How to Open a Bar

July 27, 2021

Opening a bar of your own is profitable, rewarding, and enjoyable. As a business owner, you can expect to make good profits depending on the type of bar you start. Following is everything that you will need to know about how to become a bar owner.

Why You Should Open a Bar

There are some good reasons to open a bar. They include the fact that you can be the boss.

You will also be working in an entertaining and fun environment.
You will leave the 9 to 5 office routine behind.
Owning a bar can be a very profitable business.

You’ll be able to create a business in a market that’s worth $22 billion a year.

How much does it cost to open a bar?

Starting a bar is an investment. The initial cost is between $125,000 and $850,000 when it is averaged out. You need to rent or buy a location. Then there are licenses as well as permits and all the equipment that you need. Software or another type of technology like a POS system is required too. Don’t forget you need to come up with a concept. And, of course, you need to stock the bar.

Opening a Bar Checklist: 23 Important Steps for a Business Owner

Following is a checklist with important steps on how to open a bar.

1. Create a Bar Business Plan

You need a good business plan for any type of enterprise. And a bar is no exception. You will need a good version to convince shareholders, investors, and lenders that your business is credible. Consider the following when you’re putting together a business plan.

Your business proposal. This is where you describe the business you are going to start, include who your customer is going to be. And what you sell. Also include any plans for growth.
Outline how your bar will appeal to customers. This is where you include a unique selling point.
A business plan for your bar needs to include a market analysis. Basically, this is an overview of your target market, competition, and other important bar industry stats.
Include information on what the competition is doing and how you can improve on it.
Clearly outline all of the roles of management and your employees. This section should include how you plan on recruiting and maintaining your staff.

The key financial data is an important part of your business plan. Credit histories and business as well as personal net worth are important. Cash flow forecasts include technology inventory and equipment. You’ll also need to add financial projections for two years.

2. Choose the Perfect Bar Name

Brainstorming is considered a great way to pick the right name for your bar. Go through some of the tips suggested here and make a list.

Location specific terms are something you should consider.Think about this state or region and neighborhood where your bar is located. Does the city have a nickname.? Adding a descriptive term to these starting points is a good way to develop a concept. Consider adding phrases like station, depot and terrace.
You can also base the name on your specialties. For example, your bar might focus on wine. You can consider using phrases like cork, cave and vat in the name.
You can use the business owner’s name if you get stuck.

Future bar owners want to avoid some practices too. Like hard to pronounce and hear names. Voice and text-based searches can be complicated by jargon and numbers.

3. Identify Your Target Market

These types of businesses can’t be successful unless you know who your target market is. This is the group of people that you want to sell your services to. Here are some tips on this important part of opening a bar. These are filters you can use.

Demographics is another way that you can narrow your target market down. Decide on the age and gender. You can also add on a family situation. Decide if you’re marketing to single or married people.
Business owners should also consider location. It’s important to consider cultural and language factors in different areas.
Also decide on the education level, the professions, and the beliefs and values of your target market.

Take a look at their digital profile for further information. For example, Millennial’s and younger generations are attached to social media like Twitter. Older people have Facebook accounts to stay in touch with family.

4. Analyze the Competition and do Market Research

When you open a bar , there will be competition. Understanding that concept is about more than looking at their drink menu or bar theme nights. You need to know their weaknesses and strengths. Here are a few boxes to check off.

Make A List

Make a list of the competition in your area. Divide that up into direct competitors that offer the same products and services. And indirect competitors offering close substitutes. You can make this list by Googling your target keywords and see who comes up.

Check Out Their Marketing

If you check out their social media and other ads, you’ll see what they offer. Their websites should even list their products. If you’re lucky you can get an ingredient list.

Other Information

Check out the competition’s pricing. Do they have a discount policy? Take a look at the specials they run, are they offering the best bar snacks? Little details end up making a huge difference.
Take a look at their websites, catalogs and brochures. You can follow the competition on social media to find out more about what makes them unique.

Putting all this information together should allow you to make a list of your competition’s strengths and weaknesses.

