Long list of questions, i searched already

[THUNDERBIRD]

Hi,

I want to start by saying that i did search this forum. I have in fact read almost all the way through allens thread, and have read through about 10 pages of this forum. I already feel like I have learned a great deal from the people here and feel fortunate to find this website.

A little background info, I am active duty Air Force currently with about one year left. I own a few houses, rent one out, live in one, and am selling one for starting capital for my new venture.

My dad is retired Air Force and just sold the house he lived in for a nice profit as well but is building a house so only has about $15k to comfortably give to this venture (partnership) and I will match the $15k so as not to drain my bank account yet lol. So we want to get this started with $30k startup cash.

I know, most will scream at me for thinking I could get it done with that, and thats kind of what I am looking for. I have looked at the numbers over and over and do not see how we could not do this and succeed unless people just never come to the bar period.

We are going for more of a smaller sport/biker country bar. We are both bikers, love sports, love bars, and consider ourselves pretty responsible. We are only looking for about 2k sqft, maybe a little bigger. I have worked at a bar as a barback and a bar tender, and run my small business so I do have a small amount of experience.

Here is my breakdown of startup costs, and like i said, scream away at what im wrong with so i know:

Mortgage/Lease - $4k (rent and deposit if leasing)
Mixed beverage license TX - $3500
Stocking beer/liquor - $2500
Glasses - $500
Chairs/Tables - $2500 (i have a connection, this can be done)
TVs - $1000 (easily using craigslist!)
Pool table - $1000 (also easy using craigslist)
Coolers - $3k
Kegerators - $500 (I make these, easy to make a 3 kegger)
Cleaning Decoration - $5k
TOTAL - $23,500

Some clarification here before i get grilled. Mixed beverage license is from TABCs official website. I assume thats the only license needed for now. The stocking of beer/liquor is low because we do not yet see the need to stock multiple backups for all the liquor as it is a smaller bar.

The $5k for cleaning and decor I actually believe is a little high because i flip homes. Its what i do, and i do it cheap with my own guys who work hourly doing specialty things like tile, drywall, painting, flooring etc. so for $10/hr plus materials, I get an entire bathroom tiled (i have hookups on the tile as well). My father is a very skilled craftsman, much more so than myself and will save a TON of money in this aspect. One of his best friends builds cabinbets for a living as well, so if a new bar is in order, the bill will be a small one.

Now i also realise that my estimates only leave me with about $6k left over, and we should have reserves for the slow months, etc. But i realise this is a business, and it has its risk. Its a risk reward decision for us. So either we risk it and go for it, or dont risk it and always wish.

OK... FLAME AWAY :D

[BostonDave]

Mix - I think for a small country bar he may be OK. Here in MA our liquor license license alone over 100K but Ive realized through these forums things in other areas are MUCH different. If there isnt a lot of other places in his area that his potential clientele really like to go and he treats his guests right I think hell be OK with starting small as far as equipment and technology and upgrading as he starts to grow business...

Thunderbird - I think you got a good attitude and are doing some good planning. Make sure the location and lease for that spot is very favorable. You dont want to fix up and build up a business for a lease that can easily not be renewed in 5 or 10 yrs. Search for a post I made regarding different things to look for in regards to a lease.

Also here in Mass the Liquor/Beer distributors are required by law to give Net 60 days if credit is good....so you wouldnt need any startup for there if that holds true in TX or you can negotiate terms at all!

Make sure the liquor license is only license you need and that is all the fees involved.

Id say your biggest concern here might not be financial but take other issues into consideration like controlling your patrons...I know how bikers can be no offense, and I know here if police gotta come to your spot for stupid crap like fights and rowdiness they will be on your ass forever...so make sure a good relationship with your city and police is in place before doing anything.

Also check to see if there any local auctions for stuff like coolers and any other kitchen equipment. I know there are tons here. Check with restaurant supply places too for used stuff or closeouts.

TV's really depends if ur trying to be modern with flat panels or if you really dont care. You can definitely find some real cheap old TVs at least to start if thats what u need to do to get started. If your space isnt that big maybe invest in a couple 42" Vizio plasmas as they have come wayyyy down in price.

Good luck and keep us updated
-Dave

[allanjustallan]

I was in your position in the 80s,

Was one of the youngest stockbrokers, got in just as I turned 23, built up a great business concentrating in tax free muni bonds, after a decade boredom set in, I simply had it so good that I failed to appreciate what my hard work and dedication had accomplished for me.

Being a bar owner is not for a family man, in my opinion, and it entails a whole lot of responsibilities, stress and time at the bar in order to make it a success.

MixPro is right, what ever you think your costs are going to be at least triple it.

I went with new equipment because breakdowns are a bitch, and your power savings over the years will pay for the higher price upfront.

