Congratulations! Owning a bar is a dream scenario for many people. A lot of us have sat around our favorite watering hole—or a particularly disappointing dive bar—and discussed what we would do differently. (“And there would never be a closing time!”) There’s a lot that goes into owning a bar, like keeping up with regulations and licenses. But if you work hard, owning a bar can be quite a profitable business venture.
Today I’m going to teach you everything you need to know about how to start a bar using the Lean Startup Method, which will save you both time and money in the long run. This business method was first created by Eric Reis, who went on to explain it further in his 2011 book, The Lean Startup Method.
But before I jump into teaching you about the Lean Startup Method, let’s explore the traditional startup method as well as why it isn’t effective.
The traditional flawed business startup process
When you look up the steps to the traditional startup method, they usually look something like this:
- Identify a passion or skill set you can cash in on (in this case, I’m guessing it’s bars or alcoholic beverages).
- Write a business plan for your bar.
- Fund your business.
- Choose a location for your business.
- Choose a structure for your business.
- Decide on a business name.
- Form your business formally: register your business, get tax IDs for your business, apply for business licenses and permits, and open a business bank account.
- Ultimately fail because this method is flawed.
A lot of business owners, including bar owners, may see these steps and consider them a rational and effective business startup method. (All except for the eighth step, of course!) The traditional startup method gives the impression that if you have a good business idea, a sound business plan, and a good business location, money will just start rolling in with very little effort on behalf of the business owner.
The traditional startup method and its promised outcomes may seem enticing, but the reality of running your own bar is a lot different.
In reality, you could follow all the steps in the traditional startup method to a T and still have your business fail. As a matter of fact, four in every five businesses that apply the traditional startup method fail within a year of opening their doors.
They don’t fail because the business owners are too lazy to achieve success or because they lack ambition, but because any business started using the traditional startup method is built on flimsy foundations due to the fact that it makes three very flawed assumptions.
Assumption 1: You have deep and intimate knowledge of your market
If you’re reading an article about how to start a bar, then I feel safe saying that you’re probably not an expert in the bar industry. You probably don’t know important things like alcoholic beverage trends, state and federal laws for bars and restaurants, or the application process involved with obtaining a liquor license.
As a new bar owner, it’s unlikely you have all the knowledge about the industry that the traditional startup method automatically assumes you have. Of course, if you’re interested in owning a bar, you’ve probably got a good grasp of various menu items sold in bars, but there’s a lot more to opening a bar than simply knowing a lot about drinks.
The first flawed assumption made by the traditional startup method is that you know everything there is to know about the industry, which is knowledge you just don’t have when you first open a bar. It usually takes decades to learn the intricacies of bar ownership, but the traditional startup method assumes that you know it all from day one. So the belief that a newbie has all the knowledge of an expert is an incredibly flawed (if not puzzling) assumption.
When you open a bar using the Lean Startup Method, you’re able to learn and gain experience while you’re developing your business. This is a lot easier than the traditional startup method because you’re not thrown to the wolves, so to speak, and expected to learn everything about the industry while simultaneously learning how to run your bar. Removing this sort of strain from the equation means that your bar will have a better chance of success in the long run.
Assumption 2: Your needs and wants are more important than your customers’ needs and wants
The primary goal of most small businesses is, of course, to make money. But if you don’t pay attention to the comments, wants, and needs of your customers, your business won’t last long in today’s customer-driven market.
The traditional startup method encourages you as a prospective business owner to think of the reasons why YOU want to open a bar, and doesn’t take into account the needs of your prospective customers, or why they’d buy drinks from your bar.
Your advertisements are going to look more like desperate pleas—“Please come buy drinks from my bar”—if you don’t pay attention to feedback from your customers. This sort of advertising doesn’t work well, and it can even make your business look bad.
