Opening a new bar can be a life-changing experience. You can meet new people, make money and have fun simultaneously. However, it’s also a lot of hard work and requires foresight and planning.
Whatever the reason might be, you should know that it’s not going to happen overnight. A lot of hours will go into planning your bar’s layout, drawing up floor plans, and planning for simple things like insurance coverage.
But if you are ready to invest the time and money into opening your bar, there are things you should do first. This article outlines everything you need to know to open a bar.
Read Also: How to Write a Business Plan
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What Do You Need to Start a Bar Business? (Checklist)
Do you want to start a bar business? Do you want to be a business owner? It can be an exciting and lucrative business venture.
Still, the world of bars and nightclubs is competitive, so it’s important to know what you’re getting into before starting a bar business.
We have all dreamed of owning that local neighborhood bar, but make sure you think through it before you make any financial commitment!
Here’s a checklist of what you need to start a bar business.
Write a Bar Business Plan
Before you open any business — much less one with the high overhead costs of liquor and food — it’s essential to have a solid plan in place.
A business plan will help you determine how much money you’ll need to get started, how much revenue you can expect from different aspects of your business, and how much profit will be left after all expenses are paid. It also lets you ensure everything is covered before opening day arrives.
A business plan is a written document describing a company’s purpose, objectives, strategies, risks, and challenges. It also outlines the startup’s financial requirements and projected financial performance.
Writing a business plan before starting your bar business is essential because it forces you to think carefully about what you are doing and helps you make better decisions. The main sections of a typical business plan include:
Company description: Describe your company’s product or service, competitive advantage, and market position.
Products/services: Describe each of your company’s products or services in detail. If applicable, include any patents or trademarks that protect these products or services from competition.
Sales forecast: Project how many units (or dollars) each product will sell over a specified period — typically one year — then calculate your total sales revenue from those units or dollars. Your sales forecast should include demand for both new products and replacements for existing products that are nearing the end of their useful lives.
Marketing plan: Explain how customers will find out about your product or service, how much they will pay for it, who they are likely to be, and where they live — along with other information relevant to marketing campaigns, such as demographics.
Choose a Bar Concept and Brand
Before you start building your bar, you need to decide what kind of establishment you will have. There are many different types of bars, including sports, dive bars, neighborhood bars, craft beer, wine, and more. Each has its target audience and clientele.
For example, craft beer bars tend to attract men in their 20s-40s who enjoy drinking beer from local or small breweries around the world. Sports bars tend to attract men in their 20s-50s who enjoy watching sports on TV or playing games like pool and darts. Wine bars tend to attract women in their 30s-60s who want to drink wine without distractions such as TV or loud music.
Dive bars attract people looking for cheap drinks at low prices and a relaxed atmosphere where they can hang out with friends or meet new people without being judged for what they wear or how much money they have in their wallets.
Once you know what kind of establishment you want to open, think about the type of atmosphere that would fit in that space. Will your bar be more casual, or will people be dressed up when they come in? What kinds of drinks will they order? How much should they expect to pay for drinks at your bar?
Once you’ve nailed down those details, it’s time to start working on choosing a name for your bar.
Choose a Name for Your Bar
If you are planning to start a bar business, you need to choose a name for your bar. It’s essential to get this right because the name of your bar will be one of the first things people hear about when they hear about your business.
It’s also going to be one of the first things people see when they walk into your bar, so it needs to be memorable and attractive.
Before choosing a name, you should know some rules you should follow when naming your bar. Here are some tips for choosing a name:
Make sure it’s legally available. Check that your name does not infringe on any other company’s trademark or copyright. If you choose a name that has already been registered by someone else, then you may find yourself in trouble if you decide to go ahead with opening your business.
Keep it short and straightforward. The shorter the name, the easier it will be to remember. It also makes sense to keep it simple – don’t try to cram too much information into your bar’s name!
Make it easy to remember. The best names are easy to say and remember once people start talking about them. For example, think of some of the most popular fast-food chains like McDonald’s or Starbucks. Each one has a concise name that’s easy to remember once someone has heard it. That’s the goal for any good bar-related name as well.
Keep it professional. You want to create a professional and trustworthy image for yourself and your business — even if you’re starting with a small operation in your home! So avoid using names that might come across as too casual or juvenile when spoken aloud.
Consider a location-based name. If your bar is located in an area known for its nightlife (e.g., Bourbon Street), this can be an effective way to get customers’ attention. But don’t rely on it too much — people will want to remember the name even when they’re not near the location!
