How to open a Bar or Nightclub
eHow.com
Steps
Step One
Beware of the Beginning New bars and nightclubs only get one shot at success. Every customer who comes through your doors is crucial to the success of your venue and you need them to have a great experience if you hope to have them return. It is vital that your venue is ready for success from day one. Many bar and nightclub concepts fail within the first twelve months because they don’t have an adequate plan in place. There are many key factors that contribute to a Bar or Nightclub failing! 1- Bad Management – The most common problem is lack of experience in opening a new venue. Many managers come from concepts that have been up and running and successful. These managers have been working in an environment where all the operating procedures are already in place and functioning. 2- Bad Owners – One common failing is partners not Seeing Eye to eye about how the bar will be run. Often, money issues arise, with one or more partners unwilling to commit money to areas they feel are not effective. The most crucial areas are promotions and hiring and paying a good operations manager. It’s not unusual for owners to think that because they have spent so much time in bars, it is easy to run a bar. At this point, I often find myself asking them if they should get their tax guy to run the bar and I will do their taxes for them! Owners and investors often need to step back and let experienced operators take over. 3- Under capitalization – Many venues begin without enough capital. During the construction phase, with all the delays and changes involved, the budget gets eaten up, leaving the concept little or no capital to properly execute promotions and operations. Many times, having a bad lease agreement and not allowing enough time for construction will drive a bar into a financial crisis before opening. Owners will find themselves paying rent while still in construction because of bad lease negotiations, construction delays and horrible city planning departments. Delays are inevitable, so add an additional 20% to the bottom line when figuring out your budget. 4- Bad Partnerships – Wow, I have fallen victim to this time and time again! Partnerships are often the best way to end up strangling someone who was your best friend six months ago. The level of stress in opening a new concept is often too much for many people, leaving them bitter and spiteful and more than one partner screwed over
Step Two
Bar Business Plan If you need to raise money, a good business plan is in order. Many bars and nightclubs need large injections of capital in multiple phases from the very beginning. For construction costs or lease obligations, sometimes this amount will be in the millions of dollars. I, for one, am not great at writing a solid business plan but I know many people who love nothing better than to raise capital for a dream in spiral-bound notebook form. I recommend you find one of the many templates available on the Internet.
Step Three
Selling the dream to Investors Many investors in the bar and nightclub business are often motivated not by ungodly returns but by the illusion of being young and cool again. They missed out on the good years, the chicks and the party life. Often, it was because of marriage or work commitments or just not ever being the cool guy. Now, they have some money and want to recreate the years they missed! I like to say to these lost souls “The easiest way to make a small fortune is to start with a large fortune and then open a bar!” If you want to invest in a bar or club, great, but let professionals run the operation and stay out of the way! Have a good time with your friends and family, buying them drinks and partying in the VIP room all night. Just stay out of the way. When you are trying to raise money for your bar or nightclub, selling this dream to investors is often 90 percent timing and 10 percent sales. Despite that, you usually will find the right person at the right time. Many people want to be a part of something exciting such as a bar or nightclub. You need to make sure you present your business plan with legitimate goals and clear ideas of what you are trying to create. Make the potential investors comfortable with the risk vs. reward factor of a bar and nightclub.
Step Four
Market Research & Analysis I can't stress enough how important research is. You need to know if your dream of opening a bar or nightclub will actually work in the real world. You need to know what it is that your market and customers actually want. There are four areas you should research: 1. Marketplace and customer base 2. Competition 3. Current industry trends 4. Seasonal effects on your business. There are many professional market-research firms that can be contracted to do this for you. Successful companies specializing in market research include Market Decisions Corporation (MDC Research) and Moore Information, both companies are based in Portland, Oregon. They are experts in gathering information and opinions from targeted population samples. They can sit down with you, analyze your intentions and goals, isolate your target market and design appropriately worded questionnaires. This will enable you to gather honest and accurate information about what people will want and expect from your concept. Where Do You Plan to Open Your Bar? Who is Your Customers? This is the first question you need to ask. You are not going to want to open the wrong concept in the wrong location for the wrong demographic. It is important to get out and hit the local hot spots. Go out and do market research or hire a firm to send interviewers (or “interceptors”) to all the bars and nightclubs frequented by your target demographic for a month or two. Ask people what they like and don’t like about the existing venues, and what they think is missing in the realm of bars and nightclubs in your marketplace.
Step Five
A QUICK CUSTOMER PROFILE You may find that the promotions you thought were targeted to specific customer groups bring in patrons you didn’t expect. Demographic overlaps are more common now than at any other time in history. Now, the rich and famous are rubbing shoulders with the masses in hot spots all over the country. But it is still important to establish which customers you are trying to attract to your concept. • College students • Twenty something • Blue-collar workers • The in-crowd/A-listers/celebrities • Working professionals
Step Six
THE COMPETITION “It is my belief that competition develops synergy! “If I am wrong, then why do so many billion-dollar casinos open next to one another?” Two Types of Competitors: Direct and Indirect You need to take a good look at other local venues long before you lock in your location and concept. This is the time to study everything other venues and concepts are doing over your entire marketplace. What is working for other venues and concepts and what isn’t? Do you feel the location you have chosen is the type of area you can jump into and provide a product on par with the other local establishments? Who are you competing against? Do you want to compete against another established concept? Is a similar concept 10 miles away going to affect yours? Direct Competition vs. Synergistic Competition Synergy is a very real effect that occurs in the bar and nightclub industry. As an intelligent operator, you are not going to open the same type of bar or nightclub next door to an existing one with the same concept. But with so many ideas to choose from, you will be able to find a twist on other local establishments. I do not believe in competing with your neighbors since you all have the same goals. If you and your neighbors understand the business, they know that people today have extremely short attention spans and are always on the move. The typical customer will hang out for anywhere from 30 minutes to 2 ½ hours, depending on many factors, including seating, entertainment and the concept’s popularity.
How to Open a Bar or Nightclub, Chris’ extensive experience in concept development, design, market placement and construction management have given him the insight to be able to design layouts that maximize flow patterns and provide energy points needed for efficient and successful operations.
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