When you apply the Lean Startup Method, you talk to customers and learn about other bars in the area, your potential client base, and what these people would like to see from a new bar. Is the area an entertainment desert, with no good bars for miles? Do the other bars in the area not serve the types of drinks customers want (like cocktails, craft beers, wine, etc.)?
Assuming that the wants of the bar owner are more important than the needs of the customers is the second flawed assumption that the traditional startup method makes.
The Lean Startup Method encourages you to talk to customers and find out about bars in the area, as well as what customers want from your new bar. This method requires fewer financial risks than the traditional startup method because you find out what will work before you invest your capital instead of the other way around. This customer feedback is massively helpful during the beginning stages of your bar because you’ll be able to design your bar and choose your inventory and menu items according to what your customers tell you they want.
Assumption 3: You have unlimited cash to burn
How easy life would be if money were an infinite and renewable resource. But since that isn’t the case, recklessly spending money isn’t a good way to maintain financial security. Of course, every business owner has to take some financial risks at some point, but if you waste money you can’t very well keep your business in the black.
Opening a bar using the Lean Startup Method means you’ll start by selling beer, and maybe shots, from a booth, which is probably not nearly as glamorous as the fantasy sports bar or specialty bar that’s inspired your dreams.
If you used the Lean Startup Method to open a bar, you’d start by immediately choosing your bar’s location, buying a brick-and-mortar bar and loads of bar equipment, obtaining all the permits and licenses your bar requires, choosing your bar’s concept, following loads of regulations if you choose to serve food at your bar, paying massive startup costs, and learning everything there is to learn about advertising, business management, and the bar industry—all without actually having any knowledge or expertise in business ownership and the hospitality industry. The traditional startup method makes the assumption that you not only have the money to sink into opening a bar, but also have networked and made all the necessary contacts. It assumes that you can run a successful bar immediately following your grand opening.
Opening a bar can cost anywhere from $125,000–$850,000. That’s a pretty big chunk of money that the average person can’t afford to easily replace if their business fails, and I’m guessing that it would be a critical hit to your finances to lose those startup costs too.
Using the Lean Startup Method to start your bar means that you can open your business in smaller, more manageable steps, while simultaneously learning about and making connections in the industry, learning about rival bars in the area, and earning a profit—all before taking any significant financial risks and paying outrageous startup costs.
If you’d rather own a bar that grows and succeeds, instead of becoming another of the four in five businesses that fail during their first year of business using the traditional startup method, then the Lean Startup Method is the more suitable option for you.
What is the Lean Startup Method?
There are three core ideas behind the Lean Startup Method: build, measure, and learn.
Starting a bar with the lean startup process means experimenting with different ideas and menu items, as well as making improvements to your service. Another important component of the Lean Startup Method is developing products that can most efficiently be delivered to customers at the lowest production costs. You’ll immediately begin learning about the industry, but the information comes more gradually than would be required with the traditional startup method. The Lean Startup Method is more effective than the traditional startup method because the traditional startup method requires you to create and stick to a business plan before you learn how to run your bar and figure out what tactics work for you.
The build phase comes first. In this phase you go out and talk to local people to find out what issues they face with other neighborhood bars, identify a problem you can feasibly solve, and then come up with a solution to the problem that fixes the issue brought up by your customers base.
Next is the measure phase. This is where you’ll test out the problem you identified during the build phase. This phase will help you learn critical information about what works for your bar.
Last is the learn phase. During this phase you’ll learn more about customer satisfaction levels with your products and services, as well as the customer experience at your bar. If one of your products, promotions or advertisements isn’t working, then you can scrap that idea and develop a new one as opposed to spending a lot of time and money on a failing tactic or product. Focusing on successful menu items, products and sales tactics will lead to a more successful bar.
During the first phase, the build phase, you’ll devise a plan and then set to work building your business. You accomplish this by finding a problem that many members of your community experience with other bars, creating a community for your bar, identifying an opportunity to supply a solution to the problem you discovered, and then developing that solution.