Think about how people will pronounce it. It’s always good practice to ask around and see how people say your name before going ahead with it as a business title or tagline — mainly if it’s long or complicated! Similarly, always write out your name so it looks good in print (e.g., no spaces between words). This will also help ensure that there aren’t any spelling mistakes in any advertising material.
You want to ensure that the name is unique and not already used by another business or trademarked. You also want to ensure that the term isn’t too long or complicated, as this can confuse customers and other companies. Once you have chosen the perfect name for your bar, the next step is to choose a legal business entity for your bar.
Choose a Legal Business Entity for Your Bar
It’s essential to choose the proper legal structure for your business. Most small businesses use one of three business entities: sole proprietorship, partnership, limited liability company, or corporation. Each type of business structure has its pros and cons, but it’s best to choose the one that matches your goals and objectives as closely as possible.
For example, suppose you plan on working alone in your new establishment and don’t want any partners involved in your business venture. In that case, a sole proprietorship is probably the best option.
However, a partnership or corporation may be better suited for your needs if you plan on hiring employees or have more than one person involved in owning the business.
This is the simplest business structure and offers the least protection for your assets in case of a lawsuit or other claim against your bar. You are personally responsible for all business debts and legal issues.
A sole proprietor can also be personally liable for any claims against the business, such as product liability or personal injury suits. The owner’s personal assets such as home, car, and savings accounts can be seized to pay off business debts.
This also means that profits from your bar are subject to self-employment taxes. In other words, you will be paying taxes on your income instead of having them deducted from your paycheck as other employees do.
A sole proprietorship is also very easy to set up and maintain, with no formal requirements or filings. It’s best suited for small businesses with just one owner who works alone and wants total control over their business affairs.
A partnership is a business entity in which two or more people agree to share ownership and run a company together. Partnerships are formed when two or more people sign a partnership agreement that details how the partnership will be run, their responsibilities, and how profits will be distributed among the partners.
Like sole proprietorships, partnerships do not have separate legal existence from their owners. The partners agree to share responsibility for managing and financing the venture and sharing profits made from the venture’s operations.
In addition, each partner is personally liable for any debts or obligations incurred by all partners on behalf of their business unless otherwise agreed upon by all partners.
Partnerships may be formed by oral agreement or written contract, but they must register with the state after being in operation for one year or more. Unless you take steps to protect yourself by creating an operating agreement, a partnership may dissolve if one partner leaves or dies.
Limited Liability Company
A limited liability company is similar to a partnership, but can only have a sole owner or could have multiple owners. It can have some of the attributes of a c corp, like separate share classes or choosing to be elected as an S Corp. You should consult with your attorney and accountant to put the best structure in place.
The LLC is the most popular entity type that I have come across for those operating in the hospitality business. It ensures if run properly, that the owners have limited risk (also why it’s called limited liability) and gives the flexibility to fit a range of business cases.
A corporation is a legal business entity owned by shareholders, and it’s the most complex of the four types of businesses. The owners are called shareholders and are responsible for making decisions about the company. In some cases, corporations must have directors representing the shareholders in these decisions.
Corporations have many advantages over other business entities, but usually for large organizations or those raising large amounts of capital. Corporations also have limited liability, which means that if the business is sued, the owner’s assets aren’t at risk unless they’ve personally guaranteed a loan or some other obligation of the company.
The downside of using a corporation is that you must file additional paperwork with state and federal governments and pay extra taxes on your profits. This isn’t an issue if you’re starting and don’t expect your business to make much money right away — but once your bar has become successful, it might be worth considering converting into an LLC or another form of business structure that’s easier to manage.
It’s relatively easier to form a sole proprietorship or a partnership, but the only problem is that you are personally liable for lawsuits and debt incurred by your bar. For example, if someone were to slip in a bar and wanted to sue you, you would have to forfeit personal assets to cover the expenses.
So to avoid personal liability, your best option would be to form a corporation or LLC. These business structures act as an entity of their own and take on the business’s liabilities, which limits your liability. In that case, you wouldn’t be fined personally but the business as a whole.
Get a Liquor License
Liquor license qualifications and applications can vary from state to state and city to city.
If this is your first time through this process, I recommend you do a bit of research, so you are aware of the timeline and scope of going from idea to application to approval.
It’s best to hire a great liquor license attorney with local expertise to help you navigate the complexities of the regulations around this and ensure you are compliant.
Trademark Your Name and Logo
Before you start dreaming up names, you must do some research first. Ensure another business or individual doesn’t already take your chosen word.
