A helpful guide on how to start a bar

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Congratulations! If you’re reading this, you must want to know about how to start a bar and become a business owner. While being a bar owner is certainly a lot of work, it’s also rewarding. After all, running a bar is like having a playground and an endless puzzle all in one. Done right, it can be a gratifying challenge that’s profitable to boot.

Note the word “puzzle.” There are countless pieces to a successful bar—maybe more than many other small businesses. This complexity is due to a combination of licensing requirements, business structure options, and many other details that need definition in a business plan before a single drink gets poured.

So, let’s discuss the finer aspects of how to start a bar. Let’s start with building the business plan and then move to gearing up for the grand opening.

Build your business plan

Before you think about what your signature beverage will be, you’ll need to build a business plan for your bar. It should be as detailed as possible but provide significant room for flexibility. For example, you should know what type of business you’ll establish and what type of bar you’ll run. But defining exact revenue or operating costs can come later since surprises are guaranteed.

Let’s look at the various components of a good bar business plan, starting with the fun part: the bar concept.

Establishing the bar concept

Every bar has an idea behind it and fits into a category. You probably have the kind of bar you’d like to run in mind. Common examples include:

• Sports bars that serve a wide variety of drinks and food and have many big screens so patrons can watch the game.
• Neighborhood bars that are typically down-to-earth establishments with simple menus and a laid-back vibe.
• Beer bars that offer a wide variety of beers on tap and in bottles.
• Wine bars that … well, are all about wine by the glass.
• Specialty bars like mixology or craft cocktail bars, which highlight bartender skill and serve classic and custom cocktails.
• Pubs that combine a bar and a restaurant, often with a homey feel.
• Clubs that feature music and dancing, and can be huge and thematic.

Some bars stay within one category, while others look like a Venn diagram of multiple categories. What you choose will depend on several factors, including your location, personal preference, target market, and how much focus you put on food service.

Your concept should consider the demographics and zoning laws in your area. A dance club doesn’t make much sense in a single-family home neighborhood, nor does a spendy wine bar make sense in an industrial park.

During this phase, you should decide on the bar’s name, what décor you intend to have, and a rough draft of your drink menu and food offerings.

Deciding on a location

Choosing the right location is crucial for any business, and a bar is no exception. The perfect location would put your establishment within walking distance of a large customer base. But whatever the case, your bar needs to be visible and findable—unless you’re opting for a secret club underground in a major metropolitan area.

One of the most important decisions you’ll make is whether or not to purchase an existing bar, renovate another piece of developed real estate, or build from scratch. If you build from scratch, you’re likely looking at significantly higher startup costs—but you also have a clean slate to design a new bar.

Choosing what type of business to be

Deciding on the legal status of your business is another critical step in developing your business plan. While a sole proprietorship may be more straightforward on paper in many areas, it leaves you open to liability issues that other business licenses could help mitigate. A limited liability company or LLC, for example, means that legal liability remains solely with the company and not with the owner. A sole proprietorship losing a lawsuit can mean the owner loses personal assets, for instance.

We strongly recommend consulting a lawyer and accountant on this issue since the laws between each state can differ significantly, and Yelp is not in the business of giving legal advice.

Getting the liquor license sorted

The process of getting a liquor license varies from state to state and even by county or city. Familiarize yourself with local laws while crafting your business plan, as there’s no worse fate for a bar than to unknowingly break alcoholic beverage control laws.

Seek an attorney’s advice to make sure you have all your bases covered. When it comes to the law, guessing isn’t good enough.

Developing a clear financial picture

As we mentioned, you don’t need the precise details of income and expenses before opening your doors. But having a general idea of your costs, what revenue you can expect, and how to set your prices is a must.

For example, many establishments follow a simple three-times-cost model for menu pricing and to ensure bar profit. If you’re putting together a basic revenue concept for your business plan, this is a solid place to start.

Unless you’re starting with a generous sum of cash, you’ll likely want to obtain a business loan. Lenders will want to see your business plan in detail, including anticipated startup costs, revenue potential, inventory and staff costs, and liquor license costs. You’ll need to be able to determine a strong potential for turning a profit to increase your odds of being accepted for the loan.

Get up and running

Once you’ve developed your business plan, found a location, and secured funding, the fun can begin. Let’s assume you’ve purchased an existing bar that you’re going to use for your new business.

Once you have a clear idea of what renovations you need to make—including kitchen equipment replacement and décor changes—you can begin hiring staff. You should first hire your bar manager who can give advice and assist with the opening.

If you prefer to be hands-off, you can leave further hiring to your new bar manager. This choice depends on your preferred style of management and how intimate you intend to be with day-to-day operations.

You’ll also need to consider point of sale (POS) systems, entertainment options like pool tables and TVs, and sourcing glassware and other supplies.

Advertise for the grand opening

When the stage is set and the curtains are ready to rise, you’ll want to make sure the word is out about your bar. A combination of social media advertising and good old word of mouth can help make your opening day a success. Consider some grand-opening special promotions to connect with potential customers, like giving away freebies at happy hour or hosting live music or other entertainment.

How to start a bar on the right foot

Starting a bar is an evolutionary journey from conception to grand opening. When you’re planning your new bar, use modern tools to your advantage. The Yelp Guest Manager platform can be a huge leg up. Restaurants that start using Guest Manager paired with Yelp Ads experience up to 2.3 times the traffic on their Yelp Business Page.*

Guest Manager syncs with a number of different POS systems and helps with table management, takeout and delivery options, and much more.

Want to see how it works? Curious if it’s right for you? Reach out for a free demo and we’ll show you around. One of our reps may even end up being a regular at your own bar.

*Yelp Internal Data 2021. Based on average results from a sample study of restaurants that purchased Guest Manager and Yelp Ads for at least 90 days (in Q2-Q3 2021) versus the 90 days prior to making a purchase. Results may vary.