A tu salud y éxito! So, you want to learn how to open a bar. Well, that’s a great idea because it’s a very profitable business.
According to industry data reports, the bar and nightclub industry in the United States will grow steadily. We will see the emergence of new concoctions that include non-alcoholic drinks and the rise of products from abroad such as the Mexican mezcal. There will be new opportunities for you in the years ahead.
In this article you’ll find the steps to how to open a bar laid out for you, these steps will bring you closer to your dream. Most of them will require additional research and hard work. But in the end, your efforts will be rewarded!
Choose your bar type and your target market
Have you thought about the kind of bar you’re going to open?
Stephen Covey wrote, “Begin with the end in mind.” It’s simple, yet brilliant advice. So close your eyes for a moment and imagine yourself running your own bar.
What do you see and hear inside? Are your stools, tables, and chairs made of wood, plastic or metal? Are there cozy booths for couples? Do you hear music playing from a sound system or a live band? Or do you hear the cheers from customers watching live sports events?
What are you serving? Is it just beer and wine or will you include hard drinks and cocktails? Is there food in your bar? If so, what kind of food?
Who are your potential customers? Are they from your neighborhood? Are they yuppies or blue-collar workers? Do you see James Bond wannabes who like their martinis shaken but not stirred? Or are your customers from all walks of life, sharing a common interest, background or affiliation?
Write down whatever comes to your mind. Review your notes several times. You’ll soon discover the type of bar you truly want to open. You could open a:
- Neighborhood Bar: It’s the local watering hole where everyone knows everybody. These places are cozy and simple establishments.
- Beer Pub: It’s a bar that serves… well, beer, including its own self-brewed brand. It’s the perfect establishment if you have a beer formula your customers will love.
- Sports Bar: If you want customers watching sporting events while they drink, then open a sports bar. Widescreen TVs, pool tables, darts, foosball and pinball machines are just some of the things you find in a sports bar.
- Specialty Bar: It’s a bar that follows a theme expressed in its setting, service or products. For example, if your bar only served popular Latin American drinks, it is a specialty bar.
You can model your bar after any of the types listed above. However, this guide on how to open a bar insists that you create your own kind!
Name your Bar
Shakespeare once wrote, “What’s in a name?”. For a small business, it means a lot.
A bar called Where Else.
A bakery called Bread Pitt.
A realty called RightHaus.
What do these names have in common? They’re catchy, familiar and easy to remember.
Don’t easily settle for any name. Your bar’s name can set you apart from your competitors. Spend time thinking of at least three names.
Create your business plan
Many guides on how to open a bar will tell you that you only need a business plan if you’re thinking of getting a business loan. This isn’t true! A business plan defines your business goals, what needs to be done to achieve those and the time frame when these will be achieved. It’s your guide to success.
Your business plan will include your mission statement. This should answer the question: What are you in business for and for whom or what?
Register your business name
If you visit the websites of the U.S. Patent and Trademark Office and your state’s Division of Corporations, you can find out if your chosen name is available. Remember our advice to have at least three names ready? If your first choice is unavailable, you have two other options to fall back on.
Register your bar’s name by filing a DBA (Doing Business As) with your local government agency. A DBA is your trade name. Your legal name during filing depends on the type of your business organization:
- Single Proprietorship: Your name as the owner.
- Partnership: The names of all the owners.
- LLC (Limited Liability Company): The name of your company owning the bar.
Consider having your business name and logo trademarked. File for a state trademark first. It prevents others from using your business name in your area.
Many how-to-open-a-bar guides fail to mention this, but while registering your business name with your local government agency, inquire if you need a business license too. Many towns and cities require this for bars.
Employee Identification Number (EIN)
Also known as the Federal Employer Identification Number (FEIN), it’s a nine-digit number assigned to businesses for identification purposes. You can apply for your EIN online with the IRS.
Apply for Your Liquor License
Once you know what type of drinks you will serve, you can apply for the right liquor license. There are two types namely, off-premises and on-premises. Off-premises licenses are for groceries, liquor stores, and retailers. For a bar, you will need an on-premises license.
You might have to apply for a food service license with your state’s health department if you are serving food.
Find your Location
Unless you are taking over an existing bar, finding the right location is a tricky situation. Guides on how to open a bar are divided on this step.
Your first instinct might be to find a place that’s close to your target market. However, being close does not automatically mean success. Your location is just one aspect of your business.
Consider potential, accessibility and cost when finding the right location. However, if your bar offers products and services better than your competitors, they will come to you regardless of your location.
We recommend that you keep your current job when you open your bar. This means that you need to hire a manager, bartenders, and waiters.
People you know are a great source of candidates for employment. Ask them first. They usually vouch for potential employees you can hire. When you have exhausted this resource, only then seek bar staff through traditional means which should include the use of social media.
Explore External Sources of Funding
When people ask about how to open a bar, their main concern is the cost. But did you know you can start a small business without borrowing money from outside sources?
Income from your job and savings might just be enough to open your bar and keep it running for several months. Likewise, family members and friends might offer financial support.
However, you need to identify possible sources of funds early on for your expansion. Unfortunately, most financial institutions require you to be in business for at least two years before considering you for a small business loan.
At Camino Financial, we only require a minimum of nine months as long as your business shows potential. Our loans could also be used as bridge loans that help fund your immediate needs while you wait for funds from a long-term loan (like an SBA loan).
How to make your bar successful
1. Be different
Stand out by doing something different or by offering something unique.
As we mentioned, you could open a bar that only serves popular Latin American drinks, or you could create your own unique brew.
2. Treat your customers like guests
Do you want repeat customers? People love going back to places where they feel at home and where the staff is friendly. A little change in attitude might do the trick.
3. Offer discounts for group celebrations
Give discounts to families or groups and allow them exclusive use of your bar for parties and other occasions.
4. Word of mouth
You will always find this tip in how-to-open-a-bar guides. It’s always the best free advertising out there.
Dream big but start small
“Dream big but start small” is a quote from a book by Israelmore Ayivor. We’re not telling you to let go of your big dreams. We’re telling you to make small steps to reach them.
We hope this guide on how to open a bar has enlightened you.
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