If you’re starting a bar or opening a new location, you’re probably going to need a business plan.
Whether it’s for securing a bank loan or internal organization, it’s still a crucial tool for any small business.
So in this article, we’ll guide you through writing a bar business plan step-by-step.
We’re going to look at everything from your bar concept to marketing, operations, and financial projections.
You can read the article and write your plan as you go along or just get acquainted with the whole process. At the very least, you’ll be in a position to create the first version of your bar business plan by the time you finish reading.
Ready? Let’s go.
What exactly is the purpose of a business plan?
There are two main use cases for your business plan: Internal and External.
In the internal use case, a business plan helps you and your team make better progress. It’s easy to deviate from your path or come to a halt when you don’t have a roadmap for your business.
Also, you’re likely to understand and anticipate issues early on, helping you prepare and make better decisions as you move forward with your business.
In the external use case, a business plan helps you communicate with stakeholders, especially when raising finances. Private investors and banks want to see your rationale for starting the business before funding it.
Do you need to write a business plan?
But if you need to raise funding, any lender is likely to need it in order to consider funding your business.
In addition, the business plan is arguably more useful as an internal organization tool. The process of thinking through different scenarios and risks will help you uncover opportunities that you might otherwise overlook.
So we strongly recommend creating one before you start or even if you already have an operating business.
What should a bar business plan include?
A business plan outlines your goals and how to achieve them – simple.
However, there are a few standard rules and specifics related to bars that you’ll need to include.
Here’s a quick overview of the elements in a bar business plan:
1. Executive summary
Here you’ll describe the purpose of your business plan and the main sections in 2-3 sentences each.
2. Market Analysis
This is where you’ll describe your target customers, competitors, and your marketing strategy.
Here you’ll cover things like your menu, equipment, HR, sourcing, and administration. Basically the elements for running your bar effectively.
This is where you’ll present revenue, cost, and profit estimations – with at least 3 different scenarios.
Those are the main sections or elements in your business plan. You can make the plan much bigger or smaller but we recommend starting with this structure for two main reasons.
First, you will not spend weeks or months working on it – you can complete it in a day and modify the plan if needed as you go.
Second, this structure includes all of the most important aspects of a bar business so you will not miss anything crucial.
So let’s dive into each of the sections of your business plan in more detail.
The Executive Summary
There are 4 big things to include here:
- The purpose of the business plan, for example a loan or internal use.
- A summary of your business concept and marketing strategy.
- A summary of your key operations and staffing requirements.
- Financial targets and milestones.
You’ll have an opportunity to explain everything in detail but the summary should be brief – not more than a page. The idea is to quickly catch someone’s attention using your concept, goals, and strategy – especially if that someone is an investor considering to back your business.
If you need more help, here’s a step-by-step guide for writing your summary.
The Market Analysis
The Market Analysis should include details about your target customers, competitors, and marketing strategy.
Let’s look into each of these aspects.
Here you can describe your ideal customers, including demographic data like their age, location, and average income levels. It’s good to back your claims with data from your local statistics bureau – this will help you estimate your revenue later and show potential investors you’ve done your research.
It’s important to paint a clear picture here since you will be referring to this target persona for all of your marketing communication later on. Try to add as much detail as you can, especially information about their interests – this will help you improve your marketing and overall concept.
Researching your competition will help you position and differentiate yourself. It will also provide you with a better understanding of the market opportunity – too many competitors could mean an uphill battle, making it hard or even impossible to build a successful bar.
On the other hand, struggling or no competition could indicate a lack of demand so you need to look for a healthy balance that allows you to enter the market profitably.
Make sure you highlight the key players as well as your differentiator that captures why people will choose you over other establishments in the area.
Using information about your target customers and competitors, you can build a marketing strategy based on facts and understanding rather than guessing.
So think about how you can reach your customers – whether it’s social media, referrals, or relying on foot traffic in the area.
A key element here is your strategy not just for attracting, but also retaining long-term patrons. So highlight any relevant parts of your customer service and menu that will drive people through the door again and again.
In this section, you should describe your activities related to serving customers and overall fulfillment. This includes your menu, bar design, equipment, sourcing products, HR, and legal considerations.
You don’t need to include your whole menu here but it’s good to include any key items you’re going to sell and the ingredients you’ll need to purchase on a regular basis. This will help you manage inventory later and plan your initial capital investment. In addition, you’ll get a better understanding of the tools and equipment you’ll need to buy.
If you need some inspiration, here’s our choice of top bar menu ideas.
Bar design and location
Your bar design and location will determine some of your initial investment and ongoing expenses like utilities and rent so it’s an important element of your operations.
If you’ve chosen a location and a theme already – great, you can now include photos and sketches to draw a better picture of your venue.
If not, you can include details about your desired location and bar layout, as well as design examples from other venues.
In this part, you can also include any major tools and equipment like refrigerators, tables, chairs, and security cameras.
Here you can include the items you plan to sell the most of as well as any key suppliers. You can also detail any special relationships with suppliers that can give you a competitive advantage in terms of price or exclusivity when measured against competitors.
Legal considerations and licenses
When it comes to the bar business, you will need certain licenses to sell alcohol and food. You will also need to take into account health and safety regulations, dealing with incidents, and general food safety and cleanliness standards. So make sure to check your local jurisdiction about it and outline the key requirements and certificates you already have.
This is arguably the most important part of your business plan – it’s time to outline your budget and financial projections about revenue, costs, and profit.
After you take marketing and operations into account, you should have a good idea of your one-off and ongoing expenses. Now it’s time to put these into a useful document to guide your spending as you open and start growing your bar.
The budget will help you stay on track with your plan and show potential investors how you’re going to spend your startup funding. So it’s good to include this information here, at least in a summarized format with the main costs you will incur.
You can get started with this sample template by JotForm.
Start by adding your sales projections, taking into account your target customers, location, and the fading novelty effect (you can expect a strong start right after you open – but this is likely to go down over time and normalize). A standard time frame to cover is 6 months, 1 year, 3 years, and 5 years.
It’s good to highlight at least 3 scenarios – pessimistic, optimistic, and realistic. This way, you can prepare for the worst-case scenario and avoid risking too much in the process.
The big ongoing costs to include here are rent, salaries, products, and utilities.
You should also factor in your startup costs (usually $110,000 – $850,000 depending on your location and whether you decide to buy or lease). This includes things like licensing, equipment, and your initial inventory.
Again, add a cost estimate for a few scenarios and time frames in line with your revenue. It’s easy to underestimate this so we recommend at least doubling your initial projections to factor in all of the unexpected costs that will arise.
Once you estimate your revenue and costs, you will arrive at your pre-tax profit figures. This will influence any funding decisions as well as your own incentive to work on the venture.
Again, make sure to include at least 3 different scenarios for up to 5 years of operations. While financial projections rarely go as planned, you will at least have several milestones to aim for and a realistic view for potential investors.
We hope that you now have a better understanding of the process behind writing your bar business plan.
But what’s next?
We recommend setting aside a full day to work on the first version of your plan. If needed, you can bookmark this article and use it as you write along.
You can also download our free checklist for opening a bar to make the process easier.