How to Start a Bar: Key Steps, Tips, and Insights

Starting a bar can be an exciting venture, but it requires careful planning and execution. Whether you’re dreaming of a cozy neighborhood pub or an upscale cocktail lounge, success depends on understanding the industry, making smart decisions, and avoiding common pitfalls.

This guide walks you through everything you need to know. We’ll cover the essential steps to get your bar up and running, help you decide if this business is right for you, and share valuable resources to support your journey.

Let’s dive in.

15 Steps to Starting Your Bar

1.) Research the Industry Thoroughly

The more you understand about running a bar before you open, the better your chances of success. Smart research now saves you from expensive mistakes later. Here’s how to get the insider knowledge you need.

Talk to Current Bar Owners

Nothing beats learning from people who’ve walked this path. They know the challenges, the opportunities, and the secrets that only come with experience.

Connect with bars for sale: Start by contacting owners who are selling their businesses. Tell them you’re exploring the possibility of buying rather than starting fresh. This approach opens doors to honest conversations about the realities of bar ownership.

Before each meeting, prepare your questions. Begin with personal ones that break the ice:

What drew you to the bar business?
What do you enjoy most about running a bar?
If you could start over, what would you change?
Why are you selling now?

Once the conversation flows, dig into the business details:

What was your revenue last year?
How much of that became profit?
What are your biggest operational challenges?
How much do you spend on staff annually?
What equipment is essential versus nice-to-have?

Keep an open mind during these conversations. You might discover that buying an existing bar makes more sense than starting from scratch.

Explore franchise opportunities: Look into bar and nightclub franchise options. These meetings provide structured insights into the industry, even if you ultimately decide against franchising.

Reach out to distant competitors: Contact bar owners outside your area. Explain that you’re planning to open in a different market and would appreciate their advice. Many successful owners are willing to share wisdom when they don’t see you as competition.

Study published interviews: Search for articles and podcasts featuring bar owners. These often contain golden nuggets of advice and may include contact information for follow-up questions.

After spending a few weeks on this research, you’ll have expert-level knowledge that would otherwise take years to acquire. For more detailed strategies on gathering industry insights, check out our guide on getting an inside look at the business you’re considering.

Stay Current with Industry Trends

The bar and nightclub industry constantly evolves. New cocktail trends, changing customer preferences, and regulatory updates all affect your business.

Set up a system to stay informed. Subscribe to industry publications, follow bar industry experts on social media, and join professional associations. Schedule time weekly or monthly to review this information.

This ongoing education helps you spot opportunities and avoid outdated practices.

Choose Your Location Strategically

Your location can make or break your bar. You need enough foot traffic to sustain business, but you also need to afford the rent.

Consider these factors:

Customer accessibility: Is it easy for people to find and reach you?
Market demand: Are there enough potential customers in the area?
Competition level: Is the market oversaturated or underserved?
Cost balance: Can you afford the rent while still turning a profit?

A prime downtown location might bring lots of customers but cost so much that you can’t make money. Meanwhile, a cheap rural spot might not have enough potential customers to survive.

Research the area thoroughly. Visit at different times and days of the week. Count foot traffic. Talk to neighboring business owners about the area’s patterns.

Define Your Bar Concept

Before you go further, decide what type of bar you’re creating:

Will you serve only drinks, or include food?
Are you targeting the after-work crowd or the late-night party scene?
Will you have a specific theme or atmosphere?
What’s your target customer like?

These decisions affect everything from your equipment needs to your staffing requirements. Having a clear vision makes every other decision easier.

2.) Choose Your Business Name

Your bar’s name stays with you as long as you’re in business. Make it count.

A great bar name is memorable, appropriate for your concept, and easy to pronounce. It should work well in conversation and look good on signage.

Start by brainstorming 15-20 options. Don’t judge them yet—just get ideas flowing. Put the list away for a few days, then come back with fresh eyes.

Narrow it down to your top five choices. Check if these names are available for business registration and if matching domain names are free.

Print out your finalists and see how they look on paper. Say them out loud in sentences: “Let’s meet at [bar name]” or “I had dinner at [bar name] last night.”

Get feedback from friends and potential customers, but remember—you’ll live with this decision daily, so choose something you love.

3.) Make Your Business Legal

You can’t operate legally without proper business registration. Requirements vary by location, so check with your state and local authorities for specific rules.

Select Your Business Structure

Entity choice is strategic—especially for a bar. While sole proprietorships are simple, they offer no personal-asset protection. Most operators should evaluate an LLC or corporation to create legal separation between the business and the owner, then confirm the best fit with an attorney or accountant.

Consider forming an LLC or corporation instead. These structures create legal separation between you and your business. If someone sues your bar or it goes bankrupt, your personal assets stay protected.

The choice affects your taxes, liability, and ability to bring in partners. Consult with a lawyer or accountant to determine the best structure for your situation. For detailed guidance, see our article on how to choose a business structure.

