How to Open a Bar: Your Complete 10-Step Checklist
By: Nick Rubright
Oct 29, 2018
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. It’s important to keep this in mind, because many bars lose money at a rapid rate before going out of business entirely.
To give your bar the best chance of success, here is your checklist for opening a bar.
1. Write Your Bar's Business Plan
A failure to plan is a plan to fail.
A bar or nightclub is a type of business where a lack of initial planning can be expensive — if not impossible — to fix. That's 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 factors.
Remember that writing out a bar business plan can help you identify holes in your business model that can be fixed before opening and reduce your risk of failure. It can also help you get your big goals in writing, like your mission statement and competitive advantage.
2. Set Up Your Business Structure
When starting any business or new company, one of the first big decisions you will make is how to structure your business. Specifically, do you plan to be a sole proprietorship, a partnership, an LLC, or a corporation?
It's arguably easier to become a sole proprietorship 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 your restaurant or bar as an LLC or a corporation. These business structures act as an entity of their own and take on the business' 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.
While 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).
It's important first to come up with a great name for your bar. Use this restaurant name generator from FitSmallBusiness if you're stuck.
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.
Location is everything. Here 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?
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 a bar point of sale system that integrates with your favorite bar technology providers, such as:
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 and to price your bar menu for profitability.
In addition to properly tracking inventory, 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.
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 customers to share promos with friends, and consider putting some money behind your brand.
Once you have a killer staff, rely on them to find you more candidates. The best employees often stem from an existing network; great bartenders know great bartenders. Keep everyone motivated and happy by featuring your bartenders' creations on social media or entering your staff for bartending contests and awards.
It's imperative that you invest in a bar POS system before opening your bar. The point of sale system will act as a safeguard against theft — from patrons and employees — and will speed up your workflows behind the bar and in the kitchen.
The best POS systems for bars are customizable to your setup — even if you run a high-volume bar or nightclub. Here are three top bar POS features you should look for:
Handhelds - With handheld point of sale systems such as Toast Go™, servers can take customers' orders from anywhere in the bar — even the rooftop — and allow customers to pay, sign, and tip quickly on the device. Plus, a "repeat" button on the device makes it easy to re-order drinks.
Time-based Pricing - As a bar owner, you will most likely want to set happy hour pricing to entice the after-work crowd. With some POS systems, time-based pricing can be automatic, so you don't have to sit down and set it every day.
Preauthorization - Credit and debit card preauthorization (or "preauth") allows bartenders to swipe a customer's credit card, securely save that information as their bar tab, and verify that the card is real and has a preconfigured amount of funds on it.
Moving & Splitting the Check - If a customer moves from one area of the bar to another, transferring the check should be easy and painless, as should splitting checks by person or item. Plus, if a shift changes, you should be able to bulk transfer checks, sending multiple paid and/or open checks to a new server or closing several paid checks at a time.
Intuitive Drink Menu Management - You might need to change the price of a drink on the fly, or change your pitcher specials and happy hour specials every morning. With cloud-based bar POS software, you can do that from your couch.
A smart POS system with bar and nightclub management software is critical to the success of your business early on.
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