Starting a bar - business advice/reality check required
Discussion
I've been looking into what I want to do for a decent long-term career.
I've got (what I think) is a great idea for a bar in the centre of my local city.
The thing is, I've never worked in this sector, so I know little about how it all works.
Does anyone on PH run a bar?
I've found a vacant council-owned building in the city centre which was previously a bar (the bar relocated close by, because they wanted more space). Consequently, the bar and associated plumbing is all in place. I believe there is a kitchen, too.
I spoke to an employee of the bar which previously occupied the building. They said they were paying between £7,000 and £8,000 pcm. Would that be reasonable for a city centre bar? She did mention an issue of damp in the walls, which the counsil (depsite owning the building) are reluctant to repair at their cost.
My bar would sell food, as well as the drink. What kind of licenses would I require? How costly are they?
My target market would be the early 20s thru to late 30s, and I believe my idea suits that market. The area where this building is also takes advantage of many local better-paid jobs (solicitors, accounting firms, and the city's largest employer - Norwich Union).
I've got a firm idea as to how to advertise the new premise, using a compaign of mystery to being with. That would get people thinking (Much like Aerial did with their Cold Wash product). Newspapers, radio and flyer/business card advertising features heavily in my idea. Does anyone have any idea as to the cost of this type of campaign? Thousands or Hundreds of pounds?
Then there is the issue of business loans.
I'm 23, living at the family home. I've only ever had a student loan and 2 credit cards, which are regularly paid off. With that in mind, I don't I'll have a bad credit rating, but would I have a good enough rating to warrant a business loan? My Dad is in a position to offer some financial help, but I would certainly need a loan.
Did I hear recently about a government incentive to get small businesses going? It related to the government underwriting 50% of a business loan up to a £1 million business loan. Have I got that right?
There's no doubt I've not thought of half things I need to consider. This is where you guys come in.
I need help, advice and opinions on the subjects I've mentioned, and please add everything else I'd need to consider.
I've done little research thus far, so consider this my first port-of-call. Like I've said, I know little about this sector, and little about business. I'm certainly willing to learn, so any advice or guidance is welcome.
Have I just got my head in clouds, or is this a realistic business proposition?
Many thanks in advance,
Darren
I've got (what I think) is a great idea for a bar in the centre of my local city.
The thing is, I've never worked in this sector, so I know little about how it all works.
Does anyone on PH run a bar?
I've found a vacant council-owned building in the city centre which was previously a bar (the bar relocated close by, because they wanted more space). Consequently, the bar and associated plumbing is all in place. I believe there is a kitchen, too.
I spoke to an employee of the bar which previously occupied the building. They said they were paying between £7,000 and £8,000 pcm. Would that be reasonable for a city centre bar? She did mention an issue of damp in the walls, which the counsil (depsite owning the building) are reluctant to repair at their cost.
My bar would sell food, as well as the drink. What kind of licenses would I require? How costly are they?
My target market would be the early 20s thru to late 30s, and I believe my idea suits that market. The area where this building is also takes advantage of many local better-paid jobs (solicitors, accounting firms, and the city's largest employer - Norwich Union).
I've got a firm idea as to how to advertise the new premise, using a compaign of mystery to being with. That would get people thinking (Much like Aerial did with their Cold Wash product). Newspapers, radio and flyer/business card advertising features heavily in my idea. Does anyone have any idea as to the cost of this type of campaign? Thousands or Hundreds of pounds?
Then there is the issue of business loans.
I'm 23, living at the family home. I've only ever had a student loan and 2 credit cards, which are regularly paid off. With that in mind, I don't I'll have a bad credit rating, but would I have a good enough rating to warrant a business loan? My Dad is in a position to offer some financial help, but I would certainly need a loan.
Did I hear recently about a government incentive to get small businesses going? It related to the government underwriting 50% of a business loan up to a £1 million business loan. Have I got that right?
There's no doubt I've not thought of half things I need to consider. This is where you guys come in.
I need help, advice and opinions on the subjects I've mentioned, and please add everything else I'd need to consider.
I've done little research thus far, so consider this my first port-of-call. Like I've said, I know little about this sector, and little about business. I'm certainly willing to learn, so any advice or guidance is welcome.
Have I just got my head in clouds, or is this a realistic business proposition?
Many thanks in advance,
Darren
I would have thought that a total newbie going into the pub/club/bar trade right now would be the financial equivalent on going bare back with Freddie M and Kenny E.
Seriously though i can't help much with the 'business' side of things but if you want to talk about the leasey bits and costs I'm only 25mins south of town.