Get Your Tax ID Number

You’ll need a federal tax ID (EIN) to open business bank accounts, hire employees, and handle tax obligations. The application process is straightforward, and you can often get your number immediately online. Learn more about getting a business tax ID.

Secure Licenses and Permits

Bars require multiple licenses and permits. The most critical is your liquor license, which can take months to obtain and costs thousands of dollars.

Contact your city hall and state licensing departments early in your planning process. Requirements vary significantly by location, and some have quotas that limit new licenses.

You’ll also need basic business licenses, health department permits, and possibly entertainment licenses if you plan to host live music. For comprehensive information, visit our business licenses and permits guide.

4.) Create Your Corporate Identity

Your corporate identity—logo, signage, business cards, and other branded materials—shapes how customers perceive your bar.

Professional design matters. Cheap-looking materials suggest a cheap experience, while quality design builds trust and attracts better customers.

You don’t need everything immediately. Start with:

A professional logo
Business cards
Exterior signage

Add other elements like letterhead, uniforms, and promotional materials as your business grows.

Work with a designer who understands hospitality businesses. They’ll know how to create designs that work in dim lighting and translate well across different materials.

For more insights, explore our guides on business logo design and effective business signage.

5.) Research and Purchase Equipment

Bar equipment represents a significant investment, so choose wisely. Focus on reliability and functionality over flashy features.

Essential equipment includes:

Commercial-grade refrigeration
Ice machines and storage
Draft beer systems (if serving beer on tap)
Point-of-sale system
Glassware and bar tools
Dishwashing equipment

If you spoke with current bar owners during your research phase, you already have insights into which brands and models work best. Build on that knowledge by talking to equipment dealers and reading reviews.

Consider starting with high-quality used equipment for some items. Many bars upgrade or close, creating opportunities to buy professional equipment at reduced prices.

Remember that equipment affects your insurance rates and energy costs. Energy-efficient models cost more upfront but save money over time.

6.) Estimate Your Startup Costs

Nobody can tell you exactly what opening your bar will cost—there are too many variables. However, you need realistic numbers for planning and financing.

Your costs depend on:

Location and size
Concept and theme
Equipment choices
Renovation needs
Local licensing fees

Start with major categories:

Licenses and permits: $10,000-$50,000+ (varies dramatically by location)
Equipment: $50,000-$200,000+
Renovation and buildout: $100,000-$500,000+
Initial inventory: $10,000-$25,000
Working capital: 3-6 months of operating expenses

Get quotes from multiple vendors for major items. Add 20% contingency for unexpected costs—you’ll probably need it.

Keep detailed records of your estimates. These numbers form the foundation of your business plan and loan applications.

7.) Write Your Business Plan

A business plan serves two crucial purposes: it forces you to think through every aspect of your business, and it’s required for most financing.

Your plan should cover:

Executive summary
Market analysis
Marketing strategy
Operations plan
Management structure
Financial projections

Don’t worry about creating a perfect document. Focus on demonstrating that you understand your market, have realistic financial projections, and know how you’ll make money.

You can use templates, business plan software, or hire a professional writer. Regardless of your approach, you provide the information and ideas—no one else knows your vision like you do.

A solid business plan becomes your roadmap. Review and update it regularly as your business evolves. For detailed guidance, see our comprehensive guide on how to write a business plan.

8.) Set Up Business Banking

Choose your bank carefully. You’ll handle cash daily and need convenient, reliable service.

Look for a bank near your location—you’ll want to make deposits regularly rather than keeping large amounts of cash on hand. More importantly, find a banker who understands hospitality businesses.

A knowledgeable banker becomes a valuable advisor. They can help with cash flow management, equipment financing, and emergency credit lines. When you eventually need loans for expansion, having an established relationship makes approval more likely.

For guidance on selecting the right institution, read our article on how to choose a business bank.

Merchant Account Setup

You’ll need to process credit and debit card payments.

Card-processing costs vary by provider and your profile (merchant category, average ticket, tipping, chargeback history, contract terms). Compare the effective rate (interchange + processor markup + monthly/PCI fees), dispute policies, and contract length/termination fees before you choose.

Your bank can help set up merchant services, or you can work with independent processors. Compare rates carefully, but also consider reliability and customer service quality.

9.) Secure Financing

With your business plan complete, it’s time to seek funding. Lenders scrutinize new hospitality concepts closely, so anchor your pitch in data: roughly 75%–85% of new establishments survive year one and about 50% survive to year five (varies by cohort and location). Show relevant experience, collateral, conservative projections, and a clear plan to manage cash flow and compliance to improve approval odds.

Strengthen your loan application by:

Having a detailed, professional business plan
Bringing relevant experience to the table
Offering substantial down payment or collateral
Choosing an experienced banker who understands your business

If traditional banks decline your application, ask for specific reasons and address them before approaching other lenders. Consider SBA-backed loans, which reduce risk for lenders and may improve your approval odds.