This stage is crucial because it provides you with a way to determine whether your ideas and initial concepts are good, and whether members of your community feel they adequately solve their problem. The main goal of this first phase is to establish a strong foundation for your business, ensuring that you have all the knowledge and experience necessary to run a bar successfully.
Step 1: Identify a problem
The first step is to find a problem that many people in your area have, one that only you can solve.
You can’t just dive right in and start selling cocktails, as fun as that would be, because this isn’t a solid or logical business model. There are loads of bars in the United States, and people can’t just afford to spend money at each new bar that pops up. It’s far more effective to come up with a compelling reason for people to come to your bar.
But finding this compelling reason can be difficult.
First, you need to find a pain point. This business term indicates a problem that causes many people so much pain, discomfort, or annoyance that they seek out a solution to it. When this happens, people will either come up with a solution to the problem themselves or pay someone to come up with a solution for them. In this scenario, you want your bar to be the solution.
But it’s not as easy as using the same sales tactics and products as most bars in your area. It’s far more effective to find a need that local people express that your bar can fulfill. Is it difficult to find a good bar in your area, save for the neighborhood bar whose charm has worn off? Do most of the existing bar options sell the same drinks or have the same promotions? Would customers like to see more sports bars, beer bars, wine bars, or cigar bars?
Pay close attention to the comments local customers provide you with. The feedback and information they supply will be invaluable to your bar during its early stages. Is there a lack of bars in your area? Does an existing bar in town have a bartender that isn’t personable? Would people like other alcoholic beverage options? Do people want a bartender that can give good drink recommendations or make signature drinks? Do people want to see a specialty bar in their area (e.g. a beer bar, a sports bar, a wine bar, something niche like a country bar, or a venue dedicated to an alternative rock theme)? Are people in your area knowledgeable enough about different cocktail types and shooters to be able to tell you about their favorites?
After you’ve talked to enough people you’ll identify a common problem that you can use to narrow the focus of your community outreach. Be sure to ask about the level of discomfort or frustration these problems cause. Talking to customers will allow you to learn about the industry, existing bar options in town, and community satisfaction with other bars. You’ll also learn what drinks are locally popular, when local people frequent local bars, and what events they would like to see at bars (live music, concerts, open mic night comedy events, karaoke, etc.). You can use this information to choose a problem you want to solve.
How do you choose which problem to focus on?
The Lean Startup Method doesn’t specify a way to pick which problem you attempt to solve, but these three tips should simplify the process:
- Choose a problem that affects a lot of people. Are there not enough sports bars in the area, or would people like to see a specialty bar? Are people interested in a particular type of drink that local bars aren’t serving, like Fireball or Jagermeister? Are there no bars promoting craft beer?
- Make sure the problem you choose is a pain point. There’s no reason to try to solve a problem that no one cares about. The more annoying or inconvenient the problem is, the better an idea it is for your bar. Do people want the option to dance at a bar, but none of the bars in the area have proper dance floors? Are there no fun events to go to, like ladies’ nights, karaoke, open mic night, or costume contests?
- Choose a problem that you can actually solve. If people want a bar that serves nothing but top-shelf exotic liquors, that’s not a problem you can solve initially. But you CAN test out new drinks, shots, and beers each month. This means customers will still get the quality drinks they asked for, and your menu won’t get stale, but you won’t go broke making it happen.
The idea behind this step is to find a problem that affects a lot of people in your area, that causes a lot of distress or inconvenience, and that they’re desperate enough to find a solution to that they’ll pay for one.
Step 2: Build a community
The second step involves building a community for your bar business. This community should be made up of the people who are affected by the problem you identified in step one.The good news is that this is fairly easily accomplished. Turn to social media platforms like Facebook, Reddit, Instagram, or TikTok. The viewers and followers you earn will form a community of people affected by the problem you’ve elected to solve, giving you a pool of potential customers once your bar business is up and running. While you’re cultivating your community, you’ll also be experimenting with your brand and advertising strategies, while also conducting market research. If you were to use the traditional startup method, all this research and work would take you three steps to complete, but you can get it all done in one easy step using the Lean Startup Method.
