Bartender Spirits Awards

  • Enter Now
  • My Account


What You Need To Know Before Opening Your First Bar

Photo for: What You Need To Know Before Opening Your First Bar

07/12/2020 Opening bar for the first time requires a lot of business experience. Here are some basic and important tips.

The decision to open a new bar – especially one located in a vibrant, metropolitan city like New York, San Francisco or Chicago – might seem to be a no-brainer. And, indeed, many first-time bar owners do rush into the decision without a lot of business experience. But, as veteran bar owners will tell you, there’s a lot that goes into making your dream a reality.

Let's Connect On LinkedIn

Here’s what you need to know.

Understand cash flow and budgeting

At the end of the day, your bar needs to make money consistently in order for you to be profitable. And that means you really need to take a hands-on approach to the financial benchmarks for your new bar. The starting point is always cash flow because it is precisely this ability to generate cash on a regular basis that will enable you to pay your employees and keep the lights on at night. So you really need to have a good idea of how cash is flowing in – and out – of your new venture.

For example, what if you decide to open an upscale bar and stock the bar with premium spirits? That’s going to be a significant hit to your cash flow. And what if you decide to hire a large team at the outset, instead of expecting employees to wear several different hats at one time? That decision, too, is going to impact your cash flow because you are taking on more overhead expenses. The same is true for your choice of location. That corner location on a busy urban street might look ideal, but it’s also going to be far more costly than a more low-key location tucked away on a side street!

That’s why budgeting is so important. From the outset, you need to have a very good grasp of income and expenses, and then continually look for ways to pare down those expenses. For example, you might order beer and spirits in large, bulk orders in order to get a discount from distributors. Or, you might decide to rent a location in an up-and-coming part of town rather than on a prime city block with the most daily foot traffic.

Super-serve your core customer demographic

Another important consideration to keep in mind is your customer demographic. In other words, who is your average customer? If it is a young millennial in the neighbourhood, then you are going to need a very different approach than if you are targeting tourists visiting for a day. And if your customer demographic skews older, you might find that there is more demand for premium spirits and top-shelf liquors.

All of this thinking about your customer demographic will help to inform a lot of other factors about your bar, including the décor. For example, if you happen to operate a bar in a section of town with a well-known historical background, it might be helpful to include extra touches that indicate to customers that you are well aware of your neighbourhood’s history. If you are running a sports bar, and you live in a city with a rabid fan base for a particular team, this could influence everything from the types of promotions that you run to the types of employees that you hire.

Minimize your marketing and promotion costs

As often as possible, you’ll want to do marketing and promotion as cheaply as possible. This doesn’t mean that you need to be “cheap,” though. For example, if you are designing an advertisement for a local newspaper, don’t skimp on the resources to hire a talented graphic designer.

However, there are ways to be cheap without being “cheap.” One great example is social media, which can give you the same reach and scale of traditional media, at just a fraction of the price. This is where you can really leverage the other skills and experiences of your founding team. If one of the co-owners happens to be a great writer or is talented at making videos, then this is a natural candidate to spearhead your social media efforts online. This might include setting up a Twitter profile and sending out regular tweets about promotions at your bar or might include making fun YouTube videos with the potential to go viral. You might even find that your bartenders or service staff members enjoy being part of your bar’s social media efforts, especially on social platforms like Instagram or Snapchat.

Put together a realistic business plan

A good business plan is necessary, even if you don’t plan on raising capital from investors or bringing in new partners. Creating a sound, realistic business plan is great for focusing your efforts and energies, as well as realizing what is actually possible during the first year or two of operation. A good business plan will include an overview of budget projections, a summary of operational issues to consider, and highlights of how you plan to market and advertise your new bar.

After running the numbers, for example, you might see that your initial expectation of becoming profitable after just the first few months might need to be adjusted to reflect business reality. Or you might realize that your initial marketing approach doesn’t really appeal to your core demographic. And, finally, you might realize that you don’t have the big bucks required for a splashy promotional burst. It’s one reason why first-time bar owners are continually looking for creative and innovative ways to get the word out about their bars without actually spending on expensive print, TV or radio ads.

Motivate your team around a shared vision of the future

The more you can focus your team around a shared vision and mission, the more likely you will be to find success in the marketplace. Trying to be “all things to all people” is usually a mistake, because you end up appealing to nobody instead of everybody. So focus on what makes you special – and then make that a key part of how you motivate your team on a daily basis. When it comes to opening your first bar, that might just be the key to making your dream a reality.

2021 Bartender Spirits Awards submission now open. Enter your spirits by February 04, 2021, to get early bird pricing. Submit now.