How To Open A Bar

Bars are a wonderful business concept since they are a fixture in almost every town. Obviously, bars provide booze, but with America’s growing obsession with “pub fare,” there may be a chance to also serve good cuisine to guests. Finally, bars allow you to express your creativity by developing a distinct theme and environment that distinguishes your company from the competition.

Follow these ten steps to open a bar:

Prepare your Bar

Make your bar a legal entity.

Register your Tax Bar.

Create a Business Bank Account and a Credit Card

Establish Accounting for Your Bar

Obtain the Required Permits and Licenses for Your Bar

Purchase Bar Insurance

Create a Bar Brand

Make a website for your bar.

Configure your Business Phone System

Starting a company entails more than just registering it with the state. We’ve put up this short guide on getting your bar up and running. These stages will guarantee that your new company is well-planned, correctly registered, and legally compliant.

STEP 1: Make a business plan.

A well-thought-out strategy is vital for entrepreneur success. It will assist you in mapping out the intricacies of your organisation and uncovering some unknowns. Consider the following crucial topics:

What are the initial and continuing expenses?

Who is your intended audience?

How much money may you charge your customers?

Fortunately, we have done a lot of the legwork for you.

What are the expenses of starting a bar?

The expenses of opening a bar are often determined by its size. For example, depending on the size and location of the bar, lease beginning fees might vary from $110,000 to $550,000. If you are ready to acquire a site and pay the associated mortgage, your launch expenses might vary between $175,000 to $850,000. Potential bar owners who want to get started for less money may look for existing bars for sale, which can cut the cost to as little as $25,000. Another expense is the necessary licences, permits, and insurance for the company. These expenses vary by state, but they are often in the thousands of dollars.

What are the continuing costs of running a bar?

The operational expenses of a bar are made up of various distinct charges. Food and booze may cost $6,000 or more per month, whereas an average employee might spend $13,000 per month. The second main expense is rent, which would obviously vary greatly depending on where you live. Furthermore, a new bar may offer few or no specialty foods and may have a smaller staff than it would ultimately have. Utility costs will also vary depending on a variety of things, such as the size of your bar, the season (winter vs. summer), and so on.

Who is the intended audience?

Clients that are not disruptive are the ideal customers for bar owners. Because the primary purpose of a bar is to offer a place for drunkenness, owners and personnel must continually be on the lookout for angry, disruptive, and even violent clients. Customers that are just trying to have a nice time with friends tend to be the best. Such consumers are aware of their drinking restrictions, and they contribute to the milieu of community participation and enjoyment that you are attempting to create for your company.

How can a bar generate revenue?

The major source of revenue for bars is, as you would expect, the sale of alcoholic drinks to clients. While bars often provide appetisers and sometimes dinners, providing alcohol remains the primary source of revenue for a bar. This is because you may make 200-400 percent profit on each drink you serve, with the typical drink costing $8. This implies that if you have a constant stream of customers, the bar may start making money considerably faster than other sorts of new enterprises.

How much money may you charge your customers?

The amount you may charge for beverages and meals mirrors the pricing of these items at rival bars in the region to some extent. In general, you may charge consumers 200-400% more for their wine, beer, spirits, and cocktails than you spent for them. Ironically, selling so-called “bottom shelf” booze, which is essentially marked up over 1,200 percent relative to its cost, is one of the finest bargains for you. The precise markup is typically determined by the kind of items offered, which are also impacted by your clients and the atmosphere you are attempting to create. An independent craft bar and a friendly hole-in-the-wall have a distinct tone, and that distinction extends to price.

What kind of profit can a bar make?

The quantity of clients served determines the precise amount of profit your bar may earn (and how many drinks they purchase). Bartenders may make between $25,000 and $30,000 each week on average. This is because to the inherent profit margin built into each drink’s so-called “pour cost.” Because the cost of any particular drink you serve is approximately 20-30% of the cost you charge clients, a $8 drink will normally make you around $6 in profit. With that in mind, it’s simple to understand how a steady stream of clients might help your company grow.

How can you increase the profitability of your company?

As previously said, increasing the number of clients is the major key to bar profitability. As a result, the majority of other smart suggestions for increasing profitability revolve around minimising waste. For wine, for example, you may set guidelines such as only opening a specific number of bottles before each shift and keeping bottles in a manner that minimises oxidation. Even being choosy about your ice (for example, using ice balls) may help make beverages taste better and last longer.

STEP 2: Establish a legal entity

Sole proprietorship, partnership, limited liability company (LLC), and corporation are the most frequent business structure forms.

Creating a legitimate business organisation, such as an LLC or corporation, shields you from personal liability if your establishment is sued.

STEP 3: File your taxes

Before you can begin for business, you must register for a number of state and federal taxes.

To register for taxes, you will need to get an EIN. It’s really simple and completely free!

Taxes on Small Businesses

Depending on the business form you choose, you may have multiple choices for how your company is taxed. Some LLCs, for example, may benefit from being taxed as a S company (S corp).

These guides will teach you more about small company taxes:

Taxes on LLCs

LLC vs. sole proprietorship

Corporation vs. LLC

S Corp vs. LLC

How to Form a S Corporation

S Corporation vs. C Corporation

There may be state taxes that apply to your company. In our state sales tax guides, you may learn more about state sales taxes and franchise taxes.

STEP 4: Establish a company bank account and credit card

Personal asset protection requires the use of distinct business banking and credit accounts.

When you combine your personal and business accounts, your personal assets (your house, vehicle, and other possessions) are at danger if your company is sued. This is known as penetrating your company veil in business law.

Furthermore, understanding how to develop corporate credit may help you get credit cards and other financing in your company’s name (rather than your own), lower interest rates, larger lines of credit, and other benefits.

