A neighborhood bar differs from your average brewery, specialty bar, sports bar or club. The neighborhood bar is about beer and entertainment – a great place to see a local band play but a place “regulars” frequent during the week. These folks want to go where everybody knows their name, and just like Cheers, the neighborhood bar fits the bill.
So you’ve tossed around the idea of owning such a bar? Listening to live music while giving high fives to local patrons sounds like a great way to make a living. Heck, who among us hasn’t tossed around the idea of owning a full-featured entertainment venue and living the high-life while working a job we love?
We spoke with Atlanta, Georgia bar owner, Nick Diascovis, and asked him what 22 years of owning a neighborhood bar has taught him and if he had some tips for newcomers to the bar business?
Q. Let’s start with what every budding entrepreneur looking to start a bar wants to know – Is it a profitable business?
A. It can be highly profitable if you know what you’re doing, streamline your processes and manage to survive the initial investments that will add up even faster than you can imagine. I’ve known three other bar owners that have attempted a start-up since my bar went up. One owner spent $40,000 in the first two months after budgeting for $25,000 and trying to go spend as little as possible. By his third month in business, he was already $20,000 in the hole and had to give it up. That was sad to see but most people just don’t have any idea how much the upfront costs will be. Another guy ran his new bar for over a year but never could get enough business to turn a profit. In month 14, he sold everything and managed to only lose a few thousand in the end. Those two failed and the third guy I know is a personal friend who made it work. He poured $80,000 into his bar before ever opening the doors and barely turned a profit in his first year with only two employees. That same bar employees at least ten people now and it’s always busy. In the fourth year of existence, the owner made over $300,000. It was anything but easy though – this is a man who worked 15 hour days and lived in his car during that first year.
Q. Let’s talk about those initial investments. How much money does someone need to start a small neighborhood bar?
A. How much money do you have? You’ll find that there’s no end to how much you can initially spend and no matter how much you try to budget for your start-up, you’re probably going to be spending thousands of dollars more. Some people will tell you to make sure you have a year’s worth of rent in the bank but I would advise to have at least double that. You’ll need it. Tables, chairs and booths? $10,000 will buy you a small setup. There’s insurance, a point of sale software/hardware system for ordering and keeping good track of your money, monthly utilities, deposits, leasehold improvements like plumbing and carpentry, surveillance and things you can’t imagine you’ll need. When all of that is taken care of, you’ve got to have inventory. I can’t imagine starting even a small bar with anything less than $10,000 in inventory. $20,000 is probably more realistic and $50,000 is probably closer to the average. If you want visitors to return, you better have what they want when they walk in.
Q. What’s the most important factor to being successful in owning a bar?
A. You’ve got to be a people person. You’re a politician and you’re campaigning every night, especially in the beginning. If you love talking to people and you’re a positive person who knows how to treat other people, you can really shine in this business. People love to be appreciated and when you go out of your way to show visitors that you care, they’ll remember you – they’ll be back. Equally important, they’ll tell others about you. If you’ve been blessed with a lot of charisma and you’re a natural born leader, you can really make the most of this business. I’ve never been too charismatic but I do enjoy meeting people and I’ve never had a problem letting them know how much I appreciate them. Get good at remembering names. It takes practice but goes a long way in a business like this.
Q. Is there anything you didn’t foresee in owning your own bar that you might warn someone else about?
A. The amount of hours you have to work in the beginning. I had hopes of hiring a Manager and being able to spend a modest amount of time away from the bar but until you’re profiting enough to hire a full staff, there’s simply too much work that needs to be done in the beginning. The toilets need scrubbing, books balanced, supplies reordered, repairs, improvements.. The list seems never ending in that first year. We opened at 1pm every day and I usually came in at 9am and stayed to lock the place up at almost 3am. I might have managed two or three hours away most days during that time. I honestly don’t think the bar would have survived if I had worked any less. By the third year though, I was able to hand many responsibilities off to employees and we created a system of checks and balances that kept everyone accountable with the money that exchanged hands.
Q. Do you recommend that new owners try to do it all themselves or will that cause burnout?
A. You do what you must in an effort to save the most money when you’re starting out. Expenses will eat you alive so you have to do everything you can to offset those costs. If burnout is a concern, you’re probably in the wrong business. It’s going to happen and you just have to keep moving forward. The good news is that even though you’re working more hours than most, you’re working with a goal in mind and for those that stay the course, they’ll probably reap the greatest rewards. All that said, I’d rather work 80 hours a week for myself than 40 hours a week for someone else.
Q. What’s the worst part of owning a bar?
A. Firing people. I’ve never enjoyed it but every owner has to deal with it. It’s not always easy to know what kind of person you’re hiring. Sometimes, you’re overly impressed with their work ethic and other times, you’re quickly sorry. It’s just part of being a business owner.
Q. What’s the best part of owning a bar?
A. The success. Just keep moving forward. You’ll have days with a mile-long list of things to do but don’t get discouraged. It takes months to shorten that list sometimes, but it will eventually all get taken care of. Take it one day at a time. For those that survive, it’s everything you dreamed and hoped it would be. It’s a special feeling to sit in the middle of your crowd-filled bar on a Saturday night and look around at everyone laughing and dancing to a great band you brought in – and know that it’s all happening because of a dream you made happen. I guess you could say it’s the people that fill your room that make it great. It never gets old. It’s a great way to make a living.