What to Include in Your Bar Business Plan
A bar business plan provides a snapshot of your bar at the current moment and defines your bar’s projected future over the next five years. Clearly stated goals, expected challenges, and the ways you will overcome those challenges to reach your goals form the backbone of your business plan. As a living document, your plan will grow and change as your bar develops over time.
You should include the following sections in your bar business plan:
As the introductory section to your plan, the executive summary is usually the last element to be written. Investors and lenders focus on the first page of the executive summary before deciding whether to read on, so lay out the most critical elements right away. Describe your bar in simple, concise terms. Provide a summary of your market analysis and proof that the market can support another bar. Also describe what makes your bar uniquely qualified to succeed. For example, will you be the only sports bar, or can you attract a unique customer segment?
This section focuses on your bar as it exists today. Describe the bar’s founding, legal status, and current business stage, as well as any accomplishments your bar has made to date. Expand upon the unique qualifications you mentioned in the executive summary. If you have a signature drink, or an existing customer base, explain those elements here.
In recognizing your standing within the local market, one of the first steps in opening a bar is to decide what type of establishment you’d like to run. Here are a few examples of the types of bars you might run:
Neighborhood Bar: These kinds of bars are typically small and cozy haunts visited by locals on a weekday/weekend for some drinks. They often have a very home-like atmosphere.
Beer Bar/Brewery: A brewery, as the name suggests, offers a huge selection of beers, including their own house draft beer and a selection of bottled beers.
Specialty Bar: This kind of a bar typically has a theme, for instance a martini bar. This bar will essentially serve different kinds of martinis, along with martini-based mixes and cocktails.
Sports Bar: These bars usually have a bigger food menu with options like sandwiches, burgers, pizza, wings, fries and other snacks. They host sports screenings regularly to keep the crowds entertained.
The industry analysis looks at your market and how your bar can compete in it. The market is the particular niche into which your bar fits, rather than the bar industry overall. For example, a sports bar has a different market than a neighborhood bar. Search websites and industry associations such as the American Nightlife Association to learn current trends and upcoming predictions, and address any potential obstacles with strategies to overcome them.
The customer analysis breaks down your specific target market into demographics and clearly explains how you will fulfill their needs. Here are example customer segments for a bar: beer/wine/whiskey connoisseurs, professionals, college students, people who like to socialize. These are just wide categories, and require further research and subdivision for accurate targeting. Depending on the type of bar you decide to open, there might be a niche audience for your business too.
How do your target customers make their purchasing decisions? Do they shop on price, quality, premium service, or something else? How will your bar meet those specific customers’ unique needs?
Industry factors such as ‘no drinking and driving’ and an evolving health conscious population may also affect segmentation.
Your competitors are divided into two categories. Direct competitors serve the same target market for the same need. Indirect competitors differ from you in either target market or specific need. For example, another bar around the corner would be a direct competitor while a liquor stores is an indirect competitor.
In your business plan , detail direct competitors individually, focusing on what makes your bar different. Group your indirect competitors together and mention them as a whole.
There are multiple ways to differentiate your bar from competition. For one, you could decide to open a specialty bar and focus on certain types of drinks (e.g, wine, gin, beer, whiskey, etc.). Service also makes a huge difference in attracting crowds; offering something unique like an ‘unlimited refills night’ or being generous with free bar nibbles could help you build a loyal customer base. You could also consider hosting entertainment nights with live music, stand-up comedy, karaoke etc. to keep the audience entertained.
Stocking an exclusive collection of alcohol from around the world is also one way to stand out in the market.
Traditionally, marketing plans are based on the four P’s: Product, Place, Price, and Promotion. In the bar industry, your primary focus will be promotions. Promotions is how you will lure customers to spend money with you. Customer retention, or how you will convince purchasers to return, is also an important part of marketing.
Marketing is critical when it comes to new restaurants and bars. You can’t expect to start a bar and suddenly see a pool of customers walking in. Some amount of paid advertising in newspapers, radio and/or online will be necessary to spread the word initially. Or having customers come in to give them a sample of your offerings. Ultimately, you would need to leverage the power of social media like Instagram, Twitter and Facebook to connect with new and existing customers. As part of your marketing strategy, you could also run contests and host special nights to attract more customers.
While the previous sections of your business plan focus on your vision, the operations plan delineates how you will reach your goals. The everyday short-term processes include every step involved in serving a customer, from making and serving drinks to settling the bill at the end. The long-term processes are business related, such as hitting sales goals, introducing a new product line, or opening additional bar.
The management team section highlights the skills needed to build and maintain a successful bar. Provide biographies of your key management team members, focusing on the specific educational background or hands-on experiences that prove their ability to run a business. If your management team has weaknesses in these areas, a strong advisory board can help. Be sure to clearly explain what the board members will do to directly improve the company’s growth.
It is difficult for a bar to be a success in the absence of a good staff. You need to hire excellent bartenders who know their craft. They need to be creative, excited and motivated about coming to work each day and making and serving superior drinks to your customers. When hiring, consider both the personality and skill of the potential bartenders and how they fit into your vision. Remember bartenders will ultimately become one of they key representatives of your bar.
Potential investors and lenders spend the majority of their time analyzing the financial plan, yet many entrepreneurs have little or no idea how to create it. You financial plan must provide a breakdown of all potential revenue streams (most often sales of drinks, food and/or cover charges), including their relative importance and when they will be implemented, along with projections for outside funding. You must also summarize both past and projected Income Statements, Cash Flow Statements, and Balance Sheets, and the assumptions you make must be reasonable and easy to verify through a competition analysis. A solid exit strategy (if you eventually plan to sell your bar) might be helpful to show to equity investors.
In your financial model, you need to include the costs involved in starting a bar. These costs primarily depend on the location and license type you end up purchasing (wine and beer only or liquor too). Some of the general costs incurred by new bar owners include the following:
- Fixtures and equipment
- Leasehold improvements- air conditioning/heating, carpentry, flooring, painting, plumbing, electrical etc.
- Starting inventory
- Legal services
- Permits and licenses
- Utilities and phone deposits
- Initial marketing for a grand opening
While your financial projections are summarized in the financial plan, you must also attach them in full in the appendix. This is also the spot to describe any proprietary technology you might have, list important existing customers, or provide any further documentation that supports your claims.
When opening a bar, you need to be informed about the current alcohol trends, the local laws of serving alcohol, and lifestyle trends (read about them in magazines and newspapers). If opening a bar from scratch seems like a daunting ask (with your experience), then consider taking a franchise, which will get you associated with a bigger and more experienced organisation and help avoid some key mistakes. Or find a retired bar owner that may be interested in helping you.
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