Entrepreneur Archives | Sparkler City

Getting Your First Bar Funded

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When most people decide to open their first bar or nightclub, they do it because it has been a long time dream. The sad reality is that it takes a lot of money to start a bar from scratch, and most entrepreneurs won’t have all of the capital that it takes right off the bat. That means you will need to court perspective investors and get them onboard with your concept which will be a blend of salesmanship and compromise. If you are like many entrepreneurs, this will be your first business that you start of any kind, so it can be tough to navigate the waters. Here are some basic steps that you’ll want to take before you start pitching your bar concept to investors.

Brand and Concept

The very first step that you’ll need to take is to have a viable and well thought out concept. Just approaching an investor with the dream of owning a bar will never do, so you need to work out some of the details. Come up with a name and a concept before you ever start crunching the numbers, and even come up with some logo and marketing material concepts. Chances are you’ll need to work with the investors to alter your original concept, but you can check out a project portfolio website like Behance to get some general ideas on paper before you start working through the details. Some people feel that logo design is putting the horse before the cart, but I think it’s just prudent planning.

Business Plan

Creating a high quality business plan, also called a prospectus, is another essential step to complete before approaching potential investors. You are going to need all of the detailed information included such as operating costs, building costs, and what you expect to draw from the local market based on heavy research and demographics. This is a difficult feat for most rookies, so you should hire a professional consulting firm to help you get it right. You’ll also need to figure out how the business arrangement will work over time. For instance, if the investors gave $100,000, you could do a 75/25 split of revenues in favor of the investors until they have earned $115,000, and then change it to a 25/75 split in your favor until the business is gone or sold. This is called a share flip and will probably need to be tweaked based on your investors risk comfort.

Pitching Your Bar

You could have the best concept in the world with a great business plan to show how it will be profitable, but if you flub the pitch you won’t go anywhere. There are plenty of great webinars and websites out there to coach you on pitching your business, so make sure you educate and prepare yourself before you setup any meetings. You can also tap a consulting firm to help you with this process, but that will add to the out of pocket expenses you incur just to get the bar or nightclub off the ground.

Overall, it’s important to remember that even though it was your concept originally, bringing investors onboard means sharing your vision and making compromises. It’s a trade-off that many first time bar owners simply must make if they don’t have a huge supply of capital on hand to do it alone. Remember, your goal is to get your first bar or nightclub off the ground, so focus on making your dream come true the second time around or after you have the funds to buy out the original investors.

Bar or Nightclub

Nightclub or Bar: Which to Open?

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If you are considering getting into the nightlife and entertainment industry, the two most logical choices that many entrepreneurs consider are nightclubs and bars. Though neither option is completely foolproof and requires a large learning curve without plenty of research and startup capital, there is actually more science involved in which route you choose than you might think. The fact of the matter is that opening a nightclub in the wrong area of town can lead to an almost instant destruction of your business, but choosing an ordinary bar instead can mean that you’re leaving barstools empty and profits on the table. There are some important things to consider when figuring out which option you should choose, and here are some of the most important ones.

What’s the Difference?

For many people who don’t have a lot of experience with the nightlife industry, the difference between a bar and a nightclub can seem subtle at best. However, there are actually tremendous differences that entirely shape the way the business is run. For instance, a bar is dependent on the concept of drinking to get people in the door while a nightclub emphasizes entertainment and sells alcohol as a consequence. That one simple fact should drastically change the marketing and appearance of the establishment you wish to operate.

Traditionally, nightclubs focus more on music and entertainment as well as the aesthetics of the environment. High end seating like plush chairs and couches are very common along with state-of-the art lighting so patrons don’t feel bad about forking out tons of cash for a simple cocktail. In a nightclub, you’re selling an experience more than just selling drinks which means every detail must be top-notch.

A bar on the other hand is all about the drinks and the food. When a typical customer goes to a bar, they’re looking for and enjoyable atmosphere that is more conducive to conversations rather than booming music and intense lighting effects. Value is typically a top priority as well with bar owners needing to focus on more volume and lower margins to bring in the lion’s share of the customers in a particular area.

The Benefits of Each

Both bars and nightclubs each have their own major benefits, and each can be very profitable is setup and run properly by a good staff. The most important factor to consider is opening the right business model for the area you’re in to capture as much revenue as humanly possible. Many people who are interested in starting a business make the mistake of building it up in a fashion that they personally like rather than letting the market dictate what they offer, but this usually ends up backfiring unless they have a really great pulse on the area and they close their doors within a few short months.

Knowing Which to Open

Deciding whether to open a bar or a nightclub should be a pure business decision motivated by the demographics in your area and your target market. If you have a lot of people ages 21 to 35 in your area that have a fair amount of income, then a nightclub could be a great addition to the market. However, you need to make sure that you have enough young people in the area with enough disposable income to make it a viable business model; as well as making sure you don’t have too much competition to capture your niche.

Bars on the other hand are usually viable in any situation provided that it meets the demographics. Usually, if you do the proper research to figure out your target audience and build a bar that is designed to cater to them specifically, you can open a successful establishment. The only thing you want to avoid is opening yet another bar in an area that is already flooded and overlooking the potential that a nightclub could offer the region.

Nightclub Entrepreneur Tips

Tips for Nightclub Entrepreneurs

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Starting your own nightclub or bar can be both profitable and exciting for an entrepreneur, but knowing what you’re getting in to is very important if you want to be successful. If you want to avoid being just another failed nightclub endeavor, you need to start off on the right foot. In the nightclub and bar industry, even more so than in other industries, putting together a strategy for every eventuality is vital before you ever even think about opening your doors and letting guests inside. There are several key components to consider when starting your own bar or nightclub, but here are some important things to keep in mind.

Your Business is a Story

Every time you open your doors and invite a guest into your nightclub, the entire venue is telling a story. Instead of writing a story using words and pictures, you’re displaying it with your lighting, color choices, and attitudes of everyone who works in the establishment. The story that your business tells is very important to the customer experience and thus to the reputation of your bar or nightclub. Take the time before you open your doors to make your story as great as possible so you don’t find yourself with an empty club after the initial excitement wears down. You are putting your name on every part of your club as an entrepreneur, so make sure your name is displayed proudly.

Budget for the Unexpected

All businesses have hidden expenses and unexpected turns of events, but for an unprepared club owner this can mean catastrophic failure. In fact, the more time and money you have invested into your bar or nightclub means the greater the chance of a very expensive situation arising and many entrepreneurs dump everything they have into their club to get it rolling. You may think that once you have revenue flowing that you’re ready for anything that comes up, but typically you need that money to pay your bills, staff, and building costs just to stay open. Make sure you keep enough reserve capital on hand to cover even the most unthinkable situations to avoid running out of cash if an emergency arises.

Gather a Great Staff

The staff you hire to launch your new bar or nightclub will make or break the entire business. If you don’t get your club launched in the proper fashion, chances are you’ll never bring in the types of crowds that will make you rich. Most patrons will show up one time to a club and base their views off of that one experience. If your staff drops the ball in the first few weeks of opening, chances are you will be turning off the customers that would be your regulars and your bread and butter. Don’t be afraid to recruit from other nightclub entrepreneurs and really scrutinize applicants when you’re hiring. You will likely lose a few staff members and gain a few new ones as the first few months unfold, but refusing to hire lackluster staff members is one of the biggest keys to success in this industry.

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