Are you planning on opening a bar as a post-pandemic business establishment? Do you have a great bar idea that nobody else has used for their establishment?
Hold on to that idea because we’ve got the guide to help you make it a reality.
As of 2020 and across the US, the number of nightclubs and bar businesses is at 57,625, which is 2.4% fewer than in 2019. The pandemic is one of the biggest causes of this decline in the industry. However, this doesn’t mean that it’s stopping people from establishing new bars.
Below, we’ve got an in-depth guide on how to open a bar. If you want to learn about the things you need and what you must consider before you build a bar. Keep reading until the end to learn some tips on opening a bar.
1. What You Need to Know Before Opening a Bar
Before anything else, you need to know or at least have an idea of the cost to open a bar. The building location expenses alone cost $150,000. If you’re starting from scratch, you may need up to $850,00 more to build the bar.
If you want to get a bar, the smart move is to buy an existing bar business instead. Close to 100,000 businesses shut down this past spring. At least one of them is going to be a bar located at a good place in a good state.
Next, you also need to know how a bar makes money. It is as simple as selling alcoholic beverages to patrons. Don’t lose sight of this purpose, no matter what twist you want to add to your establishment.
You’d also want to know the different types of bar establishments. The different kinds of bars include:
- Live music joint
- Nostalgia bar
- Plastic bar
- Specialty bar
- Sports bar
- College bar
- Irish pub
- Neighborhood dive
The next thing you need to consider is the customer. Your ideal target customer is someone who is looking for a place to drink in peace, not a place to pick fights. You want customers that know their drinking limits and are only in the area for a good time.
Take the knowledge of your customer to the next step. Learn how much you can charge them, how much you can profit, and how your business will profit.
Before you take on a serious enterprise like opening a bar, research everything first.
2. Make a Bar Concept and Brand
Let’s say you’ve thought long and studied hard the work of opening a bar. Now, let’s get to the next step of how to open a bar. That is to create a concept and brand for the type of bar you want to open.
When you create a concept for it, consider the people who are within the location you want. Is the town you’re opening the bar a small town that wants an unpretentious neighborhood bar, for example? If so, don’t create a sophisticated wine bar that offers drinks beyond the locals’ price range.
Having experience in starting a business in a similar or the same industry can help you out a ton. If it’s your first time to open a bar, get the opinion of someone who has experience. Talk to an older or more experienced bar owner about your concept or plans.
Listen to what he or she has to say about your bar ideas. You never know what insights you’ll get from someone like that. Such a person can also help you adjust your brand to meet the needs of the locality.
If you want updated information about the bars in your state, you can check out this guide here.
3. Create a Legal Entity
Before you go further, decide what type of business structure you want to establish. This decision will affect your legal liability, ownership rights, the taxing of your business, and funding. There are various entity types for small business owners, like:
- Sole proprietorship
- Limited Liability Company (LLC)
The most common type of business entity for businesses is a sole proprietorship. With this kind of business entity, you run the bar as the only business owner. If you want a legal entity that offers liability protection, the popular entity type is the LLC.
4. Craft a Business Plan for Your Bar
Like other businesses, the basics of learning how to open your own bar include writing a business plan. This business plan includes how you plan to execute and manage your business. Your bar business plan will serve as your guide when you don’t know what to do next in your business.
Your business plan will help you identify any holes in the business model before you open it. Create things like a mission statement and your competitive advantage.
When you create a business plan, try to emphasize the following:
- Executive summary
- Company overview and description
- Market analysis
- Business offerings
- Marketing strategies
- Financial projection
Also, you don’t need to create a business plan with too many details. Don’t obsess with minor details that you can adjust or change. Rather, focus on the big steps and ideas that you want to take once your business starts operating.
5. Raise Money and Know Your Budget
Once you’re ready with a business plan, you’ll know how much you need to build the business. However, this is different from looking at the hard numbers involved in getting a bar running. For this part, your goal is to secure funding before you open a bar.
Before you start, create a list of the startup costs of a bar. Add the cost of daily operations. From here, you’ll get an idea of the budget you’ll need to keep the bar running for the next year.
You can seek out investors who may want to invest in a bar and have the status of owning a bar. Some bar owners use debt financing to secure a lump sum. Others take convertible debt, which is a more flexible type of financing than debt financing.
6. Find the Best Location for Your Bar
Once you have your financing secured, your next step is to find the spot for your bar.