Though online communities are fantastic, it’s a good idea to create various community options. You should consider an offline community, as well. This can be accomplished by creating a meetup group or club and then scheduling regular meetings. Some of the benefits of offline communities include face-to-face interactions with customers that feel more intimate, as well as real-time feedback. Interacting with your community in person can make them feel a stronger connection to you, and it might give them a more favorable opinion of your bar business.
Reasons to build a community:
- It gives you the opportunity to learn more about the problem you’ve identified and the intimate details about how it impacts your customer base.
- It gives you a way to start developing your brand and marketing strategies, as well as a way to test them out on potential customers.
- You’ll have a group of prospective customers before you even host a grand opening for your bar business. This gives you a leg up on the businesses that used the traditional startup method because they’re forced to open their businesses and then build up a customer base from scratch.
- Creating a community gives you a way to obtain funding for your bar before you even officially open it.
How to build a community:
- Start a Facebook group and discuss different drinking trends, craft beer, draft beer, famous bar owners, bar designs, original bar concepts, some tips for how to open a bar, what it’s like to be a bar owner, different drink ideas, cocktail recipes, and more. The more content you post, the more comments and discussions and community interaction you participate in, the bigger your group will grow.
- Create polls on Twitter. People love interactive content, and polls are a great way to make people feel like their voices are being heard while also creating brand awareness for your bar business. Use this method to find out if people prefer a beer bar, sports bar, wine bar or other bar concept.
- Post pictures and videos from various events and bar openings and post them on your social media accounts.
- Use social media to network with other bar owners and business owners. This way you can meet other people in the bar industry, such as small business owners, brewers, mixologists and bartenders, as well as local officials. The people you meet through these connections will provide you with a ton of important information and useful tips, including regulations on the bar industry, steps for getting your liquor license, the headaches that come from all the regulations revolving around serving food, and more.
When you create an online community, people are able to provide you with feedback and make their voices heard. Without having to do much in the line of market research and analytics, they’ll tell you about the good and bad aspects of their small neighborhood bar, and your own bar. They’ll tell you about the types of liquor they like to drink, different varieties of craft beer they’ve tried and liked, their go-to cocktails, cover charges and drink prices of other bars, and how much they like or dislike each local drinking establishment. This fountain of information is why it’s so important to complete this step.
Another important reason to complete this step is that it provides you with free advertisement for your bar, which is something that a lot of new bar owners would kill for. As your community members interact with your posts and videos, your social media accounts will become more popular and noticeable to other people, so word about your bar will spread. Once you’ve built a reputation for interacting with your community and making changes to your establishment based on the comments and suggestions of your community, people will come in droves to your profile—and, eventually, your bar.
Step 3: Identify a solution opportunity
It would be cool if you could solve problems by simply identifying them, but sadly, that’s not how it works. Because of that, the next step is to figure out how to solve the problem you’ve identified.
While you’re creating and developing your community, ask members questions about the successful establishments they’re visiting, their favorite events, specials, and drinks from each established bar in the area, the marketing used by competitors, and how satisfied they are with the drinks and service provided by other bars. Your community will provide you with a lot of this information and you can use it to start brainstorming a solution.
You should also ask questions about the promotional tactics employed by other bars, the types of liquor and beer they stock, whether customers have visited their websites, the sort of information available on their websites, and if they could make purchases from the website for concerts and events.
Learning about the types of advertisements that other bars use, the types of alcohol they keep stocked, the prices they charge, and the type of bar that people want to see will help you develop your bar. Use all this information provided to identify a solution to the problem you’ve identified.
Step 4: Develop a solution
The next step is developing a solution that your bar can provide. This can take a lot of creativity and time to pull off because the right solution will be not only one that fulfills the needs of your community, but also one that they’ll pay for.
