Bar business plan for starting your own business

As long as humans are there on the earth, alcohol is not going out of business. Opening a bar can be a massively profitable business. As a matter of fact, an average bar makes its owners north of $30,000 a week.

In this business plan for a bar template we will be discussing everything from opening a bar to staffing it and operating it in a way that makes profit for you. Before we see how to write a business plan for a bar, we need to set an example. This bar will cover Zylar’s Drinking Arena as an example.

If you have seen business plans for restaurant before, this will be a relatively simple thing for you. This is because both these businesses fall into pretty much the same category.

Executive Summary

2.1 The Business

Zylar’s Drinking Arena will be a registered and insured alcohol business and bar in Citrus County Florida. The bar will serve alcoholic and non-alcoholic beverages to everyone regardless of their cast, creed, ethnicity, color or gender.

2.2 Management of Bar Business

The first thing that we need to cover in this bar start up business plan will be the management of the bar. The bar will be headed by Zylar Woods.

Zylar will hire three managers and two bartenders to run the place. The managers will be responsible for liaison, supply chain, and services. The managers will report all matters to Zylar as and when they arrive. Zylar will exercise executive powers to make sure that the bar runs smooth and makes profit.

With the management bit out of the way, let’s now see how to start a bar business plan.

2.3 Customers of Bar Business

The customers of this business will be everyone who is legally allowed to drink. We will also provide mobile bar services for parties and events. This business plan of a bar is written by professional business plan writers with experience in writing business plan online store.

2.4 Business Target

Our targets are:

  • To earn as many regular repeat customers as we can.
  • To deliver the best services in the area and gain customer trust and confidence.
  • To start making profit by the end of first six months.
  • To expand to other counties with at least 4 branches in 5 years.

Bar Business Plan - 3 Years Forecast

Company Summary

3.1 Company Owner

Zylar’s Drinking Arena will be owned and headed by Zylar Woods. 45-year-old Zylar has a degree in hospitality management and has been in the bar business for the last 25 years. She has worked in all positions from being a cocktail waitress to a bar manager.

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3.2 Why the Bar Business is being started?

This example of a business plan for a bar is the perfect one because this businees is being started out of passion. Zylar is passionate about serving people with the drinks they want. This starting a bar business plan is based on the view that you should do what you are good at and what you love doing.

Moreover, there is not a good bar in the Citrus County Area. This means that there is little competition. People have to fo to Jacksonville and other big cities for a drinking party. This sample business plan for a bar and lounge will show how you can benefit from such a situation. There might be a lot of business plans for bar on the internet but this one will show you how to make profit and earn name in a field which is so competitive.

3.3 How the Bar Business will be started?

Step1: Create a Marketing Plan

Just like an online dating business plan, the first thing you need to do in order to start a successful bar business is to make a strong marketing plan for the business. For this, you’ll have to research the competitors and find out what they lack. Once you know that, you can then move on to offering something new and focusing your marketing effort on what is it that you offer and the others don’t.

Step2: Define The Brand

The nest thing is to establish a brand. People have become brand conscious lately and if you do not have a strong brand, you are not going to be successful with the bar thing. Make a brand, a flashy logo, and a sensible tagline to attract people to your brand.

Step3: Promote and Market

You need to start your promotional efforts before the business comes into existence. Make enough efforts that everyone in the are who is interested in alcohol knows you before the opening ceremony.

Step4: The Launch

Launch the bar in a way that people take note of it. It is not a video games business plan, you need to make sure people know you.

Start-up Expenses
Legal $255,000
Consultants $0
Insurance $32,000
Rent $30,000
Research and Development $21,000
Expensed Equipment $52,000
Signs $4,000
TOTAL START-UP EXPENSES $394,000
Start-up Assets $330,000
Cash Required $360,000
Start-up Inventory $51,000
Other Current Assets $220,000
Long-term Assets $270,000
TOTAL ASSETS $1,231,000
Total Requirements $1,625,000
START-UP FUNDING
Start-up Expenses to Fund $394,000
Start-up Assets to Fund $1,231,000
TOTAL FUNDING REQUIRED $1,625,000
Assets
Non-cash Assets from Start-up $1,612,000
Cash Requirements from Start-up $382,000
Additional Cash Raised $58,000
Cash Balance on Starting Date $34,000
TOTAL ASSETS $2,086,000
Liabilities and Capital
Liabilities $30,000
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $47,000
Other Current Liabilities (interest-free) $0
TOTAL LIABILITIES $77,000
Capital
Planned Investment $1,625,000
Investor 1 $0
Investor 2 $0
Other $0
Additional Investment Requirement $0
TOTAL PLANNED INVESTMENT $1,625,000
Loss at Start-up (Start-up Expenses) $384,000
TOTAL CAPITAL $2,009,000
TOTAL CAPITAL AND LIABILITIES $2,086,000
Total Funding $1,625,000

