How to open a bar

A 7-step approach to opening a Cheers: How to open a bar in your neighborhood

From happy hours to trivia nights, local bars bring neighbors together. Go from patron to owner of your own neighborhood watering hole with this step-by-step guide on how to open a bar. 

Step 1: Develop plans for your bar

Start your planning with the vision for your bar. Even a simple plan in your early stages will help inform many of your most important decisions.

Write down your ideas around:

Your concept – From traditional pubs to live music venues and dance clubs, think about what will make your bar unique. Do market research to consider what bars have succeeded in the area you want to open one in to weigh what’s been successful in the past and what your community may want. 

Your branding – This will include all the visuals and words that represent your business, including internal elements like your mission and values. As you begin this process, find inspiration in other brands, including those of other bars and restaurants. Take note of their brand voice and personality in-person or via their digital presence on social media. 

Your menu – Is your bar an upscale cocktail lounge, a locally-sourced wine tasting room, or a late-night dive? Start with your most important menu, your drinks. Then, if offering food, choose what kind you’ll serve, or partner with a local food truck or chef. 

Creating a business plan

After brainstorming the creative elements, it’s time to develop a business plan, including:

• An executive summary
• Business description
• Market analysis and target demographic
• Financial data, including initial costs
• Operating costs
• Expected revenue

If you’re opening your neighborhood bar with partners, you’ll likely discuss these choices as a group. Even if your pub is a solo endeavor, you may benefit from outside advice. Reach out to bar owners and other entrepreneurs in your neighborhood for their thoughts.

Step 2: Get your finances in order

Once you’ve calculated how much it will cost to open your bar, you’ll need to figure out the best way to finance it. Some secure funding from outside investors or through a loan, like one with the Small Business Administration (SBA).

At this point, you should also form a business entity. Your options include:

• Sole Proprietorship
• Partnership
• Limited Liability Company (LLC)
• Corporation

Many bar owners choose to form an LLC for their business. Because an LLC exists as a separate legal entity for a bar owner, you’re protected as an individual in the event of a lawsuit. Consider hiring experts to help you get set up, like a lawyer and an accountant, especially if they have advised other local businesses in your area.

Step 3: Find a location

The location may come first, but if you’re deciding on the best possible spot for your bar, consider the following:

• Access to public transit – An accessible location near a bus or metro stop will make it easier for customers to come and go from your bar safely.
• Neighborhood – Location may influence the type of bar you open, and vice versa. Let’s say you want to run a sports bar, you may want to find a spot near an arena, or a college with teams and a built-in fanbase. If you’re in a location with a lot of families, maybe you’ll want to run a brewery open to all ages with room for kids to run around while parents kick back.
• Zoning laws – Most cities designate certain areas for residential or commercial buildings. When looking at potential places for your new bar, you’ll want to ensure the building is zoned to be a bar or restaurant.

Step 4: Obtain necessary licenses and permits

There are several licenses you need to open a bar based on your state, city, or county’s requirements. All businesses that sell alcohol need a permit (TTB 5360.5d) from the Alcohol and Tobacco Tax and Trade Bureau (TTB).

Depending on your location, you’ll also need to apply for a:

• Business license – Some cities require a specific business license for operate a drinking establishment.
• Liquor license – Every state has a dedicated department for liquor control. You may need to apply for a license from your state's department or buy an existing license from another business. Some counties and cities will require an additional liquor license.
• Health permit – If you serve food, you’ll likely need a permit from the health department.
• Food handling certificates – Many states require safe food handling certification for bars that serve food. Note that employees who handle food and alcohol may need special training as well.
• Tax identification number – If your bar business has employees, you’ll need an Employer Identification Number (EIN). You can apply for one for free on the IRS website.

Additionally, you may want to secure:

• Insurance – Some states request business owners have worker’s compensation insurance. Commercial liability insurance protects your business from claims of bodily injury. 
• A music license – To play music in your neighborhood bar, you’ll need a music license from BMI or ASCAP. These associations ensure artists are paid when their songs are played.

Step 5: Hire a team

While you’ll likely spend a lot of your time working at your new bar, you can’t do it alone. The employees you need will depend on the type of bar you’re running, but common positions include:

• Hosts
• Servers and bussers
• Cooks
• Dishwashers
• Bartenders
• Barbacks
• Bouncers

There are a lot of ways to build your team, but for sourcing the best local talent, post and advertise your job listing on Nextdoor.

Step 6: Get ready for business

You’re almost ready to start pouring drinks and welcoming neighbors as your first customers. Before you open, there are a few tasks you’ll want to take care of first:

• Complete renovations – Chances are the space you rent or buy won’t be exactly how you want it. Typical renovations for new bars include painting the walls, installing new flooring, and replacing the bar itself.
• Order the necessary supplies – Aside from larger purchases, like furniture and decorations, you’ll also need bar essentials, including barware, alcohol, and other drinks. When it comes to booze, keep it local where you can. Look for local vineyards, breweries, and distilleries.  
• Build on online presence – Ensure you have an up-to-date website and an account on all the relevant social media platforms before you launch. Create a free Business Page on Nextdoor to find your first regulars. Free posts on Nextdoor reach everyone who lives within two miles of your business without having to build up a following first like on other social platforms.
• Advertise – To build buzz for your local business, you’ll likely need a mix of traditional print advertising and online marketing. Keep your target demos in mind when deciding where and how to advertise. As a local bar, you’ll be able to reach your most important customers, neighbors, on Nextdoor where you can advertise in specific ZIP codes or a mile radius up to 30 miles around your business.

Step 7: Bring the neighborhood together to say “cheers!”

To welcome your first customers, host a grand opening at your bar. Weather and space permitting, attract customers with:

• An outdoor block party
• Food and drink specials
• Live music
• Karaoke
• Trivia
• A pool tournament
• Raffles and giveaways 

Even after your opening bash, holding events like these can continue to attract and retain customers, especially on weekdays, when business often slows down for bars.

Become the neighborhood’s new favorite bar with Nextdoor

Nearly 1 in U.S. 3 households are on Nextdoor, which means there are customers near your bar, looking for a spot to host their next book club, date night, or pet parent meetup. Invite your neighbors in when you claim your free Business Page. On Nextdoor, you can connect with your community over more than just an ice cold brew. Join today.

Sources: 

LA Downtowner. The Redwood Bar & Grill. https://www.ladowntowner.com/articles/redwood-bar-grill 

Small Business Association. Loans. https://www.sba.gov/funding-programs/loans 

Chron. When Starting a New Restaurant: Sole Proprietorship or LLC? https://smallbusiness.chron.com/starting-new-restaurant-sole-proprietorship-llc-11625.html 

Boston Eater. Escape Into a World of Tiki at Wusong Road. https://boston.eater.com/2022/2/1/22912291/wusong-road-cambridge-tiki-bar-restaurant-gallery

TTB. Beverage Alcohol Retailers. https://www.ttb.gov/nrc/retail-beverage-alcohol-dealers

TTB. Alcohol Beverage Authorities in United States, Canada, and Puerto Rico. https://www.ttb.gov/wine/alcohol-beverage-control-boards#US 

IRS. Employer ID Numbers. https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers