How To Open Your Own Bar: 11 Steps To Starting A Successful Bar Or Sports Pub
Thinking of opening a bar or pub? We cover everything you need to know, including funding options, POS equipment, & tips on how to run your bar successfully.
If you’re wondering how to open your own bar, we’re here to help; our step-by-step guide takes you from idea to grand opening. Just as with any small business, it takes a lot of planning and work behind the scenes to get your bar started. But when you’re providing a space for people to watch the big game with friends and family over drinks and snacks, it’s easy to enjoy what you do.
Read on to learn how to plan, fund, and open a bar or sports pub successfully.
Table of Contents
- How To Open Your Own Bar In 11 Steps
- Step 1: Create The Right Branding For Your Bar
- Step 2: Find A Location For Your Bar Or Pub
- Step 3: Create A Business Plan
- Step 4: Register Your Bar Or Sports Pub
- Step 5: Getting A Liquor License For Your Bar
- Step 6: Seek Funding To Open Your Bar
- Step 7: Create Your Bar Or Pub Menu
- Step 8: Purchase Your Equipment
- Step 9: Select Your POS System
- Step 10: Hire Employees For Your Bar Or Pub
- Step 11: Bolster Your Bar’s Web Presence
- How To Open A Bar FAQs
- How To Open Your Own Bar Successfully
How To Open Your Own Bar In 11 Steps
With the bar/pub market share expected to increase by $24.6 billion by 2026, plenty of opportunities exist. And with the average net profit margin for a bar being a healthy 10-15%, success is rewarded in this industry. This article shares 11 key steps for starting your own bar, which can be an exhilarating and lucrative path to take.
We’ll go over what you need to legally open a bar, expenses to start and maintain your business, and the importance of a business plan. We’ll also help you decode one of the biggest pieces of the small business puzzle: getting financing for your new business.
Step 1: Create The Right Branding For Your Bar
One of the first things you need to do before you take off running is to visualize a name, a theme, and an overarching concept for your bar. As you’ll see, these considerations are all interrelated.
What Type Of Bar Do You Want To Open?
Do you picture yourself running a neighborhood pub where everybody knows your name? Or maybe you’d rather open a thriving nightclub where young club hoppers from around the city come to dance the night away? Knowing what type of bar you want to open helps you plan out additional details, such as where you plan to open your bar and what kind of patrons you’d like to attract. Speaking of which…
Who Is Your Ideal Bar Patron?
This question is inseparable from the question of the sort of bar you want. For example, if you want a younger crowd, a nightclub in a trendy part of town makes sense. If you want to attract an older, more sophisticated crowd, consider opening a wine bar, martini bar, or cigar bar in a thriving downtown area. You could also target sports fans by opening a sports bar or draw in foodies with a new gastropub.
Choosing the type of bar you want to open and nailing down your target audience first will help you accurately plan everything from the design and layout of your establishment to your name and logo.
Choosing A Name For Your Bar
Because it’s your bar, you’re free to name it anything you want. However, you want to make sure that you choose a name that reflects your concept. “Jim’s Tavern” may incorporate your name, but it doesn’t stand out.
When brainstorming ideas, think about the audience you want to bring in and pick an attention-grabbing moniker — a name that lets customers know what to expect when they walk through the doors.
Step 2: Find A Location For Your Bar Or Pub
One of the most important first steps in opening your own bar is choosing a location. There are a few options you have at this stage of the game:
- Purchase an existing bar
- Start from scratch
- Buy a franchise
Each option has its advantages and disadvantages.
Purchasing An Existing Bar
If you purchase an existing bar, you inherit the existing clientele and may see immediate income. However, you could pay a steep premium if the bar is extremely successful at the time of sale. You may also rack up high costs if the bar doesn’t mesh with your vision and you have to pay for renovations.
Creating A New Bar Or Pub From Scratch
If you start from scratch, you’ll be able to see your vision through from start to finish. However, opening your doors may take many months (or even a year or longer). Costs can quickly escalate if you have to completely renovate a space or build a new bar from the ground up.
With this option, careful planning, budgeting, and knowledge of the bar and restaurant industry are needed for the highest chance of success.
Purchasing A Bar Franchise
Finally, you could purchase a franchise. This option could shield you from some of the mistakes you’d almost certainly encounter if you attempted to go it alone. However, you won’t be fully able to showcase your creativity with a franchise.
