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Before you start your business plan and as you are planning your business idea start collecting information and reports you stumble across. Your business plan is made up of millions of different areas and items.
We believe before any money is put on the table a full Financial statement and projection should be done as well. We have seen bars started building just to find out they have run out of money and cannot afford to buy booze.
What do you need for the business plan? You need to collect all the information you can. Your plan (executive summary) claiming what your business will be doing, Money how much and when, Operations how will it run, Marketing, risks, competition. Pretty much every single thing to do with your bar needs to be in your business plan. Collect every bit of information you can.
Business plans are important for any business, they are not just a lot of boring information about what you want to do and how much it is going to cost.
A business plans are the goals, objectives, target market information and financial forecasts. If you ever find your bar is starting to fail, you can refer to your business plan to understand what is going wrong. Also you should have strategic plans and operation plans to help you out of trouble. Think of every possible problem.
Business plans are so unique we cannot just tell exactly what to do. But we have put together a guide on how to work your way through on figuring out what you need in your business plan.
Lots of business owners starting out say I have my business plan in my head it’s fine. Unfortunately the business plan is not just about an idea, it is understanding if everything else works with that idea.
There is a proper layout to use if you need it for funding you can see that here.
Business plan template (coming soon)
The guide below is a way to figure out what information to gather and put in the template. We also use a different method as we understand for most people money is the defining factor. If you have deep pockets you can probably be a bit less paranoid.
Write down your concept. This is what you will be working on so make sure it’s good and detailed. You might be coming back to it with changes once you get to the end of this list.
A re-write to a business plan before the business has started is a good way to fail without losing money. When you have to re-wrote the business plan it means you found a fault that could have made you fail and cost you a lot of money.
Money before the location, unless you have endless capital you should always do money first. Why? Because if the perfect venue comes up you will need to be very quick figuring out the start-up and running costs. This is where mistakes can be made. Plus you probably wont me able to build your dream. Sorry, but dreams are usually too extreme.
If you have a basic idea of the size of the venue you want, then you can figure out most of the money side and once that perfect location comes up jump on it.
So, firstly figure out what you need, what you have got and so on.
The business plans we have go into ridiculous depth, with costs. We put everything from toilet paper to pianos into our plans. We make sure we understand the start up cost and the full running costs.
Plus then we double it.
We always want to prove the worst case scenario. If you are asking people for money maybe you need to show them the best case, but you should always do a worst case for yourself, just to understand.
This is the place you will and should get scared out of starting a bar. The numbers will probably not look that good. If it does, go back and redo it. You need to understand the true cost of running a bar, not many bar owners are millionaires, most go broke instead.
If you are half way through building your bar and run out of money you are stuffed. We have seen this plenty of times. Think, think and re-think, every little thing adds up.
Where are you getting your alcohol, are they the cheapest are they the best. Remember your not just supplying alcohol. There are other suppliers you might need POS systems, food, glassware, uniforms, toilet paper the list goes on and on.
We will have a full list here.
Make sure you know the costs of everything and if they do deals promos etc…
Location, location, location. If you are buying an existing bar then you cannot change this.
If you are looking for a location this is one of the most important decisions you are going to make. It will take time so don’t get impatient. First are you buying or leasing?
When you are looking for the perfect location there are several things you need to think about.
Is it near other bars or is it by itself. This will also depend on your concept. Bars group together for a reason. Mainly because people like going to one street and having a choice. If you are in the middle of nowhere how will people get to and from there. Maybe your concept is to make it easier for after work drinks in an area that has no bars. This all depends on your needs.
If you are building a bar where there has never been one before your neighbors are going to fight you. No one wants to live next to a bar. Think about it, If you are going to fight with your neighbors all the time over noise and other stuff, it takes away your time and money from building a bar. This is a big problem and lots of people miss this part. Just think if a bar opened next to your house how would you feel? If your planning on building a nightclub that opens at 10pm and closes at 4am and council puts in 12am closing time on your venue you’re in big trouble.
Is it going to work with your concept? You obviously have to compromise a bit. If you have a concept for a beach bar you will need the beach. Establish if it will be right for you or how you are going to make it right. If there is a big grey cloud over something that you cannot get passed. Question it again and again. You don’t want your future to be regretting the fact you have a 10,000sq club with one bathroom.
It is crazy how a bathroom can make or break a venue. Our research proves that if you make the most uncomfortable part of the night more uncomfortable you are on track. We have been to so many bars that didn’t think this through. One we even have had to leave to go to the bathroom. Also make sure they look clean and good.
There are lots of other things you need to consider. For example if you are running crazy lighting and music you will need to overhaul the power. Is the layout welcoming or does it make you feel claustrophobic. There are lots of physiological studies on the different emotions that make people spend money, read them. Your in the business of making money, if they say red menus make people spend 10% more get red menus. We will teach you about funnels and other fancy terms on how to keep flow and people happy later on. Figure out if this location will work with the layout you need.
The most expensive part of your business is also the most important, you need to think about this- plan it out.
How many, This might be how many can you afford. But figure out if you are going to have area mangers or supervisors or a general manager.
Who do you want, do you need a certain demographic or do you want a style that fits your concept.
Where are you going to get them. Yes you can post on baradvisor.com job search. If you want that really good bartender that’s at the bar down the road you will have to go get her/ him.
Pay for quality if you know they are good, get them. So many new bar owners take the cheapest rookies they can find. Just like a football team, the team with the least experience loses most of the time.
Figure out what risks you are taking. There are lots of risks when starting any business and you should always do a risk assessment. Figure out what could go wrong and figure out a solution. If you can’t find a solution for a problem that might arise you might need to make the call on if the risk is worth it or not.
Example – neighbors can crush your idea very quickly, what is the risk of this happening. If you are on a street with several other bars close by, very small. You should still have a plan on what you can do if you can’t open till 4am anymore.
Competition / future competition- Who are they, what risk do they have on taking all your business away from you. Pricing strategy is a big thing to think of here.
Personal Risk – Remember you are an important part of the business, what is your plan if you get sick or ill. Have you go other plans in the future like children. All your personal risks have a big effect on your business.
Economical risks – How stable is the area you are building the bar. If you are in a small town that survives on one large company or industry what would it mean for you if that industry collapsed.
Legal – What laws do you need to abide by, what are the possibilities of Food, alcohol, OHS legal problems. What measures/plans have you got in place for any legal problems in the future
Ok, so you are probably thinking you are done with the business plan. Sorry, but that was still just a process to establish if you are willing to move forward. If you have the location and money you can move forward with the more formal business plan, this is the one they teach in schools. You will take all the information you have gathered and put it in a nice, easy to understand layout.
This business plan can change, but you should really use it as your main guide. If you stay too far from it you might not have the money or the solutions when you run it to a problem.
Please tell us what you think in the comments below
Below is also a quick little video which might help.