How to develop your solution:
- Consider the possible solutions your bar can provide. If enough people have voiced sorrow that their local bars don’t stock a particular liquor or craft beer, that should be the first item on your inventory list. If people consistently tell you that they want friendly, knowledgeable bartenders that make great suggestions and a bar they feel safe in, that should become the brand of your bar.
- Ask your community how they feel about your solution idea. Because it’s necessary for your solution to meet the needs of your community, how they feel about your solution is important. You want your solution to not only be well liked by your community, but also generally accepted by the majority of your community as a solution that reasonably meets their needs. This is also a good time to talk to other bar owners and find out whether your idea is feasible.
- Think of and then develop your MVP, or minimum viable product. This is the product that will cost the least to produce and can be served to your customers with the least effort. This is the difference between craft beers and shots as opposed to fancy gourmet cocktails that require expert skill levels and take hours to create.
You’ll know you’ve found your solution when you find one that solves the problems of your community, requires minimal production or ongoing costs, and can be easily served or supplied to your customers. Creating an MVP for your bar guarantees that your goods won’t be expensive to produce, and the elimination of that financial strain will make your bar more likely to succeed well beyond its first year.
Next is the measure phase, which I mean in the scientific sense of the term, like “test” or “experiment,” so don’t go get your ruler or tape measure just yet! During this phase you’ll conduct a number of tests to determine whether your MVP is practical.
Step 5: Test your MVP
Once you’ve brainstormed a solution, checked that it reasonably satisfies the needs of your community, and developed your MVP, you can then test it out. Experiments are the bread and butter of the Lean Startup Method, so you need to get used to them because you’ll conduct a lot of them for your bar over the years.
You should consider many factors during the creation phase of your MVP, such as state and federal laws, licenses you may need to obtain to set up a booth, and zoning issues (a lot of places won’t let you sell alcohol within so many feet of a school or church building). But one of the best parts of the Lean Startup Method is the fact that if you choose an MVP that doesn’t work out, you can just scrap it and go back to the drawing board to start the process over and over again until you find the right one.
It may seem a little strange to you to test out your MVP before you’ve even sought funding for your bar, but in reality it makes good financial sense. If you were a bank or financial institution, and were given two business options to fund, one which had completed extensive market research, already established a community full of potential customers, and developed a product that’s proven to sell, and another that simply had a business plan and a hope for success, which one would you fund? Most financial institutions would choose the first business—it’s more of a sure bet.
It seems scary to start testing your MVP, but don’t worry. It’s a simple process, and you’ll likely find that you like it. Plus, it will create more awareness about your bar, and it’s a major component of the lean startup process, so it’s necessary.
You have a couple of options available to you when it comes to testing the MVP of your bar. The first is choosing a variety of craft and draft beer options and setting up a booth at local events, fairs, fundraisers, concerts, or farmers markets. This is a good way to find out whether people like your beer options, and let’s face it: beer is a vital menu item at any bar, regardless of the variety of liquors you sell. Also, while you may need to get a business license or permit and apply to be a vendor at some of these places, you likely won’t be required to obtain a liquor license because you aren’t serving the hard stuff. Be sure you’re following laws regarding alcohol, especially checking IDs.
Another option is creating a couple of cocktail shooters and setting up a booth somewhere like a farmer’s market, or at a concert and handing them out for free. You’ll likely need to get a license and permission to sell alcohol, but it’s a great way to find out which signature cocktail shooter your community favors. Of course, whole cocktails are probably not a great idea in many places. If you’re handing out free Long Island iced teas at the farmer’s market, for instance, it’s far too easy for granny to get smashed and cause a scene. You don’t want that sort of publicity, so stick to small amounts of alcohol, and choose something with fun colors that will draw attention and interest people. And think up a catchy name, as well. It needs to be something short and simple that people can remember. If you come up with something truly unique, people will definitely come try it out.
