Opening a bar is a dream for many people, especially when you consider the exciting life it can provide. The idea of an alcohol-fueled entertainment destination is certainly enticing, but if we’re being honest, the reality usually isn’t as glamorous.
While a bar can absolutely be enjoyable to operate, getting one off the ground and ensuring it generates steady profits takes a lot of know-how and plenty of elbow grease. This opening a bar checklist will help you prepare for a successful launch and put you on a path toward success.
In this post, we’ll cover:
- Writing a business plan
- Choosing a name and location
- Inventory, technology and hiring needs
- Operating costs
Run a smarter bar in 2021
Learn the 7 most important strategies you need to apply to your bar or restaurant opening plan. Make sure you're set up for success in 2021.
Create a business plan
In the early stages of preparation for your bar, it’s important to identify exactly what you aim to accomplish, both in terms of your launch and long-term vision. Creating a business plan is an important part of this. By writing down exactly what you want to accomplish, you’ll naturally begin to set goals for yourself. You might even find that you start creating action plans and to-do lists designed to help you achieve those goals.
We know this might seem intimidating, so to help you get started, we’ve put together a list of some general tips for writing your own business plan.
Define your business
Bars come in many shapes and sizes, from mega-popular sports bars to small, intimate neighborhood spots. Some serve food and some don’t. Some allow minors during daytime hours and cater to families. Others don’t.
Before you choose a space, you need to know what kind of bar you want to open. Think carefully about your overall vision, as a few missed details can be the difference between success and failure. In addition to considering what you personally prefer, take time to perform a competitive analysis to ensure that you understand your market, and the players within it. The last thing that you want to do is open up a craft cocktail bar only to find out that there is another one two streets over. Look for gaps in the market that you can fill. Don’t try to compete in an already crowded space.
Create a financial roadmap
Start-up costs and capital, of course, are always factors in any new business. Bars, due to the amount of inventory and licensing required, can require a significant upfront investment, particularly for those that serve food. In determining your overall financial picture, you need to take into account four aspects: your projected expenses, your personal risk tolerance, your financing sources and your own available cash.
Some entrepreneurs believe big risks mean big rewards, while others are more tentative about throwing caution to the wind. Decide which one you are before determining how much to spend. Furthermore, you need to decide how much capital you personally can invest and how much you’ll need to acquire from other sources.
For example, borrowing may seem like a great idea today, but that means there’s a lot of cash on the hook if things don’t work out. Also, keep in mind how much you’re actually qualified to borrow. Loans aren’t limitless and a poor credit report or lack of liquidity could lead to you only being qualified to borrow a very small amount of capital. You may also want to consider seeking out a private investor, but this comes with the added risk or benefit, depending on knowledge and abilities, of a business partner.
No matter how you secure funding, be prepared to invest between $100,000 and $500,000 in getting your bar off the ground.
Draft your plan
With one or more business goals in place, and a strong financial roadmap sketched out, it’s time to start writing your actual business plan. A strong business plan goes beyond conceptualization. You’ll need to put pen to paper to determine what you want and how you’ll get there. It’s a key part of securing financing, enticing investors and demonstrating the strength of your idea. It can also help you firmly visualize your goals and plans and provide a roadmap for your first few weeks and months in business.
A business plan generally features sections that include the following.
- Executive summary. This provides a high-level overview of your business model, services offered and overall objective.
- Company description. This is a comprehensive explanation of the legal structure, nature of your business, specific services offered, company growth projections and long- and short-term business goals.
- Market analysis. This analysis explains how your business fits into the local or regional economy.
- Competitor analysis. This analysis outlines how you plan to stay competitive and how your company will rise above other bars and pubs in the area.
- Operations and management. This section covers all operational and logistical considerations for your business, as well as who will be a part of the leadership team, how many employees you will hire and what their roles will be.
- Financial summary. This summary includes first year and future projections, estimated costs and plans to scale.
Don’t cut corners here. A well-executed business plan can improve your chances of success.
Now that you know what kind of bar you want and have a business plan in place for the operations of your bar, you still have a lot to do before you can actually open your doors to patrons.
Choose the right location
As they say in real estate, location, location, location. Where you put your bar will have a significant effect on who frequents your establishment, the prices you can charge, how you’ll want to decorate, what suppliers you can work with and even the staff you need to hire.