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Services of Bar Business

The next thing needed to make this bar business plan template complete is the description of the services the bar will be providing. While you might think that a business plan owning bar only means that you can just offer booze, the reality is different. There are other services too that a bar can provide. Here are a few of them.

  • Offering Fresh Drinks

The main service provided by Zylar’s Drinking Arena will be that of offering people fresh beer and other forms of liquor. This is not a business plan for an internet startup, so you will need to hire people to quench the thirst of people who come to visit you.

  • Breakfast Service

To make the bar successful and to increase the revenue, the bar will also offer breakfasts. We will open at 7 in the morning and provide sandwiches and waffles for breakfast. If someone is up for drinking at 9 am Monday morning, we are not saying no.

  • Mobile Bar Services

As Zylar’s Drinking Arena is situated in Citrus County, Florida there are not many reputable bars in the area. We will provide the services of remote bars. People need bars for parties and wedding ceremonies. This can be a lucrative service to provide and can make the bar quite a lot of money.

  • Bulk Alcohol Supply

Zylar’s Drinking Arena will also cover the needs of people who want to buy alcohol in bulk. We will be providing all the major names of Whiskey, Vodka, Tequila, and Rum at discount prices.

Marketing Analysis of a Bar Business

Before you can start any business, you need to run a marketing analysis. Marketing analysis is a comparative study of the business and the trends it has seen in the previous years. It also includes the study of the competitors and using all this knowledge to make a bar business model that can be profitable.

Let us see what the things are that we need to know before starting a bar business.

5.1 Market Trends

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The world alcohol consumption has increased by 10% per head from 1990 to 2018. It is speculated that it will see another 10% increase by mid to late 2020s with almost 50% of all adults in the world drinking alcohol by the end of this decade. That means that the alcohol business is only going to boom over the foreseeable future.

If we look at the type of alcohol being consumed by people, the American population is preferring local beer over exotic brands. There has also been a shift towards burning liquor over beer an wine in the previous years.

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If you want to know how to create a business plan for a bar, you need to make it clear that it is not like starting a virtual assistant business. You need to provide what’s in demand, or you are out of business.

5.2 Marketing Segmentation

The next thing you need to focus on while starting a bar business, is the segments of the market that you will be entertaining. If you really want to know how to start bar, we will tell you of the market segments that you will be providing the services.

But before we get into that, there is another thing that needs to be clarified. This bar business proposal focuses on selling alcohol in any form. We are not just catering the needs of the customers who come to the bar to drink. We also provide the services to people who need a bar at home for a party or the ones who want to buy booze for personal use. We will also be offering breakfasts and meals for our customers.

Let’s now see the market segments of the market we will be entertaining.

Bar Business Plan - Marketing Segmentation

5.2.1 Drinkers

As this is a bar business, the main benefactors of our services will be the drinkers. We will sell them beverages on a drink basis and not as whole bottles. These will be the bulk customers in terms of numbers but not very much in the terms of sales volume.

Note

However, to run a bar it is cardinally important to cater the needs of drinkers. We will provide them with a comfortable environment and will try our best to earn repeat customers.

5.2.2 Alcohol Buyers

We will also cater the needs of the people who pre29fer drinking at home. We will sell entire bottles or creates of bottles to these customers. We will only be selling 100% genuine Grade-A alcoholic products to make sure that the customers develop trust and come to us the next time.

5.2.3 Parties and Functions

No lavish party can be complete without serving Champagne to the guests. We will cater to the needs of these customers too. We will have a wing of our bar business dedicated to these kind of services. We will provide a mobile bar with bartender and waiters to serve parties, celebrations, birthdays, and weddings.