Ask people questions about your products and services. Do they like the drinks you’re serving? How do people like your specials? If you have signature drinks, how are they selling? Which was their favorite drink out of those you served? Which theme night draws in the biggest crowd? How do they feel about the strength of the drinks you served? And probably most importantly, would they come back and pay for more?
It will be fairly easy to determine if this test was a success. You’ll get a lot of customers coming to your booth and they’ll talk about how good your drinks are, and they’ll even tell their friends to sample your wares. This test didn’t go well if there wasn't a line at your booth. If you’re handing out free alcohol, it would be unusual for people to not take advantage of that opportunity.
Step 6: Sell your MVP
By now you’ve tested your product and learned a bit about your target market. Now it’s time to start selling your MVP. Sadly, selling your MVP is going to be a lot different than your fantasies.
Because this is the last step you need to complete before you go on to obtain funding for your bar, it’s an important step that you’ll want to get right. This stage gives you a huge advantage over businesses that were started using the traditional startup method because it will prove that your products sell, that you have a successful business, and that you’re deserving of the funding necessary to open a bar and expand.
If you don’t have a liquor license yet, selling your MVP is going to be a little different but still quite manageable. You can easily sell beer in the meantime, so long as you make sure that you’re “carding” people to make sure you’re not selling to minors, which is against the law. A great way to do this is to apply to be a vendor at concerts, fairs, farmers’ markets, flea markets, or other events in your area. This would work particularly well in the summer when people are going to be looking for cold, carbonated, refreshing beverages, but it will work all year round because there’s never a season in which people won’t drink beer. Another idea is to find a good location and set up a stationary stand. A stationary stand means that you can make sales from just one place, which can be a bit easier than booths or carts. It can draw more traffic to your location, and increase the chance of repeat and word-of-mouth business.
Selling your MVP this way allows you to learn which products and tactics work for your business and which don’t. It also allows you to learn about the state and federal regulations in your area, work on your advertising strategy and build up a loyal customer base.
The last of the core ideas behind the Lean Startup Method is learn. You’ve gone through the trouble to build your business, measured it to find out whether it’s a viable option, and now you must get feedback from your customers to find out whether it’s a sustainable business option. You can use the feedback from your customers to improve your products and services and innovate your business so that any changes made to it are by customer demand.
Step 7: Get feedback on your product idea
When you get to this step, you’ve created and grown a community that serves as the customer base for your bar, identified a problem that your community faces, and provided a solution to it, and then developed, tested, and sold your MVP. Completing this process means you should have a good idea about which advertising strategies work for your bar, how much profit your bar can make, and the ongoing costs of your bar. So the next step is to ask for feedback about your products and services. Here’s how to use the feedback to learn and create a successful bar:
- Ask your community members about which items from your drink menu they like best, why they like them, how they compare to the drinks your competitors serve, and what new items they’d like to see on your drink menu.
- Give careful consideration to the feedback your customers provide. How do your customers feel about your bartenders and cashiers? Do they like the taste of the drinks you’re serving? How do people like the quality of liquor, beer or wine you’re selling? Do they like your drink recipes? Is the alcohol content strong enough? What’s your most popular drink or promotional event? What’s the most common suggestion you see? How do they feel about the portion sizes of your drinks? How does your bar compare to other bars in the area?
- Improve various aspects of your bar business using the feedback from your community. If you do this for long enough, you’ll eventually have a bar that’s designed according to what your community wants.
Social media can provide a lot of feedback at this stage as well. You can easily create polls on various social media platforms, or set up a survey on your landing page or website. Make sure to read online reviews about your bar business, too, because they’re a great way to receive a ton of information, and you’ll usually find explicit details about how to best improve your products and services.
Once you collect the customer feedback and analyze it, and once you feel like you understand what your customers want, you can start making changes to your bar business based on the comments and concerns brought up by your customers. When changes are made to your bar at the request of your customers, then they’ll be a lot happier, and happy customers lead to more money and overall success for your bar.
