Start Your Bar

Enter the bustling world of bar ownership with our handy how-to guide. Starting a bar typically requires an initial investment ranging from $125,000 to $850,000. To thrive in the nightlife industry, you’ll need a deep understanding of the beverage market, adept customer service skills, and a grasp of staff management and legalities. And, keep in mind that your bar should be fun and entertaining to keep drawing customers back through your doors.

While profit margins in the bar business can swing between 10% and 30%, the average earnings you can anticipate will depend heavily on your location, clientele, and unique offerings. But remember, as with any enterprise, patience is key — the time to break even with a new bar varies, but with dedication, business sense, and a touch of charisma, success is within arm’s reach.

Whether you’re drawn by the allure of craft cocktails or the thrill of a packed dance floor, a bar business beckons with opportunity and potential profits. Let’s discuss the steps to creating a flourishing and compliant bar business.

Considerations Before Opening a Bar

Initial InvestmentStartup costs can range from $125,000 to $850,000, factoring in the lease, renovations, equipment, initial inventory, licenses, and insurance.
Skills RequiredKnowledge of the beverage industry, customer service, basic accounting, staff management, and familiarity with relevant laws and regulations.
DemandDemand often peaks on weekends, holidays, and evenings. Tourist areas or urban centers can see higher traffic.
LocationAreas with high foot traffic, near entertainment venues, or in nightlife districts. Both urban and suburban settings can be viable.
HoursEvening and nighttime hours, though bars in some locations may operate during the day. Hours can extend late into the night.
Permits and LicensesMost regions require a liquor license, health permits, business licenses, and possibly entertainment licenses. Always check local regulations.
Profit MarginProfit margins can range between 10 and 30%, depending on location and offerings.
ChallengesCompetition from other establishments, potential for unruly customers, navigating licensing and legal regulations, fluctuations in alcohol prices, and staying relevant in changing nightlife trends.

Conducting Market Research: Understand Your Playground

When opening a bar (as with starting any business), one of your first steps should be to conduct thorough market research. This step is crucial in understanding what your prospective customers want, what your competition offers, and how your bar can fit into the local scene.

Identifying your target market and finding a niche for your bar is key. Think about who you want to serve. Is it the college crowd, young professionals, or the high-end, mature market? Your target audience will influence everything from your bar’s concept and aesthetics to the music and menu.

Knowing your competition is equally vital. Visit the other established bar companies in your area and understand what they offer. Analyze their strengths and weaknesses. Find gaps in the market that your bar can fill. This will not only help you differentiate your establishment but also provide inspiration for what works and what doesn’t.

Staying current

Assessing market demand and trends is the final piece of the puzzle. Are craft beer bars the rage in your area, or is it a market hungry for innovative cocktails and alcoholic beverages? Stay abreast of industry trends through trade publications, reports, and by participating in local and online communities.

Creating a Solid Business Plan: Your Blueprint to Success

Having an idea is one thing, but translating that idea into a comprehensive, functional business plan is where the rubber meets the road. Your bar business plan is your roadmap, outlining your bar’s concept, expected costs, and strategic plans. 

Define your own bar concept

Firstly, clearly define the concept and theme of your own bar. Your theme should resonate with your target audience. You might choose to run a small neighborhood bar or pub, a sports bar, or a rooftop cocktail lounge. Your theme will dictate the name, décor, ambience, and even your choice of glassware and furniture.

Make financial projections

Costs and budgeting are also an essential part of your business plan. This will include startup costs (like lease, renovations, equipment, and licensing fees), as well as ongoing costs like salaries, rent, utilities, and supplies. Remember to account for a buffer for unexpected costs that invariably crop up.

Choose and define your legal structure

Understanding the legal structure of your bar business is critical. This could range from a sole proprietorship or a partnership to forming a limited liability company (LLC) or a corporation. Each business structure has its pros and cons regarding liability, taxes, and management style, so choose wisely. Read more about creating an LLC for your bar.

Describe the bar owners

How many bar owners will you have, and what will everyone’s responsibilities be? Within your business plan, it’s helpful to describe your management team, including any unique talents or skills that each person brings to the table.

For example, let’s say one member of your team will focus on the finances because they have an accounting background, and the other will create the menu and act as the bar manager because they worked as a bartender for five years before joining your team. It’s important to include that information in your plan, because investors and other potential partners will want to know.