Finding a location takes planning and a dedicated eye on financials. Sure, putting your bar in a trendy neighborhood could help your business become your city’s next hotspot, but real estate costs may be prohibitively high. Before you put down money on a location, do your market research and understand the costs.
Step 3: Create A Business Plan
Every successful business starts with a solid business plan, and a bar is no exception. Your business plan acts as a blueprint for starting, operating, and growing your business and is necessary if you plan to apply for business loans from a bank or other lender.
Here’s a suggestion that might help you start this process: Create your one-page business plan first. When you start with a condensed business plan, you’ll have something succinct to pitch to potential partners, investors, and customers. You’ll also have a foundation from which to build a full business plan later.
When it comes time to create your full business plan, know that while no two business plans are exactly alike, there are some standard sections you should include:
- Executive Summary: Basic information about your business and why it will be a success
- Company Details: Specific details about your business
- Organizational Chart: An outline of your company structure
- Marketing Strategy: Your plan for how you will market your business
- Financial Projections: Show the financial outlook of your business
Your business plan should showcase your business goals and serve as a map for you to follow, keeping your business on the right path. Lenders will want to see a business plan that demonstrates thought, intelligence, research, and reasonable plans for future success.
Step 4: Register Your Bar Or Sports Pub
Before you open your bar and begin serving customers, you have to register your business.
Register Your New Bar
First things first: Register the business’s name with your state via the county clerk’s office in the state where you’ll operate.
Choose A Legal Structure
Next, you’ll need to determine your bar’s legal structure. Do you plan to structure your business as a limited liability company or a corporation? Your business structure will determine how much you pay in taxes, what paperwork needs to be filed with the government, and your personal liability.
If you’re unsure which structure is right for your new business, consult with an attorney, accountant, or business counselor.
Obtaining Bar Licences & Permits
Before you can legally open your business, you’ll be required to obtain the proper licenses and permits. Because your bar will serve alcohol, a liquor license is required. If your bar serves food, you’ll need a license from the health department. You can find out more about the requirements in your area by contacting your state Department of Commerce.
Your business will also need to be registered with the state revenue office and the Internal Revenue Service. You’ll also need to apply for an Employer Identification Number (assuming you’ll have employees) and a sales tax permit.
Step 5: Getting A Liquor License For Your Bar
In the previous section, we touched on acquiring the right permits and licenses. One of the most important things you need to open a bar — if not the most important thing, assuming you want to sell alcohol legally — is a liquor license. This should be a top priority, as getting approval from your state’s Alcohol Beverage Control agency typically takes at least one month. In some cases, it may take up to six months to get approved.
Steps To Getting A Liquor License
The steps required to obtain your liquor license vary by state. In all states, though, you’ll have to fill out an application. You may be required to submit additional documentation with your application, such as a certificate of incorporation, your proposed menu, and the certificate of title for your bar. You may also be required to pay a processing fee.
State Fees For Your Bar’s Liquor License
Once your application is reviewed and approved, you’ll have to pay for your license. Fees vary by state and range from a few hundred dollars to several thousand dollars. Your license will last for at least one year, and you’ll need to pay a fee when it comes time to renew.
Even though getting your liquor license is a hassle and can get very expensive depending on your state, this is a crucial step that can’t be bypassed. To learn more about the process, fees, and type of license required for your business, contact your state ABC agency.
Step 6: Seek Funding To Open Your Bar
Very few small business owners have the resources to launch a bar on their own. Many such entrepreneurs will want to check out the best startup loan options for small businesses. Of course, even after you launch your bar, there will always be a need for more capital, whether an emergency has popped up, you need to expand, or a slow period has affected your day-to-day operations.
Even if your credit history is blemished, your startup has no business history, or you face other challenges, there’s funding out there if you know where to look. Our post on the best startup business loans for bad credit is a helpful resource, but let’s go through some of your other options.
Personal Loans For Starting A Bar
Getting a small business startup loan from a bank or other lender can be tough (but not impossible — have a look at our startup business loan reviews if you’re interested). Your options include SBA loans for startups, but these loans can be very difficult to land — especially if you have a short time in business or low annual revenue. Of course, depending on your circumstances, it’s not impossible. If you’re seeking an SBA startup loan, check out our piece on current SBA loan rates.
However, if you have a solid personal credit profile, more low-cost loan options are available to you. Rather than going directly for a business loan, you might want to apply for a personal loan for business purposes. With a business loan, lenders consider your time in business, personal and business credit histories, and annual revenues. But with a personal loan, your personal credit score and income are used to determine if you qualify.
