Here we go!

[JamesH]

Well we have decided to take a 180 in our life and are buying a bar! My wife and I have been married for 20 years and have been succesfully running our own construction business for the last 9 years. I run the crews and she manages the office. With the recent slowdown in construction we started exploring our options about a year ago and the short story is that we decided to look for a bar. The primary intent was to purchase a profitable bar with good cash flow.
We made our first offer before Thanksgiving 09 and spent 2 frustrating months dealing with an encompetent business broker who would take 4 to 5 days to return a phone call....no fun. We felt the place was a perfect fit for us and the cashflow was where we needed it to be so we pushed on. We finally make a deal and get our due dillegence materials only to find out that there has been a "miscommunication" between the Seller and his broker. My wife found that the bar was making just over 1/2 of what was claimed. We cut our offer in 1/2 and the Seller decided to keep it..... Oh and the bar is still being advertised to this day with the inflated gross and net earnings.....Phone call to be made to BBB soon....
After discovering the problem, she asked for the Sellers bank statements, which weren't originally part of the Due Dilligence package. We were told that "no one has ever asked for those". My response was maybe that's why so many people fail in business......They were ringing up comps and retail sales and then zeroing them out (which is legal in Nevada) but they weren't actually sales so it inflated the gross by $100k.... Then the broker added "expense" back in as Discretionary Income..... saying that he didn't know the Seller was already ringing them in as a retail sale. The bank statement confirmed that the Seller was depositing about $100k less than he was claiming as Gross Income. The P&L's do not tell the whole story....

James

[casabar]

Being in the construction business do you never do cash jobs?

I have done cash jobs in excess of 100 grand. Bars are very much like the construction business in that it is often best to generate "Black" money. This can come back to bite you in the ass as in the example you gave with these people trying to sell their business. Do they turn the numbers they claim? Who the hell knows! The most successful bars I know do high numbers and claim a loss. A bird in hand is worth 2 in the basket.

Why would someone sell a cash cow? Again who the hell knows! Maybe just burned out ot they are full of crap and losing. Frequent the bar or peak with people that are long time regulars or in your case have a someone in this business that knows whats going on investigate. Brokers = Jokers You would be better taking your chances with an Ethiopian contacting you regarding a few million they will share with you for a few thousand in advance.

I could go on and on, but I am as tired as a fat kid after a cake eating contest so I will edit this post manana.
Last note: The numbers don't lie. Ha hahahahha Yeah they do like a bad boy on Santas knee.

Good luck

[Daryl]

While reading this post it occurred to me that how much do the numbers really mean? Are you going to continue to run the bar exactly the same as it is now?

I know this may depend on the type and size of the venue. But are you going to change anything? do you think you will add food to the bar, or perhaps change the menu that is being used now.

Is the owner on site all the time currently? With your construction background are you going to enhance or remodel the bar? Are you going to give better service and a better product?

The point I am making is what difference does it make if the bar is profitable now or not.... Unless you are going to leave everything the same way it is now. And need it to turn like a franchise does it really make that much of a difference.

I realize this may seem a little unconventional, and no one wants to buy a dog, but does the place have all the elements to make a profit. Even if it is making money now and you take it over, it could quickly turn on you. Until you learn the "tricks of the trade" his money making ability may not become yours.


I think it if fairly common for smaller buisness to conceal or loose income. Often many owners make more money than they report. I have seen this with accountants, contractors, car dealers, and restaruant owners. Also a lot of expenses can get pushed into the business that are personal in nature. Creating a "loss".

I would assess the business to see if it has , good parking, decent equipment, the right demographic (area), a good customer base now, or potential, etc, etc.

Then if you think it can work and has all the right elements, put that into your consideration.

You did not say what percentage the 100k shortfall or difference is. 100k out of a million, and 100k out of $250k are two totally different things.

I may take a little head from other for taking this approach, but just because it is making money now, or lossing money now....it does not mean things will continue when you become the owner.