One of the first things you should do is trademark your name and logo. This will protect your brand from being copied or imitated by others in the industry. This will also ensure that no one else can use your name or logo in their businesses without infringing on your trademark rights.
You can do this through the U.S. Patent and Trademark Office website. It costs about $300-$500 per name/logo, and they may also charge additional costs.
Secure Startup Capital for Your Bar
Funding is one of the most important things you need to start a bar business. When considering how to fund your bar, you first need to figure out how much money you will need.
This will depend on what kind of bar it is, how many employees it will have, and how much inventory you will need. This includes money for marketing, advertising, equipment, and other expenses related to running a bar on a day-to-day basis. You’ll also need capital to cover your initial costs, such as building materials and licenses.
Startup costs can be expensive, ranging from a few hundred thousand to a few million. Make sure you set up a pre-opening budget and understand what it will take to get your doors open properly.
Once you’ve figured this out, then it’s time for the next step: finding funding sources for your bar. The good news is that many ways to secure funding for your new bar business.
Get a Small Business Loan
A small business loan can be a good option for many entrepreneurs. Depending on your credit score, you may be able to get a loan from a local bank or credit union. These loans are typically unsecured, meaning that they’re not backed by collateral or property like real estate or vehicles. Instead, they’re based on your financial situation and income history.
The downside of getting a small business loan is that you may have to pay higher interest rates than if you took out an unsecured loan through your bank or credit union. However, if you don’t have enough credit history or assets to use as collateral, then this might be the only option.
Use Your Savings
This is one of the first places most people turn when thinking about starting a business. You can use it to get started if you’ve got enough cash on hand.
Banks know that if they lend to people who have no savings, those people will be unable to pay back the loan. Banks like to see you have some cash in reserve, so they know they’ll get their money back if something goes wrong with your business.
If you use your savings as seed capital for your new business, make sure that it’s not all tied up in real estate or investments. Having some liquid assets on hand will help convince lenders that they will keep their investment if something goes wrong with your new venture.
Ask Friends and Family Members for Help
One of the best ways to get funding for your bar is to ask friends and family members for help. If you have family members who are good with money, they can help you with some financial advice.
It may be tempting to go it alone when you’re starting, but it’s often easier to get support from friends and family. They can also be a great source of advice and encouragement throughout the process.
If you decide to ask for help from relatives or friends, make sure they understand what it takes to run a bar. Also, explain how much time and effort you’ll need before they agree to lend their support. Make sure everything is clear before asking someone for money.
Crowdfunding is one of the easiest ways to raise money for your business. Crowdfunding platforms like Kickstarter and GoFundMe allow you to set up a campaign and ask friends, family, and strangers for donations toward your goal. You’ll find that crowdfunding works best when you have an established social media presence and have built trust and credibility with those who follow you online.
Crowdfunding is also great for small businesses because it allows you to gauge interest in your product before you sink thousands of dollars into it. If you’re able to meet your funding goals within a specific timeframe (usually one month), then you know that people are excited about what you’re doing and want to see it succeed.
Sometimes the best bet is to diversify your risks. This could mean raising money from experience restauranteurs, bar owners, or professional investors. They will expect a clear go to market, quantified risks, and a roadmap to profitability. If you are serious about your bar, then raising money might be the best path for you.
Find the Perfect Location
Before you start a bar, you need to find the perfect location.
You’ll need a space with enough room for your bar and its customers, but it also needs to be in a prime location.
The location of your bar is critical because it can affect how much money you make and how much business you get. If you choose an area close to schools, colleges, or universities, they attract different crowds than those that frequent bars in other areas.
The first thing you need to do is find a location that has good foot traffic. You don’t want to shop in an area where no one is around at night. You also want to ensure that there are plenty of other businesses nearby, so customers will have somewhere else to go if they wish for food or entertainment after they’ve had a few drinks at your bar.
You also want to consider where your target audience lives and whether they’ll be able to get there quickly. If your target audience lives in a different part of town than your bar, it may not be worth opening up a location there since it could be difficult for them to get there regularly.
You also want to consider whether there are other bars nearby that draw customers away from yours. If so, try talking with them about joining forces with you on promotions or events so people will go out for drinks at both places rather than just one.
Don’t forget that taking over an existing bar is always an option! This can be beneficial as it can lower your startup costs, but challenging because you may be inheriting someone else’s headaches.
Obtain Permits and Licenses
The first step in starting any business is ensuring you have all of the necessary permits and licenses from state and local agencies. In most states, these include:
Food handling license. This permit allows you to prepare food for customers, such as sandwiches, or serving hot dogs from a grill station in your bar.