Seriously though i can't help much with the 'business' side of things but if you want to talk about the leasey bits and costs I'm only 25mins south of town.
I've often thought it would be great to run a bar.
Thing is (and I may be a bit paranoid here) where there's booze there's trouble - even the nicest places eventually have some sort of punch up or drug issue or someone asking for protection money (if you're in certain areas). So security (even if it's not of the visible doorman type) has to be a consideration doesn't it?
Thing is (and I may be a bit paranoid here) where there's booze there's trouble - even the nicest places eventually have some sort of punch up or drug issue or someone asking for protection money (if you're in certain areas). So security (even if it's not of the visible doorman type) has to be a consideration doesn't it?
iluvmercs said:
I've been looking into what I want to do for a decent long-term career.
...and...
The thing is, I've never worked in this sector, so I know little about how it all works.
they?
...and...
I've done little research thus far, so consider this my first port-of-call. Like I've said, I know little about this sector, and little about business. I'm certainly willing to learn, so any advice or guidance is welcome.
Why not get a job in the sector first and get hands-on experience with someone else taking the risk with their money?...and...
The thing is, I've never worked in this sector, so I know little about how it all works.
they?
...and...
I've done little research thus far, so consider this my first port-of-call. Like I've said, I know little about this sector, and little about business. I'm certainly willing to learn, so any advice or guidance is welcome.
You would be f
king mental to approach this in the current climate and with your (non)experience.
i'd say if you want to [don't we all?] then forget it for the short term. work like a mofo, save, improve your credit rating and do as much research as you can - maybe look at an evening job in a bar close to your ideal and be really keen, take on responsibility and see how its run. wait until the economy starts to recover and go for it.
wetherspoons is piss easy to get a job in and just as easy to get a supervising role within weeks - even part time. not your ideal market but if you work in one of the lloyds ones you get experience of a busy pub in your target age range and get to learn just how lovely the british public can be after a few jars.
wetherspoons is piss easy to get a job in and just as easy to get a supervising role within weeks - even part time. not your ideal market but if you work in one of the lloyds ones you get experience of a busy pub in your target age range and get to learn just how lovely the british public can be after a few jars.
Don't do it - yet.
1. You have no experience. Get some, run someone elses bar/restraunt then decide if this is for you.
2. Competition. Lots, especially in the sector you are looking to get into. You need to taget a different market - maybe 30-40. Most bars are aimed at kids. Do food but make it good quality or good value.
3. Money. It's a credit crunch a bad time to start a business like this especially with pubs/clubs suffering the dual issues of smoking ban and lack of spending money. Also, you will struggle to get a loan and spending you own money is a bad idea.
4. Budget - at least 100k for the first year. and thats only 10k a month to cover costs. As a general idea you need enough money to pay for everything for the 1st year in th bank (total costs). Year 1 - you support the business, year 2 it supports itself, year 3+ (hopefully) you make a profit. Most business' fail in the 1st 18 months.
Go on business courses, management courses, bar keeping courses, catering, accounting and get experience.
1. You have no experience. Get some, run someone elses bar/restraunt then decide if this is for you.
2. Competition. Lots, especially in the sector you are looking to get into. You need to taget a different market - maybe 30-40. Most bars are aimed at kids. Do food but make it good quality or good value.
3. Money. It's a credit crunch a bad time to start a business like this especially with pubs/clubs suffering the dual issues of smoking ban and lack of spending money. Also, you will struggle to get a loan and spending you own money is a bad idea.
4. Budget - at least 100k for the first year. and thats only 10k a month to cover costs. As a general idea you need enough money to pay for everything for the 1st year in th bank (total costs). Year 1 - you support the business, year 2 it supports itself, year 3+ (hopefully) you make a profit. Most business' fail in the 1st 18 months.
Go on business courses, management courses, bar keeping courses, catering, accounting and get experience.
I admire your planning and optimisim but in this market, you'd struggle.
Get any ideas of government assistance out of your head, the scheme is intended as a headline grabber, one of the stipulations actually states that the loan may be granted up to the value of your cash reserves, which does beg the question why you'd need the loan.
Any loan made to a business will depend on two things, what security backs it (usually property and dont expect valuations to be optimisitc) and business plan viability. You're considering operating in a shrinking sector, with enormous overheads and practically no security. With Woolworths struggling to find people to give them credit do you think this is a market in which you could convince a banker to part with a sum that will need to be deep into six figures to someone operating in the aforementioned market conditions with no experience in the sector?
