Who hasn't been at a fantastic bar and thought, hey I could do this? For some, the thought is a dream turned reality when they actually open up their own bar. However, opening a bar is no guarantee of success. The following are seven tips to help you survive the first year of being a bar owner.
1. Cultivate a Loyal Weekday Clientele
It's not Friday or Saturday that will break your business. It's Sunday through Thursday that will determine whether you will be in business for years to come or one of the 59 percent of hospitality businesses that fail within the first year. As a bar owner, you want to become the local watering hole for the community you serve. Dushan Zaric, owner of Employees Only in New York, said it best, "The bar is made or broken on slow nights, Sunday through Thursday, and if you can attract people to come to your place on those nights, you have something special."
2. Be Ruthless With How You Spend Your Money
There are an endless number of ways to spend money during your first year of business. From renovations to a better point-of-sale system, there's always something you can improve or something new to buy. However, you want to be ruthless about where you spend your money. Burning through your money too fast is a recipe for quickly shuttering your business. Before spending any money, ask yourself if this is something you really need or a service you can perform yourself. The more ruthless you are with your spending (without sacrificing customer experience), the better shape you will be in as the year progresses.
3. Cash Is King
There is a saying that goes: Profit is theory, but cash is facts. Cash flow problems will doom a business quicker than almost any other issue. Outside of being smart with how you spend your money, there are couple other actions to take to better manage cash flow.
First, try to extend your payables. To keep more money in the bank, consider extending the time you pay your vendors to the end of the billing cycle instead of the beginning. Stretching accounts payable is a way to keep cash on hand for as long as possible. Whether your vendor terms are 30, 60 or 90 days, consider setting up automatic payments with your bank to electronically pay on the last day, so you keep access to your cash for longer periods of time.
Secondly, renegotiate terms with your vendors. Take a look at your vendor list and target those that you think will be amenable to negotiating better terms. Lower interest rates, friendlier payment terms or other possible discounts means you'll have more money available to run other aspects of your business. You may not be able to renegotiate all of your terms with vendors, but any savings will help you keep the bar running.
However, if you find yourself running through your starting capital quickly and experiencing cash flow problems, a small business loan can help. Rapid Advance is a way to get fast and flexible business loans that will help keep the doors open and expand your business. To see what they can do for you, check them out here.
4. Hire Good People
Don't skimp on hiring the best people you can for your bar. While no one will love your business as much as you do, you want people who share your vision for the business and will act as ambassadors for the company as they interact with customers and keep everything running, especially when you're not there. It's also expensive to constantly replace employees. So take the hiring process seriously and hire the best people you can find and afford.
5. Maximize Your Profits With Other Services
While you may have a steady clientele, you may not be wildly successful right out of the gate. Bars experience slow days, and you should have a way to still profit from the establishment when the taps aren't flowing. Consider allowing local groups and organization to rent available space for their functions. If you have a strong menu, catering opportunities are another option. The idea is to have as many revenue streams as possible, so you're not worrying how you are going to cover your expenses when business is slow.
6. Market Yourself
If you build it, they will not come. In some communities, bars are everywhere. Why should someone frequent your establishment over another bar down the street? As a small business, having a big marketing budget may not be possible, but you do have to set aside time and money to market your business if you want to continue to grow and stay in business long after your first year is behind you. Take advantage of free marketing avenues, like social media, that require time, but not much money. Also try to frequent community events and utilize other pub owners for joint events and cross promotions that are beneficial to both establishments.
7. Find a Mentor
While it seems counterintuitive to find a mentor who also owns a bar, it can make all the difference as you try to survive your first year in business. Someone who also owns a bar can help you navigate many of the issues that are likely to rise during your first year. You can also learn from their mistakes as they will have opinions about what they would do differently if they were starting over today. A good mentor can go a long way in helping you have a successful bar for years to come.
Turning your dream of owning a bar into reality is an amazing accomplishment. To keep that dream from becoming a nightmare, use these seven tips, to not just survive your first year of business, but to thrive for many years to come.
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