For example, if you put your bar within walking distance of a college campus, you’ll likely find yourself with a younger crowd and the potential for regular fake IDs. If you open a bar in proximity to fine dining restaurants, your patrons will likely be a wealthier clientele looking for premium cocktails and a more upscale experience overall. And if you put your bar in the suburbs, away from other shopping or dining districts, you may not get many patrons at all.
When evaluating locations, keep these points in mind.
- Foot traffic. Due to concerns about drinking and driving, many bar-goers prefer places close to home, within walking distance or near public transportation.
- Neighborhood. If you open a dive bar in a high-end dining district, your look and feel may be incongruous with the surrounding area if you don’t plan carefully.
- Parking availability. Most bar patrons have no interest in paying to park.
Competition should also play a role in your location analysis. On a block with five sports bars, a sixth likely won’t survive long. However, you do want to try to maintain proximity to other bars so that bar-hopping patrons can easily find and get to your establishment. Striking this balance can be tricky, but bar owners who manage to choose the right spot will see higher profits from the start, and enjoy a better chance at long-term success.
You also want to consider size. A big bar may seem better, after all, that means more room for more paying customers. Plus, with a larger bar, you might have space for a restaurant. Serving food can be a savvy way to increase ticket sizes. But your rental and operating costs will also be higher. Work to find a location that is big enough for your purposes, but isn’t too big for your budget. Especially if you’re a first-time bar owner, it might make sense to play it safe and start small. Once you hit on a formula that works for you, then start planning your expansion.
Obtain the right licenses
Opening a bar or restaurant isn’t quite as easy as picking a property, buying some alcohol and opening your doors to the community. Due to the nature of alcoholic beverages in the United States and Canada, sale and distribution are highly regulated. Before you let the taps flow, you’ll need to obtain all of the relevant licenses.
As a bar owner, a liquor license is priority number one. After all, without permission to serve alcohol, your bar probably won’t appeal to anyone. However, getting a liquor license is often easier said than done. In some cities and states or provinces, only so many licenses are available and waiting lists can span years. In others, only so many establishments are permitted to hold licenses at the same time, regardless of license availability. In others still, only one chain location can hold a liquor license in a particular county.
Before charging ahead with your bar, do your due diligence and be sure license availability in your area won’t throw a wrench in your plans. Licensing can be expensive too, with some states charging around $10,000 for the initial licensure.
A liquor license isn’t the only license you’ll need, either. Other requirements include:
- Business license
- Employer identification number (EIN) or Business number for tax purposes
- Certificate of occupancy
- Food service license
- Music license
- Sign permit
Be sure to check with your local authorities to understand all of the licenses and permits you’ll need, as well as how to get them.
Name and logo trademarks
The name and logo you decide on for your bar will define who you are, so it’s important to keep these things protected. Otherwise, anyone can use or abuse your intellectual property, and that’s a headache your bar doesn’t need.
Registering a trademark may sound like a daunting legal battle, but this doesn’t have to be the case. In reality, registration can be done in the Canadian Intellectual Property Office for Canadian businesses and U.S. Patent and Trademark Office’s website in around 90 minutes without help from an attorney. This costs around a few hundred dollars. You will receive a response in approximately six months.
If your name is too generic or coincides with an already-trademarked name of another business, you may want to switch things up to avoid potential infringement. A filing that is too similar to an existing business may be contested, so take care to stand out from the crowd.
Secure the essentials
You have a business plan, a location and all of the licenses you need to move forward. Your name is trademarked and your sign is hanging out front. But what now?
Initial inventory obligations
When planning out the necessary steps to successful bar ownership, it’s critical to make sure you have everything you need inside, including the following.
- Bar equipment including well and top-shelf liquor, beer taps and kegs, glasses, mixers, garnishes, straws, cocktail shakers, napkins, shot glasses and jiggers
- Dishes and serving materials like glasses, silverware, plates, napkins and tablecloths
- Furniture, like tables, chairs, booths and bar stools
- Cooking equipment, like grills, griddles, ovens, stoves, steamers, broilers and fryers
- Kitchen equipment, like walk-in fridges and freezers, heat lamps, condensation goods, coffee machines, ice machines, soda fountains and dishwashers
- Workspaces, like counters, storage spaces, food coolers and prep tables
- Cooking utensils, like spatulas, knives, cutting boards, containers, ladles, gloves and tongs
- Miscellaneous supplies, like brooms, mops and cleaning products
If you decide to serve food in addition to drinks, kitchen equipment is an area in which you can’t skimp, so be sure to decide exactly what you need before your grand opening. These items are often costly as well, so keep that in mind. The average kitchen requires over $100,000 in equipment. One way to save a little money is to explore the used market. You can often find equipment from quality brands at a fraction of the cost of new products, especially if you’re willing to travel a bit.