Market Analysis
Potential Customers Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Drinkers 37% 48,000 50,000 52,000 54,000 56,000 10.00%
Alcohol Buyers 29% 38,000 39,000 40,000 41,000 43,000 10.00%
Parties and Functions 34% 45,000 47,000 49,000 51,000 53,000 11.00%
Total 100% 131,000 136,000 141,000 146,000 152,000 10%

5.3 Business Target

In subjective terms, we aspire to be the leading provider of bar service in the US. Objectively, we have set the following targets for our bar.

  • To make as many repeat customers as we can by providing impeccable quality and service.
  • To start making a profit of at least $26,000 a month by the end of the three years of opening.
  • To expand to at least two other cities by the end of 5 years.
  • To start making at least $1million in revenue a month by the end of 5 years.

5.4 Product Pricing

We will keep the prices lower than the competitors in the area. This will be done to attract customers in the start. Once we start getting business, Zylar’s Drinking Arena will increase the rates to a little bit above the other bars in the area. This will be done to give a premium feel as we will be providing an environment unrivaled by the competitors.

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Marketing Strategy of Bar Business

The next thing we need to make is the marketing plan for a bar and it is one of the most crucial things needed for opening your own bar. We have to run a thorough competitive analysis and make a sales strategy.

6.1 Competitive Analysis

Zylar’s Drinking Arena will have the following competitive advantages:

  • We will provide the best drinking environment, the like of which would not be there in the area.
  • We will provide the best quality alcohol with no compromises on the quality.
  • We will keep a stock of all the brands so that no customer goes back disappointed in us.

6.2 Sales Strategy

  • We will advertise the bar through Google, Facebook, and YouTube ads.
  • We will erect hoardings and banners to make Zylar’s Drinking Arena a known name.
  • We will offer up to 20% discount on all products for the first 3 months to kickstart the sales.

6.3 Sales Monthly

Bar Business Plan - Sales Monthly

6.4 Sales Yearly

Bar Business Plan - Sales Yearly

6.5 Sales Forecast

Bar Business Plan - Unit Sales

Sales Forecast
Unit Sales Year 1 Year 2 Year 3
Offering Fresh Drinks 46,000 48,760 51,686
Breakfast Service 38,000 40,280 42,697
Mobile Bar Services 34,000 36,040 38,202
Bulk Alcohol Supply 30,000 31,800 33,708
TOTAL UNIT SALES 148,000 156,880 166,293
Unit Prices Year 1 Year 2 Year 3
Offering Fresh Drinks $56.00 $64.96 $75.35
Breakfast Service $42.00 $48.72 $56.52
Mobile Bar Services $60.00 $69.60 $80.74
Bulk Alcohol Supply $65.00 $75.40 $87.46
Sales
Offering Fresh Drinks $2,576,000.00 $3,167,449.60 $3,894,696.03
Breakfast Service $1,596,000.00 $1,962,441.60 $2,413,018.19
Mobile Bar Services $2,040,000.00 $2,508,384.00 $3,084,308.97
Bulk Alcohol Supply $1,950,000.00 $2,397,720.00 $2,948,236.51
TOTAL SALES $8,162,000.00 $10,035,995.20 $12,340,259.70
Direct Unit Costs Year 1 Year 2 Year 3
Offering Fresh Drinks $54.00 $61.00 $70.00
Breakfast Service $40.00 $44.00 $52.00
Mobile Bar Services $58.00 $66.00 $75.00
Bulk Alcohol Supply $63.00 $72.00 $83.00
Direct Cost of Sales
CrossFit Training $2,484,000.00 $2,974,360.00 $3,617,992.00
Offering Fresh Drinks $1,520,000.00 $1,772,320.00 $2,220,233.60
Breakfast Service $1,972,000.00 $2,378,640.00 $2,865,180.00
Mobile Bar Services $1,890,000.00 $2,289,600.00 $2,797,764.00
Bulk Alcohol Supply $7,866,000.00 $9,414,920.00 $11,501,169.60

Personnel plan

This is not a business plan for a video game company and hence you will need to hire some staff for the company to run smooth. Let us see how to make a business plan for a bar from the point of view of the staff.

