Chapter 1

Bar Business Basics

IN THIS CHAPTER

Understanding the basics of the business

Deciding whether you have the necessary skills

Think of all the great times people have in bars. They meet for girls’ night out, bachelor parties, reunions, birthdays, or just because it’s Thursday. They come to celebrate, relax, or have fun. It’s a fact: People like bars. So it’s not a leap for people to think “Hey, I enjoy hanging out in bars, so I may as well get paid to do what I enjoy — hanging out in bars.”

Viewed from the bar stool (on the public side of the bar), it’s easy to miss all the hard work that goes on to make hanging out in bars fun for everyone else. When you have to manage every detail — such as hiring the staff, selecting the music, choosing the lighting, designing the menu, and picking up trash in the parking lot — the bar business quickly becomes more work than fun, so don’t be fooled.

In this chapter, we take you on a quick tour of the business. We explore your reasons for getting into the business and help you check your expectations for your new venture. We introduce you to what you need to know to understand and maximize the true financial performance of your new venture. And finally, we inspire you to keep reaching out to your patrons. Look at the other chapters in this book for more detailed information about these topics and other important points to know about getting your bar going and keeping it running.

Deciding Whether the Bar Business Is Right for You

The bar business world is more than a party every night of the week. It’s actually a business. Those owners who look at it as a business ultimately have a much greater chance of succeeding. You can’t just give drinks to friends or offer drink specials too deep to turn a profit. You can’t order too many bottles of whiskey only to (not) see two of them walk out the door. You have a tremendous opportunity to make a great career out of a fun business if you’re willing to put in the effort and use some common sense.

Why do you want to be in the bar business?

The bar business is tough for some people to relate to because you’re selling an experience rather than something that’s physically packaged that you can hold. Instead, your product is packaged in many layers, from the music you play, to your furniture and lighting choices, to the beers you have on draft. All these things make up your packaging, affect the costs of doing business, and affect your patron’s decision to hang out at your place or move on down the street.

Think about these questions when you’re contemplating your decision to take the plunge and run your own place:

• Do you really like people? An odd question on the surface perhaps, but running a bar doesn’t afford you a lot of quiet, contemplative alone-time. Make sure you can stand the onslaught of constant conversation and complaints.
• How do you handle your own liquor? For some people, running a bar is like giving a kid the keys to a candy store. The liquor is always available, and they don’t seem to know when to say “when.”
• Are you a night owl? Think about your own internal clock. When does it turn on and shut off? If you like to be up until 2 or 3 o’clock in the morning, this could be the industry for you.
• Are you ready to baby-sit adults? As the owner or manager of the bar, you have many employees, suppliers, and customers who need your attention. Sometimes you’re the one who has to cover a missed shift on the fly. Occasionally, you have to handle a late shipment of liquor that arrives inconveniently at 6 o’clock on a Friday night. Most likely, you’ll need to attend to a patron who needs a cab. Whatever the scenario, tag — you’re it.

Make sure you spend some time reading Chapter 2 to get a feel for what the business is really like before you invest serious time and money in developing your ideas.

What do you expect to get out of your place?

Now’s the time for you to sit down and create your plan for what your bar should be. Early on, create the pie-in-the-sky version of your ideal place, including a menu (both drink and food), and even draw up mock floor plans. Figure out where you want your stage and TVs to go, how many bars or wells you might have, what your theme is going to be, and so on.

Make sure you figure out what you, as a person, want to get out of the occupation of running a bar. Think about these questions:

• How much time do I want to dedicate to work? Running a bar takes a lot of time, just like managing any other business. The key difference, though, is that the time tends to be during nontraditional work times. So when the rest of the world is out having a good time, you’re providing the good time.
• How much time do I need to spend with my family? If you like to spend nights and weekends at home, this may not be the business for you. But if you’re open to finding other times to spend with your family, you can make it work.
• How do I like to spend my free time? If you enjoy talking with people, listening to music, and playing an occasional game of pool during your free time, you’ll probably enjoy this work. But remember to draw a clear line between your business and personal lives.
• Do I like having any free time? When you own your own business, you don’t have lots of free time in the beginning. If you hire the right staff members (see Chapter 10 for help) and train them right, you can work your way into delegating some of your jobs.

Eventually, you must take certain steps to plan your business so it’ll be a success before you can open the doors and enjoy it. In fact, we recommend you start planning as soon as you can so you can decide whether your plan is a viable one.

Create a timeline for getting your business up and running (Chapter 13). Decide exactly what kind of bar you want to run (Chapter 4). Choose a name that suits it (Chapter 6). Develop a detailed business plan and use it to find and secure financing (Chapters 5 and 3, respectively). Find the best location for your new bar and get the right licenses and permits as soon as you can (Chapters 6 and 3, respectively).

Starting Fresh or Taking Over an Existing Bar

The decision to open a bar is a big one. Sometimes people are just sort of considering the idea, and then — out of the blue — they fall in love with an existing location, immediately imagining themselves behind the bar, spit shining glasses. Other people build their dream bar in their mind’s eye from the ground up. They have very specific ideas about every physical detail of their place. And naturally, they want to physically build it from the ground up, as well. Depending on your schedule and budget, you can make either scenario a success if you keep certain things in mind, which we explore in this section.

Location, location, location

The bar business is a bit of a different animal. Location definitely matters as it does in any business. But what defines a great location is in the mind of the beholder.

Some people choose to buy or build a bar in an already booming area (and choose to pay higher rent) to get a leg up on getting people in the door. Others think it’s better to speculate a bit and get in on the ground floor of an up-and-coming neighborhood, in the hopes that the area will be the next “hot” thing. They save on rent, but usually spend more promoting their business and have to wait a while to see a return on their investment. The choice is yours.

To help you figure out which way to go, and other specifics about finding the right location for your bar, check out Chapter 6.

Many small neighborhood bars are not in what people would consider ideal locations, but the people who patronize them love them and wouldn’t think of going anywhere else. In most cases, these places have been around a long time. If you’re taking over a location like this, it’s important to figure out what’s working already. People have sought out this place for a reason, so you need to figure out what that reason is to avoid messing it up. Don’t just come in and change everything; instead, meld your ideas with the existing business to make it work for you.

Don’t alienate your built-in clientele unless you have to, and then make sure you can replace them with another clientele through marketing, advertising, and other means.

Getting in with the right people

We’re not talking about the celebrity A-list crowd here. Instead, we mean the barrage of people who can help you alter your space to fit your needs. Most people starting a new business want to change a few things at their new location. Maybe you need to add a wall to create a quiet area away from the stage. Maybe you need to upgrade the bathrooms to comply with the Americans with Disabilities Act regulations. A contractor can save you lots of time and trouble. Don’t hesitate to ask questions of a couple of different ones and check their references. Chapter 3 has tips on finding and hiring a contractor.

Here’s a quick list of a few hired helpers to keep on speed dial, depending on your concept:

• A...