Pour 2 — Realize Your Business Goals. Do Your Research.

Going into this venture, I’m realizing some things off the bat. Owning a bar means long hours, attention to detail, and sacrificing vacations and weekends. But I’m certain that it will result in a financially successful venture. My confidence stems from the fact that my partner and I each have a large network of friends to rely on. We’re both great with people, and definitely outgoing. I just hope those characteristics help translate into a steady stream of income for our operation.

Do The Due…Diligence
This is easy for me to say. The location we found was previously a bar, and a bar that did well at that. However, the viability of the location is somewhat debatable (I’ll explain more below). But the fact that it will require less capital to get off the ground and that it was an established bar is a huge plus…so much so that I’m betting it will offset any doubts about our selection. Here are some things we considered before settling on the spot.

• Know Your Customer. The demographics of your surroundings is an important factor. It is really important to know the area well. The leasing company provided us with some demographic information, but determining its plausibility is really up to you. If you’re unfamiliar with the area, drive around and see what audience you could potentially bring. Focus on your target audience to develop your theme. Our desired clientele are young professionals between the ages of 25 and 40 with incomes of $30,000 and greater. (In San Antonio, that may be equivalent to $50,000 and greater in another market…the cost of living here is relatively low).
• Know Your Competition. They May Hold The Key. In some cases you can incorporate ideas from your competition. Choose a few bars that will act as benchmarks. It is also a good idea to know what kind of sales you can expect to generate. Usually sales information is public. We used that to create sales projections. In Texas, bars and restaurants are required to pay 14% on gross receipts. So, we simply divided the number in their records by 0.14 to get a “gross receipts” number. We averaged those revenues from bars we thought we could match, and rounded down to be conservative.
• Location, Location, Location. Earlier I mentioned that the “location is somewhat debatable”. Well, the bar is located on the edge of an affluent area of town. Just down the street, there are some low [not Section 8] to middle income apartments. While it’s not cool to make assumptions about the people that live there, you have to. Focus on the image you want to keep and cater to that “ideal” crowd. Our location has a huge patio and a great area for live music. These were important factors in our decision as well.
• Surround Yourself With Experience. Nevermind my 3 summers’ worth of experience waiting tables…that’s not knowing how to operate a bar. Neither my partner nor I have experience in the bar industry. We were lucky enough to hire someone with over 20 years of experience managing bars and restaurants. Needless to say, we will rely on him almost completely. It is also a good idea to communicate with suppliers. They can provide valuable information about your customers and what they like to drink.
• Licensing. It is important to be aware of every piece of red tape involved in obtaining a license. We chose to commission the services of a liquor licensing agency to complete this task. We did so at the suggestion of my bar owner friend. While you pay a fee for the service, you save time and it ensures the process is completed correctly. The one we used happened to offer to help with the formation of our LLC.
• Inventory, Equipment, Operations & Budgeting. In addition to the experience of our general manager, we “hired” a good friend of mine who happens to be an architect. He has been involved in the design and organization of over 15 bars. His experience included knowledge of codes, health compliance, equipment placement and logistics, and of course design budget. He gave us a relatively accurate estimate of how much we may spend giving our bar a facelift and optimizing space behind the bar. His advice also included a 20% buffer to account for unexpected expenses.

According to the several months of research we have invested into this plan, these are the most important steps to getting started. To date, my partner and I have formed an LLC and opened a bank account that is ready for our initial investment. We have yet to sign a formal lease agreement, but our Letter of Intent has been signed and submitted. Once our location is certain, our licensing agency will begin the approval process for our liquor license which will take approximately 60 days.

If you missed Part 1…excuse me, Pour 1 of this series…check it out:
Pour 1: Can I Buy You A Drink

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