To many, the idea of owning their own bar is filled with thoughts of friends, laughter, and nothing but good times. Maybe your idea of the perfect bar comes complete with flat screen TVs playing the big game or the hottest spot in town where everyone comes to let loose and dance, but have you ever thought about what owning a bar looks like behind the scenes?
What does it really take to open a bar and make it a successful venture? Here’s everything you need to know.
Putting In The Work
A successful bar owners can find themselves making positive income within the first six months of business, but it normally takes around three to five years before the owners recover their initial investment. Strictly speaking in monetary terms, those are favorable statistics for any business. However, a majority of bar owners also find themselves closing their doors for good during that time.
The first reason is simple, there’s just not enough capital to keep things up and running. When the money runs out, a new owner might get into a pile of debt. The second reason is that many owners have no idea what they’re getting themselves into.
While you might be able to hire a trustworthy, highly skilled team that practically runs your business for you, chances are you’ll be doing the majority of the groundwork. Will you be able to start your work day at 10AM, then close at 2AM the next morning and finish cleaning up around 3 or 4 in the morning?
These long days won’t last forever, but it’s often the kind of shifts first time owners undertake until employees can fill a steady schedule. You’ll have to consider how these shifts will affect other aspects of your life, like family and health.
The first reason bars fail is not enough capital. So, what kind of expenses can you expect to have? A small tavern with a 100-person capacity can expect startup costs of around $141,982, while a nightclub that can hold 1,000 people would average around $431,618.
These estimates include everything from rent to insurance and licensing, which often requires the help of a liquor law attorney to ensure you’re staying compliant. Provided your venture is a successful one, you can expect these costs to take up 43-55% of your annual sales for the first year.
With such an incredible cost, funding this venture on your own can be a risky endeavor. You may want to consider pitching the idea to the public first via a crowdfunding source like Plumfund. If people in the area really want to see this idea come to life, they’ll contribute to the opening costs and ensure success once the doors open.
If none of the above information has changed your mind, then this is where the fun begins. Taking your initial idea of the perfect bar, you can start making a plan to see that dream become a reality.
This is where the finer details come into play, like pricing and inventory. What will your bar carry, how will the customers pay, and how much money do you make off of each sale? Other essential questions to consider are:
- Where will the bar be located?
- What is the name going to be?
- What are your weekly drink specials?
- Will there be live bands, karaoke, or pool tournaments on certain nights?
- What marketing will you need?
- What kind of bar will this be?