Create a marketing strategy

Lastly, consider your marketing and promotion strategies to attract potential customers. Will you run regular happy hours, live music nights, or tasting events? Will you promote your neighborhood bar through social media, local press, or outdoor advertising? Having a well-planned marketing strategy can make all the difference; arguably, your bar depends on good marketing to turn potential visitors into repeat customers.

Location and Space Selection: Finding Your Perfect Spot

When it comes to bars, location is everything. The location you choose can play a major role in determining the success of your bar. Your ideal location will depend on your target audience. A specialty bar aimed at college students, for example, will ideally be located near a university, while a high-end cocktail bar or wine bar might fare better in a business district or an upscale residential area.

Foot traffic is another crucial consideration. Bars in high-visibility, high-traffic areas often attract more customers than those tucked away in a back street. However, these locations often come with higher rent, so you’ll need to weigh the benefits of  location against the costs.

Once you’ve found the ideal area, it’s time to consider the specifics of your potential space. The size should be big enough to accommodate your anticipated customer base but not so large that it feels empty or unwelcoming. The layout is also important; you’ll need enough space for a serving area, seating, restrooms, and possibly a kitchen, if you plan to serve food.

Securing Funding and Financial Management: Making the Numbers Work

Like any business, opening a bar requires significant financial investment. Depending on your situation, you might consider self-financing, taking out a business loan, or seeking investors. Each of these funding options comes with its own pros and cons, and you should consider your financial situation and risk tolerance before deciding on the best option.

Once you’ve secured funding, you’ll need to set up and maintain an effective system for managing your bar’s finances. This includes setting up a business bank account, deciding on a bookkeeping system, and regularly reviewing your income, expenses, and overall financial health. Don’t overlook the importance of having a contingency plan in case your costs are higher than anticipated or your revenues don’t meet expectations.

Obtaining Necessary Licenses and Permits: Keeping It Legal

Before you can open your bar to the public, you’ll need to ensure you have all the necessary licenses and permits. This often includes a business license, a liquor license, a health permit, a signage permit, and possibly a live entertainment license, among others.

Acquiring a liquor license is usually the most complex part of this process. The application process for a liquor license varies widely by state and can be quite competitive and expensive. Make sure you understand your local regulations and start this process early. Other important license types can include a food service license for serving food, if you plan to have a food menu.

Remember, you’ll also need to register your business with the state and federal governments. This can include getting an EIN, a sales tax permit, and more.

If you’re not sure where to start, our business license report can streamline this process for you. We’ll help you learn which licenses you need to open a bar, all in one place. 

Building a Menu and Sourcing Suppliers: Crafting Your Offerings

Building an appealing menu is one of the most critical aspects of creating a profitable bar business. You don’t just sell alcoholic beverages; your menu is a powerful tool that can set your bar apart from the competition, attract a certain clientele, and drive sales.

Your drink menu should reflect your bar’s concept and target audience. For example, a high-end cocktail lounge might offer a curated list of classic cocktails and fine wines, or craft beer, while a neighborhood pub might focus on a broad selection of local beers.

Sourcing high-quality ingredients is equally important. Building relationships with reliable suppliers can help ensure you always have the products you need at the best possible prices. Consider attending industry trade shows or joining a bar owners’ association to make connections with your potential customers and suppliers.

Hiring and Training Staff: Building Your Dream Team

Your staff will play a crucial role in the success of your bar. Hiring the right people and investing in their training can make all the difference in providing exceptional customer service, which can in turn drive repeat business and word-of-mouth recommendations.

Get an EIN

The first step to hiring employees as a small business owner is to to get an EIN, or employer identification number, from the IRS. This nine-digit code acts like a Social Security number for your business. It also sets you up for employment taxes. It’s free to get one from the IRS, or our EIN service can help.

Hire and train employees

Start by creating clear job descriptions for all positions, from bartenders and servers to bouncers and kitchen staff. When hiring, look for candidates who not only have the necessary skills but also fit in with your bar’s culture and values.

Once you’ve assembled your team, provide comprehensive training. This should cover not only the technical aspects of their jobs, like pouring drinks or operating the cash register, but also soft skills like customer service and conflict resolution. Regularly review and update your training program to ensure it meets your bar’s evolving needs.

Be sure to stay up-to-date on employment regulations and insurance requirements in your area, too.

Marketing and Promotion: Spreading the Word

Even the best bar in the world won’t succeed if nobody knows about it. That’s why marketing and promoting your bar are so crucial. Start by developing a strong brand identity, which includes a logo, color scheme, and a clear value proposition. Then use this brand identity consistently across all your marketing materials and platforms.