You should analyze the sales, promotions, and advertisements of other bars in the area as well. Every time a bar puts on a sale or drastically switches up their marketing strategy, that’s an attempt to solve a community’s problem. If their tactics fail, then you’ll know not to employ them yourself. But if they succeed, you’ll know this is an area you need to look into for your own bar.
The research into other businesses and the feedback you receive from your customer base will help your business grow and expand. It will also allow your bar to successfully compete against other bars in the area. These tactics may just be what puts your bar on the map and makes people consider it the new neighborhood bar.
Why use the Lean Startup Method?
If someone told you that a really expensive product had an 80% chance of breaking or failing within a year of purchasing it, would you still buy it? Most people would consider that a ridiculous question, but that’s the case with the traditional startup method. Four in five businesses created using the traditional startup method close their doors within a year of opening them.
Opening a bar using the traditional startup method means paying insane startup costs and taking considerable financial risks. With no market or industry research, you just dive headfirst into business ownership and hope nothing goes wrong. But as a bar owner that applies the Lean Startup Method, you’ll continually test different ideas and strategies with your customers and adjust them based on their feedback. Using the Lean Startup Method to open your bar gives you a notable advantage over businesses started with the traditional startup method because you’ll create a community for your bar that will eventually turn into your customer base.
When you use the Lean Startup Method to open a bar, you enjoy lower startup costs than those incurred when you use the traditional startup method. The traditional startup method assumes that you have enough funding to start a bar yourself. Meanwhile, the Lean Startup Method gives you the opportunity to learn about the industry and how to successfully run your own bar. Without the added strain of significant financial risks, your bar is more likely to flourish under the Lean Startup Method and survive past its first year.
How is it that I can confidently tell you that the Lean Startup Method can give your bar a better chance of success than the traditional startup method? Using the Lean Startup Method, I’ve started five different businesses over the past eight years. I’ve successfully sold three of them, and still currently run the other two. I’ve also helped thousands of people start the businesses of their dreams using the Lean Startup Method, and I can help you open a bar, too!
You’ve demonstrated that you can successfully run a bar on your own. You’ve conducted thorough market research and received customer feedback to improve your services, all of which will lead to a more successful bar business well into the future. It’s a good idea to start thinking about expanding your bar at this point. This means you’re going to speak with a real estate agent, find the perfect location, write a business plan for opening a bar, secure funding, acquire the proper licensing, decide on your bar concept (do you want a beer bar, a wine bar, or something else?), and follow the state and federal regulations, and finally open a bar. Luckily, all the knowledge and experience you’ve accrued by completing the lean startup process should make designing a business plan, getting funding, and opening a bar a cakewalk.
Once you get the funding to open a bar, you’ve still got to do a ton of work before your grand opening.
You’ll need to hire employees, so you’ll want to apply for an EIN (employer identification number) from the IRS. Also, when you open a bar, it’s a good time to open a business bank account.
You should also decide on a business structure for your bar. There are several to choose from, like a corporation, sole proprietorship, or limited liability company (LLC). If you’d like to learn more about LLC formation, check out How to Start an LLC.
You’ll also need to consider what’s known as a “registered agent.” A registered agent is a person or business entity that will accept mail, legal documents, and service of process on behalf of your business. If you’d like to know more about registered agents, read the Best Registered Agent.
Choosing the right physical location is a big decision. You’ll have to take into account all the normal factors, like foot traffic and visibility, but you’ll also have to consider various legal issues, as well. You’ll need a liquor license, of course, as well as business licenses, and in many places opening a bar close to a school, playground, or church isn’t legal. So, check the rules and regulations in your state.
