Running a bar cum club can be a very pleasant and entertaining business. It is nothing like owning a restaurant. Bars are filled with laughter, friends, celebrations, loads of entertainment and of course, varying levels of emotional outbursts. Bars and clubs are usually loud and filled with friendly conversations, occasional fights, and upbeat music. If you are thinking of owning and running a bar, you have hit the right page.
Although, the bar business is fun, starting it needs a lot of dedication, effort, and time. Running it would also mean spending hours together serving drinks, making meals, purchasing supplies, and more importantly connecting with the right people.
However, there is nothing to fret. In order to establish and run a successful business, you just need to focus on putting the steps together and refine your business management skill. Today we shall focus on the steps to open a bar. You will be able to up your skills over time, we promise you.
Different Types of Bars
First, you need to choose the type of bar you would like to establish. If you go into the details, you will find more types than you can possibly think of. Here is a short brief on the different types of bars:
1. Specialty Bar
These bars have several types in themselves. Each is built focusing on a different theme. For instance, some specialty bars serve only a particular drink, such as Martini and its many versions. You can also run a wine specialty bar or focus on other consumables, such as cigars, hookahs etc. Specialty bars are generally smaller in size where only selective and exclusive customers visit.
2. Neighborhood Bars
The bars usually have a homely and cozy ambiance. The bars open early and close early than nightclubs. They generally serve beers and wines. However, if you wish to serve other hard liquors, then the proper license must be obtained first. Full dinners are not served. Drinks are accompanied with snacks and appetizers. Games are included in the bars for entertainment, such as pool tables, dart boards, video games etc.
3. Sports Bar
They are similar to neighborhood bars. However, they differ in terms of variety of foods and entertainment. They must include audio and visual entertainment, other relevant tools and technology. Games for entertainment are not important, but you can add some for an impression. Your major investment will be in the form of television and cable connection.
4. Beer Bar
Also known as a brewpub, they serve only beers. Startup investment and licensing requirements are low and easy to fulfill. You can sell other drinks in bottles apart from tap beers. Depending upon your location, you can easily turn a beer pup into profit in no time.
You can start different types of nightclubs, such as large nightclubs for celebrity guests, mid-sized nightclubs, a combination of a night club and neighborhood bar or cocktail lounges. The size and type will decide your start-up cost. The source of music in mid-sized clubs is local popular talents or bands. Cocktail lounges must include piano or jukebox for entertainment. Clubs can make plenty of money if they are located in the right city and if managed properly.
The cost will dramatically vary based on the type of bar, the location, the food you serve, music and entertainment source, and the size. For instance, a brewpub can cost you between $100,000 and $1 million, while a beer bar can cost you between $20,000 and $1,00,000.
Steps to Start a Bar Business
Step 1: Plan Your Business
We always recommend commencing business with a business plan. A correct and comprehensive plan will guide you for several years. If planning is not done properly, your start-up cost may shoot up and by the time you realize, it will be too late to fix. Minor details are even more important in business plans. People usually omit them or add them in miscellaneous expenses. But that’s not how it is supposed to be done. A business plan will help you identify the opportunities, and the loopholes and other factors that can cause the business to fail.
Work on Your Target Market
That should be your basic. We cannot give you a concrete start-up cost because the price highly varies depending upon the target market, size, and location as mentioned earlier. You could buy an existing bar and refurbish it to suit your requirement. Doing so will nullify a lot of your start-up cost.
However, you have to research on your target market and find out what bar will suit based on your concept and location.
Calculate the Start-up Costs
Once you have decided the type of bar you will like to establish, you need to write down your expenses. The important elements that comprise the start-up cost of a bar business include:
- Rent of the place (security deposit included), lease amount, or cost of the property if you plan to buy.
- Refurbishing expenses, including electrical, plumbing, carpentry, painting, heating, lighting, air conditioning, flooring, lavatories, and interior designing.
- Furniture/ fixtures
- Kitchen Equipment/ Tools
- Food and liquor supplies and inventory
- Utility bills, such as internet, phone, fuel
- Maintenance and
Do Your Groundworks
You will have to do groundwork, such as from where and whom you should source food and liquor and how will your bar be different from your competitors? This could be in terms of prices, the food you serve, the entertainment you provide, the theme or any other thing your competition does not support or that people crave.
You also have to determine the following in your groundwork phase:
- Financial projection
- Goals (short term and long term)
- Marketing and advertising strategies
- Branding strategies
- Skills required
Step 2: Get Proper License to Run a Bar
Once you have thoroughly planned your business, it is time to establish your bar legally. Before you proceed further, we suggest that you hire an attorney who will review your business plan and guide you with the necessary legalities for commencing the business.