7.1 Company Staff

Zylar will be the CEO. She will be hiring the following people:

  • 3 Managers for Liaison, Operations, and Procurement.
  • 2 Bartenders for the bar.
  • 1 Bartender for mobile bar services.
  • 3 Bouncers to keep things under control.
  • 8 Waiters.
  • 2 Cleaners to maintain facility.
  • 1 Chef to prepare snacks.
  • 1 Driver to provide transport.

7.2 Average Salary of Employees

Personnel Plan
Year 1 Year 2 Year 3
Liaison Manager $13,000 $14,300 $15,730
Operations Manager $13,000 $14,300 $15,730
Procurement Manager $13,000 $14,300 $15,730
Bartenders $38,000 $41,800 $45,980
Bouncers $31,000 $34,100 $37,510
Waiters $78,000 $85,800 $94,380
Cleaners $16,000 $17,600 $19,360
Driver $8,000 $8,800 $9,680
Chef $10,000 $11,000 $12,100
Total Salaries $220,000 $242,000 $266,200

Financial Plan

The cost for opening a bar will include the following:

  • Cost for getting a place to open the bar.
  • Salaries of the employees for the first six months.
  • Costs for outfitting the place we’ve hired into a bar.
  • Marketing costs.

8.1 Important Assumptions

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 8.07% 8.12% 8.16%
Long-term Interest Rate 8.29% 8.45% 8.52%
Tax Rate 23.80% 24.45% 25.41%
Other 0 0 0

8.2 Break-even Analysis

Bar Business Plan - Break-even Analysis

Break-Even Analysis
Monthly Units Break-even 5349
Monthly Revenue Break-even $135,560
Assumptions:
Average Per-Unit Revenue $239.00
Average Per-Unit Variable Cost $0.66
Estimated Monthly Fixed Cost $163,200

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8.3 Projected Profit and Loss

Pro Forma Profit And Loss
Year 1 Year 2 Year 3
Sales $8,162,000 $10,035,995 $12,340,260
Direct Cost of Sales $7,866,000 $9,414,920 $11,501,170
Other $0 $0 $0
TOTAL COST OF SALES $7,866,000 $9,414,920 $11,501,170
Gross Margin $296,000 $621,075 $839,090
Gross Margin % 3.63% 6.19% 6.80%
Expenses
Payroll $220,000 $242,000 $266,200
Sales and Marketing and Other Expenses $121,000 $130,000 $131,000
Depreciation $2,490 $2,500 $2,600
Leased Equipment $0 $0 $0
Utilities $2,900 $3,000 $3,100
Insurance $2,000 $2,100 $2,200
Rent $3,400 $3,600 $3,700
Payroll Taxes $31,000 $32,000 $33,000
Other $0 $0 $0
Total Operating Expenses $382,790 $415,200 $441,800
Profit Before Interest and Taxes ($86,790) $205,875 $397,290
EBITDA ($86,790) $205,875 $397,290
Interest Expense $0 $0 $0
Taxes Incurred ($17,358) $41,175 $79,458
Net Profit ($69,432) $164,700 $317,832
Net Profit/Sales -0.85% 1.64% 2.58%

8.3.1 Profit Monthly

Bar Business Plan - Profit Monthly

8.3.2 Profit Yearly

Bar Business Plan - Profitt Yearly

8.3.3 Gross Margin Monthly

Bar Business Plan - Gross Margin Monthly

8.3.4 Gross Margin Yearly

Bar Business Plan - Gross Margin Yearly

8.4 Projected Cash Flow

Bar Business Plan - Projected Cash Flow

Pro Forma Cash Flow
Cash Received Year 1 Year 2 Year 3
Cash from Operations
Cash Sales $56,000 $60,480 $65,318
Cash from Receivables $16,000 $17,280 $18,662
SUBTOTAL CASH FROM OPERATIONS $72,000 $78,480 $84,758
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
SUBTOTAL CASH RECEIVED $73,000 $82,000 $89,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $37,000 $40,000 $41,000
Bill Payments $21,000 $23,000 $25,000
SUBTOTAL SPENT ON OPERATIONS $58,000 $63,000 $66,000
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
SUBTOTAL CASH SPENT $59,000 $63,720 $68,818
Net Cash Flow $16,000 $17,000 $18,000
Cash Balance $28,000 $29,000 $31,000

