Bars are very popular businesses; they come in all shapes and sizes and it’s easy to put your own stamp on one. But it’s not easy to create a successful bar. Creating a razor sharp atmosphere that people respond to is an art; a combination of the right drinks, decorum, music etc. is essential. However, if you’ve got the skills, then starting a bar can be a great way to combine your love of nightlife with a passion for business.
What does the market look like?
Competition from large businesses is not as pronounced as in other sectors; pub chains will typically be your biggest competitors, although there are some bar and nightclub brands that have prominent locations across the country. Differentiation is key to giving yourself the best chance of taking your own share; you won’t be able to beat the big companies on price (not in the long-term) so finding a viable USP is important.
Seasonal variations are also prominent; big sporting events such as football championships and Wimbledon draw people into bars, particularly so if you can offer them an inviting atmosphere. New Year and Christmas are also very busy times, as is St Patrick’s Day. These occasions can be very profitable, but they don’t last forever; effective marketing and promotion can help you make the most of them.
What are the main challenges?
Getting people through the door is a big challenge for all businesses that rely on regular patronage, as is getting them to stay and come back again. Providing a good service (i.e. wide selection of inexpensive drinks, good music, comfortable chairs) is the best way of encouraging people to visit. Effective advertising is also important.
Competition is also a big challenge, since you’ll probably share street space with other bars and nightclubs. On-the-night marketing is important, for example with drinks vouchers, but raising awareness of your bar as the best place to go will encourage people to make a special visit to your bar, instead of going elsewhere.
Rising costs are another challenge, particularly when cheap drinks are a motivator for many customers. Alcohol is not cheap to buy; neither are utilities. There’s also a need to employ professional bouncers, bar staff and glass collectors.
The importance of location
Retail businesses must get their location right – often the type of business being run prioritises a particular aspect of location, for example heavy footfall or easy access. When it comes to bars, a good location is almost always in the town centre, where the majority of drinkers and clubbers will congregate. If you’re running a pub, that’s different – pubs found in villages, serving local communities, are popular.
Being in the town centre does not guarantee business, however. If your bar will have a more leisurely atmosphere, a location away from the main nightlife hotspots may be a good bet, but it’s risky. Clubs designed to appeal to clubbers will need to be in close proximity to popular nightclubs; proximity to transport routes into the town centre (such as bus stations) is also a good bet.
Of course, you need to understand the town you’re setting up in to make a good decision on the location of your bar. All towns and cities are different; understanding the mood and attitudes of clubbers and other segments of your audience, and of how the town’s nightlife works, are key. Don’t slack on your market research. Location can make or break bars, so make sure you get off to a good start.
Training and development
There are many courses dedicated to running a pub, but not so many related to running a bar. Of course, there’s plenty of cross-over between the two, but marketing and many other aspects are completely different. Experience of running a bar is the best training – there’s a lot to learn and actually doing it is the best way. If you do want formal training, general business training, such as book-keeping or marketing, will help as these are key to running a profitable bar.
Training staff is absolutely key – they represent your bar at all times and their attitude tends to rub off on patrons. If they are moody or unhelpful, customers may look elsewhere. Train staff in customer service to make sure they provide the best possible experience at all times. Practical training, enabling them to make quality drinks, is also useful, particularly if your bar specialises in a particular product e.g. cocktails.
Starting a bar is expensive, particularly if starting from scratch and retrofitting a premises. You’ll need to pay for lighting systems, a music system, a cooled cellar, initial stock, staff costs and more – budget no less than £20,000 but in reality it’s likely to be much more than this, particularly if you need elaborate signage and a wide-reaching advertising drive.
If you want to show sports and special events, you’ll also need licenses and a range of wide-screen televisions. In fact, all bars tend to have televisions to show music videos; these will need to go into your start-up budget.
Once you’ve started operating, unexpected costs can also crop up; windows are often broken, for example. You could claim on your insurance but you lose your no claims bonus and have to pay an excess; many bars will absorb the costs themselves, which is why it makes sense to some have funds left over from your initial budget.
Insurance and compliance
Insurance is an absolute must-have for bars, for a number of reasons. Alcohol sets the scene for grievances, both between patrons and between patrons and the bar, so you need to be covered in the event of disagreements. At a basic level, insurance will cover any costs associated with cleaning up after incidents e.g. replacing broken windows.
Bouncers are a common target of third-party lawsuits due to the nature of their work; these may include the establishment so you must make sure you’re protected. Public liability insurance and professional indemnity insurance are the important policies here, but you should consider speaking to a specialist bar insurer who tend to offer more suitable policies than mainstream insurers.
Employer’s liability insurance is important to protect you against third-party action taken against you by employees or ex-employees. This is important; if a staff member is injured by a patron, they may have grievance against you if they believe you didn’t take suitable steps to prevent the incident occurring.