Market Research

Looking into this helps too. You can start by getting a job in a bar. Moving up the ranks to manager will give you a good idea how the market works.

Talk to the owners of your favorite bars. Ask about things like operating costs. You can also attend trade shows.

The idea is to find out what the major trends are for bar owners in your area. There are several things to take a look at like:

How many bars there are in the area you want to break into. If the number is rising, that’s a good sign. If it’s going down, you might have picked a bad location.
Look at the number of potential customers and the demographic profile of the population.
Look at the seasonality. Is the bar you’re proposing located by the water? That might mean you’ll have more customers in the summer than winter.

If you’re putting together a plan on how to open a bar, this research is essential. It helps to develop your concept.

5. Get Your Branding Right

There is no way around creating an identifiable strong brand for your new bar. Here are some things that you can do to make sure that your branding strategy is effective.

Be Consistent

Developing your target market is essential. Once you understand who you want to sell to, you can design all of your marketing to those people. Small things matter. For example, your logo needs to be the same on your menus, in social media and on any signs. Your email address should have your business name included to pump up interest.

Decide What Makes Your Bar Unique

Your brand needs to highlight what’s different about your bar. You have to consider everything, from furniture to lighting. Look at other establishments to get decor and bar lighting ideas. Think about some of these factors also.

Are there any unique benefits? Are you the only sports bar in the area?
Does your bar have features that cant be found elsewhere? Maybe a piano bar or karaoke machine?
What type of atmosphere does your place have? Are you going to be a friendly neighborhood bar? Or a noisy place with live bands?

Pick and choose the right medium based on the target market. A younger crowd will pick up on ads on social media. An older crowd might be better reached on radio and television. Remember, your staff has a role to play too.

6. Choose a Bar Concept

This is the overall theme or idea that defines your bar. It’s an initial step in opening this type of business. You can make several different choices of the type of bar that suits your vision.

Sports Bar

For this kind of business, you will need to pick a theme. It’s important to have some game equipment like air hockey tables and pool tables. And big-screen TVs. Soft lighting is another feature that can help your patrons feel comfortable.

Neighborhood Bar

This type of bar should be both unique and comfortable. Don’t forget to include things like pub food fare and craft beer. Putting together a Facebook page allows patrons to share photos and events.

Wine Bar

A big part of a successful wine bar has to do with partnering with local vineyards and wine shops when possible. When you are looking to stock your shelves with wine, invite your customers in to taste the seasonal varieties available. Theme nights work with this type of bar. But you need to be selective. Singles nights and ladies’ nights work better than having a Super Bowl party.

7. Decide on Your Business Structure

Starting a bar can be daunting. The business structure is another thing that you will need to consider. The selection you make affects the kind of taxes you pay and the level of liability or risk you face.

A sole proprietorship is one option. These are fairly inexpensive and simple. The downside is there is no separation between business and personal assets. If you fail or get sued, your personal assets are on the line.
Partnerships are governed by different state laws. You’ll need an attorney here. There are different types like a general partnership. This is one where everyone is involved equally. A limited partnership is where one party is an investor only. They usually only supply money.
A limited liability corporation (LLC) is for people who don’t want to be held personally responsible for losses. It offers limits on legal liability and some good tax incentives.

If you are looking to open a bar with an LLC, be aware. These are difficult to set up.

8. Get The Legal Stuff Right

Opening a bar means going through lots of different regulations and laws. It’s not all about getting guests.

These need to cover insurance, sexual harassment, liability, licenses taxes and worker safety. First off, you’ll need to get an employee identification number from the IRS. That’s for permits and licenses. Then you need to deal with The Alcohol and Tobacco Tax and Trade Bureau (TTB). And The Department of Alcoholic Beverage Control.

Decide on a Business Entity

You can choose from the business structures for a bar listed above. However, there are other entities to pick from. For example, an S-Corporation entity is like an LLC. It gets taxed on a pass-through basis. However, this choice does not allow you to have more than 100 shareholders.

A C- Corporation is taxed at an entity and individual level.

Get Permits and Licenses

If you are looking to open a bar in the United States, there are many startup costs. Those include permits and licenses. Here is a quick list of the ones that you will need.