8.5 Projected Balance Sheet

Pro Forma Balance Sheet
Assets Year 1 Year 2 Year 3
Current Assets
Cash $287,000 $321,440 $353,584
Accounts Receivable $26,100 $29,232 $32,857
Inventory $4,100 $4,592 $4,900
Other Current Assets $1,000 $1,000 $1,000
TOTAL CURRENT ASSETS $296,000 $331,520 $372,628
Long-term Assets
Long-term Assets $10,000 $10,000 $10,000
Accumulated Depreciation $20,000 $22,400 $25,200
TOTAL LONG-TERM ASSETS $24,000 $26,880 $30,240
TOTAL ASSETS $299,800 $335,776 $377,748
Liabilities and Capital Year 4 Year 5 Year 6
Current Liabilities
Accounts Payable $21,000 $23,520 $26,436
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
SUBTOTAL CURRENT LIABILITIES $16,000 $17,920 $20,142
Long-term Liabilities $0 $0 $0
TOTAL LIABILITIES $15,500 $17,360 $19,513
Paid-in Capital $33,000 $32,000 $33,000
Retained Earnings $59,000 $64,310 $70,741
Earnings $208,000 $226,720 $249,392
TOTAL CAPITAL $278,000 $303,020 $333,322
TOTAL LIABILITIES AND CAPITAL $293,500 $335,776 $377,748
Net Worth $298,000 $324,820 $357,302

8.6 Business Ratios

Ratio Analysis
Year 1 Year 2 Year 3 INDUSTRY PROFILE
Sales Growth 7.04% 7.80% 8.64% 3.00%
Percent of Total Assets
Accounts Receivable 9.22% 10.22% 11.32% 9.80%
Inventory 5.60% 6.20% 6.87% 9.90%
Other Current Assets 2.12% 2.35% 2.60% 2.40%
Total Current Assets 148.80% 151.00% 152.00% 158.00%
Long-term Assets 11.94% 11,89% 11.93% 12.00%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
Current Liabilities 4.67% 4.71% 4.75% 4.34%
Long-term Liabilities 0.00% 0.00% 0.00% 0.00%
Total Liabilities 7.50% 7.56% 7.63% 7.38%
NET WORTH 100.46% 101.26% 102.20% 110.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 95.06% 97.63% 100.36% 99.00%
Selling, General & Administrative Expenses 94.00% 96.54% 99.24% 97.80%
Advertising Expenses 1.63% 1.67% 1.72% 1.40%
Profit Before Interest and Taxes 41.00% 42.11% 43.29% 33.90%
Main Ratios
Current 37 38 38 32
Quick 32 33 33.825 33
Total Debt to Total Assets 0.21% 0.19% 0.18% 0.40%
Pre-tax Return on Net Worth 74.59% 75.64% 76.69% 75.00%
Pre-tax Return on Assets 93.60% 98.28% 103.19% 111.30%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 32.80% 33.82% 34.87% N.A.
Return on Equity 57.00% 58.77% 60.59% N.A.
Activity Ratios
Accounts Receivable Turnover 7.7 7.8 7.9 N.A.
Collection Days 100 100 100 N.A.
Inventory Turnover 32.6 34.23 35 N.A.
Accounts Payable Turnover 16.35 16.4 16.54 N.A.
Payment Days 27 27 27 N.A.
Total Asset Turnover 2.4 2.5 2.6 N.A.
Debt Ratios
Debt to Net Worth -0.03 -0.03 -0.04 N.A.
Current Liab. to Liab. 1 1 1 N.A.
Liquidity Ratios
Net Working Capital $239,100 $252,490 $266,629 N.A.
Interest Coverage 0 0 0 N.A.
Additional Ratios
Assets to Sales 0.83 0.86 0.9 N.A.
Current Debt/Total Assets 1% 0% 0% N.A.
Acid Test 28.03 28.5 29.11 N.A.
Sales/Net Worth 2.1 2.1 2.2 N.A.
Dividend Payout 0 0 0 N.A.

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