How To Buy A Bar?
Many people wish of buying a bar and running it themselves. It is a great place to socialise and this may tempt you to turn it into your career.However, you should be aware that it involves working late nights, over the weekend and generally involves a lot more work than people initially imagine.
Regardless of the preceding, it can be gratifying and can lead to success for the right person. In this article, we will present a guide to help you with your dream of buying and running a bar.
Design a bar business plan
A smart business plan can make the difference between a successful and a flop start-up. Due to this, many people feel more comfortable buying a business with a proven track record.
Regardless of the preceding, you will still need a clear business plan to ensure that the business will be a successful one, once you have taken over.
However, it will take more than a proven track record to keep the bar running and profitable. It will require experience and a comprehensive understanding of the industry as well. Even if you have well-experienced staff, you can also make full use of your employees if you know how to manage them.
To be able to make the most profits you will have to be at your bar from open till close. This will also ensure that the staff is running the bar the way you it to run. If you hire well-experienced staff, they can take the pressure off during peak hours.
Further, you need to be speaking to your customers. This will not only make them feel welcomed, but you will also get the valuable feedback you need to keep the business profitable.
The best thing you can do is make a clear business plan to be aware of what you need to start doing once you have taken over. A business plan will also enable you to figure out what type of bar you want to invest in.
Which skills will you need?
You have to be a social person, have some experience and knowledge of alcoholic beverages, and be good with numbers since you will be keeping records of nightly sales and stocks.
A great way to gain experience of the bar industry and be a successful bar owner, it to first work as a manager at a successful bar.
Finding the right bar
If it is your dream to open a bar, you probably already have some ideas of what kind of bar you want to run. For instance, you want to run a sports bar, karaoke bar, a nightclub, or music bar, to name a few types of bars.
The location where you want your bar to be is critical. For example, if you want a high concept bar in a small town, it will probably not be a good idea. Hence, you want to find out the demand for various types of bar in the locality you want to start up your bar.
You will have to decide what kind of bar you want to buy when making your business plan. However, buying the right bar takes more than deciding the type of bar you want to purchase.
You will have to do a lot of research and carry out due diligence to ensure that the business remains booming and profitable.
Valuing a bar
An important step you need to take before you purchase a bar is to carry out an evaluation of the bar to determine its’ worth.
One of the most popular methods of carrying out evaluation is the Multiple Discretionary Earnings method. It involves assessing the pre-tax earnings, salary, depreciation and other expenses.
Further, it will also be considered whether the bar is a freehold or leasehold. If the bar is leasehold, you must look at the terms of the lease. It will set out your rights and obligations under which you can operate the bar.
First, get a good understanding of the state of the business you want to purchase and plan out how much you will have to spend to bring it to the standards you want it to be. You should also determine what equipment will be included in the sale and whether any of those will have to be replaced.
Do thorough research, carry out due diligence and hire well-experienced staff, and you can confidently buy a bar and keep it running profitably.
The process of due diligence is one that provides a thorough investigation into a proposed investment transaction. It means you check the investment worthiness, and assess the full claims made by the owner. This check is usually performed by a solicitor and accountant who act on behalf of the buyer. A large portion of due diligence will involve checking financial statements and accounts.
Click here to find more about due diligence.
If you buy wisely and do a thorough research of the background and potential of the business which attracts your interest, you will get immediate access to the existing base of customers and suppliers. This will ensure that you know what you are getting into.
You need a solid contract
Click here to download a business sale agreement.
You, as the buyer, will have to produce the sale document. This agreement will have to cover the mechanics of the deal – what is being sold, where it is, how it is to be transferred, and so on. This is where warranties come in.
Warranties are legally binding promise as facts about the business, which provide information relating to the business. Click here to know about how warranties work and why they are important.
Essential documents you will need
Additionally, you may need assignment and novation agreements to transfer contracts the seller is a party to.
If company shares are being sold, then you will need directors service agreements, board minutes to document approvals to changes, and possibly, a new shareholders agreement and new articles of association.
We can help you find exactly what you need for your circumstances if you contact us and ask.
Please note that the information provided on this page:
- Does not provide a complete or authoritative statement of the law;
- Does not constitute legal advice by Net Lawman;
- Does not create a contractual relationship;
- Does not form part of any other advice, whether paid or free.
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