There are a few things you should know if you want to purchase a bar. It can be a difficult process, and if you’re not careful, you might end up making a mistake that ends up costing you time and money. We’ll go over the tips and tricks for purchasing a bar in this article. You’ll receive some pointers on what to look for as well as what to steer clear of. The information you need to purchase the ideal bar is in the following paragraphs, so read on whether you’re just starting your research or you’re prepared to make an offer.
Table of Contents
Some Tips You Must Know to buy a bar
1. Do You Want To Run A Bar As Its Owner And Operator?
You must be a people person to succeed in the bar business, even if you don’t intend to serve customers directly (and especially if you do). Being a night owl and having good alcohol control are advantages.
Additionally, you must be tolerant of a wide range of personality types. Employees who prioritize other things over their job, like school or another job, are probably going to work for you. Make sure you hire competent managers if you have the option of being “hands off” in your company.
2. Whom Do You Want To Appeal To?
Due to the high failure rate in the bar industry, it’s crucial to determine your target market and make sure you are catering to its needs. Do the concept, location, and size of the bar you’re thinking about buying work for the current clientele? Is there room for expansion or must you start from scratch?
3. Which Type Of Bar Is Best For You?
There are many different kinds of bars that can be bought, ranging from the neighborhood bar in your community to the hip wine bar (did you know that more women order wine than any other alcoholic beverage?), dance club, popular microbrews, or traditional pub or sports bar.
Remember that the type of bar you select will have a significant impact on your operating costs. For instance, if you want to compete with today’s sports bars that show football and other sporting events on numerous high-definition televisions, you will need excellent audio and visual technology.
4. Whom Do You Want To Appeal To?
Due to the high failure rate in the bar industry, it’s crucial to determine your target market and make sure you are catering to its needs. Do the concept, location, and size of the bar you’re thinking about buying work for the current clientele? Is there room for expansion or must you start from scratch?
5. The Location Of The Bar
The significance of the physical location is a topic of discussion in the bar industry. Some bar owners think the location is very important, especially if you want to attract locals in that area to become your customers.
Some claim that if you generate buzz and establish your bar as a destination, people will seek out your establishment for a reason. Nevertheless, when selecting a location you should think about security, parking, and client accessibility.
6. The Name Of The Bar
Your bar’s name should convey the idea you want to convey. If the bar you buy needs a new name, come up with a bunch of ideas until you find one you adore. Describe your responses in order to inspire creativity.
• How well does the name correspond to your idea?
• Who is the target market for the name?
• What does the name suggest to customers in terms of expectations?
• Is it simple for customers to remember and search for this name online?
If you went to a place called The Boom Boom Room, you wouldn’t anticipate the kind of atmosphere you would need for a quiet, romantic drink with your date, for instance!
7. How Will You Monitor The Sales Of Alcohol And/or Food?
You should select an accounting system in accordance with the expected level of sales. Not just bartenders are susceptible to theft; anyone can. In a cash-and-carry setup, the customer pays for the drink upfront before it is rung up. Although it is the quickest method of conducting business, it also encourages providing free drinks. The most efficient and effective way to track sales, however, is with a point-of-sale system. Nevertheless, the cost of these systems varies. It won’t matter which path you take; the important thing is to have some sort of inventory control in place.
8. Are You Able To Maintain The Business With Your Current Capital?
Due to inadequate capitalization, many bars close their doors. A year’s worth of operating expenses, including at least six months’ worth of rent, are advised to be kept on hand, according to experts.
Even if you’ve managed to get this far without raising money, having good working capital available will help you stay dry if something goes wrong.
9. Marketing The Bar
Get your bar’s name out there by spreading the word. Customer recommendations, also known as social selling, as well as the kinds of promotions you run, will provide that.
Charity events and community activities can also help promote your company. These days, having an online presence with a current website, social media accounts, and email newsletters to customers is essential. Bring promotion concepts that are successful in other markets to your area to stay ahead of the competition.
10. Latest Bar Trends
Read trade publications and blogs to stay informed about the most recent trends in the industry and to get inspiration for marketing whimsy, menu additions, and promotions. To stay ahead of the local competition, a savvy bar owner will also look at national, international, and regional trends.
