Opening a bar can be a daunting task, particularly if you have not done it before. Cocktail Mixing Master helps to have more time and save money by bringing you tips and advice on the topic. We also point out potential hurdles to look out for when embarking on such a project.
OK, so you have decided to open a bar
We look at the steps involved in opening a bar below, but before you go any further, ask yourself the following questions:
> Can I make it happen and will I have control over the process?
> Am I really keen on it and am I determined to make a success of it?
> Do I have enough money or can I find someone – like a relative or a bank - who will lend or give me enough money? (We look at how much money you might need a little later.)
> Will I be managing the bar myself?
> Am I prepared to work long hours and at times when most other people are enjoying themselves and relaxing, like weekends, holidays and Christmas? Remember, a bar is normally at its busiest later in the evening and over holidays.
> Do I have sound knowledge of business in general?
> Do I have experience of managing a bar?
If you answered ‘no’ to any of these questions, think again if your are ready for opening a bar.
> If you are not determined to make it a success, chances are you will not.
> If you don’t have access to enough money, you will not be able to buy the necessary stock and fit out the bar.
> If you don’t manage it yourself, you need a reliable person to do it – someone who will not manage the place into the ground and/or steal money from you. The same goes if you are not prepared to work long hours and be there when the bar is open. It is advisable to partner with the person who will manage the bar so that he or she has a financial interest in making it successful. For example, let the manager pitch in some cash up front for a part-ownership of the bar and/or let her work on a profit share basis – the higher the profit, the higher the pay.
> A bar is a business. If you do not have a keen knowledge of business management, you must educate yourself first. This includes things like accounting, budgeting, stock taking and ordering and staff management. Also, on the bar business in particular, for example which special laws may apply to it and if there are any special taxes and license requirements. Most locations require liquor lincese and these are often notoriously expensive and time-consuming to get hold of..
> Remember that on average 90% of restaurants and bars fail in their first year. Of those who survive, 90% fail in their second year.
Apologies if we are sounding negative, but you must realize that opening a bar is tough and you really need to be and remain highly motivated and prepared to work really hard at making a success of it.
All and all, owning and successfully running a bar can be very rewarding. Just know that it is not always the glamorous life as portrayed in the movies. (Ever seen Cocktail?)
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Let’s look at the steps involved in opening a bar
(Much of the information given here was obtained from Earth Bar).
The steps below are the most important ones required when opening a bar. It is very important that you familiarise yourself with the laws, regulations and other requirements in the area where you want to open your bar. A good place to start is to speak to local bar owners and solicitors.
> THE CONCEPT
This is arguably the most important step and decision in the whole process – what is the concept or theme of the bar. For example, do you want to go for a sports bar, an English style pub or a funky cocktail lounge.
People tend to visit bars close to where they live – you therefore need to have a good understanding of the people in the area who will be your clientele. A funky cocktail lounge will clearly not work in an industrial town. The point is, have your customers in mind when deciding on the concept. Alternatively, if you have a concept in mind make sure you choose the right location for it.
Also be aware of competition in the area - it’s no good having two English pubs next to one another in a quite back street.
You really need to think about this one. More importantly do some market reseach in the area(s) you consider opening your bar. Go to existing bars and see what they offer, talk to people and find out what they would like in the area. Think of places you have been before and how their concepts might work. Get a market research company to help you.
At this stage, start to think of your menu - what food, drinks, cocktails and shooters you will offer. We revisit this later.
Make a short list of three concepts if you do not have one already and keep these in mind while reading the rest of this article.
This should keep you busy for about two weeks.
> THE BUSINESS PLAN
The business plan covers every aspect of the bar including the location, concept and projected income statements. You might need the help of a few experts including an accountant, solicitor, interior designer, architect and bar consultant to help with this.
The business plan will also be used as the basis to acquire finance from banks and/or investors in your new business, so make sure you do a good and presentable piece of work. We look at the business plan again further down the page. At this point you should have a draft business plan with certain blanks (like the actual cost of the project) to be filled in at a later stage once you have more information.
This should keep you busy for about one week.
> GET FINANCING FOR YOUR BAR
Approach a few banks and investors. Place an add in the paper: Investors required for new bar opening soon. . Your business plan will set out exactly who much you need and at what point you expect the venture to break even.
If at first you do not succeed with obtaining finance, don’t give up. Keep going until you get it. If you really cannot get finance anywhere, revisit your concept and business plan – maybe there is something obvious, or not so obvious, which puts investors off and you might need to change.
This should keep you busy for about two weeks.