In order to serve alcohol, you need to obtain many licenses. The regulations, however, vary from state to state and country to country. For instance, alcohol is totally banned in the Gujarat state of India, while it is not in the rest of the country. The rules also change with the type of alcohol and food you plan to serve.
To start the process, get in touch with your state’s federal or corporation. Corporations usually limit the numbers of liquor licenses to be sold in a particular area. They are called zoning restrictions. You have to inquire about it for your chosen area. Once that is done, find out about the licenses and permits required to sell beer, wine, and other hard liquor. You will also need to find about the licensing needs to be done to serve and sell food.
Generally, food and beverages businesses are highly regulated. There are several food and safety laws that you must adhere to. You could take help from a restaurant owner or a bar owner regarding this.
Step 3: Establish Your Business Legally
You have to give your business a concrete legal structure. The structure of your business will determine many things, such as your tax liabilities and your personal liabilities. Your attorney should be the best person to suggest the most suitable business structure based on your finances and personal assets.
However, some of your options include sole proprietorship, partnership, LLC or corporation. While sole proprietorship can be easily established, you will be personally liable for legal claims and debts. This means your personal assets can be easily forfeited to cover the business loss.
In order to develop a more sustainable business entity, set up your bar as an LLC or a corporation. The benefits of establishing these structures are greater than their cons.
Moving on, don’t forget to apply for an EIN from your state’s IRS and a business liability insurance. EIN number is mandatory for bank account opening and for worker’s compensation. You may have to purchase two or three types of business insurance for your bar depending upon the scope and operations.
Step 4: Choose Your Bar
The success of a restaurant or bar largely depends upon the location. Location is the prime factor. And you need to consider a whole lot of factors before settling down to one. Here are the factors listed:
- Bar Type: Are you planning to establish a nightclub, a neighborhood bar, beer bar, specialty bar, or sports bar? Also, decide the style of your bar; is it casual, formal, or elegant? This will heavily determine the type of customers to target.
- Accessibility: How accessible your bar location is in terms of parking and local transportation. If the bar is exclusive for tourists, then parking is not an issue.
- Crowd: What type of crowd would you like to attract? Different areas of your city attract different demographics. If you want to appeal the younger generation, aged between 15 – 25 years, then opening near university will make sense. If you are planning to open the bar for affluent customers, then set up your bar in a posh locality. A sports bar could be opened near a sports club, stadium etc.
- Cost: How much can you spend on the rent or purchase of the bar in the location? The average number of people you are expecting to visit will determine the cost.
Step 5: Pick a Name and Design Your Bar
The name plays a major role in advertising your bar. The name should be kept based on the crowd you want to appeal. The name can be kept on the concept of the bar, physical location, or something that is really catchy. For instance, if its beer bar, you can name it ‘Bikes n Barrels’.
Like the name, the style of your bar is also a determinant for attracting a good number of crowd. Customers usually go to a place for food, atmosphere, and music. In the case of bars, it is the service, atmosphere, and music. Bars are mainly for socializing and having fun. So, from the right music to the right décor, including the furniture, you have to ace it to lure in more people. Make sure the design and the theme compliment each other. You cannot open an Irish club and play Bollywood music.
Consider hiring an interior designer for designing the pub. You can also look at Pinterest for ideas.
Step 6: Marketing and Promoting Your Bar
Your bar will not succeed without right staffs. Super cool bartenders with creative ways to serve drinks are definitely a bonus point for marketing. Your Barbacks, Staffs, and Bartenders should be sleek, stylish, creative, friendly, and crafty in serving drinks.Killer staffs will amplify crowd with their acts. So, make sure you hire the best from the lot.
Now it is about promoting and attracting customers into your bar. You have to use all three mediums of advertising, namely:
- Traditional: Direct, Print, and Word-of-mouth
- Social Media: Instagram, Facebook, Twitter
- Digital: Website, Blog, PPC,Video ad Campaigns
Some of these are expensive, but most of them bring guaranteed returns if used in the right way. First impressions are always the best impressions. Customers who try your bar out of curiosity will talk about it to others if you serve them well.
Print media and social media are two popular forums that you can use to rapidly spread the word. Use the newspaper, local television channels, and radio station for announcements. Some of the ways you can leverage Facebook and Instagram are:
- Create promotional events and post them. Check the internet for inspiration.
- Update frequent stories displaying different views of your bar/pub.
- Click pics of your bar, food, menu, crowd, and the drinks served on Instagram.
Keep the music fun, upbeat, and up-to-date. Greet your customers personally. Ask for suggestions and personalize their drinks. Pay attention to their feedback and work on them. Try to eliminate problems quickly and try to bring in variety every day, especially on the weekends.
We have done our best to cover all the steps required to start a bar business. Hope this inspires and guides you through the process. All the best.