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How to Start a Bar or Club Business

Starting a bar, club or pub business is a great way to give
your customers the perfect place to meet, drink and socialize.
The combination of a good location, friendly staff, great
selection and the right ambiance can really help set you
apart and make your bar successful.

Starting a bar, club or pub business is a great way to give your customers the perfect place to meet, drink and socialize. The combination of a good location, friendly staff, great selection and the right ambiance can really help set you apart and make your bar successful.

If you’re interested in starting a bar, club or other business that serves alcohol, there’s plenty to do. You’ll need to balance the competing demands of long hours, regulation, employees and competition. That's why we’ve put together this guide — it explores everything you need to do to set up your bar or club business and maximize your chances for success. We’ll cover:

  • Understanding the world of the bar or club
  • Deciding if you’re ready to start a bar business
  • Planning your bar business
  • Determining the best legal structure for your new organization
  • Following the various rules and regulations your business requires
  • Finding information on taxes and finances for your bar or club business
  • Hiring employees
  • Managing marketing and administration processes
  • Locating resources for your bar or club business
  • ... and much more

Understanding the World of the Bar or Club Business

Key Bar or Club Business and Background Data and Statistics

$25B

Revenue of bar and nightclub industry in the U.S. every year

1.1 - 1.4

Percent of sales increase each year

400K

People employs in the industry

200M

Barrels of beer are sold every year

32% Taverns
20% Bars and Lounges
19% Drinking Places
12% Cocktail Lounges
9% Nightclubs
  • There are over 65,000 bars and clubs throughout the U.S.
  • Each establishment employs an average of six to seven people.
  • The split of alcohol sold tends to be42% beer, 31% spirits, 10% wine and the remainder as food and non-alcoholic drinks.
  • Nearly 80 percent of establishments are small businesses employing fewer than 10 people.
This all points to the bar or club industry being ripe with new opportunities for focused entrepreneurs, so now might be the perfect time to dive into starting your bar or club business. Incfile is here to help you form your business and understand the ins and outs of owning an establishment like this.

Understand Your Bar or Club Market

The bar and club market is very much driven by your customers’ personal incomes and entertainment needs. It’s vital to look at the competition in your local area and find a niche you can fill. It’s easy for an area to become saturated with bars or clubs, so choosing the right location will be vital to your success.

What Your Bar or Club Customers Are Looking for

When you’re looking to start a bar or club, you have plenty of options to help you stand out. It’s important to cater to your customers’ needs. There are many different types of bars or clubs you could run; here are some suggestions:

Price

A brewhouse and pub where you make and serve your own beer

Quality

A wine bar with plenty of choices for medium- and high-end wine

Speed

A cocktail bar mainly serving spirits and mixers

Reviews

A sports bar where people can enjoy the big game

Speed

A nightclub or dance club where customers can move to the music

Reviews

A bar specializing in live music or comedy

Speed

A themed bar like an Irish, Mexican or British pub

Explore what’s already on offer in your area and think about what your ideal customer would want. Talk to people in the local area about the type of pub or club that might be missing.

The Challenges of Running a Bar or Club

Is Bar or Club Entrepreneurship for You?

The popularity and profitability of your bar or club will depend on balancing several different areas. You’ll need to have loyal, repeat customers, be good at marketing and provide a unique experience for your patrons. Fortunately, there are no large companies that dominate in the bar and nightclub industry — the combined revenue of the 50 largest bar and nightclub companies only accounts for 5 percent of all sales.

You’ll also have to work long hours and need to get involved in every aspect of the business, from accepting deliveries to training staff, resolving problems and serving beer. You can compete most effectively by understanding your local customers, providing the right atmosphere and experience and focusing on great customer service.

There are low barriers to entry, meaning new bars and clubs open fairly frequently, so there will always be competition. Margins are slim though, so unless a bar or club is well-managed, that competition may not last for long.

There are strict rules, regulations and compliance on serving alcohol that are different from state to state. One of the main issues new bar owners will face is getting the right licenses to serve alcohol and food. The type, cost and availability of alcohol licenses vary widely; you may also need a specialized entertainment license.

Bar and club locations must have proper zoning from local government, and you may face issues with community resistance due to patrons and noise. Additionally, local laws will dictate when you are and are not allowed to be open.

What Are the main Skills, Expertise and Experience to Be a Successful Bar or Club Entrepreneur?

If you want to run a bar or club, you’re going to need multiple skills:

Strong research abilities
Market research

So you know what your customers want and need

Good math skills
Negotiation

To get the best deals from suppliers and distributors

Powerful attention to detail
Employee management

So you can choose, hire and work with the best people

Excellent forecasting abilities
Customer service

To keep all your patrons happy

Excellent forecasting abilities
Marketing

So you can get your name out there and attract customers

Excellent forecasting abilities
Time management

So you have enough hours to do everything

Excellent forecasting abilities
Financial management

So you can get the most out of the thin margins

...and many more

You will be working long hours, often up early in the morning and staying past closing time. No two days will be quite the same, although many of those days are likely to be tiring! You will need to deal with a high staff turnover and be able to spot good servers and bartenders who will work well with your patrons.