> EMPLOY AN ARCHITECT, INTERIOR DESIGNER AND BAR CONSULTANT
You are going to require a team of experts to open you bar. These professionals will give you sound advice on how to design and decorate your bar and on the management thereof once it’s open. They will also give you and idea on building and operating costs, so you will require their inputs even for your business plan.
Be sure to interview a number of these contractors, get references and go and look at work they have previously been involved with and speak to people who employed them previously. This is very important – you need to have reliable, competent, professional people helping you otherwise you are heading for a disaster. Do not skimp on this step.
This should keep you busy for about two weeks.
> LOOK FOR THE RIGHT LOCATION
As you figured out in the concept phase, make sure you understand your potential client base and competition when deciding on a location. Also, be aware of trends in the area like new developments or, on the down side, an outflow of people and business and hence clients. Remember, the more people in the area, the more clients you are likely to attract. The opposite of this is also true – fewer people = fewer clients = less money.
Also discuss this with your architect and bar consultant. Once you have identified a site discuss it with the town council to make sure the sites are suitable for a bar. Bear in mind that bars are generally not welcome in residential areas because of the noise. There may be restrictions on operating hours in certain locations – make sure you are aware of these.
You want to identify vacant premises, either for rent or for sale, which will be suitable for your bar in your chosen area(s). Now, make a short list of potential locations.
> HIRE A SOLICITOR
Get a solicitor with experience in liquor licensing for the region your venue will be in. Your solicitor should have experience in opening a bar for clients and should know all the legal steps required, including any approvals you need to obtain from the council.
This should keep you busy for about two weeks.
> DECIDE ON THE LOCATION
It is now time to decide your location. Take your short list and work through all the fact and pros and cons again. Ask your architect and bar consultant to help you make the final decision.
This step involves negotiating and signing the necessary lease agreements or offer to purchase, depending on if you rent or buy.
> HIRE AN ACCOUNTANT
As you know by now, a bar is a business for which you will require an accountant.
> REFINE THE CONCEPT
Now that you have identified a suitable premises, you can start translating the concept and theme into the premises. The interior designer, architect and bar consultant can now work together to create a final concept. Your concept should be attractive for clients and practical for staff i.e. allow to easily around and clean. The architect should design the venues structure and plans to be understood by the bar builders.
This should keep you busy for about 1 month.
> SUBMIT THE PLANS FOR APPROVAL
The local council will require all plans to be approved before you start to build. Your solicitor and architect can help you with this. Note that approvals may take a long time (months!) in some countries and jurisdictions, particularly if there is lots of building activity going on in the area. Make sure you allow for possible delays in your planning.
> SOURCE BUILDING CONTRACTORS
Contractors include a builder, a plumber, an electrician, tillers, painters, joiners, carpenters and a structural engineer. Your architect, bar consultant and interior designer should be able to give you good references. Be sure to go and look at work each of the contractors has done (get references from each) and speak to people who hired them previously.
This step also includes looking for finishes like tiles, carpets and sanitary ware like taps, basins and toilets. Also, kitchen equipment. If your budget is not an issue, you can go with whatever the architect etc. advises on. If you are budget conscience, shop around – you will be surprised at the bargains you can pick up if you do a bit of leg work.
This should keep you busy for a week or two.
> SELECT AND BUY FURNITURE
This includes bar stools, tables, chairs, couches, etc. Here your interior designer should lead the way. Your furniture should of course fit in with your overall theme. Think carefully before you commit to anything. For example, you should not fill a night club, where people will do a lot of dancing and standing around, with couches.
You should also source other types of furniture you might require like pool tables, juke boxes, cigarette machines and slot machines. There are providers that supply these and they usually rent them out for a cut of the profit made by the machines.
This should keep you busy for a week.
> MEET THE AUTHORITIES (POLICE etc) AND NEXT DOOR NEIGHBOURS Good relations with these groups are essential. So make a good impression fro the word go. Owning an establishment that 1)sells liquor and 2) stay open late and makes a noise is very likely to get you in hot water at some point or another.
Be sure to have your solicitor by your side when meeting these people.
> GET YOUR BUILDING PLANS APPROVED
Meet with council to get your venues plans approved. You should actually get the architect to follow up on this. Architects usually have contacts in the council to help escalate the approval process.
Apply for all licences your bar requires including liquor licensing. As this may take a considerable time to get approved in some regions (your solicitor should know), start with this early in the process. Bear in mind Liquor licences can be very expensive with annual renewal fees.
> FINISH THE BUSINESS PLAN
You should have all the information to complete your business plan for opening the bar. The financiers (like the bank) will want to see a detailed and well thought through business plan. Your business plan will now show everything that still need to be completed, how much it will cost and who will do every task.