Recommended Option: Upstart
- Lower borrower qualifications than what banks require
- Rates tend to be inexpensive
- A fast and easy application process
- Low borrowing amounts
Upstart offers personal loans of between $1,000 and $50,000. These loans have competitive interest rates (5.35% to 35.99%) based on your creditworthiness. Repayment terms of 36 or 60 months are available.
To qualify for an Upstart personal loan, you must meet a few basic requirements, including having a valid email address, verifiable personal information, a source of income, and a US checking account. You also have to meet the lender’s credit requirements, which include:
- A credit score of 300 (a very low minimum requirement, relatively speaking)
- A solid debt-to-income ratio
- No bankruptcies or public records
- No delinquent accounts or accounts in collections
- Six or fewer inquiries on your credit report over the last six months
Lines Of Credit
A more traditional financing option is a flexible line of credit. A line of credit is a revolving account, so money becomes available to draw again as you repay the lender. A line of credit can be used to purchase supplies and inventory, cover an emergency, or cover payroll or daily operational expenses. The one drawback is that business performance is typically a qualifying factor. If you haven’t made any sales, you won’t qualify, so this funding option only becomes available with time (often six months or so).
When you receive a line of credit, a lender provides you with a credit limit. You can make draws against the line of credit up to your credit limit. Once you initiate a draw, the lender transfers the money directly to your bank account. Over time, you’ll make payments that are applied to the principal and any fees and/or interest charged by the lender.
Recommended Option: Fundbox
- Funds are disbursed quickly
- The quick and easy application process
- Save money on fees if you pay early
- High borrower requirements
- Weekly repayments required
You may qualify to receive a line of credit of up to $150,000 through Fundbox. Fundbox lines of credit have no restrictions and can be used to cover any business expense. The Fundbox application process takes just minutes, and it’s easy to qualify. The lender focuses on the performance of your business — not your business or personal credit history — so even borrowers with credit challenges can qualify.
You do, however, have to meet the following requirements:
- Own a US-based business
- Have a business checking account
- At least six months in business
- At least $100,000 in annual revenue
- A personal FICO score of 600+
Once you draw on your line of credit, automatic drafts are made weekly from your linked business checking account. If you do not use your funds, you do not pay. Repayment terms are 12 or 24 weeks, and fees start at 4.66% of the total borrowing amount for 12-week terms and 8.99% for 24-week terms.
Business Credit Cards
Business credit cards work just like personal credit cards, only they’re used to pay business expenses. Business credit cards are great for emergency expenses, recurring payments, or whenever your cash flow is a little short. And if you have a rewards card that gives you cash back or other rewards for the spending you were going to do anyway, all the better. You may want to review our picks for the top business credit cards, along with the business credit cards with the best rewards.
If approved for a credit card, your lender will set a credit limit. You may spend up to this credit limit anywhere credit cards are accepted. Each month, you’ll make a payment that is applied to the principal, interest, and fees charged by the lender. As you pay down your balance, funds will become available again. If you don’t have a balance, you won’t pay any interest, although you may have to pay annual fees depending on the card you select.
Recommended Option: Chase Ink Business Unlimited
Chase Ink Business Unlimited
- No annual fee
- 0% APR on purchases for 12 months
- Unlimited 1.5% cash back on all purchases
- No bonus categories for earning extra rewards
You may qualify for the Chase Ink Business Unlimited credit card if you have good-to-excellent credit. This rewards card provides you with unlimited 1.5% cash back on all purchases made for your business. As a new cardholder, you will also be eligible to receive a $750 cash back bonus if you spend $7,500 within three months of opening your account.
The Chase Ink Business Unlimited card comes with a 0% introductory APR for purchases for the first 12 months. After the introductory period, the card has a variable APR of 13.49% to 19.49%. This card comes with no annual fee. You can also get additional cards for employees at no extra cost.
Rollover For Business Startups (ROBS)
If you have a retirement account, you can legally leverage these funds to pay your startup costs without facing tax or early withdrawal penalties. With a Rollover for Business Startups (ROBS) plan, you can put your retirement account to work for your new bar.
The best thing about ROBS plans is that you are using your own money, so you won’t have to pay interest on a loan. You will, however, have to pay a monthly fee to maintain your account, and you also risk losing your retirement funds if your business is unsuccessful. Read our piece on rollovers as business startups to more fully understand the process.
