Imagine yourself sitting in a cozy bar or pub late in the evening. Maybe you’re with a friend or two, or maybe on your own. But it’s quiet. Just the clink of glasses as the bartender wipes a few down or the few remaining customers finish up their drinks. The yeasty smell of draft beer is heavy in the air, and there’s still a salty nugget of peanut left in the bowl you thought you’d emptied.
And you think to yourself, “This is great! I’d love to own my own bar!”
The first piece of essential advice, of course, is to call a cab, get yourself home, and sleep on it. Think about it again in the morning with a clear head.
But if owning your own bar remains a serious life goal, then the following tips will be invaluable to the successful realization of that dream.
Build or Buy?
While it’s always going to be theoretically possible to build a bar from scratch, the difficulty is finding the right available location. You’d need to find an adequate piece of land that’s zoned correctly, gets the right amount of foot and road traffic, has ample parking available, and doesn’t already have two or three other bars within sight?
Most towns and cities are already filled with lots of bar competition, so it can be difficult to locate the right land in most areas with a large enough population to support it.
Identifying smaller towns and cities on the cusp of a population boom is a good idea. Look for areas where maybe a large manufacturer is building a plant, tech companies are starting up, or a new highway is coming through. It could be a great opportunity to start fresh with a brand-new establishment in an area on the verge of growth.
Buying an already running bar is a great option, if developing one from scratch seems prohibitive.
Selecting the Best Bar for Sale
To determine which bar for sale is the right one for you to choose, run through the following checklist with the help of a small team of experts, including an experienced business broker, a local commercial real estate agent, a lawyer, and an accountant. Their advice will prove invaluable as you do your due diligence in preparation for making an offer.
1. Listing: Start by obtaining access to a reputable businesses-for-sale listing. While local newspapers or business periodicals and websites may or may not offer adequate details, national business listing services are most likely to have the widest range of listings available for comparison, especially if you’re considering a wide geographic area.
2. Location: If you already know where you want to own a bar, your available selections are more limited. It just means that you may need to be patient while waiting for the right type of bar worth buying to go up for sale in that area. If you’re not tied to a particular area, your selection will be much wider and you can prioritize listings based on other important factors.
3. Budget: Understand that purchasing a bar and successfully transitioning into full ownership is likely to require more capital than just the purchase price. The history of the brand and any public reputation or issues that go with it can create challenges under new management. Budget to cover a minimum of six months of operating expenses when starting out. Twelve would be even safer.
4. Caution and legal matters: The majority of bar owners who decide to sell are doing so for personal reasons, ranging from retirement, burn out, or just because they’re eager to tackle a different life goal. But, as in every major purchase decision, you’ll want to exercise caution and investigate every aspect of the business, including financial and personnel records of the prospective bar you’re considering buying. Do research with the local authorities as well to confirm there haven’t been any serious violations noted, any ordinances or regulations under which the bar is considered non-compliant, or any other legal or other complications that the current owner may not be eager to share.
Once You’ve Chosen the Right Bar to Buy
Let’s say you’ve found the perfect bar in an ideal location, and it’s available at the right price. Before you sign on the dotted line, here are some more important factors to consider.
5. Personnel: Make a concerted effort to get to know the existing employees and managers very early in the transition process, and determine if they are the right fit for your business model. At the same time, review employment records and financials with a keen eye for potential efficiencies. This is not the time to be sentimental. If one or more employees needs to be let go in order for the rest of the team to reach greater levels of success under your new ownership, now is the time to make that decision and act on it.
6. Customers: Assuming the previous owner is not selling his bar due to a complete lack of patronage, make just as much effort getting to know the regular customers as you do getting to know the employees. Regulars are the lifeblood of any bar, and are easily your most powerful marketing resource. Understand that they may be nervous about a change in ownership, and gaining their trust and loyalty needs to be high on your priority list.
Setting Your New Bar Up for Success
Once the purchase is made and you’re officially a bar owner, it’s time to actively keep this business moving along toward a successful, profitable future. What you do in the first few months of ownership can set the tone for your career.
7. Making changes: While there’s something to be said for overhauling a recently purchased business and making it completely your own - from the name above the door to the decor, the menu, the music being played - make any and all decisions of this nature a business decision rather than a matter of personal preference. Specifically, all of these aspects of your new bar fall under your marketing umbrella, and need to be decided on with the customer’s preferences first.
Note: This doesn’t mean your personal preferences don’t matter. Rather, this is a caution specific to the period immediately surrounding the purchase of your new bar. If the current arrangement is working well and everyone’s happy, any changes you have in mind should be approached slowly and with a high level of awareness about how they will impact business.
8. Marketing: Again, if you’re taking over running an already successful and profitable bar, you should be able to start right out emulating what the previous owner has been doing from a marketing standpoint and hit the ground running. However, if the bar you purchase isn’t generating a profit, or if there are some significant upgrades or costly changes you want or need to make down the road, focus your early efforts on boosting the power and reach of your marketing program.
a. Consider creating a loyalty program to encourage repeat customers and word-of-mouth.
b. Pay attention to online reviews and respond professionally when appropriate.
c. Place signage where your customers will see it encouraging them to leave reviews online for you (which helps boost positive reviews, since negative reviewers are more likely to stew about a problem and remember to go online later to write about it).
d. Emphasize great customer service and quality products, then encourage your happy customers to bring their friends.
As with any entrepreneurial effort, buying a bar - even one that’s already successful - is not a guarantee of financial or personal success. But, by paying attention to the points outlined and by making an effort to learn all you can about successfully buying and running a bar, you’ll be in the best possible position to make it a thriving business.
Bruce Hakutizwi is the U.S. and international manager of BusinessesForSale.com, a global online marketplace for buying and selling small- and medium-sized businesses. With more than 60,000 business listings, it attracts 1.3 million buyers every month. Bruce regularly writes about entrepreneurship and small business management for leading online publications. Nightclub & Bar Media Group’s editorial team played no part in developing the article.