Here’s a list of some of the other activities you may need to complete to make sure your bar is successful:
- Hire employees: When you own a bar, it’s likely that people will at least get buzzed, if not inebriated. And inebriated individuals can be just as stressful as they are fun. So, you’ll need a crew of trustworthy employees that can handle stress well. Here are some positions you should consider hiring for: bar manager, bartender, barback, cocktail server, busser, cook, host/hostess, and a marketing specialist.
- Follow state requirements: Depending on what you serve at your bar, there could be a number of requirements and regulations you’ll have to follow. Some of these include business licenses and insurance, liquor licenses, and a slew of licenses and inspections if you decide to serve food at your bar.
- Hire a security team: Unfortunately, some people get rowdy when they drink. This leads to a number of different types of crime, including theft, fights, and worse. And there are some predators who go to bars to look for victims. So, you should get a security system, along with a great security team, and an inventory specialist that works closely with the security team. On top of that, you should consider instituting a “pink drink” policy. If someone comes up to your bartender and orders a “pink drink,” that means that their date or someone in the bar is intimidating them, scaring them, or making them feel uncomfortable. The bartender should then contact security, and your security team should be trained on how to handle these situations. Many bars with “pink drink” policies post about them in the bathrooms so patrons know what to say to the bartenders to initiate the protocol.
- Find the right vendors: Alcohol costs a lot of money, so it’s important to find the right vendors. The right vendors will be cost-efficient but sell quality products. No one is going to come back to a bar that doesn’t serve good quality alcohol.
- Switch on the utilities: Now that you have a physical location for your bar, you need to switch on the utilities so that your business operates properly. Some of the utilities you’ll need to get include electricity, water, gas (or some other heat source), air conditioning, and Wi-Fi.
- Business software: You’ll need some good business software when you open your bar. There are a number of things that business software can do for you, such as tracking sales, managing your taxes, tracking inventory, processing payroll, and more. Basically, business software is designed to make running your business a lot easier. Check out my Best Business Software article to learn more about business software.
- Acquire legal services: There are a lot of legal considerations when it comes to owning a bar. Intoxicated people are a liability in and of themselves. It’s a good idea to make sure you’re covered because any legal issues could be a major setback for your bar. Luckily, there are a number of online legal services to choose from. Click here to check out my article about the best online legal services.
- Experiment with your products: Just because people are fond of your drinks and services doesn’t mean you should never change your menu up. Offering your customers new signature cocktails and drinks means that your customers will have the opportunity to experience new flavors and drink trends, and they may come away from your bar with a new favorite drink. To change your menu up and keep it fresh, consider adding a new menu item, promotion, or theme night on a weekly or monthly basis. If a drink or promotional event goes well, consider adding it permanently to your menu or services.
Congratulations! It’s a lot of hard work to open a bar. It’s even more scary to start a business when you consider that four out of every five businesses started using the traditional startup method fail in their first year. But using the Lean Startup Method to start your bar gives it a better chance of long term success. Here are the steps to starting a business with the Lean Startup Method:
- Identify a problem.
- Build a community.
- Identify a solution opportunity.
- Develop a solution.
- Test your minimum viable product (MVP).
- Sell your MVP.
- Get feedback on your product idea.
Once you’ve finished the last step, your work isn’t done. You’ll complete the process and go through the build, measure, learn phases numerous times throughout the life of your bar, and it will help your bar succeed.
It doesn’t matter which startup method you choose, it’s a lot of hard work to open a bar. But if you’ve got dreams of owning a great bar and have the drive and determination to do it, then the Lean Startup Method will provide you with a safety net that ensures that your business is more successful in the long run.
Congratulations again, and good luck with your bar!
How to start a business guides
- How to start a non-profit
- How to start a record label
- How to start a dispensary
- How to start a restaurant
- How to start a coffee shop
- How to start a skincare line
- How to start a courier business
- How to start a painting business
- How to start a sticker business
- How to start a candle business
- How to start a makeup line
- How to start a bar
- How to start a farm
- How to start a car wash
- How to start a food truck