| Bring On the Good Times: Opening your own bar or nightclub |
Who hasn't dreamed of opening a cozy neighborhood tavern, an eclectic jazz lounge or a popular nightclub? With 225,000 restaurants and bars in operation the competition will be fierce. So don't take your shot in the dark. Let us help you with a few pointers to get you on your way.
As with any start up business the initial work may be challenging, but the rewards can be great. If you want to rule the nightlife in your town or city it helps to be a night owl. The industry often requires long, late hours, giving up weekends and sometimes vacations. This time commitment could put a strain on your family life, so talk it over the people you love first. In the beginning, some bar owners start their day at around 10 a.m. and are not finished until 4 or 5 the next morning.
Start up costs will vary greatly depending on the size, location and type of establishment you will open. In some instances you can buy your friendly neighborhood bar in a small town for $20,000 or spend millions building a downtown club in a large city. When deciding on a budget, there are some basic expenses you will typically need to plan for:
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Rent (1st month + security deposit)
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Phone/utilities deposits
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Renovations (carpentry, sign, painting, flooring, heating/air conditioning, electrical, plumbing, smoke detectors)
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Payroll
Insurance
Miscellaneous expenses (add 10 percent to the total)
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Equipment/fixtures
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Grand opening marketing
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Licenses/permits
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Legal services
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Beginning inventory
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Accounting
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To recoup your "cover charge" in three to five years will be a feat. Many bar ventures fail because of lack of capital or lack of knowledge about the business. However, establishments that fare well can be in the black in the first six months. Whatever the scale of your operation, make sure you do your homework.
Homework
Scout general locations and profile your potential customers. The local chamber of commerce, Small Business Association and business departments in libraries will have information on demographics, income levels and spending trends. The theme of your establishment will be vastly different if, for instance, you are in a big college town or a quiet suburb.
Consult your suppliers. Alcohol suppliers keep records on their products and the market. Find out the trends. For example, the Distilled Spirits Council of the United States (DISCUS) reported U.S. spirits sales grew by 3.1 percent in 2004, but the super-premium brands experienced the biggest jump. Regional and national suppliers are generally willing to help because if your business does well, they will do well also.
Learn the scene. Research your competitors. The Arts & Entertainment editor of the local newspaper or marketing departments of local radio stations can tell you what your competition is and which establishments have been successful. Even searching internet chat rooms can give you insight as to what's hot in your area and what's not.
When you've collected all your information, you can decide what will be your target market. Are they blue-collar workers in an industrial area or young urban professionals? You may even have a different customer base at different times of the day. You should choose your bar stock, menu items and develop the concept of your place with regard to what your customers like.
Location, location, location
The actual location of your establishment will depend on a number of things. First, consider the type of place you plan to open. You may have envisioned a neighborhood pub with darts, pool tables, video games and a jukebox or a sports bar with high-tech televisions. A brewpub usually has a broad selection of microbrews or even a house beer brewed on site. Specialty bars have become increasingly popular including wine, martini and cigar bars. The nightclub can be as versatile as all of these. For this venture you could consider live entertainment and a dance floor on a small or large scale.
Second you should consider how your patrons will find you. Will you appeal to the passerby in an area of high foot traffic or will you divert these often high real estate costs into developing the ambience of your place?
Now, this is where it gets fun. Define your concept. Will you be a mellow, chill spot or a high intensity rave nightclub? Maybe a sophisticated singles bar or hippie hangout. Naming your bar/club is especially important. Here's where you can exercise your creative genius, but don't forget to do your research. Conduct some surveys to make sure the name you choose has the desired effect. Typically, the name of your bar should: give some indication of your theme, be attractive to your target market, and let customers know what to expect or even specify its location. Names like "3rd & Pine Pub", "Tracks" or "Hyphee!" may all give indications about the energy and clientele you expect to entice.
Buzz
Besides a brand you need to create a buzz. Media advertisements are often too expensive to be effective in generating profits, so the alternative is developing your reputation through word-of-mouth. To get people talking consider attending community activities, sponsoring a local recreational sports team or sending out a newsletter to regular customers. However, the choice method of marketing used to jumpstart the chatter, is a special promotion.
When planning a promotion, make sure you map it from start to finish. Decide on a budget and a calendar of events. When you advertise leave the end date open so you can discontinue the event if it doesn't prove successful. Maintain the energy throughout your campaign. For example, don't let your announcements disrupt the ambience of your establishment. Lastly, save the best for last. Announce your grand prize toward the end of your business hours to keep your "bar flies" there as late as possible.
Run a Tight Ship
Don't let bad management kill your buzz. The operations side of running your bar or a nightclub is undoubtedly the most important part of running these kinds of businesses. If you don't shore up all your loose ends, you may end up hemorrhaging money. You should track all inventory closely and make sure your accounting system does not have any loop-holes. You will need to account for every penny to ensure your venture has longevity. Consider the procedures you will use to carry out transactions. Will patrons settle with a cashier at the bar or will servers handle transactions? Anticipate situations where a server might lose a ticket or a bartender might shave a little off the top. Try to find a system that eliminates these possibilities from arising. Maybe cash transactions will be handled by a manager who already has a vested interest in profit margins.
Although the job requires some pencil pushing and numbers-crunching, you should stay connected with your patrons. Successful owners get to know their patrons, their preferences and their pet peeves.
In short, opening your new bar or nightclub will be like raising a child. You will have to enforce structure. There will be many late nights, maybe even some unruly behavior, but for all your hard work and effort you will have a budding establishment that is a reflection of yourself.
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