Plan Your Bar or Club Business

Before you start your business, there are a few key areas you need to focus on. You will need to establish whether there’s a demand for your bar or club business services, look at potential benefits and pitfalls, understand how your business finances might look and ensure everything is in order.

In short, you need a business plan — here’s how to think about your business idea.

Do Market Research and Validate Your Bar or Club Products and Services

Before you launch your bar or club business, you need to understand if there’s a demand for what you’re selling. That means carrying out market research and “validating” your products and services. Here’s how to go about it:

  • Find market research reports for bar or club businesses: These types of businesses rely almost completely on locality and location, so understanding the residential and tourism markets in your region is critical.
  • Check out your competitors in the space: Having competitors is a good thing as it shows there’s a market. Additionally, in the bar and club scene there’s generally plenty of room for a niche establishment that provides a unique reason for customers to drink there.
  • Talk to patrons: Speak with potential customers to understand what they want from your bar or club and find out what’s currently missing in the local area
  • Identify your business’s unique selling points (USPs): These are the areas that will set you apart from competitors and encourage customers to come to you. This will mainly be driven by the type of bar or club you choose to run.
  • Get involved with business communities and discussion groups: Ask questions about bar or club businesses and meet up with other owners. You can find links to some excellent discussion groups later in the article.
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Understand Your Bar or Club Business Model and Financial Projections

All businesses need a business model, which details the way you will generate sales, provide services and make money. Think about your business model now, because it’s better to have that in place so you can start acquiring customers and generating revenue from day one.

You will also need to look at financial projections for your bar or club business. What are your expected sales and revenues? What is your profitability? How much money will you keep in the business to grow it? How much will you pay yourself and others? If you can, try to plan your revenue out for the next month, three months, year and two years.

Here’s what you can expect in an average day

Write a Business Plan for Your Bar or Club Business

Finally, you should put your business plan together. Business plans do vary slightly, but they should cover the following areas:

  • 1 An executive summary with the most important points from your business plan
  • 2 Your goals and what you hope to achieve with your bar or club business
  • 3 A description of your business, background information and context
  • 4 A market analysis and likely demand
  • 5 An overview of how your business is structured
  • 6 Your business model
  • 7 How you will market and sell your offerings
  • 8 Financial projections, revenue and profitability
  • 9 Appendices

Choose the Right Business Structure and Register Your Bar or Club Business

Now that you have all the background information for your bar or club business, it’s time to make it into a reality. That starts by choosing the right structure or “legal entity” for your business. In the US, there are four main business structures. They are:

Choose the Right Business Structure and Register Your Amazon Business

Sole Proprietorship

This is the "default" business
structure and is what your
business will be if you decide
not to create a more formal
structure. We don't
recommend this type of
business as it doesn't give
you the legal protections you need.

Limited Liability

Limited Liability
Company or LLC

The most common type of business entity. An LLC is fast, simple and inexpensive to setup and maintain. It protects your personal finances and assets and is a great way to start your real estate

Series LLC

Series LLC

This is a special type of LLC entity that's only available in certain states. It allows you to create "mini" LLCs, each with their own limited liability and separate assets, under the umbrella of a master LLC.

S Corporation

S Corporation

This is a more complex type of
business and isn't generally
recommended for smaller
organization.

C Corporation

C Corporation

These are the largest and most
complex types of businesses
and are far more than the
average entrepreneur or
business owner will need.

For more information on the advantages and disadvantages of different types of businesses, please see our in-depth guide. If you’ve still got questions, we’ve answered them to help you choose the right business structure.

In most cases our recommendation would be to create an LLC. We’ve got a complete guide to everything you need to do and we can set one up for your bar or club business. LLC formation does vary from state to state, but we’ve got you covered, wherever you are.

Setting up Your Bar or Club Business

Once you've legally created your bar or club business you’ll need to get some other things in place.

Location

As we’ve discussed before, location is everything for this type of business. It’s worth holding out for a great location, since local traffic and pedestrian patterns will have a major impact on your success.

Equipment

Running a bar or club is all about the furniture, fixtures and fittings. You’ll need to outfit your space first and then develop a good inventory of the stock you’re going to be selling. Depending on what your bar does, you may need other specialized equipment like commercial cooking and kitchen facilities or brewing gear.

Marketing

You will probably need to build a website and should also get professional branding, marketing and business cards.

Employees

You will almost certainly need to hire employees to help you out. Staff turnover in the bar and club business tends to be high and positions are not very well-paid, so expect to always be on the lookout for new servers and bar staff.

Our Start a Business Checklist will get your bar or club business going in the best possible way.

Conclusion

Although there are many challenges in running a bar or club business, they can still be an excellent way to generate revenue and create a great place for your patrons and employees. Find the perfect location, create the right type of bar, hire excellent people and share your establishment's uniqueness to really stand out.

When you’re ready to start your bar or club business, we’re here to help.