Buying a bar is a dream that has crossed the mind of many would-be entrepreneurs. Finding the right bar for you and for the market can be tricky, though and, once you have found the ideal bar, you will want to move fast to put down the money and make sure you don’t lose it.
You will need to be prepared in advance, though, if you are going to be able to do this. In order to get you as prepared as possible, we give you a breakdown of all the costs involved so that you won’t get caught out at the last minute.
Giving yourself ample time to plan your finances is the best way to make sure that you can afford the bar that you decide to buy and turn it into a success.
Buying the business
The most obvious cost involved with buying a bar is buying the actual business. When you are first looking for the right bar to buy, you will have an idea of your price range.
It can be worthwhile to get the help of a professional when it comes to pinning down the amount that you should pay for the business. You will need to do a thorough due diligence to be sure that you don’t pay too much for the business.
Make sure you find if there are any red flags that will cost you money down the line. You should take this off what you pay so that you don’t end up overpaying.
Leasehold or freehold
Be aware of whether the bar is being sold with the property. There will be a far greater capital outlay if you are buying the property as well as the business. However, if you are only buying the business and leasing the property, you need to be sure of what you will be required to pay to the landlord.
If you are signing a new lease, be sure to have the terms of the lease before you buy the business. If the landlord decides to raise the rent after you have taken over the business, you might not be able to break even.
Fixing it up
During the due diligence process, you will need to get a clear idea of what is included in the sale of the business and what kind of condition the inventory is in.
Make sure that you have a detailed plan of the money that you will need to spend on fixing things or getting new equipment. There is often a large amount of capital that is needed to fix up decor before you reopen the doors.
Stocking the bar
The most important part of any bar is the drinks that it serves. You will have to have a fully stocked business ready to sell to your customers. This cost will vary according to the size of your bar and the turnover that you are projecting, however, it's vital that you factor this in when considering the costs of opening your business.
You may need to think about other things that you will need to keep stocked like snacks, toilet paper, cleaning supplies, ice and serviettes. You will also need enough glasses to serve the drinks.
Once you have bought the business, you need to get customers to come. Planning a grand reopening is usually a good way to let customers know that the business is under new ownership.
No matter how big or small you choose to make the reopening, you will need to market your business to customers. Keep some of your budget for these purposes. Spending money to get the word out about your business will always pay off.
Finally, there are always expenses that come up when you are buying a business. Things such as accounting services, insurance and licenses. Keep a relatively small amount of money ready for any of these extras that pop up before you open your door.
If you are going to outlay the capital to buy a business, you need to be able to do it right. You don’t want to be caught outright at the end of the process because you didn’t make sure you had the right licenses to serve your customers their booze!
By Bruce Hakutizwi, Director of North America for BusinessesForSale.com, the world’s largest online marketplace for buying and selling small and medium size businesses.