How to open a bar

Opening a bar comes with the same fundamentals as opening any kind of store, you either start from scratch with a brand-new business, or you buy an existing bar with an established customer base. 

If you choose to buy an existing bar you’ll only have to modify the licenses and permits, carry out any changes to the décor that you wish to make and perhaps rethink the marketing strategy. However, buying an established bar won’t come cheap. Depending on where the bar is located and how successful it is, you could end up spending many hundreds of thousands, or even a few million dollars to claim the bar as your own.

Starting from scratch will be far cheaper than buying an existing bar, although you’ll have to build your customer base from zero – which will take time and burn more cash for marketing. But let’s assume you choose the brand new route – here’s what you need to do to start a bar from scratch:

1. Create a business plan

If you’re seeking external investment or a commercial business loan to open your bar, you’ll need a detailed business plan to support your pitch or application. Investors and lenders will want to know why you need their funds and what the money will do for your new bar. Business plans should do more than paint a rosy picture – explain the risks involved, what the downsides could be – and how you intend to overcome them. 

Even if you don’t need investment or a loan, a business plan can still be a very useful vital tool. Use it as your business manual, referring to the contents to guide your strategy and manage your financials.

Find out more about creating your business plan here.

2. Find the right location

Where your bar is located can have major impact on the success of your business. Take the time to research different locations, measuring the competition and the size of the local population. You want a bar in an area where foot traffic is high and local incomes can support your business and the kind of drinks you sell. Once you have a target area, you can look for vacant units to lease.

3. Choose a business name

You’ll need to register your bar with local, state and federal authorities. But before you do that, you’ll need a name for the business. You’ll want a name that is not taken by another organization, as infringing on someone else’s brand name and copyright could end up in a costly lawsuit. Check the official trademark database with the US Patent and Trademark Office to make sure your business name is available.

You will also want a website and branded email addresses for your bar. Check to see if your preferred company name is also available as a domain name– such as: www.mynewbar.com. You can do this at the global domain name database – WhatsmyDNS.net. If your domain name is available, you should be able to buy it via any of the advertised web hosting services. 

4. Register your business

Once you’ve settled on a name, you must decide if you want to run the business as a sole proprietorship, an LLC or a corporation. Although it involves more paperwork, operating as a corporation can protect you if the business does not succeed, as you are not personally responsible for the company’s debts. If you choose this route, you must submit your articles of incorporation to the secretary of state’s office in the state where you register. You can do this in-person, online, or by mail. You will have to pay a registration fee at the time of filing – typically $100.

5. Obtain licenses and permits

Bars are governed by a host of laws, and you will need to get the necessary licenses and permits. Initially, you must register with the federal Alcohol and Tobacco Tax and Trade Bureau (TTP). They can also give you the information you need to get state and local operating licenses and permits for your location. Don’t be tempted to start trading without the proper licensing as that can lead to large financial penalties or even prosecution.

Learn more about getting a liquor license here.

6. Find suppliers

Keeping your customers happy is crucial for the success of your bar. This means finding reliable suppliers is essential. Start by connecting with neighboring bar owners for recommendations on trusted vendors. Create a comprehensive list of supplies needed and establish a budget to guide your purchasing decisions. Exploring online suppliers can be beneficial due to potential discounts, but exercise caution, as not all are reputable. 

Before partnering with a supplier, inquire about their business history, ask for references, and clarify the minimum order amounts and payment terms. Additionally, ensure they have a solid quality assurance process in place. A good supplier should be adaptable and understand your specific business needs. If a vendor does not meet your expectations, don’t hesitate to seek out a new supplier to ensure your bar remains well-stocked and your patrons are satisfied.

7. Secure funding

If you don’t have enough cash on hand to launch your new business on your own, you’ll need funds from investors or lenders. Many new businesses get started using financial support from friends and family, but if that’s not an option, there are networks of venture capitalists and angel investors readily available online. Bringing in external investment can give you the cash you need to get your bar off the ground but be aware that investors will usually want a piece of the action in exchange for their money. This means you will need to give up a share of your ownership and you may lose overall control of the business. 

With a business loan you don’t have to surrender a share of your store to get the funds. Although it’s never easy for new businesses to borrow money, some lenders have special products and programs for startups and entrepreneurs. These types of financing include:

• Term loan – this is a lump sum that you pay back over time. Borrow up to $5million over as long as 25 years. Collateral may be required.
• Business line of credit – a loan that functions like a high-value credit card. Withdraw cash anytime up to the maximum of your credit limit. You only pay interest on the sum you withdraw, not the whole line. This can significantly reduce your borrowing costs. Collateral may be required.
• Merchant cash advance – borrow against the value of your credit/debit card sales. As your card sales increase, your credit limit goes up. Pay the loan back with a small percentage of your weekly or daily card sales. No added collateral is required.
• Equipment loans use the asset you’re financing as security, similar to a car loan or a residential mortgage, so no added collateral is required.  Buy machinery, furniture, technology, etc. Use the equipment as you pay for it. 

To get these types of loans you can approach banks, credit unions and online lenders one by one, or you can use the services of a loan marketplace that will immediately introduce you to a choice of loans from a range of lenders. Some marketplace platforms can also give you advice and help you with the application process. This can be especially useful for borrowers who have never taken out a business loan before. 

8. Design your bar

Sports bar, cocktail bar, lounge bar, brew pub, karaoke bar, wine bar, etc – the US has many types of drinking establishments and the design and theme of your bar are where you can let your imagination play a role. However, no matter which theme or look you give your bar, the fundamentals are the same:

• It has to be welcoming and a place where customers want to stay
• Furnishings, materials and signage should reflect your theme without being jarring to the eye. Avoid being too gimmicky, as those kind of venues usually have a short shelf life
• Your venue should provide easy access to tables, the main bar and the restrooms – if you’re offering wait service, think how the wait staff will get around. Is it easy and efficient?
• Will there be a dance floor or a stage for live music? If so, how will they impact customer and employee movement around the venue? (Be aware that you may need an extra license or permit to offer these activities)
• Sports bars use big TVs to broadcast games to customers. Where will you place yours? Keep in mind that you may get crowds of fans watching at any one time – will they block other customers or your working staff?
• Exits must be clearly marked and unobstructed – safety is key

9. Pick a reliable POS system

You’ll need a reliable POS (point-of-sale) system to process customer orders, track sales and take digital payments. The ideal POS system should streamline your business operations without requiring a hefty investment. Look for a system that requires a modest monthly fee along with a small transaction fee for credit card processing. 

Potential POS systems include: 

• Square: ideal for small businesses 
• Toast: good for midsize establishments
• TouchBistro: suitable for handling high-volume transactions

10. Develop your marketing strategies

Competition in the US entertainment and hospitality space is fierce. Customers often have many choices when they want to go to a bar. This means marketing is crucial when opening your new venue, as it will create awareness and attract customers. Effective marketing strategies can generate buzz before your opening, setting the tone for your brand and establishing a loyal customer base. Utilizing social media, local promotions, and community events can enhance visibility and customer engagement. 

A well-planned marketing approach will not only highlight your bar’s unique offerings but also build anticipation, ultimately contributing to your bar’s long-term success and profitability.