How to open your own bar in 18 steps
If you’ve ever thought about how to open your own bar, you’ve probably also thought about how amazing it would be to accomplish that goal. From finding the perfect location to designing your space to creating a menu and finally reaching that grand opening night, it’s an exciting journey to open your own bar. Let’s break down what you need to know to make it happen.
But first, have you been asking yourself:
Should I open my own bar?
Any new venture brings a bit of nail-biting. How much does it cost to open a bar? Can I afford it? How will I market my new bar to get customers? What if I fail? What if I don't have enough experience? These and other major entrepreneurial questions are common for aspiring bar owners, yet if the thought of owning your own bar gets you fired up and you're willing to do the hard work to succeed, it’s worth it.
If you feel you don't have enough experience to start your own bar, find the right partners, mentors, employees, and funding. You can navigate the rest. And, whether you have experience in the industry or not, the path to opening a successful bar still requires you to follow several basic steps. Let’s take a look at each one and get you on your way to becoming a bar owner.
1) Create a bar business plan
Yes, bar owners need a business plan. Investors need to see something on paper that gives them a clear indication that investing in your business is the right way to go. Likewise, banks need something on paper before they offer you a business loan that displays the profitability of your idea.
However, don’t think that business plans are only for banks and investors. You will benefit from writing your idea out in a clear, actionable way. Just the process of writing the business plan gives you time and space to focus your thoughts and ask yourself any additional questions that need answering before you proceed with your bar business.
There are several key components of a successful business plan.
This is a brief overview of your bar business idea. It can be as short as a clear and concise paragraph, but most run 1-2 pages. Your executive summary should outline the following:
- What is the purpose of the business?
- What will it offer?
- Have you found the right location?
- Will it be a leased space, a new space, a pop-up?
- What are your main goals?
- Will you need business loans?
- What is the current state of the market?
- How do you stack up against your competition?
Do a little storytelling in this area, but remember brevity is key. You can go into greater detail about each part of the executive summary in the rest of the business plan.
What does your market research indicate? Who is your target demographic for this bar business idea? How likely is the success of your bar business? This is a good place for helpful graphics and charts to clarify your findings.
Who is your competition? How do you compare? What makes you different?
Outline your marketing strategy. Who are your potential customers? How do you intend to attract them? How will you get them to come back? What is your projected marketing budget?
Who are you as a bar owner? Why should investors or banks trust you with their money to open your own bar? Outline any experience in the bar or restaurant industry. Make connections between your current venture and any experience you have that doesn’t seem immediately relevant. Tell a story and make it compelling.
What is the plan for your day-to-day bar operations? What are your operating costs? What POS system do you plan to use? What sort of team will you build? How will you run that team? What is the maintenance plan for your bar business, and who will ensure that plan is executed?
How much capital will you need to start the business? What are your estimated equipment costs, operating costs, pricing, revenues, and projected profit margin for each of your first five years in business?
Your business plan need only be as long as it takes to deliver all the important information. You will also likely iterate your business plan over time. Think of your business plan as a living document for your business that you can use as a reference to stay on track, refocus your goals, and make changes when needed.
2) Choose your business structure
As a bar owner, you’ll have your pick of several types of business ownership: Sole proprietorship, partnership, corporation, and limited liability company (LLC). You will likely not select sole proprietorship, as you will have employees and a physical location to maintain. Beyond that, consider each option concerning your specific business goals and seek counsel if you need help deciding on the right type of business ownership.
3) Find your niche
One of the best parts about starting and owning your own bar is the concept. What type of bar will your business be? What is the ambiance like? When you define this, you give yourself a clear path for branding, bar design, and marketing.
Some starting ideas for a bar concept could be:
- A speakeasy
- A specialty bar like a Tiki bar
- A sports bar
- A wine bar
- A true “neighborhood bar” like a beer bar or brewpub
Commit to a concept and go for it. Customers love a richly realized bar concept as it gives them a clear understanding of who you are and what sort of time they’re likely to have when they visit your bar.
4) Discover your unique value proposition
Your unique value proposition (UVP) is what makes you different from every other bar in your area. It can be as simple as the bar concept, or the types of drinks or food offered. It can also be the kind of events you plan to throw or the superstar team you plan to hire.
Whatever it is for you, as a bar owner, it’s imperative that you define this and then market it at every opportunity. It will help define who you are to your community, which is essential for new bar owners who want to develop a loyal customer base.
5) Target specific potential customers
The customers should inform your UVP and the niche you intend to serve. That target market can be determined by market research. Anything you can identify about your target customer helps to inform your brand and your marketing.