BostonDave is right about being very careful about the lease terms, as a matter of fact leases in my opinion can be a tar trap, if you work really hard and make your bar a success then when the renewal comes up the real owner, the landlord will try to gouge you for your success.

A poor lease will also hinder your ability to cash in on your success when someday in the future you want to move on.

Having said this I am really happy to have embarked on my adventure buying a bar, but it could have easily turned into a financial nightmare.

I wish you all the very best, if you do decide to move forward your life will not be boring, thats for sure,

Allan.

[BadMonkeyBistro]

Hello Thunderbird,

I was happy to see that Allan posted a comment. I'd like to offer a few words as well (and when I say few, who knows it may be many, we'll see -- for now) =)

First of all, you and no one else knows me on this site, since I just came across it today. So, here's a little bit about me. Nearly 20 years as Full-Charge Bookkeeper; 8+ years Property Management & Development; 2 years direct bar ownership from conception to build-out to operation; 20+ year of moxi, self-determination and proving everyone else wrong (well not always, but always come out on top). =)

Okay, as for your budget. Here is a quick bullet list of things off the top of my head:
1 - Budget a Contingency, never less than $5,000 and up to as much as 50% of what you think it will cost to open.
2 - Research. And I mean EVERYTHING. If you're not a detailed person this will be tough. Break everything down to the Anti-fatigue mats for behind the bar, then do it again, then get bids from contractors who would do the work that you can't.
3 - Did I say Research yet? Yes, well do some more. For example... glassware. You will ALWAYS be replacing it. Don't buy cheap. Spend a little more up-front and buy "tempered" glassware. It will hold-up SOOOO much longer going through the dishwasher countless times. Talk to distributors... Restaurant Suppliers; Beer, Wine, Liquor Suppliers; etc. They are an enless source of quality FREE information.
4 - Visit your local City Hall and talk with the Building Code Department (or whatever they call it in Texas). In this day and age you need to make sure that your space is ADA compliant, meets International Fire Code, and Health Department Regulations.
5 - Contact your local Health Department. They usually have different requirements (more strict) than Liquor Control Boards do.
6 - Hire a Commercial Real Estate Lawyer. (don't forget to budget the cost for this). If you have never negotiated a Commercial Lease Agreement, a lawyer is a must to save you on the backside.
7 - WRITE A COMPLETE BUSINESS PLAN!!!!! It's a taxing and daunty task, and you may never refer back to it once you're open, but the exercise alone will help to ensure that you don't miss something that will cost you later.

Oh, and I almost forgot...
8 - Marketing/Advertising costs. Wanna fail? Then don't advertise. Unless you're in a location like Allan (where you're the only game in town), you should plan to spend about 2% to 4% of your monthly gross revenue on advertising. The days of the belief "build it and they will come" is gone.

So, these are my opinions and initial suggestions based on my experience. I hope it is helpful. I'd be happy to share more with you. Just ask. If I don't know the answer, I will at least tell you I don't and try to stear you in the right direction towards a resource. Feel free to call me if you'd like 425-531-2507.

Cheers and Good Luck!!!
Daniel
Bad Monkey Bistro

[owneroper]

I agree with bostondave. However I will say it will take more than you think so have something to fall back on so you dont panic. There will be something you havent thought of , utility deposits, other state and city license etc that you havent thought of, while none are a ton of money it all adds up. My first bar I didnt alot myself enough my second I had some to fall back on while I didnt need it it was nice to know I had it just in case.

[THUNDERBIRD]

Ok Stocking beer/liquor - $2500 more like 10K
Glasses - $500, more like $1800
TVs - $1000 (Junk is still junk) I found out the hard way!
Coolers - $3k, Maybe for a coubple of beers, more like $8k
Pool table - $1000 You can get this free!

You have a long long way to go. Things you would never ever plan on will pop up. Hope you have lots of $$$ to hold you over until the season gets here. That money will run out so fast is will make you dizzy.

Did you account for sound? Lighting? Payroll? Liquor tax? Shit man I can keep going and quickly put you into the 100k range fast...

Ok, anyway someone can break down very simply the way i spend 10k on beer/liquor in a small country bar? Not being a smartass, actually one hundred percent curious. $2500 in my eyes buys easily 80 cases of beer and 45 bottles of liquor to start. (assuming each is average of $20) If I start to sell out of something, isnt that a good thing? Just order more with the revenue?

And $1800 on glasses? This isnt a nightclub with hundreds of people in it. Most people will want canned/bottled beers. When i say country bar, I do not mean country bar setting in rural area. I mean bar in the country with a pretty specific clientele base. That being country men and women, country bikers, and country fun.

Ive been to many many biker bars all over, thats what i do when i ride my bike, find country biker bars and stop in for a drink... and not once have I ever seen a fight break out between them. Its a different mentality out here I suppose.

