5 Requirements for a Successful Bar Business

Melissa is a mother of 2, lives in Utah, and writes for a multitude of sites. She is currently the EIC of HarcourtHealth.com and writes about health, wellness, and business topics.

Bars and taverns are a great outlet after work and on weekends. You can watch your favorite team on a Monday night, meet up with buddies, and maybe find your next date. There’s a lot to like about such an establishment.

But owning a bar is a completely different matter. Being the owner can be stressful, and you might forget why you opened it in the first place. What you need is a little confidence and a reminder of some of the most important steps for success. By understanding these five requirements, you can not only turn your business into a success, but also enjoy the journey.

1. Obtain a Liquor License

A liquor license is required if you want to serve alcohol. Obtaining your license should be one of the first things you do because it can take some time – sometimes three to six months to get approved.

Begin your research early and be aware of local, county, and state zoning laws and restrictions. Purchase the proper license for your business and stay up to date on all licenses. A lapsed license can be cause for closing your bar.

Also, liquor licenses can be expensive. Although the initial fees and taxes may only be a few hundred dollars, many areas limit the number of available licenses, increasing the difficulty and cost of obtaining them. Intelligent owners who are buying or transferring a license from another establishment have lawyers involved, which can increase the cost as well.

2. Know your Liability

All business owners face some degree of liability. You’re responsible for running an ethical business and taking care of anyone who enters your property. Failing to do so could end in a nasty lawsuit.

A common issue for bar and tavern owners is the dram shop law. In 38 states, it’s illegal to sell alcoholic drinks to someone who is borderline or obviously intoxicated. According to the law offices of Davis, Saperstein, & Salomon, “Taverns and bars who continue to serve alcohol to someone who is clearly impaired should be held responsible…This sends a clear message to the community that making a few more dollars by continuing to serve a drunk will not be tolerated.”

Be aware of all laws and liabilities facing your business, and train employees to comply as well. Speak with a reputable lawyer to learn more about liability issues you may face.

3. Get Finances in Order

A good business plan ensures that your income is greater than your expenses. Startup costs for a bar can average between $100,000 to $500,000. You also need enough capital to keep your business running. Ideally, you’ll have a year’s worth of expenses in savings, but if that’s not possible, four to six months worth is the bare minimum.

Start with a good business plan. Banks like prospects who are organized, and they only lend money when they’re confident they’ll get their money back. Having a good business plan can show lenders that you’re a trustworthy investment.

The financial section of your business plan doesn’t have to be precise. “You don’t do financials in a business plan the same way you calculate the details in your accounting reports,” Tim Berry, founder of Palo Alto Software, blogger, and author told Inc.com. “It’s not tax reporting. It’s an elaborate educated guess. You don’t have to imagine all future asset purchases with hypothetical dates and hypothetical depreciation schedules to estimate future depreciation. You can just guess based on past results. And you don’t spend a lot of time on minute details in a financial forecast that depends on an educated guess for sales.”

4. Commit to a Bar Theme

The theme you choose will dictate your clientele. Here are three of the most common themes: the neighborhood bar, sports bar, and brewpubs.

Neighborhood bars, which are most common, provide a place for friends and co-workers to go after work or on a weeknight to relax and unwind. Sports bars are where die-hard fans go to cheer on their team and enjoy some drinks and good food. Brewpubs cater to beer drinkers and often carry many types of beers including local or specialized beers. Some brewpubs even make their own craft beer on location.

Each type of bar comes with its own client demographics and specialized requirements. Commit to your theme, and use it to properly stock your bar and give your clientele a memorable experience.

5. Have a Marketing Strategy

A great first step to introduce your bar to new patrons is to have a grand opening. They create excitement in the community and, when properly advertised, can bring heavy traffic to your business in a short time.

“Everything about your grand opening hinges on your brand and your target audience,” advises Mark Prosser, contributing writer for Biz Journals. Design your planning and marketing to cater directly to this group.

Utilize social media to get the word out about your grand opening and especially about your establishment. We live in a technological world and social media is an essential marketing tool. Word of mouth can be just as effective, which is why good customer service is essential. Ensure that every interaction people have with your business, whether in person or online, is a positive experience.

Meeting these five requirements will set you up for a successful business that you will enjoy owning for many years to come.