Let us know

[JamesH]

While I don't deal in cash in my construction business, I do have friends who have been in the restaurant business for 30 yrs so I completely understand what can go on in a cash business. The $100k was part of about $500k gross income claim. Regardless of whether the owner was skimming from his corporation or not (which they swear they aren't) the going rate for for bars around here is about 2x net earnings or less. If you want top dollar for your business, you better report all the income.....or find someone who is willing to risk $200k on bad info in a recession....Trust me I really wanted to make it work, that's why we offered less even though it no longer fit our original criteria as far as cash flow goes.

So the rest of the story is that after this deal fell through my wife was surfing the internet and came across a bar for sale by owner on Craigslist in our old home town.... For now we will just say it's in a small town in Northern California. We both graduated high school there, both our parents and grandparents still live there as does my wifes sister. Man I couldn't wait to get out of there 20+ yrs ago when we graduated...now we are going back.... Amazing how things change.

[JamesH]

About 4 years ago, this bar was purchased by a couple who moved up from Southern California, along with a Bed & Breakfast across the street, a resort motel 15 miles outside of town and a parcel of land where they had a new house built..... Can you say ambitious......18 months later they divorced.....Imagine that....They eventually moved back to SoCal and closed the bar (about 6 months ago). The bar is about 4,000 sq ft split level with a really nice lounge type bar at street level (which they decorated in Rat Pack stuff) and a Sports Bar with dance floor and stage at the back of the building which is about 7 steps lower than the upstairs bar. Each bar had an electronic cash register with sticky notes showing the drink prices.... The Gross for 2008 was about $155K with a liquor cost of $59K.... The owner tended the Lounge bar and had bartenders in the Sports bar.
We are buying the business and liquor license for $60k. $15k down owner carry $45k for 5 yrs. 5 year lease at $1,500/month with a 5 year option which includes a purchase option on the building.

[rootsreality]

In fact you can pretty well count on a big downturn in business with am ownership change. You will need to have a game plan to turn it around quickly.

[Thomas]

How much do they charge for a cocktail in Cali? .38 seems like a high cos to me. 155k annual gross seems low. That is an average of $425 a day!

Read these forums carefully my Cali friend!

Thomas

[JamesH]

Not only are the cost of liquor high, they were the most expensive bar in town......how do you have that combination? We believe that the liquor costs relate directly to the fact that there is no POS system in place and even with the owner running one bar, they couldn't possibly monitor the other bar and control theft.
With their cost of liquor, the gross should have been over $250K at a 23%.....
They told me their intent was to bring a "High Class" atmosphere to a small town and that their "Martini Bar" concept never really took off.... The number one employer in town is the lumber mill followed by the County....
Correct me if I'm wrong, but don't your available clientel dictate the atmosphere of your bar? I think they were fishing in a very small pond....

James

[JamesH]

We visited the competition this Friday, there are 3 other bars in town. Three of us are "Downtown" and the other is across town. We visited the two other Downtown locations first.

The first place we visited was very basic, with a beautiful backbar from the 1800's in a room with a wooden floor, there was 1 pool table, internet jukebox, one 26" television and 2 dart boards. There were about 35 people in there and the Friday night special was Bud Wheat on tap $1 or Coors light/Sierra Nevada on tap $2 in 10oz plastic throw aways. 9 out of 10 patrons under 25. Two beers cost us $3

The second place we visited didn't have nearly as nice a back bar but had way more charm, lots of memorabelia etc. They had a pool table, a bartop video game, two 20" televisions and internet jukebox. There were about 40 people and there prices were Bud/Coors light on tap $2 or Sierra Nevada on tap $3 in 10oz glass mugs or they had 1/2 pitchers of for $4/$5..... 6 out of 10 patrons under 30. Two beers cost us $5

Our final stop was the Sports Bar across town, it's in a standalone building with it's own parking lot. It was much more sterile, more like a diner without food. They had 2 pool tables, 2 dart boards and a wall mount cd/jukebox. There were 4 people there, including the bartender. The pool table room was seperate and dark (no patrons). We did have a nice conversation about fishing with the locals as their was no music playing and an old 20" television showing the olympics. Two 12oz beers in ice cold mugs cost us $5.75 (one Bud, one Sierra Nevada).