Margins are so tight as to be next to pointless, you've no experience of buying the product you're considering selling and thats before facing up to the fact that you'll be competing for smaller crowds with less money than the big boys.
Bars like restaurants are nice dreams, they'd be fun things to do if you suddenly found yourself with a very wealthy benefactor but making them work, especially in this climate, is a nigh on possible task I'd say.
You've quite obviously got entrepenuerial aspirations and flair but I'd say shelve this, for the time being.
Get any ideas of government assistance out of your head, the scheme is intended as a headline grabber, one of the stipulations actually states that the loan may be granted up to the value of your cash reserves, which does beg the question why you'd need the loan.
Any loan made to a business will depend on two things, what security backs it (usually property and dont expect valuations to be optimisitc) and business plan viability. You're considering operating in a shrinking sector, with enormous overheads and practically no security. With Woolworths struggling to find people to give them credit do you think this is a market in which you could convince a banker to part with a sum that will need to be deep into six figures to someone operating in the aforementioned market conditions with no experience in the sector?
Margins are so tight as to be next to pointless, you've no experience of buying the product you're considering selling and thats before facing up to the fact that you'll be competing for smaller crowds with less money than the big boys.
Bars like restaurants are nice dreams, they'd be fun things to do if you suddenly found yourself with a very wealthy benefactor but making them work, especially in this climate, is a nigh on possible task I'd say.
You've quite obviously got entrepenuerial aspirations and flair but I'd say shelve this, for the time being.
Do your research, but it ain't easy. I have had several clients get their fingers burnt with bars.
Remember, bars/clubs go out of fashion with the punters very quickly.
Think Riverside/Tombland
Year on year one tends to be more popular than the other, and the clubs change hands regularly.
Remember, bars/clubs go out of fashion with the punters very quickly.
Think Riverside/Tombland
Year on year one tends to be more popular than the other, and the clubs change hands regularly.
Further to what others have said, I agree but add from personal experience, in my very early twenties I had a lot of confidence and no experience.
The government will back loans that the banks can justify themselves.
To be able to do that, they have to argue the business cases for you being able to be highly likely to be able to pay back the money.
To look at the potential amounts of money involved, the bank are going to look at the money you need and a cashflow forecast for 6 months, or most likely a year.
At 7k a month, plus maybe 1k rates, that 8k. You then have staffing costs, 4k a month?
On top of that you are going to have to buy all your stock up front, in cash.
Further to that you need to market, brand, and finally fit up the bar to the standard you want - £10k?
Realistically, even for a 6 month buffer, you are looking at needing £12k a month for 6 months, and another £20k for fitting, marketing and stock.
Add 8 grand for just in case money, and you need £100,000.
From that point, you are going to have to not only cover all of the overheads, plus maybe £3,000 a month in loan repayments. Thats £15,000 profit a month to break even.
I'll let you work out how many pints and meals you need to make that amount of profit!
The more pertinent point is even if the figures added up to get that kind of money you will need to have it yourself. No one in this climate is going to loan that.
The risk - a very large one - is if you don't get the turnover you expected, not only are you not able to pay the overheads, your debt will grow month after month.
As has been said, the positive side is to keep the ideas going, get experience and start small with what you can afford to lose.
The government will back loans that the banks can justify themselves.
To be able to do that, they have to argue the business cases for you being able to be highly likely to be able to pay back the money.
To look at the potential amounts of money involved, the bank are going to look at the money you need and a cashflow forecast for 6 months, or most likely a year.
At 7k a month, plus maybe 1k rates, that 8k. You then have staffing costs, 4k a month?
On top of that you are going to have to buy all your stock up front, in cash.
Further to that you need to market, brand, and finally fit up the bar to the standard you want - £10k?
Realistically, even for a 6 month buffer, you are looking at needing £12k a month for 6 months, and another £20k for fitting, marketing and stock.
Add 8 grand for just in case money, and you need £100,000.
From that point, you are going to have to not only cover all of the overheads, plus maybe £3,000 a month in loan repayments. Thats £15,000 profit a month to break even.
I'll let you work out how many pints and meals you need to make that amount of profit!
The more pertinent point is even if the figures added up to get that kind of money you will need to have it yourself. No one in this climate is going to loan that.
The risk - a very large one - is if you don't get the turnover you expected, not only are you not able to pay the overheads, your debt will grow month after month.
As has been said, the positive side is to keep the ideas going, get experience and start small with what you can afford to lose.
So you never want a vacation then.