Establish a business bank account.

Opening a business bank account is not only required when asking for business financing, but it also:

Separates your personal assets from the assets of your firm, which is required for personal asset protection.

It simplifies bookkeeping and tax reporting.

Create a net 30 account.

Net 30 accounts are used to develop and grow company credit while also increasing cash flow. Businesses use a net 30 account to purchase items and refund the whole debt within a 30-day period.

Many net 30 credit suppliers submit information to the main business credit agencies (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how firms establish business credit in order to get approved for credit cards and other lines of credit.

Apply for a business credit card.

Obtaining a business credit card benefits you in the following ways:

Put all of your company’s costs in one location to separate personal and business spending.

Build your company’s credit history, which will be important for raising funds in the future.

STEP 5: Establish business accounting

Recording your numerous costs and sources of revenue is crucial to assessing your company’s financial status. Keeping precise and thorough accounting also makes yearly tax filing much easier.

STEP 6: Obtain all required permissions and licences

Failure to get appropriate permissions and licences may result in significant penalties or possibly the closure of your firm.

Requirements for State and Local Business Licensing

Businesses that sell alcoholic drinks must get a liquor licence from the proper state or municipal body.

The Alcohol and Tobacco Tax and Trade Bureau has compiled a thorough list of legislation by state (including required licences, zoning rules, and so forth).

You will also need a health department licence since all restaurants providing food and/or drinks must undergo a health inspection. The local health agency inspects food enterprises at random on a regular basis. These inspections will verify for compliance with local health rules, which are generally connected to food contamination prevention.

If you want to brew beer in-house, as some establishments do, you must meet extra licensing/permitting criteria.

Additional licencing or regulatory requirements may apply at the state and municipal levels.

Visit the SBA’s reference to state licences and permits for further information on state licencing requirements.

Check with your town, city, or county clerk’s office for further information on local licencing and permitting procedures, or seek help from one of the local organisations mentioned in US Small Business Associations’ database of local business resources.

Licensing of Music

Permission from the composer or licence holder is required to play music in a commercial environment. The most convenient method to do this is to get a “blanket” licence, which allows your bar to play music owned by a broad library of artists and recording studios. Performance rights organisations, such as ASCAP or BMI, may provide such licences.

Labor Security

It is essential to follow all Occupational Safety and Health Administration regulations. Bars are rather dangerous locations for workers, thus proprietors must ensure suitable working conditions.

Find out more here.

Occupancy Certificate

A Certificate of Occupancy is normally required to operate a bar (CO). A certificate of occupancy certifies that all building rules, zoning laws, and government requirements have been satisfied.

If you intend to rent a space:

In most cases, it is the landlord’s obligation to get a CO.

Before leasing, ensure that your landlord has or can get a valid CO for a bar.

A new CO is often required after a big remodelling. If your location will be refurbished before opening, incorporate wording in your leasing agreement saying that lease payments would not begin until a valid CO is given.

If you intend to buy or create a location:

It is your responsibility to secure a valid CO from a local government entity.

Examine all building rules and zoning standards for your business’s location to verify compliance and the ability to acquire a CO.

STEP 7: Obtain commercial insurance.

Insurance, like licences and permits, is required for your company to operate safely and legally. In the case of a covered loss, business insurance protects your company’s financial well-being.

There are several sorts of insurance plans designed for various types of companies with varying risks. If you are unaware about the hazards that your company may encounter, start with General Liability Insurance. This is the most popular coverage required by small companies, so it’s a good place to start for yours.

Workers’ Compensation Insurance is another important insurance product that many companies need. If your company will have workers, your state may require you to purchase Workers’ Compensation insurance.

STEP 8: Establish your brand

Your company’s brand is what it stands for, as well as how the public perceives it. A strong brand will help your company stand out from the crowd.

How to Market and Promote a Bar

Some methods of marketing your bar are similar to those used to advertise other companies. For example, advertising on television, radio, and in print may assist ensure that everyone is aware of your new venture. Word of mouth is more significant than formal advertising in the bar sector. The simplest method to acquire this is to build social media sites and contribute as much as possible on platforms like Yelp. These platforms allow consumers to rave about your service, beverages, and atmosphere, and these customers will tell their friends about it. This is more effective than typical bar advertising and, best of all, far less expensive.

How to Keep Customers Returning

When it comes to enticing clients, the tactics listed above work well together. In other words, establish a conventional media advertising campaign while simultaneously encouraging word-of-mouth via social media. Keeping those consumers is a little more difficult. You must keep your prices competitive with other bars in the area while also offering something unique to customers that they cannot find at other bars. Superior service, an original theme, or special bar promotions such as live music or trivia nights may all contribute to this. Offering a range of attractions demonstrates to regular customers that they can always find fun and value at your bar, minimising their desire to visit other establishments.

STEP 9: Create your company’s website.

After you’ve defined your brand and designed your logo, the next step is to build a website for your company.

While developing a website is an important step, some may be concerned that it is out of their grasp due to a lack of website-building skills. While this was a fair concern in 2015, online technology has made significant advances in recent years, making the lives of small company owners considerably easier.

The following are the primary reasons why you should not put off developing your website:

Every genuine company has a website, period. When it comes to bringing your company online, it doesn’t matter what size or sector it is.

Social media accounts, such as Facebook pages or LinkedIn company profiles, are not a substitute for your own business website.

STEP 10: Install your company phone system.

Getting a phone for your company is one of the finest methods to keep your personal and professional lives distinct and private. That isn’t the only advantage; it also helps you automate your company, provides it legitimacy, and makes it simpler for prospective clients to identify and contact you.