Next week hopefully we can find a DD and I can check out the liquor prices....

James

[walawdog]

Those numbers could be right depending on how many days/hours they were open.

[Thomas]

Yes walawdog the numbers could be right. (by the way, nice buildout on the school). If they were open 2 nights a week, gross sales would be $1490 per nite. Not pretty for a 4000 sq ft club. The .38 cost of sales could be correct if they are getting ripped off or skiimming a bunch. With the numbers provided the gross profit would be $96,000. Overhead is an unknown but we do know that the lease is $1500 per month and if the previous owner is carrying $45k for 5 years @ 5% interest that would add $200 a month. That would be about $20k for the rent. That leaves about $6k a month for all the other expense. Labor, insurance, utilities, advertising, maintanence, licences, ect, ect. Pretty scary. :eek:
Thomas

[rootsreality]

JamesH, I would like to take a guess on the location.........could it be Quincy?

[JamesH]

JamesH, I would like to take a guess on the location.........could it be Quincy?

I will have to plead the 5th until escrow closes :D Hopefully I will be off restriction here by then and be able to post at will :eek::eek::eek: Until then I can only reply when the mods find the time to moderate....every 3 days or so.... or when they aren't offended by my constructive criticism :D

James

[JamesH]

<p>I was pleading the 5th but yes you are correct I am talking about Quincy...</p> <p>&nbsp;</p> <p>James</p>
I got the flash intro done for the website, www.mainstreetsportsbar.net (http://www.mainstreetsportsbar.net)

[JamesH]

Yes walawdog the numbers could be right. (by the way, nice buildout on the school). If they were open 2 nights a week, gross sales would be $1490 per nite. Not pretty for a 4000 sq ft club. The .38 cost of sales could be correct if they are getting ripped off or skiimming a bunch. With the numbers provided the gross profit would be $96,000. Overhead is an unknown but we do know that the lease is $1500 per month and if the previous owner is carrying $45k for 5 years @ 5% interest that would add $200 a month. That would be about $20k for the rent. That leaves about $6k a month for all the other expense. Labor, insurance, utilities, advertising, maintanence, licences, ect, ect. Pretty scary. :eek:
Thomas
Yes, the bar was losing money every month...scary indeed..... We plan on focusing our business plan around having something for people to do and installing POS/implementing controls to bring the COG down.
We just picked up two Golden Tee 05 machines for $1k each, I'm actively searching for a CAV Karaoke system, ordering 3 Beer Pong Tables and three- 3 Hole Washer Toss games. There is already a pool table and CD Jukebox.
Not real sure about the availability of live bands and whether we will be able to pull off having one every week.
We have already worked out a partnership with the local pizza place to offer their full menu at our place and they will deliver at no extra cost, I think that's a win-win for us both.
That will allow us to do specials like Beer Pong Tournament with All you can Eat pizza for say $12/Person.
We have our meeting with ABC on Weds.....

James

[JamesH]

Well as I'm sure many before us have done, we thought we had all of our ducks in a row for our appointment with ABC to start the transfer of the liquor license..... Not so quick there mister..... just found out that Foreign LLC's (ours is Nevada not Cali) need a little piece of paper from the California Secretary of State "allowing" us to operate in California.

So we march down to the SOS office in Sacramento to plead our case, "No problem for $15 we can get that to you in 10 to 15 days".
Only problem is I need it tomorrow....
"No problem, for $350 you can have it in 24 hrs".
Sweet, let's do it!
"Ok, all we need is your "Letter of Good Standing" from the Nevada Secretary of State".
Sweet, I can get that online.....Oh wait, I can ORDER it online...."to be mailed to recipient" No other options available. No mention of when they might actually stuff it into the envelope and mail it.....Hmmmmm. Not good.