A Business License. When you are looking to create a business, you need to start here. You’ll need to get one of these through the Alcohol and Tobacco Tax and Trade Bureau.
A Certificate of Occupancy. There often work with building permits. Get a location first.
A Liquor License. This is another cost if you’re opening up a beer bar or another type. Depending on the location your lounge might even need a tavern license.
A Food Service License. This is about meeting all of your local safety and health requirements. The codes vary by state.
A Music License. Songs in your new bar will be copyrighted. That’s why there is a licensing for them. It’s another one of the startup costs you will incur.

There are several other permits and licenses on any new bar checklist. They include a signage permit and food handlers’ permit. There’s an entertainment/life performance license and others.

Get an Employer Identification Number (EIN)

When you are looking to start a bar, you need to file for an employee identification number (EIN). It’s free and you can click this link to get started. This is a nine digit number assigned by the IRS for taxes and identification.

Apply for Trademarks

You need to register a trademark for your bar. Without one, another bar can claim they own the name that you have been using. Another consequence can be lost revenue. You might pick a name similar to another bar. Customers might go to the competition.

Fill out an application through the United States Patent & Trademark Office.

9. Decide on the Size of Your Bar

Whether you are going to open a sports bar or another type, dimensions and size matter. Generally, the section of the bar where work gets done accounts for up to 40% of the area. That leaves up to 70% for customers. You might need to include dining and seating. If that’s the case set aside twenty five percent for that and leave two thirds for the bar area.

Remember, customers enjoy mulling around the bar area.

10. Choose the Right Location for Your Bar

You need to pick the right location whether you’re planning on a sports bar, a martini bar, or even a specialty bar. The location matters regardless. Here are a few tips to make sure that you get this right.

A wine bar does best when it’s located near wineries or an arts’ district.
Accessibility is another feature. Does the location have steps in front that can hinder customers in wheelchairs? Is the parking lot accessible?
What kind of signage can you get? Will your new business have a standalone sign? Or will your business name be placed on a common sign with other businesses?

Here’s another location consideration. Find out if your bar is going to have good visibility from the street for walk-in and drive-by traffic. Ask yourself if staff will be attracted to the location.

11. Negotiate a Good Lease

Negotiating a lease is another important step. Having a plan of action is critical. You should know what other nightclubs and bars in the area pay. Understand the remodeling needs the place has. Here’s an important last point. Limit the amount of time for that first deal. That’s good if things don’t work out.

12. Secure Funding

Securing funding is the next step. It’s different whether you are looking at acquiring an existing bar or starting a new one. Maybe you want to get the most from your existing business. Don’t forget to include items like speed racks, glass washers, and coolers. Themed bars will need games and AV equipment.

Don’t forget to add in the kitchen equipment like processors, refrigerators, and freezers as well as dishwashers. Safety equipment and ovens should be added too. Check out the section below on how to actually get the money. It will help you to negotiate like a pro.

13. Design Your Bar

There are lots of things people need to consider here. A welcoming entrance needs to be a priority. It should be upbeat and engaging. The flow of customers will dictate where the kitchen goes.

Working with accurate blueprints helps. Don’t forget about the restrooms.

14. Design Your Menu

Your brand will be reflected in the menu. This needs to be designed to include the drink menu and food. High-quality photos are a good idea.

15. Choose Each Part of Your Inventory

Good suppliers and equipment can make or break these businesses. There are some handy checklists available like this one. Getting bids from suppliers is a good idea.

16. Build a Relationship with Suppliers

Money isn’t the only option with suppliers. Having a good relationship is as important as having a good menu. Be mindful of any cultural differences and open to communication.

17. Get the Staffing Right

Different types of staff make a bar run. Here’s a quick template of some of the people you should hire.

Waitresses or waiters. They can be responsible for the beer, wine, mixed drinks, and quite often food.
Bouncers and security guards are important. They should be able to diffuse situations.
Bartenders need to serve wine and beer as well as mix the drinks. Good ones can also make conversation with customers who sit at the bar.

