How much does it cost to start a bar?

You have decided to open a bar, so now comes the hard question: How much will it cost to start your business? Start-up money is necessary for any business venture to get moving. The answer will vary considerably, but do not let that get you down. It is possible to get a rough estimate on how much it will cost your to start your dream bar.

Education
Do you know what a balance sheet is? Have you ever taken inventory? If you're new to the business world, education is key to success. Contact local community colleges in your area to see what classes they offer. In America, most community colleges charge in-district tuition if you live in a certain area, and this may run anywhere from $100-$200 per credit hour.

Business Associates Degree : $4,000-$6,000
Books : $500- $1,000

Building Expenses
If you decided to build your bar from the bottom up (link:Should You Buy a Bar or Start Fresh?), then you will incur many expenses related to the construction and licenses. If you decide to lease a building, the monthly expense of rent will be your major cost. Check around your town to get a good estimate for rent prices. Real estate prices vary considerably, but it is extremely important to find an excellent location, even if the cost is a bit higher.

Building Your Bar : $100,000-$300,000+
Renting: Varies

Equipment
New or used, equipment is needed, and it is expensive. Your basic equipment will be functional equipment such as a soda system, refrigerator, fryer or oven, and the bar tools needed by bartenders. Depending upon your interior design, you can also expect to pay top dollar for the flooring, lighting, wall decorations, tables and chairs.

New Equipment : $20,000-$50,000

Licenses
Depending upon the state you live in, you may need multiple licenses and permits in order to stay in business. Good news is that most of these will last for a full year, bad news is most will require annual renewals. These licenses are common for the majority of bar owners:

City Business License, City Liquor License, State Liquor License, Health Code permits, Building Inspection permits
Licensing and permit costs : $500-$3,000

Insurance
General liability insurance will be the most common type of insurance you may be legally required to buy. You may buy commercial property insurance, should any damage come to your business. Insurance rates vary considerably, and estimates are hard to come by if you're not already up and running.

Consult local insurance companies to get an accurate estimate.

Employee Liabilities
You may decide to hire an employee or two when you start your bar. If this is the case, it is good business practice to have at least 6 months of pay set aside. In addition, you'll need to set aside money for unemployment insurance (Check your state's regulations), social security and medicare payments, worker's compensation insurance, and any benefits you plan on providing.

2 Employee at $10/hr, 40 hrs of work/week for 6 months:
$28,000-$36,000

Drink and Food Supplies
How much drink and food to buy will very much depend upon how large your storage faculties are, and how fast the supplies leave. Beer and soda often have a long shelf life. Most foods, such as fruits and vegetables, are perishable, so do not buy these in large-bulk orders unless the demand calls for it.

Starting Liquor and Drink Inventory : $5,000-$15,000
Food : Varies

Total Estimated Cost: $250,000-$400,000+

The above estimate does not include insurance. How you will finance your bar will be a make-or-break for your bar. No financing means no bar. It is business savvy to be able to provide 25-40% of the estimated costs out of your own pocket, or combined with you and several partners. Banks may or may not be willing to lend, it will depend upon your credit history, current economic conditions, and a multitude of other factors.

Wherever you get your financing, remember that the first six months of starting a business is crucial to future success, keep an eye on expenses and do plenty of research before opening the doors in order to get started on the best foot possible!

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