Two of my friends did a start up, just after I was outbid on a going concern.
The people you want to frequent your bar may not be the ones you get. Although there are ways to encourage the right sort, it only takes one bad event....
List your skills.
Catering
Legal
Accountancy (an understanding of) Can you sit down and do a realistic projected cash flow .
Managment.
Choosing bar staff, probably the most important, lets be honest sex sells. Cute semi bright girls make a difference.
My friends opened their bar with less than semi bright ones
, had a selection of quite expensive cars parked outside, it flew from day one. Pricing was high enough to keep out the unwanted.
Their target market, Champange Charley crowd.
Get job in the sort of bar you would like yours to be. At the same time work on the other requisits. Every skill you have will reduce your costs and prevent efups and possible failure.
Do you mix with business owners or are all your friends employed, was your Father in business? If you can answer yes to this then go back to "Get a job in...." and give it go.
And definately take that offer of help with the lease if you do.
Don't drink and own
Two of my friends did a start up, just after I was outbid on a going concern.
The people you want to frequent your bar may not be the ones you get. Although there are ways to encourage the right sort, it only takes one bad event....
List your skills.
Catering
Legal
Accountancy (an understanding of) Can you sit down and do a realistic projected cash flow .
Managment.
Choosing bar staff, probably the most important, lets be honest sex sells. Cute semi bright girls make a difference.
My friends opened their bar with less than semi bright ones
, had a selection of quite expensive cars parked outside, it flew from day one. Pricing was high enough to keep out the unwanted.Their target market, Champange Charley crowd.
Get job in the sort of bar you would like yours to be. At the same time work on the other requisits. Every skill you have will reduce your costs and prevent efups and possible failure.
Do you mix with business owners or are all your friends employed, was your Father in business? If you can answer yes to this then go back to "Get a job in...." and give it go.
And definately take that offer of help with the lease if you do.
Don't drink and own
Takings (423,165.83)
Purchases 183,037.04
Hire of equipment 5,389.71
Licences 6,110.56
Entertainment 11,894.48
Wages 63,112.78
Doormen 20,784.60
Closing stock (16,665.29)
Rent 75,093.67
Rates and water 9,921.92
Insurance 15,349.93
Light and heat 5,235.08
Repairs to property 2,040.53
Telephone 1,471.55
Post and stationery 1,933.03
Advertising 6,479.94
Travelling 1,040.00
Repairs and renewals 5,435.21
Cleaning 9,122.87
Sundry expenses 1,712.10
This bar is long gone, and doesn't include any professional fees, bank charges, the cost of equipment etc. Also there was a purchase of short term leashold.
It can be profitable, but it takes something special, that doesn't go out of fashion
Purchases 183,037.04
Hire of equipment 5,389.71
Licences 6,110.56
Entertainment 11,894.48
Wages 63,112.78
Doormen 20,784.60
Closing stock (16,665.29)
Rent 75,093.67
Rates and water 9,921.92
Insurance 15,349.93
Light and heat 5,235.08
Repairs to property 2,040.53
Telephone 1,471.55
Post and stationery 1,933.03
Advertising 6,479.94
Travelling 1,040.00
Repairs and renewals 5,435.21
Cleaning 9,122.87
Sundry expenses 1,712.10
This bar is long gone, and doesn't include any professional fees, bank charges, the cost of equipment etc. Also there was a purchase of short term leashold.
It can be profitable, but it takes something special, that doesn't go out of fashion
As a note, it's the rent that kills everything. The property owners don't care if the business fails.
They fail and go, then they get in another punter who fancies a go at the bar trade, they fail, someone else goes in...etc etc.
I'd say it's the money men, who go and buy the place with cash who tend to survive.
They fail and go, then they get in another punter who fancies a go at the bar trade, they fail, someone else goes in...etc etc.
I'd say it's the money men, who go and buy the place with cash who tend to survive.
dirty boy said:
As a note, it's the rent that kills everything. The property owners don't care if the business fails.
They fail and go, then they get in another punter who fancies a go at the bar trade, they fail, someone else goes in...etc etc.
I'd say it's the money men, who go and buy the place with cash who tend to survive.
Exactly.They fail and go, then they get in another punter who fancies a go at the bar trade, they fail, someone else goes in...etc etc.
I'd say it's the money men, who go and buy the place with cash who tend to survive.
If you have a few hundred grand in the bank and you buy, looking at my guesstimate figures you only need to do half as much turnover to break even.
In these type of times, these are going to be the ones that survive.
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