Some other positions include a host or hostess. You can even have an on-staff DJ as well as bar managers.

18. Choose a Point of Sale Systems (POS)

The right pos systems look after important aspects of customer service. It’s the digital point where customers buy your goods and services. Here’s a list of some of the industry leaders.

Look for products with cloud-based data management. And a sales history. Take some time to decide on the features you need to have in this device.

19. Stock Up Your Bar

There are some products that are considered essential. Like liquors and mixers, garnishes, and fruit. Here’s a template you can work from.

20. Advertise Your New Bar Business

Getting the word out about your new business is important. Social media and other types of digital marketing are necessary. A Facebook Page is an excellent idea. Instagram works for menu pictures. Don’t forget to sponsor events and interact with your community. And take advantage of print and other media like radio.

21. Host an Amazing Soft Opening

The Grand Opening occurs on the day your new bar officially opens. Before that, a soft opening helps you to test things out in advance. These have a limited number of people so you can see where you need to improve. Reach out to influencers and community leaders.

22. Continue Marketing Your Bar

Good marketing requires constant effort. Including a digital strategy is important to draw in customers. The costs for digital tools like Google My Business are minimal. Don’t forget to consider hosting events that will drive in customers.

Take advantage of apps that can provide your customers with offers. And make sure to refresh these deals on a weekly basis. Don’t forget to add in loyalty schemes and online ordering capabilities.

23. Be a Successful Bar Owner

Having a complete bar business plan that covers all customer service angles is important. Even with things like the service style and concept worked out, you’ll need to put in a constant effort.

Successful bars need to put in countless hours. Read on for a few more tips on what goes into successful bars.

How to Have a Profitable Bar Business

Here’s some other tips to get guests into new cigar bars and other types.

Watch your profit margins on drinks. This is one area where bars can reduce the cost. Measured pourers dispense the right portions.
A good club will train its staff to upsell.
Here’s another point. New bars should keep the menu in front of guests. Offer drink and food pairings from your grand opening on.

How to Obtain a Liquor License in the USA

This is another one of the costs for opening a new bar or club. First off, you need to determine what your state’s alcohol laws are.

Then you need to determine if you live in a liquor license quota state.
Sports bars and others need to determine what class of liquor license they need.

These can include beer and wine licenses, retail licenses, and even tavern licenses.

How much is a liquor license in the USA?

The answer is the cost varies from state to state. Each state has an individual alcohol beverage control board. Full licenses can cost anywhere from $12,000-$400,000. At the other end of that scale, a wine and beer liquor license can be as little as $3000. The costs vary.

What states require a liquor license?

Every state has a different agency regulating how alcohol gets sold. These laws vary significantly. Follow this link and scroll down for specific information.

How are liquor licenses determined?

Some states restrict the number of liquor licenses they issue. That can make the costs high. There might be additional costs based on your bar’s concept.

Generally, there’s a restaurant license, a beer and wine license and or a tavern or bar license. These can apply to specialty bars and other types.

How can I get money to open a bar?

There are several ways to get the money to open a bar.

The Small Business Administration. They offer a variety of loans to get you started. They are guaranteed by the government. The loans range from $500 to 5.5 million.
Traditional Business Loans. You can also apply directly to financial institutions and banks for money. The amounts depend on the size of the lender and the requirements. Your businesses’ history and size matters too. You might have trouble getting one of these loans if you don’t have a good history.
Crowdfunding. These are popular with entrepreneurs and startups. This is a way to raise a large amount of money through small individual donations via the Internet.

What is the process of opening a bar?

These steps were carefully put together to help you open your own bar. They cover different points like developing a concept and funding. You need to look into permits and licenses and how to hire good staff.

There are some advertising ideas that you can use on a constant basis included. The table of contents included in this post will help you to look after all of the details. Right down to the best pos system.

How much does a bar owner make a year?

How much you will make as a bar owner depends on your individual business. That includes the market you are in and how your business gets run. However, the national median salary is $71,550. The average bar makes $330,000 annually.

Image: Depositphotos

This article, “How to Open a Bar” was first published on Small Business Trends