Recommended Option: Benetrends
- Financing available for qualified startups
- Applicants can quickly get prequalified
- Long-term financing available
- High setup fee
- Some additional fees charged
Benetrends is a ROBS pioneer. Benetrends can get the capital you need from your qualified retirement plan with just four easy steps. And with the Rainmaker Plan, you can have your funding in just 10 days. To qualify, you must have an eligible retirement plan with at least $50,000. Most retirement plans are eligible, except for Roth IRAs, 457 plans for non-governmental agencies, and distribution of death benefits from an IRA other than to the spouse. There are no requirements for time in business, annual revenue, or personal credit score.
To get started with Benetrends, you’ll be required to pay a setup fee of $4,995. After paying this fee, your C-corporation and ROBS plan will be set up. After your plan is set up, you’ll be required to pay a monthly maintenance fee of $145. This fee covers ongoing support and services, including legal support, audit protection, and compliance.
Paying your vendors will be an ongoing expense for your business. You have multiple options available to pay your vendors. You can pay out of pocket, use a credit card or line of credit, or take advantage of purchase financing.
With purchase financing, your vendors are paid immediately by the lender; you then repay the lender over a set period. The lender will add fees and/or interest to your loan balance for paying your expenses upfront. By using purchase financing, you can pay your vendors immediately to receive the supplies, inventory, or services you need for your bar. You can then spread out your payments over time to make these purchases more affordable.
Recommended Option: Behalf
- Relatively low borrower qualifications
- No prepayment penalties
- Builds personal credit
- Rates can be expensive
Behalf offers purchase financing of up to $50,000 for qualified borrowers. Repayment terms of up to 180 days are available. Behalf charges fees of 1% to 3% of the borrowed amount per month for using this service. There are no additional fees. You can repay on a weekly or monthly schedule.
Behalf’s financing can be used to pay merchants for inventory or services. However, there are some restrictions. You can’t pay bills, cover payroll, or pay other existing debt through Behalf. As for the application process, Behalf analyzes your business’s performance when making its approval decisions. There are no requirements for time in business or business revenue. Behalf doesn’t advertise a minimum personal credit score, though your credit history will be considered during the application process.
This option carries some risks, but if you have some money stashed away in your savings accounts, now may be the time to put these savings to use. When you use your own money, you aren’t indebted to a lender, and you won’t have to worry about scheduled payments, interest, or fees. On the downside, if your business is unsuccessful, you lose part — or all — of your savings. Tread carefully!
Loans From Friends & Family
Another option you can pursue at your own discretion: You could pitch your business idea to a friend or family member to see if they’re interested. However, don’t simply have a casual conversation asking to borrow funds just because you share a personal relationship with that person. Instead, give them your business plan and present your pitch just as you would with a bank or other lender. Show them why you think your business will be a success, and give them a good reason to invest in you.
If you come to a loan agreement, get everything in writing, including the total borrowing amount, rates, and terms of the loan. Put your personal relationship aside, and be sure to follow all terms of the loans just as any responsible borrower should.
Step 7: Create Your Bar Or Pub Menu
Before you open your bar, you need to know what food and drinks you plan to serve and what equipment you’ll need to prepare each menu item. We’ve published a guide on how to create a great restaurant menu, but here’s a quick summary.
When planning your menu, think about your chosen theme and clientele while keeping your budget in mind. When deciding on drinks, know that what you should serve will depend on your bar’s theme. Likewise, if your bar will serve food, think about what types of food will be appropriate in your instance — neighborhood bars and gastropubs will have different needs. Once you’ve decided what to serve, talk with suppliers to get cost estimates. As you approach opening day, you’ll place orders with your selected suppliers.
If your menu starts looking a bit long, a simplified menu can be good for both your customers (fewer options to agonize over) and employees (quicker ordering, a more streamlined kitchen).
Another thing to consider is that the COVID-19 pandemic has led many states to legalize to-go alcohol sales. Depending on your type of bar, your customers may want an online ordering system — not having one may mean you’ll lose business. If you implement online ordering, just make sure you comply with your state’s liquor laws. For instance, most states that allow to-go alcohol sales require that food be ordered with any alcoholic beverages.
Step 8: Purchase Your Equipment
Once you’ve secured a location and have moved further into building your bar, it’s time to think about the equipment and fixtures you need. What your bar needs depends on the theme you’ve selected and what you’ll be serving, but some items you may consider include:
- Bar and barstools
- Tables and chairs
- Industrial ovens and other kitchen equipment
- Coolers, refrigerators, and ice bins
- Blenders and other bar equipment
- Big-screen TVs
- Sound system
- Microphones and other audio equipment
- Beer taps
After you’ve leased, purchased, or built your building, create a detailed layout to ensure that you have enough room for everything required to run your bar while leaving enough space for your patrons.
