The idea of purchasing a bar may conjure up lively times with good friends and drinks. Perhaps you’ve always wanted to own a place where everyone knows your name. But owning a bar isn’t always cause for celebration; there’s definitely a serious side.
Being a barkeep can mean taking on long hours, giving up your weekends and holidays and dealing with the occasional unruly customer. Competition can be tough in this industry, but owning a bar can also be a successful enterprise if you have a clear vision and are willing to work hard.
Here are 9 things to consider before purchasing a bar:
1. Are you the type of person who wants to own and run a bar?
Even if you don’t plan to tend bar yourself (and especially if you do), you need to be a people person to be successful in the bar industry. Being a night owl and able to handle your own liquor well helps.
You must also be accepting of lots of different types of personalities. You will likely have employees who have other priorities such as school or another job that take precedence over their job. If you have the choice to be “hands off” in your business, make sure you hire good managers.
2. What kind of bar is right for you?
There are many different types of bars available for purchase, from the local neighborhood bar, trendy wine bar (did you know women order wine more than any other alcoholic beverage?), dance club, popular microbrews or traditional pub or sports bar.
Keep in mind the type of bar you choose will play a big factor in your operation costs. For example, you will need excellent audio and visual technology if you want to compete with today’s sports bars that offer football and other sporting events on multiple high definition televisions.
3. Who is your target market?
The bar industry has a high failure rate, so it’s important to identify your target market to make sure you are meeting its needs. Does the bar you are considering buying have a concept, location and size that works for current customers? Is there potential for growing the business or do you need to start from scratch?
4. The location of the bar
There is some debate in the bar industry surrounding the importance of physical location. Some bar owners consider the location to be of enormous importance, especially if your goal is to get local traffic in a certain area to be your patrons.
Others say people will seek out your bar for a reason, as you create a buzz and make your bar a destination. Regardless, you should take into consideration safety, parking and accessibility to customers when choosing a location.
5. The name of the bar
The name of your bar should speak to your concept. If you need to rename the bar you buy, brainstorm names until you find one that you absolutely love. Answer these questions to spark the creativity:
• How well does the name fit with your concept?
• What type of customer does the name appeal to?
• What expectations does the name imply to customers?
• Is this name easy for customers to remember and then find online?
For example, you wouldn’t expect an atmosphere for a quiet, romantic drink with your date if you were going to a place called The Boom Boom Room!
6. How will you track liquor and/or food sales?
The level of sales you expect should help you decide on an accounting system. Theft can be a problem at all levels, not just with bartenders. In a cash-and-carry system, the drink is paid for by the customer before it is rung up. It’s the fastest way to do business, but also invites giving drinks away for free. Alternatively, a point-of-sale system is the most efficient and effective way to track sales. However, these systems can be expensive. Regardless of which route you choose, having some type of inventory controls in place will be key.
7. Do you have enough capital to keep the business going?
Many bars fail due to being undercapitalized. Experts recommend having enough money on hand to operate for a year including at least six months’ worth of rent and operating expenditures.
Even if you've got this far without raising finance, having access to good working capital will help you avoid stormy weather if something goes wrong.
8. Marketing the bar
It’s important to get word-of-mouth buzz going about your bar. That will come from customer referrals (often called social selling) as well as the types of promotions you offer.
Community events and charity functions can also help bring exposure to your business. Having an online presence with an up-to-date website, social media and email newsletters to customers is a must these days. Stay ahead of the pack by getting promotion ideas that work in other markets and bringing them to your area.
9. Latest bar trends
Stay up to date on the latest industry trends by reading trade magazines and blogs to find ideas for promotions, additions to food and drink menus and marketing genius. A savvy bar owner will look at regional, country wide and international trends too, in order to keep ahead of local competition.
The bar industry is not a business to get into if you are just looking to have a place to hang out. But while every night may not be a party, the bar business could be lucrative if you are organized. Remember, that as a bar owner, your role will be more facilitator of fun rather than participant.
Interested? Take a look at our bars for sale
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