James

[JamesH]

Next available ABC appointment March 23rd..... There goes 3 weeks......

James

[rootsreality]

I was in that place a couple of years ago. It struck me as oddly urban for a town like Quincy. You'll have to stop by my bar someday when commuting back and forth. We are off Highway 99 in Gridley. Quincy is bigger than Gridley but I can give you some insight about doing business in a small town. It has been a real adventure for me - fun but not a money maker.

I've been wanting to get the snowshoes out. Maybe I'll drop in one of these days..... Are you already living up there?? Send me a private note if you'd like to talk one on one.

[JamesH]

I was in that place a couple of years ago. It struck me as oddly urban for a town like Quincy. You'll have to stop by my bar someday when commuting back and forth. We are off Highway 99 in Gridley. Quincy is bigger than Gridley but I can give you some insight about doing business in a small town. It has been a real adventure for me - fun but not a money maker.

I've been wanting to get the snowshoes out. Maybe I'll drop in one of these days..... Are you already living up there?? Send me a private note if you'd like to talk one on one.

Will definitely drop by one day, my cousin lives in Gridley. We are not in Quincy yet.

James

[JamesH]

So we rescheduled the ABC appointment, got our "Letter of Good Standing" from Nevada SOS and still ended up paying the $350 "Overnight" fee because the California SOS says 10 to 15 working days, maybe....... Maybe if I ask, the Obama administration will refund all the fees so that I can use them in a more productive way to "Stimulate" the economy.... What do you think?

James

[JamesH]

Well we took inventory of the bar and it is really heavy on Whiskey..... The previous owner said he had a habit of buying a bottle or two of anything that was requested.... He had sold most of the unopened inventory back to the liquor supplier so these are mostly open bottles.

I have no way of knowing what was truly popular because the previous owner did not track inventory.....

Would greatly appreciate any input after you check out what he had on hand.

thanks,

James

[JamesH]

Well we are getting close to opening. Hopefully the 10th or 11th of May we will have our license. We had another 10 day delay with ABC because the attorney had our address as "West" Main Street instead of just Main Street on one of the documents. They rejected it and of course it was one of the documents that we had to file with the County prior to resending it to ABC. Then they wouldn't issue the license for a minimum of 10 days after the receipt....

So in the mean time we have been busy painting and stuff! Here are a couple of before and after pictures (hopefully)
1570
1569

[JamesH]

Well looks like the picture uploader worked so here are a few more....


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[TheBarNation]

Thanks for the updates James. Once the dust settles and you get sorted, would love to do an interview with you about the challenges of opening a bar.

Cheers,

Barry

[TheAuteur]

I really like how you made the place stand out with the brighter yellowish-orange color on the exterior. The black was really dull. I hope you take full advantage of that upstairs patio too, people having fun out there is free advertisement and makes your place look alive, especially since it has no front windows.

If I might ask, how much per square feet is that wood-panel flooring?

[BarStoolsUK]

Looks great guys! Well done and good luck with the new venture!

[JamesH]

