressed-out and tired patrons want a little R&R after a busy day at work. Especially during the workweek, being in the center of commercial hustle and bustle may prove more profitable than being near the suburbs.
3. Choose a theme for your bar. It doesn't have to be an in-your-face, without a doubt theme. Subtle can work, too, as long as you have other factors working in your favor. But it pays to know what your bar is all about. So, what will it be?
   • Neighborhood bar. This is where Chuck and his buddies congregate after work on Wednesdays, and perhaps play darts or even cash checks. (Well, probably not.) Neighborhood bars are probably the most popular types of bars, and are perfect for small-scale entertainment.
   • Sports bar. This is where die-hard fans and curious fans alike gather to watch the game on Sunday. Expect to offer food in these sorts of bars, and to have a television viewable from every seat in the house.
   • Brewpubs. This is where discerning beer drinkers go to get their fix. You'll probably have lots of niche or local beers on tap, and some brewpubs even make and offer their own beer on the premises. Brewpubs that manufacture a popular beer can capitalize on their product in several different ways.
   • Specialty bars. This is where you'll find intimate wine bars or specialty martini bars. Specialty bars either have a décor theme, such as a pirate theme, or a liquor theme, such as rum — or they combine it into an amazing pirate-themed, rum bar.
4. If you're going to have live music, know the audience you're trying to attract. There are country-themed bars, blues-themed bars, punk-themed bars, rock-themed bars, jazz-themed bars, and so on. Attracting the same sort of clientele that fits within the theme of your bar is a plus, not a necessity.
   • Quiet wine bars might want to have jazz or piano music.
   • Neighborhood bars might benefit from local rock groups or comics.
   • Clubs would probably do well to fit dance music into their repertoire.

Finalizing the Essentials

1. Name your bar. This is more complicated that you think, and every bit as important as other aspects of the business. Your bar's name will be its living advertisement, the embodiment of what it's all about. Make sure that it connects with customers on a visceral level, telling them what the bar is about while sounding intriguing at the same time.
   • Make sure your name exemplifies your theme. If you're a trendy wine bar, you probably don't want to adopt the name "Bill's Place" — peoples' ideas about what the bar is about won't conform to what it actually is.
   • Don't be afraid to research the possibilities. Spend a lot of time thinking about what kind of customers you want to attract, and what people might expect given the name. Don't stop coming up with names until you've gotten at least three names that you love; then, decide between the three.
2. Create a Create a Bar Menu. If you're going to serve food or quality cocktails, spend a little extra on the ingredients; fresh is always better. Try to make your bar menu fit along with the theme of the bar, if it has one. A bar with a Mexican theme would be remiss not to have tequila, margaritas, or cervezas.
   • Consider making a happy hour menu. The bottom line on your profit won't be as high, but clientele will definitely increase, and some customers will probably stay even after happy hour has passed.
3. Contract with an amusements company for coin operated machines. Pool tables, dart boards, and touch screen or arcade style games can offer distractions to people while they drink. Think about getting a jukebox and a change machine, especially if your bar is a neighborhood establishment. Usually the profits are split 50/50 and the service comes free.

Getting Ready to Launch

1. Have city inspectors come look at the property and ask the landlord fix everything before you sign a lease. You'll be glad you did. After you do this, have the Health Department inspectors look at it and give it an operational pass.
2. Utilize friends and acquaintances to help you with electrical, plumbing, sound and construction. Cut them a deal to drink cheap forever. They're your friends, and you'll want them to bring their friends. Word of mouth is essential in the bar business.
3. Advertise the grand opening weekend. Set aside a marketing budget. Get involved in community events. Launch direct-mail campaigns and utilize social media. Opening with great fanfare helps to create a buzz, and buzz will help spread word of mouth.
4. Get promotional products. Work with the local liquor and beer distributors to provide you with swag for customers. Everyone likes getting stuff for free, even if it is a cheap T-shirt.
5. Make yourself visible. In the beginning especially, make sure you're working shifts in the kitchen, behind the bar, and on the floor. You'll need to effectively oversee operations and learn while on the ground. Patrons also like seeing the owner.

Tips

• Check into who your lessor is and how they do business. If people say, "Oh, they're OK, just not on top of things", don't sign a lease. They might just wringing money out of the building and won't fix anything. It'll cost you patrons, business and your investment.
• Never get involved with your waitstaff. It will cost you big time in long run.
• Keep an eye on your bartenders and waitstaff. Make sure they don't have their hand in your pocket and that they're not comping drinks for better tips. By the way, they don't make better tips on cheaper tabs.
• Keep your business and personal assets separate.
• Don't drink on the job. You can get carried away and stuff falls through the cracks.

Warnings

• Good customers are hard to come by and easily lost. Know how to retain them once you gain them.
• You probably won't make as much money as you think you will, at least at the beginning.
• It's not the good times that make your business, it's the bad times that break your business.
• You need to know everything about the business and have had experience.

Related Articles

• Research Effectively Before Opening Your Own Bar
• Stock a Bar
• Start a Small Business
• Finance Your Business
• Write a Business Plan
• Buy Your Own Business
• Get Business Funds

Sources and Citations

See also

• Plan a Restaurant
• Manage a Hotel
• Open a Restaurant
• Research Effectively Before Opening Your Own Bar
• Make a Restaurant Menu
• Set up a Hostel
• Start a Cafe
• Buy a Restaurant
• Open a Fast Food Franchise Business
• Start a Small Restaurant or Coffee Shop

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