The TVs being junk I could argue. I personally use a 65" HDTV I bought off of Craigslist for $700 and have found cheaper. I have owned it for about a year and a half with absolutely zero problems, and several of my friends have done the same. For the TVs, I want to buy 2 decent sized HDTVs (54"+) and maybe a smaller LCD TV. Here, just to show ya:

http://sanantonio.craigslist.org/for/991073178.html
http://sanantonio.craigslist.org/ele/966218637.html
http://sanantonio.craigslist.org/ele/967628310.html

Exactly a $1000, and I didnt even look hard or outside of San Antonio, and there were more to choose from than these. Im a shopper, always have been, and always will be a Craigslist junkie. In fact, my older TV (27" HDTV) has been mine since 04 used, and still works great.

The coolers are mostly Craigslist as well to be honest though I do realise that this is something that should probably be purchased new. And I know about leasing a pool table, but I think I would rather just own it. But maybe youre right since I am trying to do this on a budget. And upgrade to my own table a little later.

2 more quick points (on top of my quick post lol) are that I will not just jump into this. Thats why I am asking you fellas, and I will make several meetings with health inspectors and TABC people before putting a cent into this venture and that I also have a few friend of friend types that own bars in my area who are willing to talk to me. I am meeting one this weekend at his bar to have a chat with him about what he thinks, and some of the bumps and bruises and such.

I really hope I am not coming off as cocky or an ass, I am just confident in my abilities and work ethic, and believe one hundred percent that if I want to do this, then I will do this. Working countless hours is not a tough task for me. I have been deployed for 7 day 12 hour work weeks for multiple months and it wasnt even for my personal gain. Not that I didnt enjoy what I did, or believe that everything I do should be all about me, but I know it would have been easier on me if it was something for me and not seemingly monotonous work day after day after day for the same paycheck no matter what in a place with nothing to do in your off time anyways! Wow, long sentence.

Thanks for the knowledge guys, keep letting me know what else is on your mind!

JT

[originolsin]

I guess I should put my .02 in since I now have a year under my belt and somehow are going to show a profit according to my accountant.

My bar is approx. 2k sq feet in a town of about 75k. So, I believe things will be very similiar.

Beer- 3k

Liquor(full bar, from $6 vodka to $45 Jager Halves)-$3,500 was at $5k when we bought the place, but we trimmed down to a pretty good system.

Coolers- Pepsi rents us 3 glass fronts for $30 a month

Beer Coolers- Had to buy one for 2100 not to long ago

Jager Machine- This is a must for us, but we are one of the top Jager bars in the state, $299

Pint Glasses- AB sells us these at $1 each and we carry around 72

Shot Glasses- Good ones will run about $100 for 48, get the heavier ones. People associate this with getting a bigger shot

Licenses- We have a state, county, and city license. Like Owner said, these are very important and add up, each year.

Jukebox, Games, Pool Tables- Free from a game company. Many times they will do leagues like darts or pool that will help business on slower nights.

What about cigarettes? If you can smoke in the bars there, and you can also sell cigarettes, you could be looking at around $600 for just the bare minimum in brand selection.

Look at a Computer, printer/fax/copy, desk, file cabinet, safe.

Liability insurance- My dad pays around 2k a year for his and I pay 7k for mine.

Internet, Satalite(Sports packages), Utilies, Professional fees(lawyer, accountanting)
Toilet paper, paper towels, sani-tabs, limes, lemons, cherries, pineapple juice, clamato, tomato, creamer, pens, bar mats(maybe free through liquor reps), cocktail napkins.

Chairs, booths, tables, all very pricey.

IMPORTANT*** You have to have money in the register!!! As stupid as it sounds, it hurts to have to take $1k out of the bank the day you open because you forgot to think about this. We did it, and just spaced it with everything else that we had to think about.

I think we already burned through that 30K and that isn't leaving you any money to pay anyone while you drum up business or during the lean times. I burned through 20K staying afloat during the summer. I would set your target at around 60k, and that is without knowing what it will take to even get your spot ready. Flooring could easily cost you 10k, a plumbed bar and back bar could easily cost you another 10k.

My wife and I are in our 20's and had to put up with a lot of "You are stupid, you can't do that". It can be done, just plan and be focussed. And plan on A LOT of hours!

Feel free to ask any other questions.