Alcoholic beverage license. You must get this license from the state liquor authority before serving alcoholic beverages in your establishment. Some states require separate permits for beer, wine, and spirits sales. Other states allow one general license that covers all three types of alcohol products sold at your bar.
Business license. Most counties require businesses within their boundaries to obtain a business license before beginning operations. This license identifies you as an authorized business owner operating within their jurisdiction.
In addition to the basic licensing requirements, your bar must be approved by your local zoning board. This is important because specific zoning restrictions apply to bars, especially those in residential areas or close to schools or churches.
You should also check with your city or county health department for any food service regulations that may apply to your business. You don’t want to open a restaurant without realizing that it needs special equipment or certification from health inspectors before serving food or drinks.
Find a Liquor Supplier
The first thing you need to do is find a liquor supplier. This can be difficult if you still need to get connections in the industry. An excellent place to start looking is local grocery stores and other businesses selling alcohol. If they don’t know where to find one, ask them if they can recommend someone else who can help you out.
You also want to find someone who knows what drinks are prevalent in your area. This way, when customers come into your bar and ask for something specific, you know exactly how much of it you need on hand, so it doesn’t run out before closing time.
You’ll also need to decide how much you want to spend on alcohol and how much money you want to make on each drink.
If you’re opening a small bar, this may be less important because you’ll have fewer options for brands and types of alcohol. But if you’re planning a large club or restaurant with a wide selection of drinks, it’s essential to know precisely what you’re getting into so that you don’t get stuck with expensive bottles that nobody buys.
When choosing your liquor suppliers, ensure they offer the best prices and good customer service. Suppose you work directly with a distributor or manufacturer. In that case, this shouldn’t be an issue because they’re used to dealing with new businesses that need help finding their footing in the industry.
However, if you deal with small independent distributors who only sell one type of product or specialty bars that only sell one brand of liquor, then it will be harder for them.
Design a Bar Layout
While it may seem like an obvious step, it’s essential to have a layout in mind before you start building your bar. This will help you determine where your equipment should go, how much room you have for seating and other features like a stage or dance floor.
A good layout is essential to any bar owner. You want customers to see all of your products so they can make informed decisions about what they want to drink or eat. A well-designed bar layout will also make it easy for employees to navigate the space without bumping into each other or causing a distraction for customers.
The design of your space can also affect the cost of your project, so be sure to include this in your budget planning. Consider consulting with a professional designer or architect if you don’t have experience with these projects.
Here are some questions to consider:
Will it be a full-service or limited-service bar? A full-service bar provides all the drinks and food patrons order while sitting at the bar itself. A limited-service bar is more like a pub where people order drinks at the bar but then take them to their table or booth.
What’s your target customer? This can influence your size and layout. For example, if you’re going after families with young children, you may want a smaller location without many stairs or steep inclines leading up to it. Suppose you’re targeting young professionals looking for a place to hang out with friends after work. In that case, you’ll probably want a more prominent location with seating for groups of four or more people around large tables (and maybe even some booths).
Buy Your Equipment
Once you have obtained all the necessary licenses and have all the other aspects of running a business, it’s time to start shopping for equipment! This can be one of the most fun parts of starting your own bar business because there are so many different items available for purchase and use in an establishment like this one! With the right equipment, you can get your bar up and running in no time. Here’s what you’ll need:
Barware. You’ll need plenty of glasses for serving drinks and a few different types of glassware for mixed drinks and beer. You’ll also need shakers for making martinis, beer mugs, and pilsner glasses.
Kitchenware. The kitchen area of your bar will be where all the magic happens — so you’ll want to ensure it’s equipped with all the right tools. At a minimum, you’ll need a blender, a food processor, a mixer or two (one for heavy batters and one for lighter ones), and some pots and pans to cook food items like burgers or steaks on the grill. You may also want to invest in an oven if you plan on serving pizza or other baked goods at your establishment.
Purchase and Track Your Inventory
If you’re a bar owner looking to open a new location or expand your existing business, you’ll need to stock up on beer, wine, liquor, and mixers. That’s where the inventory comes in.
Inventory is significant because it’s what will be sold in your bar. It’s vital to keep track of your list to accurately calculate how much money is being spent on drinks and what types of drinks are most popular with customers. This will help you decide which items to stock more of, which ones to reduce, and which ones should be removed from the menu entirely.
