How to Write a Killer Bar Business Plan
Congratulations: you’ve decided to open a bar. Making this decision is an exciting first step, but before you go any further, you need to write a business plan.
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To kick things off, write an executive summary to outline the key point of your business plan. This helps give readers an idea of what you’ll be highlighting throughout the plan.
Start with your vision for the bar. Do you imagine a sports bar filled with patrons during the big game, or a speakeasy space with craft cocktails? Every bar caters to a different type of clientele — be very specific about yours.
Next, create a mission statement and include the key factors for your bar’s success. Your mission is a summary of your company’s values that highlights how your bar distinguishes itself from the competition.
This statement will trickle through every aspect of your business and may influence who decides to do business with you. Your mission can also help you clearly identify what you need to focus on to draw in customers and beat out the competition.
Think of your company description as the “who, what, when, where, and why” of your business. Include the most important aspects of your bar including the theme or concept, location, and your target market. If you have investors or stakeholders, this piece should give them your business’s most salient details.
Make sure to go into detail about your bar’s location and design. Is there parking nearby? Or space for ride sharing or public transit? (You want to make your bar easily accessible.) The design should create an experience that engages customers and encourages loyalty over time.
To attract investors, you want to show you know your stuff when it comes to the industry and market. So you need a market analysis that compiles industry insights, customer information, and competitive analysis and helps you define what success looks like.
Start with a service industry analysis and then dive deeper into your specific industry segmentation. If you’re a sports bar, cocktail bar, wine bar, or nightclub, you should compare forecasts and trends in your market.
Next, describe your market segmentation and target customer and why your bar will appeal to them. Creating a customer profile (a description of your ideal customer) can help you later on when you need to develop a marketing plan. This does not mean you’re excluding people from coming, but it helps you focus your marketing efforts.
Then analyze your competitors. How many other local bars are there and how do they stack up? Are there larger bars that would take customers from you?
Finally, write a SWOT analysis for your bar. Discuss your bar’s strengths, weaknesses, opportunities, and threats. By running a SWOT analysis, you can discover what advantages you have over the competition and plan to take advantage of opportunities.
Product line and menu
What you offer on your menu can attract customers (and investors). List out everything on your menu with descriptions, from cocktails and liquor to mixers, garnishes, and other add-ons.
Many purchasing decisions are based on emotion, so naming drinks and including the right type of menu descriptions is a crucial component of your marketing plan. Take your time when writing out these descriptions so you can convey the right message to your customers.
Next, talk product sourcing and where everything’s coming from. For some bars, touting 100+ beers on tap is a point of pride, so make sure to identify what your claim to fame will be. Also, think about sourcing locally, as this can be attractive to certain customer groups.
After you decide what to source, lay out how you’ll manage your products and ingredients. Developing an inventory management system for your bar is important to optimize your daily operations and cut down spending.
Finally, write up your competitive comparison to other bars in the area. Are you offering the same beer selection as everyone else on your block? Are you the only one serving craft cocktails? Keeping track of your competitors allows you to diversify and use your menu as a competitive advantage.
A marketing strategy is the section of your business plan that outlines your overall strategy for finding, attracting, and retaining customers. Here’s what you need in this section:
- A positioning statement: This should include a description of your target market, as well as how you want that group to perceive your brand.
Pricing strategy: Achieving a successful bar is almost impossible without pricing your drinks the right way. To calculate your price, start by adding up the cost of ingredients.
Then, choose a pour cost percentage (or profit margin) to target. Price the drink by taking the cost of your ingredients and dividing by the target pour cost. That equals your price. Good target pour costs to target are 20 percent for beer, 14 percent for liquor, and 22 percent for wine.
- Pre-opening promotion strategy: Describe whether you’ll have a soft opening, a pop-up prior to opening, or a grand opening, and how you’ll execute it. Also, make sure to describe how you’ll generate buzz for it.
- Marketing programs:Once you’re open, you need to encourage your regulars to keep coming back and entice new customers to try your bar. You want to think about all the channels you might use to do this — email, social media, PR, paid ads, etc. — as well as the types of events and promotions that would attract customers. The range of industry options include guest bartending nights, happy hours, reverse happy hours, live music, and karaoke.
Website: The final piece of the marketing strategy is your online presence. Forty-four percent of consumers we surveyed said a website was very or extremely important in their decision to try a business. So include screenshots of your website and describe the content customers can find on it.
You should also utilize your social media presence as an extension of your website; most customers expect to find the same types of information on a business’s social profiles as its website. Of course, social media is also a chance to expand on your website and really show your bar’s personality.
Spell out the type of business entity you will select for the bar, like sole proprietorship, partnership, or LLC. This is important when filing your tax return, so be sure to speak with a legal consultant when selecting the right business entity for you.
A sole proprietorship allows you to be your own boss, but you’re also liable for all of the company’s debts. A partnership helps alleviate all the work that goes into opening a bar. The downside to partnerships is that partners are legally liable for both their actions and the actions of their partners. Finally, an LLC shields you from personal liability, but the company can never go public.
Next you need to lay out the building blocks of your organizational structure. Who is on your management team and what is your personnel plan? How many bartenders, bar backs, and other staff do you need to get started? This is important to include to give a picture of payroll costs.
Finally, outline what technology you need to run your bar. A point of sale allows you to take payments and control your daily operations. Ideally, you want a system that lets you keep tabs open, incorporates tipping, and conducts sales reporting so you can uncover inefficiencies and improve how you run your bar.
Last, talk financials. A financial plan is important to lay out what the sales need to be for the business to be successful. The financial plan section includes bar startup costs and a break-even analysis.
Your bar startup costs are the expenses incurred during the process of starting up your business. Startup costs vary depending on the type of bar. For dive bars, seating and real estate (or size) is your biggest cost. For a cocktail bar, your biggest startup cost is getting the interior design right.
Funding for your bar can be difficult at times, so it’s important to brainstorm your options and lay out a plan. Is it self-funded? Are you looking for investors? Can you take out a small business loan? There are various funding options that should be assessed when you’re starting out.
Then look at how much revenue it takes to break even — to cover all the fixed and variable costs of starting and running your bar. Finally, discuss your profit and loss forecast, what type of cash flow you need, and how you will manage a balance sheet. Include a profit loss analysis, which is a financial statement that summarizes the revenues, costs, and expenses incurred during a specific period of time (usually a fiscal quarter or year).
Writing out all of these technical and financial items in your bar business plan helps you ensure your bar’s success. Of course, if you’re inexperienced with these types of analysis, you might reach out to a financial, tax, and/or legal professional to give you a helping hand.
Running a business is no easy feat, but Square is here to help. We have all the tools you need to start, run, and grow your business, whether you’re selling in person, online, or both. And we’ve made all our tools to work together as one system, saving you time and money — and making decisions easier. So you can get back to doing the work you love and focusing on whatever’s next. See how Square works.
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