Digital marketing, including a website, social media, and email marketing, can be particularly effective for bars. Regularly post engaging content, run promotions, and interact with your followers to build a loyal online community.

Traditional marketing methods, like outdoor advertising, PR, and events, can also be very effective. Consider hosting a grand opening event, participating in local festivals or markets, or sponsoring local community events to generate buzz and get people talking about your bar.

Opening Night and Ongoing Operations: The Big Debut and Beyond

The night you’ve been waiting for — your grand opening! This is your chance to make a strong first impression and set the tone for your bar’s future. Consider hosting a special event with live music, discounts, or giveaways to attract a crowd.

However, your work as business owner doesn’t end after opening night. Regularly review your operations to identify areas for improvement. Collect feedback from customers, monitor your finances closely, and stay abreast of industry trends to keep your bar relevant and successful.

Keeping your bar safe and compliant with all local, state, and federal regulations is essential. Regularly review and update your licenses and permits to ensure you’re always operating legally.

Prioritize safety in all aspects of your operations. This includes keeping your liquor license up to date, regularly checking and maintaining equipment, training staff in safety procedures, and ensuring your premises are safe for customers. Consider investing in security measures like CCTV, alarms, and bouncers to protect your bar, staff, and customers.

If you want some help staying compliant every year, our worry-free compliance program can help.

The bar industry is notoriously competitive and can be influenced by a range of factors, from economic downturns to changing consumer tastes. Staying flexible and willing to adapt is key to long-term success in bar ownership.

Regularly revisit your business plan and adjust as necessary. Seek feedback from customers, staff, and industry peers. Consider expanding or refining your offerings, experimenting with new marketing strategies, or even rebranding if necessary. The key is to stay proactive, anticipate challenges, and adapt accordingly.

Pouring Your Way to Success

Opening a bar is a complex but rewarding journey. With passion, careful planning, and a willingness to adapt and learn, you can turn your dream of owning a bar into a reality. Remember, every successful bar started as a dream, just like yours. With hard work, dedication, and the right guidance, you, too, can pour your way to success.

We can help!

Ready to set the stage? With our $0 LLC formation services or corporation formation services (and more), we make starting a bar seamless. With our support, you can hit the ground running, focusing on your dream while we handle the red tape. With ZenBusiness by your side, opening a bar is not just a dream; it’s a journey we embark on together.

Disclaimer: The content on this page is for informational purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

Opening a Bar FAQs

  • Owning a bar can be profitable, but much depends on various factors like location, management, theme, and competition. On average, the profit margin for bars ranges from 10% to 15%, with some well-run establishments achieving even higher. Successful bar owners understand their local market, continuously adapt to trends, and manage overhead costs efficiently. Profitability also heavily relies on consistent patronage, which can be nurtured through marketing, events, and top-notch customer service.

  • Starting a bar with $100k can be feasible, but the exact amount needed will vary based on location, size, concept, and initial operating expenses. In some areas, this might cover just the lease and renovation costs, while in others, it might stretch further to include initial inventory, staff wages, and marketing for the grand opening. It’s essential to have a detailed business plan to understand all anticipated expenses and ensure that $100k will suffice, and to consider keeping some buffer for unforeseen costs.

  • Owning a bar is indeed a challenging endeavor. While it might appear glamorous from the outside, behind the scenes, it requires long hours, keen business acumen, and the ability to manage a diverse range of tasks — from personnel issues to inventory management. The bar industry is also susceptible to trends, economic fluctuations, and seasonal variations, making flexibility and adaptability crucial. Successful bar owners often cite passion, persistence, and continuous learning as vital attributes in navigating these challenges.

  • There is always inherent risk when you start any business, including any type of bar: a sports bar, a specialty bar, a craft beer bar, or any other type. While you can’t completely eliminate risks, you can reduce them by following a few steps.
    To start, register your bar as an LLC or corporation to get some personal asset protection. Then ensure you have the right licenses, including a business license, liquor license, and food service license. Pair this with strategic insurance policies and good legal compliance, and you should be pretty well protected.

“This is your life.
You want to get it right.”

– Mark Cuban on Starting a Business

Entrepreneur and Shark Tank host lays out
3 steps to follow when starting a business

  • Form an LLC to protect your liability
  • Set up your banking and accounting
  • Grow sales by marketing your website


Play Video

Start a Business in Your State

Popular States for Starting a Small Business