6) Find a great location
Whoever your target customer is, you want to be near them. Find a bar location that places you right in the heart of the area in which your ideal clientele spends a good deal of time.
You’ll also want to think about your budget during the location scouting process. Premium locations come with a premium price tag. Depending on your budget, you may want to consider options that place you near enough to your target demographic without ruining your bottom line. A balance of price and position is what is needed.
In addition, consider the building itself. Do you need new construction, or will an older building serve your purposes? Ensure that whichever building you select complies with all zoning and health regulations.
Give yourself enough time to scour the market for the right location and work with a commercial real estate agent to help you find the best fit.
7) Get clear on your finances
Bars require significant funding to open. You will likely need some combination of bank loans, personal savings, and investors.
What are the startup costs to open a bar?
It varies based on your location, the type of lease you take on, and your concept. However, you can expect to spend at least $100,000 and perhaps even as much as $800,000 to open your own bar from scratch. This number includes:
- Design and construction
- Bar equipment
- POS system
- Bookkeeping and accounting
- Insurance and licenses
- Lease payments
A less expensive option is to buy an existing bar, which can reduce your cost to as little as $25,000. Still, expect to invest additional funds updating the place to reflect your concept and prepare for a reopening.
Is a bar business profitable?
Now that you’ve learned about the high costs associated with opening a bar, you may doubt its profitability. However, bars can be lucrative businesses if marketed and managed effectively. The profit margin for each alcoholic beverage you serve can be as high as 80%. With margins like this, effective bar owners have been known to break even in their business in as little as 2 years. While the initial investment is sizable, the returns can be even greater.
How to secure funding for a bar
There are several options to raise your initial capital to open your new business. Some of these include:
- Bank loans
- Line of credit
- Your personal savings
- Friends and family
If you’re unsure which option is best for you, work with a financial advisor specializing in new business ventures, preferably in the restaurant/bar space. You should also plan to open a business checking account and a business credit card to separate your personal and professional finances.
8) Find suppliers
The relationships you build with your suppliers and distributors can determine the fate of your bar. You need to know you can trust your distributors to get you what you need on time and within your budget. They must be trustworthy partners for you.
To find these types of suppliers, you can connect with other bar owners in the area to learn who they use. If you find the other bar owners are reluctant to share their suppliers with you, research suppliers on your own and make a spreadsheet with your findings. Then, start calling. Ask each supplier an important list of questions such as:
- How long have they been in business?
- Do they have any references they can provide?
- What is their minimum order amount?
- What are their payment terms?
- What are their quality assurance protocols?
You’ll learn a lot not just from the answer they give, but how they give it. You want to have a good rapport with your suppliers. If they are short or rude to you, you may want to look elsewhere.
9) Design your bar
You know your concept, you have the location, and you have your funding secured. Now it’s time to build out your bar. Consider the following as you work with a designer or DIY your space:
- What is your bar concept?
- What design elements align with that concept?
- Who are your target customers?
- What floor plan and station setup will best serve your staff?
- How will you provide accessibility to those who need it?
10) Pick a reliable Point of Sale (POS) system
POS systems allow your team to make transactions, keep track of tables, and place orders with ease. There are multiple options available for you to purchase. Research many POS systems before you decide on the one that’s right for you. Here are some popular POS systems for small businesses to get you started:
11) Choose your bar business name
The name of your bar can become iconic and memorable—if chosen correctly. Think about the following when deciding on the best name for your bar business:
- What’s your concept?
- Are there popular phrases or words that match your concept? (Example: Old Sport for a Great Gatsby themed bar)
- Is it easy to spell?
- Is it short and uncomplicated?
- Is it easy to read and pronounce?
- Are the matching domain and social media handles available?
Make a list of potential names and ask friends and family for their input. You can use a business name generator to help you brainstorm.
12) Develop and design your menu
Your menu is the most important offering of your business. If the drinks are delicious and the food is memorable, you’ll keep guests coming back for more. Consider how the appetizers, entrees, cocktails, and other alcoholic beverages on your menu fit in with your bar's concept. Also, think about your competition—what can you offer that can't be found anywhere else?
13) Get your bar equipment
There are some basic pieces of equipment you will need to open your bar. Some of these include:
- Ice machines
- Bottle coolers
- Ice bins
- Soda guns
- Beer dispenser
- Shakers, jigs, and strainers
- Napkins, coasters, and straws
- Various kitchen equipment, depending on what sort of food you plan to serve
And, of course, you’ll need all the ingredients to make your drinks and food. Create an inventory list to help you prep for opening and track costs and expenses after your business is up and running.