In addition to properly tracking inventory, you also have to ensure that you have a sound accounting system. If you’re starting in business, it may take time to figure out exactly what’s selling at your bar and what isn’t. You can use bookkeeping services such as Quickbooks or hire a bookkeeper. You can start by keeping track of sales figures each day or week so that once you have enough data, you’ll have a better idea of what items belong on the menu and which ones don’t sell as well as expected.
Buy a Bar Point of Sale System
If you’re going to open a bar, you need to be able to track all the information about your customers and their purchases. It would be best if you also did this quickly and easily without going back and forth between multiple pieces of paper or over numerous electronic devices.
This is why having a point-of-sale system is so important. A POS system allows you to keep track of all customer transactions in one place and makes everything easier for you and your customers.
Your point-of-sale system is your lifeline for tracking inventory and sales. It can help you run reports on your business’s performance, spot trends in customer behavior, and more.
When choosing a POS system for your bar, it’s essential to choose one that meets all your needs. You’ll want something that will track sales data from multiple registers at once, which is why we recommend choosing an online or cloud-based system over a traditional cash register system.
Hire the Right Staff
One of the most important aspects of running any business is hiring good people who will work hard for you and keep customers coming back again and again — especially if your bar only has one location! Staff members need to love what they do; otherwise, they won’t put forth their best effort when serving drinks or cleaning up after closing time.
Ensure that all employees are adequately trained before they take on any duties in your bar so they know exactly how things should be done every time a customer walks through your doors.
To find excellent candidates, you can use sites such as:
Make sure they’re as passionate about your idea as you are. If they’re not interested in what you’re trying to accomplish, it will show in their work ethic and attitude.
Your employees must share your vision for how the bar should operate, so make sure they understand what kind of establishment it will be before hiring them on board.
Check out their resumes or portfolios online. If there’s no online presence, ask for references from previous employers or someone who knows them personally — someone who can offer insight into their character and work ethic.
The best bartenders should have experience working in other bars and restaurants because it shows they know how to handle different types of customers and situations.
Advertise Your Awesome New Bar
It’s time to start your own bar business. You have the location, the alcohol license, and the equipment you need to make a successful bar. It’s time to get people in the door.
Advertising is one of the most critical aspects of a successful bar business. It’s how you get people through your door. If you want to make money in the bar industry, you need to advertise.
That doesn’t mean you need to spend a fortune on ads. You just need to find an effective way to reach your target market. Here are some tips and ideas that will help you get started:
Start by creating a social media presence for your business. Social media is an excellent way to reach potential customers as well as connect with them on a personal level. Start by creating accounts on Facebook and Twitter, then use these accounts to share updates about your business and post photos of what you’re offering (like happy hour specials).
Make sure your location is accessible. Ideally, it should be located near a major road or highway so people who can’t easily walk can still find it quickly enough when driving by with friends or family in tow.
Use social media platforms such as Facebook, Instagram, and Twitter to spread the word about your new bar business venture with friends, family members, and neighbors who live nearby or have connections with other potential customers.
These platforms also allow you to post photos from events held at your location so patrons can see what fun things are going on there every night!
Find local bloggers who write about bars and restaurants in your area, then reach out to them about writing reviews of your establishment or hosting an event there (like an open mic night). This will help get the word out about your new bar business.
Have A Soft Opening
Now that you have a great location and everything else is in place, it’s time to start opening your bar.
You don’t want to rush into opening a bar without testing everything first. Hosting a soft opening will give you ample time to test everything before doing it in front of paying customers. You’ll also get some feedback from people who aren’t your friends or family, who might be more critical when it comes to the quality of food and drink offerings.
During this period, ask for feedback about service, decorating, and overall ambiance to make any necessary changes before the grand opening event. You should also take inventory as much as possible so that you know what supplies need replenishing before the grand opening event.
This is also an excellent way to test how well your staff works together, especially if you haven’t hired them yet. It can be expensive if something goes wrong during your soft opening and there are no guests around — but if there are guests present and something goes wrong, then you know where the problem lies.
Soft openings don’t have to be elaborate affairs; they just need to give customers a taste of what they can expect when they come back later in the week or on their next visit.
Takeaways for Opening a Bar
Running a successful bar is about more than great cocktails and good management. It takes extensive professional knowledge, investment capital, and effort to build a solid bar business over the long term.
This article has given you insight into what it takes to open a bar. There are a lot of regulations for any type of business, but bars are in particular because there is a lot to consider when serving alcohol.
Make sure to check out the local laws and requirements as you’re starting your business planning process, as well as consult with an accountant and receive professional legal advice when you’re ready to do so.
Also, start with something small first, then move on to your more significant venture.