How to Open Up a Small Bar
How to Open Up a Small Bar
What does it take to open up a small bar?
Question by Black Jack
I have an idea for a small bar and would like to open one up. Can someone tell me what it takes as far as licensing goes and how much investment it will take ? Do I need to be a bartender to own a bar ? How much money can you expect to make your first year and what are the challenges ?
BarsandBartending Answer:
Starting up and running a bar – any size bar – is a LOT of work. If you want to open up a bar, aside from the massive monetary obligations and legal responsibilities you’ll be undertaking, you’ll also be putting in a lot of hours.
Expect to be working at least 80 hours / week until you get your bar to the point where it’s making enough money and has the proper systems in place to have a well compensated bar manager replace you.
There are definitely people who have “lucked out” and opened a bar who didn’t really have to do anything beyond open their doors and they were making money hand over fist. This is not the norm.
We recently wrote about a very similar topic – How to Run a Bar – because of the horrible advice people were giving on the subject. We heard things like recycle your beer, tap a cheap keg but change the tap handles to something more expensive, under-pour on your guests etc. Do any of these things and you’ll be out of business before you know it.
If you’re serious about opening up a small bar and managing the bar yourself, make sure you read through all 16 points in How to Run a Bar.
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First is a license. The going price in my neighborhood is $ 525,000. Cash only. It can not be encumbered by a lien from property or other assets. Also you must determine if one is available. The Liquor Control Commission allows each municipality to determine how many licenses are allowed by population. Your application also involves a criminal background check. The license can only be in an individuals name, no corporation. Don’t even think about getting a DWI. Your license would be in jeopardy.
Ok. Next is obvious such as location, lease, insurance, etc.
Cash for initial inventory. Expect a minimum of $ 20,000 to start. All subsequent orders must be paid in 30 days. If not all distributors will require cash only and a notice will be given to The Liquor Control Board.
Ok. This is mostly a cash business. The IRS and the state knows this so pay your taxes. They like to watch businesses that deal with a lot of cash. Also because it is mostly cash you have to have controls to make sure every drink is “rung” in the “cash register”. There are many “tricks” around this. You would be amazed.
Ok. Inventory control. Liquor, wine and beer is very expensive. Very easy to “give away” to patrons by over pouring or “under-ringing”. The minimum is once a week.
If there is a problem, you can hopefully find it.
Yes. The bar business is very profitable and can be fun. You have to be very much in control.