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How to Start a Bar Business

Owning a bar can be an expensive affair if you're just starting from scratch. That won't come as much of a surprise, as the deliverable being liquor can be exorbitant if not at least plain expensive. In the US, the bar industry has grown significantly, with over 65,000 popularly functioning bars in the country.

This might seem a lot lesser than other traditional industry establishments. The reason is simple - the startup cost can be really high, and running a bar is typically more complex than other food-type joints. Why is it still a good idea to consider opening a bar? Well, you will earn equally well with excess returns and profits in your kitty.

An average bar can make anything between $25-30K per week, and that says a lot. While the investment for other businesses can be less, profit margins are also much lesser. Bar businesses typically apply a markup of 200-400% on drinks, food items, and appetizers. Even that isn't much of a reveal - we all know how expensive alcohol can be, especially in a fancy bar.

So, if you're on the other side of the pub table (not literally), you can actually make a lot after an initial setup and preparation process. Even a not-so-successful average bar can muster monthly profits of $5000 after cutting out expenses. You can only imagine what a successful business will achieve!

Now that you've corroborated that your vision for a bar business is, in fact, a good one, let's talk about how exactly you can set it up. With heavy installments and startup costs to incur, it's better to have a solid game plan to set up your bar business.

Steps to Start your Bar Business

Wondering how to start a bar business? Here are some things to consider before getting started with your bar venture. Run through this comprehensive "opening a bar checklist" to get your ideas in order.

1. Decide on your Bar Concept, Name, and Aesthetic

The first step on the ideation table is to decide on the primary concept and aesthetic of your bar business. One thing is for sure, every bar in your locality will have a specific ambiance. And, every bar will also most likely have all the standard liquor.

What will your bar have that will set you apart from the rest? An exciting cocktail menu? Or perhaps a location concept that has a theme? What will be the name of your bar? These are some things you need to think of before proceeding with any technical aspects.

2. Choose a suitable Business Structure

Your business structure and ownership vision will also have to be decided in the early stages. What kind of business entity do you wish to be? This aspect will affect legal implications for your business, the primary ownership, profits, funding as well as the tax levied on your business.

For a typical small business, you can operate in a partnership, as an LLC, or with a sole proprietorship. While a partnership will involve multiple partners who will fund and manage the business, an LLC can operate as a separate legal entity of its own. Being the sole owner will mean a surplus of both profits and responsibilities.

bar business structure

3. Write a Business Plan

With the basic ideas in mind, the next phase is to create a thorough business plan. Some might consider this to be a redundant step of just writing things down, but it's actually pretty mandatory to have in a full-scale business. This is especially true for an expensive bar business setup, where loan/investment partners or investors are likely to be a part of the business.

A business plan can serve as an official document for your venture, with lists of qualified members, past achievements, and a detailed operations plan. A well-structured business plan should include an executive summary, company overview, offerings, financial strategies, operational strategies, and much more.

A comprehensive bar business plan, for instance, should even include the prospective menu that you plan to offer. You can browse through this Bar Business Plan Example to get an idea of how you can make yours accurate.

4. Select Location, Design, and Equipment setup

With a clearly drafted plan, you can finalize your location, design layout, and equipment requirements as per the estimates of the plan. A lot of people like to do this before a plan is made. But, having financial assessments and insights from the plan can actually help to make these decisions more accurately.

You will need a suitable location as per your target demographics and a simple yet effective design layout and theme that you can implement within your budget. Equipment requirements such as ice machines, bar blenders, beer dispensers, and washers need to be approximated and decided at this stage.

bar design equipment and location

5. Obtain Funding and Liquor Supply

By this stage, you will surely have an idea of how you're going to obtain funding and operate. Any loans or investors as decided during the planning stage should be applied for and be ready for use at this stage.

Secure your funding and ensure that all aspects for running the bar have been considered with updates since applying for the funds. Finding a liquor supplier can also take some time. Get in touch with good liquor suppliers and strike a deal for any discounts, payment terms, and brands required beforehand. 

6. Acquire Adequate licenses

Obtaining the required permits and licenses for your business is crucial, especially in the case of a bar. You will need several basic permits such as the location permit, EIN for employees, and a food service license.

Some specific permits like a liquor license and permissions for the Alcohol and Tobacco Tax and Trade Bureau will also be required. Failing to deliver on these can levy heavy fines on your business, so make sure you get these sorted on time.

7. Hire a Manager and Staff

You can begin with hiring the staff only after valid permissions are obtained. However, you can start running checks beforehand to get the best selection of employees to associate with your bar business.

You will need a Manager, several bartenders, servers, hosts, and other roles depending on your concept and theme. A regular DJ and music person will also be needed in case you are thinking of a nightclub setup.

bar hiring staff

8. Boost your Sales and Marketing

After setting up everything and with your bar ready to open for business, you will need to boost your sales through effective marketing. A testing opening for students or team members can be great to test the basics. An opening for a limited number of guests can help gauge the environment as well as the capabilities of the staff on duty. 

You can start the first few months of operation with "Girls Wednesdays" or a discount coupon for plus ones to get the crowds flowing. Market through various social media and traditional platforms to reach customers way before the official opening. You can start engaging with audiences months in advance to have the best impact on the "D-day."

Summing Up

So, you can't really cut any corners with a bar business setup. To yield good profits, it is essential to carry out setup and marketing in the right way. The aspects to take care of might look obvious, but with so many to cater to, a detailed business plan can be a life-saver. For a detailed business plan or even niche business plans for a specific aspect, Upmetrics offers a wide range of templates. Organize each aspect to the ground level to be fully prepared to open your bar business for success!

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Sudeshna Ray
Sudeshna Ray
Avid writer and content marketer, Sudeshna Ray, has created content for diverse premises including technical niches, business and marketing, finances, creative character sketches, and much more. Engineer-turned-Writer-turned-Marketer, she has explored several aspects of performance, lead generation and establishing a brand presence in the digital domain.