If you just want a place to hang out, the bar business is not something you should get into. While there might not be a party every night, running a successful bar requires organization. Keep in mind that, as a bar owner, your role will be more of a facilitator than a participant in the fun.
5 Do’s When Buying A Bar
1- When purchasing a bar, make sure you are aware of the requirements for a liquor license. It’s an important step: your background (or the background of the holder of the liquor license) must be free of any felonies, and in some cases, even misdemeanor charges. The state licensing board will carry out a background check. Fingerprints are also required.
2- Do keep in mind that some states even include a neighborhood meeting as one of the requirements for a liquor license. This happens, for instance, in Atlanta where NPUs, or Neighborhood Planning Units, meet with all applicants for liquor licenses. At these meetings, the locals can ask you questions about your concept, operating hours, and other things. As part of your preparation for learning how to buy a bar, be prepared to explain the goals of your company.
3 -Do not hesitate to work with experts. While reading this article on how to buy a bar, you are increasing your knowledge, keep in mind that this is general knowledge. Unless you are completely familiar with the requirements for a liquor license, it is best to have an experienced resource on the ground. Alcohol license facilitators or attorneys are resources that specialize in creating the application and fulfilling the necessary conditions.
4 – Always use a closing attorney who conducts a lien search on the company and requests a sales tax clearance letter. This letter from the state licensing authority, which is issued in each state, demonstrates that the current owner is free of any outstanding sales tax obligations. This is important to know when buying a bar because the only type of debt that transfers to the new owner is sales tax liabilities. If you owe money for back sales tax, you won’t be able to obtain a new alcohol license (or a transfer, if the state permits this). At the negotiation table, a skilled lawyer must handle this.
5 – Do be aware of the variations between the various license types available. If you serve liquor by the drink instead of just beer and wine, there is a big difference. Since the pandemic changed the law to permit drinks to be delivered or put in to-go cups, selling packaged goods or drinks on the go has become even more popular in some states where liquor by the drink license is issued. The limitations on the kinds of alcoholic beverages you can serve may depend on the specifications for the quantity of seating, parking, and other elements related to the physical layout of the bar. If your concept calls for full liquor service but the existing establishment only sells beer and wine, knowing how to buy a bar is essential.
5 Don’ts When Buying A Bar
1- Refrain from mentioning that you are thinking about purchasing the bar for sale to anyone besides a trusted advisor (a CPA or attorney). In most cases, you will be bound by the terms of a confidentiality or non-disclosure agreement that is more fully described in this article. By doing this, the seller is shielded from potential business damage caused by word of his business’s sale spreading.
2 – Don’t spend all of your time at the establishment studying the business and park yourself there every night. Through the financial due diligence process, a company is examined. You only harm the bar’s prospects for the future by making the staff suspicious of a potential sale because you run the risk of losing important employees or jeopardizing your newly formed employee/employer relationship.
3 – Avoid attempting to purchase a bar unless you are completely familiar with the requirements for a liquor license. Fingerprinting and a background investigation will be part of this. You as well as any partners are covered by this. You don’t want to make an offer and begin the approval process only to learn that your business partner has a conviction in his past that will prevent you both from achieving your goals.
4 – Avoid letting the flaws you notice influence the way you bargain the deal. For instance, it is obviously causing the concern if you see a bartender pocketing cash rather than ringing it into the register. It’s possible to see bartenders checking IDs. It won’t be successful for the seller to use these flaws as a tool to reduce the price. He’ll consider it to be insulting. You run the risk of upsetting the vendor and derailing the negotiation process. You must keep in mind that you are making a purchase based on performance in the past. When you take over and make all the operations better, you get the “upside.”
5 – If you haven’t already secured financing, hold off on making an offer. This covers the purchase price as well as any repairs or working capital you’ll need to open and operate the business. It will be challenging, if not impossible, for buyers who cannot show they have access to the necessary financing to successfully purchase a bar.
To determine why a business succeeded or failed, you must conduct the same research that I do. Avoid places where many people have tried and failed by always checking the tenant’s history. It might be a sign to avoid the situation if everyone who came before you failed within a short period of time.