Again, go back to your research on your customers. Today, those who often visit bars are younger millennials, which are those in the age range of 21-26 years old. Of the millennials, 51% of young millennials go to a bar once per week on average before the pandemic hit.
You’d also want to watch out for areas with little or low visibility and access. How will your bar make money if people can’t find it or have trouble getting to it? Also, consider the accessibility of parking in an area.
Is the place you’re considering close to the competition? If you want to be nearby and available for bar hoppers, make sure your bar stands out. Otherwise, choose a different competition for your bar.
Watch out for health regulations and zoning laws in the city or county. If you’re establishing a bar in a location you’re unfamiliar with, at least get familiar with its local laws.
7. Design a Layout for Your Bar
At this point, you already have a bar location. The next step is to create a layout for your bar that allows a good flow within the establishment. Make sure that the area can accommodate all the needed equipment, seating, and fixtures in the bar.
If you’re doing the design of your bar, keep functionality at the forefront of your mind. With the rise of COVID-19, consider the social distancing protocols in the bar. Other than your patrons, you also want to keep your staff in mind and how well they can move in the bar.
The aesthetic quality of a bar will depend on what type it is. For example, you can don’t need artworks, only great Bolt Down Bar Stools for a neighborhood dive. If you aim to open a fancy or unique bar, then let your creativity roll off of you in waves during the design process.
8. Have the Necessary Permits and Licenses
The next essential step is to get the permits and licenses you need to run a bar. The liquor license is a top priority because you can’t sell alcohol if you don’t have it. It will also determine what type of alcohol you can sell and when.
The Alcohol and Tobacco Tax and Trade Bureau (TTB) regulates businesses that sell alcohol. Register your business with the TTB on their website. The TTB will also give you a logbook where you’ll record the quantity and date of all alcohol you get from suppliers.
If you want to serve food at your bar, make sure you also have a food service license. This means that your establishment meets food safety laws and regulations.
Other permits you need to get a hold of before you open your business include:
- Employee Identification Number
- Dumpster placement permit
- Sign permit
- Music permit
- Pool table permit
- Certificate of Occupancy
You don’t need to gather all the permits if you don’t need them. The important thing is that you get everything required by the state to operate.
9. Look for a Supplier of Liquor
Your next big step is to find a liquor supplier. From your business plan or concept, you likely already know which beverages you want to serve. Now, you only need to make a deal with an alcohol distributor that offers what you need.
When you’re searching for a liquor distributor, consider a few things. Look at its brand selection, payment terms and discounts, and delivery dates. You also want to look at the minimum purchase requirements and access to brand ambassadors or promotional materials.
To get the best liquor supplier, shop around or contact the local bar association. Make sure you have a few options to pick from and consider. Every liquor distributor will vary in price and terms.
10. Build the Space and Hire Your Team
Once you have a supplier tied to your establishment, it’s time to build your bar.
Refer to your bar design and turn it into reality. Get the right equipment for it, like coolers, ice machines, glasswashers, and more. Stock up on bar essentials like glassware, garnishes, and napkins.
Depending on your bar concept, you may also want to add in the pool table here. To save space, some bars have dartboards instead of pool tables. Refer to your design and plan, and adjust the appearance and amenities in the bar as you like.
Also, don’t forget to hire staff who will man the bar. For a smooth and successful business, you want to hire:
- A bar manager
- A host or hostess
- Security or ID checker
It’s common for bars to have high turnover rates, so make sure you invest in the bartending staff. You also want to give your new employees an informative training program. Here, they’ll learn how to look for signs of intoxication, protocols on guest safety, and others.
11. Put Your Bar Out into the Market
The last step you need to take before your bar opening is to market it. Use a combination of the various types of digital and traditional advertising. Create a social media account and Yelp profile, put the word out via local paper, or host an event.
If you can get people to join a loyalty program, go for it. Promote a Happy Hour for clients who want value-priced specials. During this time, you can also offer free snacks and sample drinks.
Hire a social media expert to help you create a social media marketing campaign. It’s also a great idea to invite local celebrities to your opening. Having a celebrity around can increase the chances of getting a big crowd for your opening day.
Now You Know How to Open a Bar
That ends our guide on how to open a bar the right way. Build your brand, secure finances, then make sure you finalize all of the legal requirements.
Most states in the US now allow bars and breweries to reopen. In some states, customers need to follow curfews or other requirements.
We hope you enjoyed reading about the steps of opening a bar. If you want more in-depth guides like this on building a business, check out our other guides right here.