A perfect POS system
In addition to the physical items you’ll need to support your bar, you also need a way to ring in orders, operate customer tabs and process payment promptly and efficiently. A tablet-based POS system like Lightspeed can help you accomplish these goals quickly and easily, putting flexibility and functionality right at your fingertips.
Lightspeed is perfect for bars and restaurants, offering powerful inventory management capabilities, customizable menu options, easy check management, open tab features and staff management tools to keep your business running smoothly. Furthermore, Lightspeed also provides comprehensive analytics, giving you insight into sales trends, inventory turnover, staffing and more to help you optimize your business.
Hiring the right team
No matter how skilled you are, it’s likely that you won’t be running your bar on your own. There’s just too much to do, and running a successful bar means both late nights and early mornings. If you try to do all of that yourself, either your quality of work will suffer, or you’ll burn out and lose the passion that got you into this in the first place. The solution is to hire a qualified team of employees to help you out.
Here are a few of the positions you’ll want to hire.
While you may want to fill the role of lead bartender, a busy weekend night is going to necessitate more than one bartender. Plus, there may be weeknights where you need to take care of other work instead of tending the bar. In these instances, a team of trained bartenders is invaluable.
Depending on the size of your bar, you may have a table service or an outside seating area. These areas are best attended to by a dedicated server.
If you want to serve food, you need someone to cook it. That’s where a head chef, line cooks, prep cooks, dishwashers and other kitchen staff fill a role. You may also need servers or waitstaff to run food out to customers. An alternative is to only offer counter service or have customers pick up food at the bar.
As we’ve discussed throughout this article, running a bar means much more than making drinks. To help you with specialized tasks like bookkeeping and licensing, you may want to work with an accountant and a lawyer. Marketing support is another role you may want to fill, especially if you have a robust marketing plan that covers multiple channels like social media, email, events and more. The good news is that you can likely work with these professionals on a retainer or per project basis depending on your market and needs. You don’t need to hire each full time.
Maintaining a sanitary bar is an important part of customer satisfaction (no one wants to hang out in a dirty, disgusting bar) and legal compliance. If you’re strapped for time (or just hate cleaning), it may be easier and more efficient for you to have a team of bar cleaning staff come in and clean your bar as part of your closing procedures.
Establishing operating costs
Mixing a great cocktail can do wonders for establishing your reputation in the bar scene, but without a focus on back-end operations, you won’t stay in business for long. In addition to putting together a plan for equipment acquisition, you’ll also need a plan for expenses like the below.
- Rent and utilities
- Payroll and benefits, if applicable
- Inventory procurement and management
- Marketing expenses
These aren’t areas you can work around, either. Your employees need to be paid and you need to market your business if you want to start off on the right foot. While some of this, like paying a landlord and setting up suppliers, will require some manual effort, a great POS can take the burden off of your shoulders, offering tools that make these processes significantly easier. Lightspeed can help you with inventory management, tracking quantities, sales trends and even cost margins to save you time and money.
Further, marketing tools are right at your fingertips with the ability to build an email marketing list, create custom email receipts and even track return visits by loyal customers. Staff management can be handled through your POS as well, with time tracking and metrics that can help you highlight top performers and better understand your budget.
With the right POS, you can simplify necessary back-office duties, freeing up more of your time to invest in the success of your front-of-house. Instead of tackling the tedious tasks yourself, you can let technology do the hard part while you shift focus back to building a sterling reputation.
Make your bar a success
Running and operating a successful bar can take a lot of time and effort, but the struggles are well worth it when everything comes together. With this checklist, you’ll be fully prepared to open your doors, serve customers and let the drinks flow.
Ready to open your bar? Don’t forget about a point of sale system. Talk to one of our experts to learn how Lightspeed POS can give you a head start on launching a successful bar.