[Dynamic Digital]

I would check with the health department. Especially on the homemade kegerators. I would also double check on any new regulations for disabilities. I recently did a project and they changed the code for handicap to 42" clearance which changed some things by 3' feet. I agree with Allan and Daniel. I think your numbers are very conservative. Regular TV's are not made for the extended use that a bar requires. You might want to consider a lease for your equipment. It sounds like you have great resources on the build. I would also put in your lease that it doesn't start until you finish the build and get your final inspection. A delay with as tight of a budget you have will cause you to close before you open.
I wish you luck on your endeavor. Keep us posted

[UnderDawg]

I am in the process of (maybe ) buying a bar; its been in business for 30 yrs. owner wants to retire, its a blue collar bar; its been for sale for 2 yrs
$500.000, out of our range but we were interested 2 yrs ago, well they had a buyer,but couldnt get financed; current owner came to me and offered a great term and lower price. am i nuts for thinking about it in 2009?
the bar is busy even during these times, i have been there 5 days a week for the last 3 months just watching and taking notes; is there any good references out there, books , or sites, about due dilligence, and what ellse to look for?
would i be shooting myself in the foot if i changed the name after 3 -6 months of ownership? its been well kept, and super clean, had ful menu, but could be expanded on. just open to ideas or questions or answers to my questions , thanks guys budmanoh@aol.com

[Crazy Mike]

I opened a small bar just like you are wanting to, in a small town, about 2,000 sq. ft., in TX.

We did a TOTAL demo and re-model. I mean total. I spent 50K. I thought I could do it for 30K haha. Things come up and I didn't cheap out on anything. I could have maybe done it for 40K had I done more of the work myself.

[THUNDERBIRD]

see, i want to talk to crazy mike about his bar. just about all the work will be done ourselves or by my crew. and i doubt wed be looking for a total demo and remodel.

hey guys, i tried to reply 2 days ago, and it says my post have to be approved by a mod. is it always like this? my post never showed, which sucks because i put a lot of work into making it and showing my numbers... with links to websites to back them up!

oh well, if this one shows, i will see if i can recreate it.

[bargirl23]

you are definitely off to a good start. and everyone who said to plan is correct. i have opened three places now and you will always forget something. mine is always pour spouts. i dont' know why, but i always forget them when i do my initial equipment order. anyway... i did a 3500 sq ft from the studs in (new drywall, EVERYTHING) for 45K, so you might be ok. just remember to keep track of everything, do as much as you can and visit a whole bunch of places and take notes... you will see things you may have never thought of. some things that i thought of...

1. make sure you check everything with the health dept, building dept, fire dept, and all liquor laws.
2. if you are going to have music... ascap and bmi, you can hold them off for awhile, but they will always find you.
3. are you going to have food... different laws for that
4. tv's - on circuitcity.com, i just got 4 plasmas (element.. not that great of a brand, but they work great) for a total of 1600 with delivery. or you could do 2 projectors. we built our screens out of plywood, framed them and painted them white.
5. pool tables - usually you can find a distributor who will bring out pool, darts, jukebox, etc for free and you just split the profits 50/50. this is awesome, because they also will fix anything that breaks, refelt the tables every 6 months, etc.
6. glassware/decor - IKEA!!!
7. the last thing that i can think of right now that you forgot... UTILITIES!! phone, electric, gas, cable, etc. i know that it is not a startup persay, but you should still include that, so that you dont have to rely on income from your first month to include that.

[Bnnopo]

There are a couple of things I think might be important missing from the list. Are you going to have an ice machine? Dish washer? Cash reg? Any kind of food that will require a way to prep and serve it? Is the bar already built and functioning so no plumbing or alterations are needed? Are you going to have a business sign outside?

When I was kicking around the idea of opening a bar, a friend pulled me aside and sat me down with his books. Things I never even thought of. Lots and lots of little cheap things, but in the big picture pennies make dollars. He pointed out simple little things like the toilet seat "cowboy hat" covers, straws, limes, matches and ashtrays, garbage bags, napkins and paper towels/TP. I'm not trying to discourage you in any way, but just remember to leave yourself a nice chunk of change for the things you might not forsee.

[DavidTownsend]

Check out this website.

http://www.dixiehostinvestors.com

username: dixie

Password: guest

It is a business plan for a street of nightclubs that I did near the end of last year. On it you will find pre-opening budgets, operating pro-formas, etc.

This is a much bigger project than what you are doing, but it might get you thinking about some things...

[bargirl23]

david-
thank you so much for the link to your business plan. i always do one for any of our new places regardless of whether we are searching for income, because i feel it is the best way to not forget anything. however, i always forget something in them, so thank you. it had all the info that i could never think of!!

[Michael Black]

David, good to have you again. Back with McFaddin or didn't really ever leave?:)

Thanks for the link and solid example of a plan as well as good advice on other threads

Feel free to contribute to our fairly new Doc Box when you find the time.

[georgebud]

add about 5k-20k for bonds in texas

and dont forget in texas you need to pay for 2 years of liquor license starting in 09
im a texas bar owner if you need help pm me

[walawdog]

Thunderbird....any update? Have you found a location yet?