Reposted from our friends at Toast. If you need bar equipment - shop here first! So you want to open a bar? You love talking to new people, you’re a pro at mixing drinks, and you just don’t feel cut out for the 9-to-5 life. Well, a bar isn’t a hobby. It’s a business. That said, it’s important to keep this in mind, because many bars lose money at a rapid pace before going out of business entirely, leaving the bar owner in a tough financial situation. To give you the best chance of success when opening a bar, here are some things to prepare for. 1. Write Your Bar's Business Plan A failure to plan is a plan to fail. Bar ownership is a type of business where a lack of initial planning can be expensive - if not impossible - to fix. This is why it’s important to have a business plan in place. The minor details aren’t extremely important, since they’re likely to change over time. For example, don't plan on your break even point to be exactly two years from yesterday, rather 20-25 months pending on three or four key facrtors. Instead, remember that writing out a business plan can help you identify holes in your business model that can be fixed before opening and reduce your risk of failure. They also help you get your big goals in writing, like your mission statement and competitive advantage. To get started on your restaurant or bar business plan, check out this guide on how to write one. 2. Set Up Your Business Structure When starting any business or new company, one of the first choices pertains to business structure. Specifically, do you plan to be a sole-proprietorship, a partnership, an LLC, or a corporation? It's arguably easier to become a sole proprtietorship or a partnership, but one problem with this structure is that you’re personally liable for lawsuits and debt incurred by your bar. In other words, if something goes wrong, there are no limits to your liability, so you may need to forfeit personal assets to cover a loss should one occur. To avoid personal liability, the best option is for you to set up as an LLC or a corporation. These business structures act as an entity of their own, and take on the businesses liabilities, which limit your liability. So if someone slips and falls in your bar and wants to sue, they sue the business instead of you as an individual. The benefits of each of these are beyond the scope of this article, but you can learn more about them here. 3. Trademark Your Name and Logo While simply using a trademark grants you protection of your bar’s name or logo within a certain geographic area, it’s difficult to enforce protection without registering your trademarks with the United States Patent and Trademark Office (USPTO). To trademark your name and logo, I’d recommend hiring an intellectual property attorney instead of trying to go at it alone, as the trademark process is quite complicated. Before you trademark a logo, be sure to have the logo designer grant you the copyright as well, or at least the rights to use the logo for your business. 4. Get the Proper Licenses It’s important that your bar is properly licensed before you open for business to avoid legal trouble. Licenses are required in order to serve alcohol, food, and even to play music in your bar. Some of these are easy to get, others more complicated. Not acquiring the proper license is a silly mistake that can cause your bar to close down, so don’t skip this step. 5. Choose a Location Location is everything, and there are a few things to consider before choosing the right location for your bar. Your Style – Are you formal? Elegant? Casual? This can determine the type of customers you’re likely to appeal to. Demographics – Different areas of your city appeal to different demographics. If you’re looking to appeal to college students, opening near a university makes sense. If you’re looking to attract higher-class customers, set up shop in the more affluent part of town. Accessibility and Parking – If you’re attracting tourists, parking is less of an issue since they’re likely to call a cab or use Lyft or Uber. However, tourists are less likely to be repeat customers. Keep this in mind when choosing your location. Zoning Restrictions – Can you open a bar here? Rent and Utilities Costs – Will you be able to make this up in sales with the type of customers you’re going to draw in? Read More - Restaurant Real Estate: Finding Sites for Restaurant Concepts 6. Designing Your Bar Your style is everything. People go out for atmosphere and to socialize, so selecting the right music, décor, and furniture is important. When choosing these things with your bar, make sure they’re all complimentary to each other. Don’t open an Irish pub and play top-40 music - everything should be in sync. You can check out Pinterest for some unique ideas, or if you have the budget, hire an interior designer. Whatever you decide, make sure you get this right so that you can create a memorable experience for your customers to keep them coming back. 7. Accounting and Inventory Bar inventory is an important aspect of keeping track of your cost of sales, so before you open, make sure you set up a process for this, or make proper use of bar inventory software. Proper inventory tracking can help you set prices and figure out which items are most profitable in your bar. You can use this information to help bartenders make more effective drink recommendations. In addition to properly tracking inventory, you want to make sure you have a good accounting system in place. Whether you use Quickbooks or hire a bookkeeper, it’s important to keep track of how your business is doing, and where you need to make improvements. 8. Bar Marketing Bar marketing consists of two main activities – customer attraction and customer retention. Customer attraction is theoretically simple – put out an ad and watch the customers flow in. However, paid advertising can become expensive quickly unless you’re able to keep these customers coming back repeatedly. Additionally, you may want to find ways to bring people into your bar through word of mouth. Marketing is essential in the world of bars and restaurants. Don't expect to open shop and see an influx of customers! Utilize social media, encourage word of mouth marketing, and consider putting some money behind your brand.