Get your team of experts to help you. Print your plan on high quality paper , bind it in expensive covers and make sure you have a few copies at hand to give to the bank and potential investors.
> SUBMIT YOUR BUSINESS PLAN TO FINANCIERS
Submit your business plan to banks and investors to obtain the finances to open your bar. Do not only approach one or two banks – go to them all. Don’t be discouraged if the first few say no - persevere!
Ask the reason if you application is declined, because maybe they see a gap in your plan you missed. If you are convinced of the success of your plan and you continually gets ‘no’ from the bank, look for other investors - advertise in the paper, or look on the internet.
This might be the hardest part of the whole process, so be prepared to work hard at it, particularly in difficult economic time.
> NEGOTIATE THE COMPLETION DATE
Establish with THE builders how long it will take to finish building your bar and when it can be handed over to you. Know that builders underestimate (deliberately!) in 99% of cases. Add at least another 30% extra time.
Be sure to sign a contract with the builder - once again your solicitor can help here. Two majorly important things the contract should cover:
1. A stated completion and hand over date and a penalty clause for late completion. For example, $100 per day fine for the builder for every day he goes over time. This fine should be deducted from his final payment.
2. A payment structure for the builder for example he will be paid on the last day of every week based on the completed work done. Always ensure you pay so that you rather owe the builder money for work done rather than he owning you work for payments made. This is particularly important towards the end of the project to ensure the builder has enough incentive to finish the project.
> BUILDING WORK BEGINS
Be prepared to visit the site regularly and ensure building takes place according to the plans. Your architect should assist here.
Depending on the size and complexity of the project, the building phase can take anything from 1 to 10 months.
> APPPIONT BAR MANAGEMENT
It is important that you get your managerial infrastructure in place, you may require a General Manager, Assistant Manager, Human Resources, Bar Manager, Floor Manager, Entertainment manager, IT manager. Get people who are experienced in the industry – approach personnel agencies if necessary.
Bear in mind your requirements may depend on the size of your bar.
It may also be appropriate to plan ahead & book your bar consultant for an extra 3 months to assist the bar management once the bar opens.
> CREATE STANDARD WORKING PROCEDURES FOR YOUR BAR
You bar should have standards in place for every aspect of operation like ordering systems, stock levels and bartender service standards. In addition you might require standard outfits for various staff members. This will usually be consistent with you theme.
> FINALISE LEGAL REQUIREMENTS
This includes your liquor licence and approval for operating hours.
> AUDIO, LIGHTING AND OTHER ELECTRONICS FOR YOUR BAR
State of the art sound and lighting is essential, especially if you open a dance club. Be prepared to spend a bit extra and ensure you get professional experts to design the sound and lighting. They will work together with your bar consultant and interior designer.
This includes setting up computer systems for sales, orders, stock level and payments like salaries and purchasing stock.
> APPROVAL FOR THE BUILDING OF YOUR BAR
Once your bar is completed, the council will usually have to approve it and give you an occupation certificate before you can officially open.
> RECRUIT STAFF FOR YOUR BAR
This includes bartenders, floor staff, cleaners, security/bouncers, and DJ’s. Let your bar consultant lead and help you. Again, get people experienced in the industry.
> Opening schedule and marketing
Plan your opening date and start advertising in the local media and on local radio stations. You can also hire a PR or marketing company to market your bar.
> BAR MENUS
Depending on what you will offer you might have food, drinks and cocktail menus. Your bar consultant will be able help you here. Have your menus professionally designed and printed.
> FINAL LICENCE APPROVAL
Make sure all your required licences are approved and ready. Let your solicitor do this.
> ORGANISE ENTERTAINMENT FOR YOUR BAR
DJ’s, bands or any other unique entertainment your venue may require.
> ORDER STOCK
Establish relationships with suppliers and order in all your stock.
Conduct staff training, remember first impressions are lasting ones & you want your staff to be ready from day one. It is also important to set a high standard. Extra time and money spent on staff training usually results in greater success.
> VIP OPENING PARTY OF YOUR BAR
This is your opening party for the media, people from the industry like suppliers and celebrities.
> PUBLIC OPENING OF YOUR BAR
This is it! Now is the opening of your bar and time to entertain clients, make money and enjoy it.
A very important piece of advice for opening a bar: Make sure you have signed contracts with all service providers and contractors. These contracts should set out any and all obligations of contractors towards you, including time lines within which goods and services will be delivered. It should also cover procedures if there are any disputes for example, if the building of your bar is not finished on time. This will ensure you have a legal document with everything in black and white to refer back to.
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