As you grow your business and need to add or update equipment, consider equipment financing to make these expenses more manageable. If you’re interested, we’ve posted an article explaining equipment financing basics as well as a table that lets you compare equipment financing options.
Step 9: Select Your POS System
Gone are the days when most businesses just needed a cash register or two for their customers. With the rising use of credit cards, debit cards, and mobile payments, your bar will need a more advanced system for accepting payments.
A good point of sale (POS) system is all-important for a new bar. A POS system lets you take orders and accept payments, but that’s not all. Some advanced POS systems have bar-specific features, such as built-in tipping, handheld mobile card readers, inventory management that allows you to track your stock levels, and an open ticket system for creating bar tabs. Also, the ability to accept contactless payments is increasingly important.
Your POS system plays a crucial role in your bar’s success, so it’s important that you know what to look for before choosing a system. Have a look at our top POS systems for bars and pubs.
Step 10: Hire Employees For Your Bar Or Pub
To make sure your bar is a success, you need to employ the right people. If you haven’t done so already, you need to apply for an Employer Identification Number for tax purposes. Next, determine how many employees you need and their roles in your business.
Hiring Bartenders, Servers & Kitchen Staff
You’ll need at least one bartender that prepares and serves drinks. You’ll also need additional bartenders based on the number of bar areas you have and how many customers there are. If you offer any made-to-order food, you will also need a kitchen staff. This includes at least one cook, but you may also need prep cooks, dishwashers, and other staff as your business grows.
You’ll also need servers to serve customers not seated at the bar. The number of servers you’ll need will be determined by the size of your bar and how busy it gets. And while your servers may be able to handle cleaning tables at first, as your business grows, you may want to add a busser (or two) who will be responsible for cleaning off tables for new customers.
Additional Staff For Your Bar
You might need additional staff. For example, you may hire a door attendant that checks IDs at the door or a security guard to handle problems arising from customers who’ve had one too many.
You also need at least one manager to oversee the staff. A manager’s role may include hiring employees, firing employees, training, making schedules, and making sure that all staff members are doing their jobs properly.
Creating An Organizational Chart For Your Bar
Before you start seeking job applicants, you should create an in-house organizational chart to know exactly who you need to hire. Do some research to determine what salaries and benefits you will offer.
Finding Bar Employees
Unsure of where to hire new employees? You have a few options. First, post a job ad on online job boards or classified ads to find potential employees. This is an inexpensive (often free) way to find candidates.
You can also ask for referrals. If you know someone in the industry, ask if they have any new hires to recommend. Don’t know anyone in the industry? Ask other colleagues, family, and friends for recommendations. And once you’ve hired employees, remember that staff retention is important to your ultimate success, so treat your employees fairly.
Step 11: Bolster Your Bar’s Web Presence
After completing all of these steps, you’ll be that much closer to opening your bar. Of course, you’ll also have to market your new bar online. The easiest way to do this is through social media. Use Facebook, Instagram, Twitter, and Yelp to reach your target audience. As you grow, consider moving past the free advertising you get through your posts and pictures and investing in advertising on these platforms.
You also need a good website. Make sure that your website reflects your bar’s theme and the image you want to project. Many DIY website builders are available should you want to create your bar’s site yourself. Site builders such as those in our top easiest website builders article make it easy to build a professional website without prior web design experience.
Make sure the site includes the following:
- Your bar’s address
- Hours of operation
- Phone number
- Social media links
If you offer online ordering, put that front and center.
Lastly, remember that word-of-mouth is one of the best forms of advertising for a bar. If your customers love your drinks, food, service, and atmosphere, they’ll tell their friends. Of course, they’ll tell their friends if they hate it all, too. Keep customer satisfaction high so that customers online and off will have nothing but positive reviews for your bar.
How To Open A Bar FAQs
How To Open Your Own Bar Successfully
Building a successful bar takes hard work, planning, and, as the events of the last few years demonstrate, a pinch of good fortune and timing to boot. But for those who enjoy the social aspects of nightlife, making a living in the bar scene will offer more actualization than running a hardware store.
To all you aspiring bar owners out there, remember that while your bar won’t make you an overnight millionaire, a successful run can set you up with a 10-15% net profit margin and the satisfaction of creating a thriving social space for your community.