14) Get insurance
Small business insurance is essential for bar owners. Every small business owner needs a certain set of insurance policies. Still, there is also a specific suite of restaurant and bar insurance policies you will need to operate your bar or other alcohol-based business.
Some insurance policies you'll likely need include:
- Liquor Liability Insurance: Can save your company from costly legal expenses if a bartender over serves a customer.
- Hired and Non-Owned Auto Insurance: If an employee ever gets into an accident while running a business errand in their own or another’s vehicle, this insurance can help protect you.
- Workers’ Compensation Insurance: This is a necessary policy if you have even one employee on staff. Workers’ comp protects you from costs that can incur when an employee is injured on the job. Get your workers’ comp premium estimate in a flash here.
- General Liability Insurance: General liability insurance protects you from losses associated with property or equipment damage.
- Business Owner’s Policy: A Business Owner’s Policy is a bundled package of essential insurance policies for bar owners, including general liability, business property, and commercial auto insurance.
- Employee Dishonesty Coverage: Protects you from financial losses due to employee theft.
Want to know how much you stand to pay in business insurance? Grab a quote from Huckleberry in as little as 5 minutes online.
15) Complete necessary paperwork, permits, and licensing
You’ll need to gather and submit several documents and procure the proper permits and licenses before opening your bar.
Register your business name
Register your business based on the type of business model you selected.
EIN stands for Employee Identification Number. Think of it as your business’s Social Security Number. Your EIN gives you several benefits and is necessary when opening your own bar.
Get your liquor license
You’ll need to register for a liquor license no matter if you’re in New York City, Missouri, Arizona, Florida, California, or another state. If you plan to serve food, you’ll also need a food service license, which can be procured through your state government’s website.
Obtain other necessary permits and licenses
You’ll need to get your business license for sure. Keep in mind that the process is different for each of the 50 states. Also, remember that alcohol-based businesses are highly regulated. You may need to register for several additional permits depending on where your bar is located. Prepare to get permits such as sign permits, music permits, pool table permits, and more.
16) Think about employees
No bar is complete without great staff. Every bar has different staffing needs, but expect to hire:
- A bar manager
Beyond the standard bar employees, your bar might need DJs or other musical artists, performers, a head chef, cooks, sommeliers, and more.
Whoever you hire, you’ll need the proper paperwork. You can easily find and print W-4 and W-9 forms for any employees you hire in the future. Other forms for employees can be found through the U.S. Department of Labor website.
Lastly, you’ll need to develop a proper training procedure so that your team can work well together, no matter who’s on shift. Create manuals and guides to help your team train up for your grand opening.
17) Create a marketing strategy
There are several marketing channels you can use to spread the word about your bar.
You need an online presence to run a thriving bar business. Make sure your website matches your brand. Hire help for this if you need to. You’ll also want to work with a Search Engine Optimization (SEO) strategist to help you extend your reach on Google and other search engines. No sense in having a great website if no one can find it!
You can use your website to build your email list and send out regular newsletters featuring specials, events, and more.
Social Media Marketing (SMM) is big for bars. You can develop a strong brand identity through social media if you execute the right strategy. However, social media can become overwhelming fast. Start with one main channel and branch out over time. The main SMM channels you can use to build your bar business are:
Google My Business allows you to register your business name with Google, which helps with local search rankings. It’s free and simple to set up. Make a profile once you’ve secured your location to get a head start on marketing.
If people like your bar, word will spread. Encourage customers to leave you a Yelp, Google, or Facebook review to excite new customers to visit your business. You can also hand out business cards, flyers, and other printed marketing assets to circulate the news about your new bar in the non-digital world.
Promote a Happy Hour
Leverage social media to push daily drink specials or a happy hour. Even a clapboard sign on the sidewalk featuring your specials can help draw in new business via foot traffic.
Host an event
Again, social media is your friend here. Events can pack your bar with people who otherwise would have walked on by.
18) Keep learning
You made it to the end of the guide! But the journey doesn’t stop here. There will always be something more to learn to help make your bar even better. Take a look at the following resources for additional information that can help you open and run your bar.
- Bartender Journey
- Bartenders Show
- Profitable Hospitality
- Simple Cocktails Podcast
- Behind the Bar Show
For more on how to start a bar business, check out some of our other articles:
- How to start a restaurant business
- 5 things restaurant owners should do every month
- 4 ways to stay sane as an entrepreneur
Check “get bar insurance” off your to-do list with Huckleberry small business insurance
It takes a lot of work to open a small business. You don’t need to hassle for days and sometimes even weeks to get your insurance in order.