By Kyle Thacker, Contributor
One of the most important steps in opening a bar is also one of the most overlooked. That’s writing a business plan for a bar. The idea of owning a bar is exciting. And after the second or third glass of whiskey that fuels a bar owner’s dream, the buzzing excitement can turn into brazen confidence. That yes, opening a bar is a great idea. And as success is concerned for your bar of dreams: If you build it, they will come.
But too many would-be bar owners ignore the truth that opening a bar is a serious business investment. To help the dreamers, let’s explore how to write a business plan for your bar and why it’s so important.
What is a Bar Business Plan?
A business plan is a detailed document that outlines a business’s goals and the strategies that will be used to achieve them.
For a bar, this roadmap will include elements like the concept of the bar, bar and menu design, location, financial details, market conditions, staffing needs, and background information on current investors and the management team.
It should be properly formatted and organized to communicate a path to success.
Why is a Business Plan Important for Bars & Restaurants?
There are a few reasons that make a business plan a crucial step in opening a bar.
Attracting Investors. Opening a bar is expensive. It can cost between $110,000 to $850,000 and more according to Investopedia. The high startup costs require investments from others outside of the principal owners. Whether you’re seeking investment from private investors or getting a credit line from a bank, a detailed business plan will be a requirement for raising money so potential investors can evaluate their risk.
Providing Focus. Another benefit of business plans is that it will help owners work through issues and define the concept and goals of the bar. Constructing a business plan will force you to make decisions about the strategies needed to run a successful business.
Understanding the Market. An important part of a business plan is market research. It’s critical to understand the market you’re entering as a business. This includes real estate costs, neighborhood demographics, other businesses in the area, marketing opportunities, and local competition.
How to Write a Business Plan for a Bar
Writing a business plan might feel like a flashback to writing papers in school for hopeful bar owners. It requires a lot of research, strong communication skills, proper formatting and must be organized so your plans are easily understood by investors and your team.
Here are the steps and requirements of a business plan.
Branding. All branding that has been developed should be used to in the business plan. Adding a logo and tagline to the cover page of the plan will help introduce potential investors to the brand and concept, establishing a point of view right from the start.
Table of Contents. Providing a table of contents for the document is good practice that will help whoever is reading through your business plan.
Summary of Concept. What is unique about your bar that sets it apart from other establishments? Is it a cocktail bar? A craft beer bar with a travel theme? The bar concept is the hook that will attract customers -- and investors -- to spend time and money at your venue.
Make sure this summary is clear and provides insight into why your concept is a fit for the market you’re entering and the customer demographics you plan on attracting.
This is a summary, so you should include high-level analysis of the market and concept that will then be explored in more detail later on in your plan.
Market Analysis. This is an important section for any investor. This is where the bread is buttered, so to speak. Your market analysis will provide a great selling point (or a reason not to invest) to investors because it will address some of the most important financial factors for your business.
Local demographics: This section of market analysis is where you will detail your target guests. Is this a bar for young adults? If so, is there a college campus nearby or in a neighborhood that cater to recent graduates? Or are you targeting a higher-end clientele that may live in the neighborhood or visit the area for shopping, theater shows, or for business?
Make sure to answer why and how your target customers will visit your bar. Building customer personas is a great way to help with this.
Local competition: What other bars and restaurants are in the neighborhood? How will you differ from them and attract business? Will you be able to benefit from local competitors through high volume of foot traffic? Or being a bar that is visited for drinks after dinner at a neighboring restaurant?
It’s also helpful to include the customer demographics that those competitors cater to, the price points they operate within, and how your concept relates to these factors.
Marketing strategies: How do you plan on marketing to this, well, market? Will you handle marketing in house or work with a PR company? Will it be focused on a digital marketing strategy like SEO? What will your website look like? Social media activity?
Defining your marketing strategy is important for investors as well as for yourself and your marketing team. If you have connections to any publishers and influencers in the bar industry, this is a great place to outline those connections. You can also include potential marketing expenses and what your target customer acquisition cost is to make marketing effective.
Operations. This section will detail practical information for investors. It will share business hours and why those hours fit within the market analysis. It will also include the number of staff needed to operate the restaurant and expected labor costs associated with staff.
It’s good to include outlines of management positions and what jobs and tasks will be assigned to different management positions. The management structure, including your role as an owner, will help investors understand how the restaurant will be run.
In the operations section you can also include location information like proximity to stadiums, theaters, or convention centers, as well as accessibility to other traffic sources like interstate highways, business and shopping districts, and how these factors will affect business operations.
This is also a good place to include any restaurant technology you plan to use to help manage operations. Outline the costs associated with specific software and platforms and how it will benefit the business.
For example, one of the initial startup costs for opening a bar is ordering alcohol and beverage products. This means inventory control is important. Detail any potential bar inventory software you’re considering using and how it will help limit the costs of managing inventory.
Management & Investor Personnel. This section will introduce any members of the management team or investors that are already involved with financing the project.
Provide short bios for the personnel involved. It’s good to include any previous bar or restaurant experience they have, and make sure to highlight their successes.
For investors, include their experience investing in similar bar concepts and their track record of success. Also include if these investors will be active in running the business or are just silent investors providing financing.
Now that you’ve gotten an introduction on what to include in a bar business plan, let’s recap some of the most important takeaways.
Business plans are critical for attracting serious investors. Take time to conduct proper research and put care and effort into writing the business plan so your concept and strategies are clearly communicated.
Research is the most important step. Detailed research will help you make the best decisions about your business strategies and better understand the roadmap to success.
A bar is a business! Remember, opening a successful bar isn’t easy. It’s a commitment and even the best plans don’t always pan out as desired.