Well our license came through last week! (miracles do happen apparently) We got the green light on our license on the 11th and since we had already advertised our Grand Opening for the 15th, hired bands and staff I was very happy!!!!
We wanted to do a soft opening but with all the delays, we weren't sure if it was going to happen. Well on Friday the 14th we opened the doors at 4pm. I posted to our Facebook page that we were open for business and the bartending staff sent texts to all their friends that we were opening.
We had discovered on thursday that Dell had sent us the wrong cables for the mmf cash drawers so we figured out that we would just have to leave the keys in the drawers and open them manually. No big deal really.... until it was discovered that no one knew where the keys went for the Sports Bar cash drawer... WHAT?????? Well we started trying every key we could find and discovered that the keys to the Golden Tee game would work if you jiggled it while turning....oh boy this is going to be fun but what are you going to do? Ended up breaking off two keys in the drawer through out the night and digging the broken piece out with pliers.... thank god for patient customers.....
Well let me back up a little... I forgot to mention that at 4:05 pm we discovered that the funny smell in the Sports Bar wasn't the new floor cleaning solution (which was my first thought when I walked in) but the fiberglass liner of the water heater that was trying to burn because we had flames shooting out the bottom of the water heater! Thank god there wasn't anything in the water heater closet like cardboard or paint because I would be telling you about how the place burned to the ground the day before the Grand Opening!
Turns out the 12 yr old water heater was clogged solid with soot from running to rich for who knows how long. We had on several occasions during the remodel smelled "something overheating" but it would go away and we could never track it down.
Since I have been a plumber for 22yrs an almost disastrous situation turned out not to be that big a deal and an hour later I had a new water heater up and running. Wow...that was a close call....

[JamesH]

15931592159115901589
Almost ready to open the Sports Bar.....

[JamesH]

15981597159615951594
Soft opening pictures in the Sports Bar

[JamesH]

Ok so our soft opening turned out to be not so soft... by 9:30 we were packed to capacity in the Sports Bar and the Lounge was doing ok. We ran a $1.50 bottled beer special and sold the beer box out about 1-1/2 times (it holds 7 cases)
It's amazing how quickly word spread that we had opened. I love text messaging :cool: One of our bartenders had a prior commitment to cover at one of the other bars on mainstreet and left about 9pm. Well he returned at 10pm because they didn't need him:D
We don't have our music system set up yet so I plugged my Ipod into the PA mixer and hit Shuffle...We ROCKED at capacity till 1:30am
We really weren't prepared for such a big crowd but the whole staff did a great job, we handled all of the glitches and made it work!

Well more later, I've got work to do....

James

PS The wood laminate flooring was about $2.10/sq ft at Lumber Liquidators

[TheBarNation]

Hi James,

Thanks so much for sharing the opening with us! Love the pictures! Keep us posted... Maybe you'd like to do an interview with us about the opening at some point?

Barry

[JamesH]

Hi James,

Thanks so much for sharing the opening with us! Love the pictures! Keep us posted... Maybe you'd like to do an interview with us about the opening at some point?

Barry

I would be happy to do an interview. It's definitely been fun and a huge challenge at the same time.

James

[JamesH]

Well I got our website up with an event calendar and just posted a video from the band we had on Saturday night. Check it out and let me know what you think. I am planning on keeping it really simple. We are in a small town (5,000 people) so I basically just want a place where people can go to see what we have going on at any given time. www.mainstreetsportsbar.net (http://www.mainstreetsportsbar.net)

Thanks,

James

[JamesH]

Well we have been open for a month now and things are going good. The 2nd weekend was our biggest with an out of town band that kept the crowd around till almost 2am! Memorial weekend was a little dissapointing and last weekend sucked. We had beautiful weather and a lot of other things going on around the community and it showed in our sales.
I'm really nervous right now as this Saturday is our first UFC fight and first attempt at a cover charge of any kind. The fight is costing us $1200 based on our capacity (99) plus we are renting tables/chairs, then throw in advertsing and you can see why I'm a little apprehensive.
I hope that we can at least get 60 people to cover 1/2 the cost....Only time will tell at this point.
The bad thing about the UFC is that they wouldn't talk to us about this fight until after the previous fight, which was two weeks ago. We just got our promo posters on Weds... Then there is only 3 weeks until the next fight!
All we can do is make a commitment and run with it.....

Wish us luck....

James

[imindless]

You could possibly get that cost lowered due to how many chairs, tables and other obstructable things you have in your place that will hinder the amount of people you can fit in your place during the fight days.

So talk to your UFC fight provider and see if you can get the cost down next time.