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. You’ll need to get them onboard with your concept when getting your first bar funded. Unfortunately, it 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 are Crucial to Getting Your First Bar Funded
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. Ideally, you should come up with a name and a concept before you ever start crunching the numbers. In fact, you should 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. Fortunately, 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.
A Quality Business Plan is Vital
You’ll need to create a high quality business plan, also called a prospectus. This 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. It is very important to choose the right location for your venue and prove it with numbers. This is a difficult feat for most rookies! Instead, 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. 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. Finding a common ground like this deal will help you in getting your first bar funded.
Making a Pitch and Getting Your First Bra Funded
Sure, you could have the best concept in the world with a great business plan to show how it will be profitable. However, if you flub the pitch, you won’t get 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, in a pinch. However, 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 be humble about your original concept. After all, bringing investors onboard means sharing your vision and making compromises. It’s not all fun and games when getting your first bar funded. 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.