As you sip on your favorite beer at your favorite local watering hole, you’ve probably entertained the idea of opening a bar yourself. For many people the thought is little more than fantasy, for others it becomes a fully-fledged dream they then struggle to make a reality.
According to 2017 statistics, there were more than 62,000 bars, taverns, and nightclubs in the United States. That number might sound high, but it has been in steady decline over the past decade, down from over 70,000. There is no shortage of hopeful entrepreneurs who try their hand at bar ownership but, unfortunately, 60% fail within the first year and 80% fail to reach their fifth anniversary.
Bar ownership is not for the faint of heart, but it doesn’t have to be a losing battle to keep your doors open, customers (and employees) happy, and the beer flowing. Read on to learn about the top 5 mistakes bar operators make which lead to a steadily declining profit margin so you can avoid them yourself. You’ll also receive some practical tips for building your bar into a successful, money-making operation.
Avoid These Mistakes to Keep Your Bar in the Black
When you finally make the decision to make your dream of owning a bar a reality, it is easy to get caught up in the excitement. You spend your days looking for the perfect property, perfecting your menu in the meantime. When the right opportunity comes along and you’re ready to pounce, take a second to make sure you’re really ready to take that leap. Many hopeful bar owners make their biggest mistakes before the doors even open and, unfortunately, it sets them up for failure.
Here are some of the biggest problems that lead to bar failure:
- Poor financial organization. Even the most successful bars and restaurants run a tight profit margin, so keep close track of your finances and know exactly how much money is coming in compared to what you’re spending on everything from inventory to paychecks.
- Opening too soon. Many people make the mistake of thinking opening a bar is easy. While that may be true in some cases, success is no guarantee. You need to be start with enough capital to survive at least 6 months with little to no profit.
- Not upholding standards. As the money starts to run dry, many bar owners make the mistake of letting quality and aesthetic standards fall to the wayside. A shabby-looking bar with sub-par service isn’t going to attract the extra business you need to stay afloat.
- Failing to consider the community. Location is one of the biggest factors determining the success of a bar. You need to open your bar in a location where the community has disposable income and offer product and prices that suit your clientele.
- Apathetic staff members. As a bar owner, it’s your job to set an example for your staff. If you stop caring, it will create a culture of apathy among your staff that will spread to your customers and business will slowly dry up.
Now that you understand where many bar owners fail, you should have a pretty good idea what NOT to do with your own business. Before you jump headlong into planning and purchasing, however, it is important to start with a solid foundation. Read on to learn 7 tips to manage your bar successfully.
7 Tips to Operate Your Bar Successfully
Owning a bar involves more than simply pouring drinks and socializing with your customers. It is your job to know all of the little details, from current inventory and upcoming orders to how much product your staff is wasting with over-pours and comps. It is the little things that will make your business succeed (or fail) and having the right staff and technology at your back is of the utmost importance.
Here are the top 7 tips to help you manage your bar successfully:
- Use technology for your inventory. Using technology for your inventory gives you real-time insight to what is in stock. Modernizing the effort eliminates having to weigh kegs or simply guess based on register receipts. Plus, you never have to disappoint customers by telling them you ran out of their favorite beer. BeerBoard’s SmartBar technology enables you to track and monetize your draft lineup.
- Automate your ordering to improve efficiency. There was a time when placing an order involved hours of calculating inventory and placing individual orders. With BeerBoard’s SmartBar technology, you can avoid empty kegs and maximize sales. Generate orders based on actual usage and trends rather than estimates. Plus you can keep track of all of it on your smartphone or tablet.
- Always be focused on the bottom line. Opening a bar takes passion but keeping it running requires practicality and discipline. Every decision needs to be made with your bottom line in mind. Fact-based decisions and efficiency are going to make the difference between profit and loss in such a tight industry.
- Be a leader for your staff. There is something comforting about stepping into your local bar and seeing that it hasn’t changed a bit in the past decade, but that isn’t a model for long-term success. If you want to continue driving profits, you need to adopt an attitude of efficiency and profitability. Take advantage of BeerBoard technology to drive profits and show your staff that you are committed to the success of the bar, inspiring them to do the same.
- Cultivate a culture of organization and efficiency. With modern technology in its current state, there is no excuse to default to outdated methods for tracking inventory, placing orders, and calculating Cost of Goods Sold. Get your business organized with automation software and use it to your every advantage to cultivate a culture of efficiency.
- Keep your team members motivated. No matter how passionate you are as a business owner, it won’t make much of a difference if your staff aren’t motivated to see the business succeed. Set a good example for your staff and encourage them to take ownership of the business. Involve them in decisions regarding changes to the menu and consider running contests to create seasonal cocktails or promotions to help keep customers engaged and to drive new business. You can even reward them with bar-related gifts/incentives.
- Always seek to improve the customer experience. A successful bar strikes the perfect balance between cost-efficiency and optimal customer experience. You want to create an experience your customers will remember, making them want to return, but do it with efficiency, always keeping your bottom line in sight.
Every bar is as unique as the man behind the counter, but every bar can benefit from following these simple tips. BeerBoard technology provides valuable insights to help you maximize your profit margins and minimize losses. Rather than relying on outdated method of keeping inventory or relying on your instincts, take advantage of BeerBoard’s automation solutions to make data-driven decisions that will help keep your margins high and set you up for a successful future.