Alternative financing options include equipment financing, investor partnerships, and family loans. Each has advantages and drawbacks to consider carefully.

For more strategies, check out our guide on how to get a business loan.

10.) Choose Your Software Systems

The right software streamlines operations and provides valuable insights. The wrong software creates headaches and inefficiency.

Essential software categories include:

Point-of-sale (POS) system: Handles orders, payments, and basic reporting
Inventory management: Tracks liquor, beer, and food costs
Accounting software: Manages finances and tax preparation
Scheduling system: Handles staff schedules and labor cost tracking

Look for systems designed specifically for bars and restaurants. They understand industry-specific needs like liquor control and tip reporting.

Read reviews, request demos, and talk to current users before making decisions. Consider how different systems integrate—you want your POS to share data with your accounting software, for example.

Avoid trying to make your business fit the software. Choose tools that adapt to your workflow, not the other way around.

11.) Get Proper Insurance Coverage

Insurance protects your investment and is often required for licensing. Don’t wait—you need coverage before you start any physical work on your space.

Work with an agent who specializes in hospitality businesses. Bar insurance is complex, with unique risks like liquor liability and special event coverage.

Essential coverage includes:

General liability: Protects against customer injury claims
Liquor liability: Covers incidents involving intoxicated customers
Property insurance: Protects your building, equipment, and inventory
Workers’ compensation: Required in most states if you have employees
Business interruption: Covers lost income if you must close temporarily

Get quotes from multiple insurers and understand what’s covered and excluded. Cheap insurance that doesn’t pay claims is no bargain.

12.) Design Your Office Space

As your bar grows, you’ll spend more time on administrative tasks. Plan an efficient, comfortable office space from the beginning.

Your office needs:

Secure storage for cash, records, and supplies
Computer and internet access for ordering and accounting
Filing system for permits, contracts, and financial records
Phone line separate from customer areas

Consider whether your office should be on-site or separate. On-site offers convenience but uses valuable square footage. Off-site may be cheaper but less convenient for daily operations.

13.) Select Reliable Suppliers

Your suppliers significantly impact your success. Reliable vendors ensure you never run out of key products, while unreliable ones create customer service problems.

Research multiple suppliers for each category:

Liquor distributors: Often regulated by state laws
Beer distributors: May be exclusive to specific brands
Food suppliers: If you’re serving meals or snacks
Cleaning and maintenance supplies: Essential for health compliance

Build strong relationships with your suppliers. Treat them as team members, not just vendors. Pay bills promptly and communicate your needs clearly.

When supply shortages occur, suppliers prioritize their best customers. Being easy to work with and profitable for them pays dividends during tough times.

14.) Build Your External Support Team

Successful bar owners surround themselves with expert advisors who aren’t on the payroll. This external support team provides specialized knowledge when you need it.

Your team might include:

Attorney: For contracts, employment issues, and regulatory compliance
Accountant: For tax planning, financial analysis, and bookkeeping
Marketing specialist: For advertising campaigns and social media strategy
Business consultant: For operational improvements and strategic planning

You don’t need everyone immediately, but start building relationships early. When problems arise, you want advisors who already understand your business.

Stay in touch with team members regularly, even when you don’t need immediate help. A quick email or phone call maintains relationships and keeps you top-of-mind.

For more on building your advisory network, read our article on building a team of professional advisors.

15.) Hire the Right Staff

Initially, you might handle everything yourself to save money. This works fine if it doesn’t hurt customer service.

Eventually, you’ll need help. Hiring the right people is crucial—it’s much easier to hire than to fire, and terminating employees is unpleasant and potentially costly.

When calculating labor costs, think annually, not hourly. A team of five people earning $15/hour each costs over $150,000 per year when you include payroll taxes, benefits, and training time.

Focus on finding people who fit your culture and can grow with your business. Skills can be taught more easily than attitude and work ethic.

For detailed hiring strategies, see our guide on how and when to hire employees.

What to Consider Before Starting Your Bar

Is This Business Right for You?

Many people dream of owning a bar for various reasons:

Being their own boss
Escaping traditional employment
Enjoying the lifestyle of business ownership
Following their passion for hospitality

Of these motivations, passion stands out as most important. Running a bar involves long hours, difficult customers, complex regulations, and constant problem-solving. Without genuine passion for the business, you’ll look for escape routes when challenges arise instead of finding solutions.

Consider your motivations honestly. Are you drawn to the perceived glamour of bar ownership, or do you genuinely enjoy creating experiences for people? Success requires the latter.

Do You Have the Necessary Skills?

Bar ownership demands diverse skills:

Customer service: Creating welcoming experiences
Financial management: Controlling costs and maximizing profit
Staff leadership: Motivating and managing employees
Marketing: Attracting and retaining customers
Problem-solving: Handling daily operational challenges

Don’t worry if you lack some skills initially. You can develop them through courses, mentorship, or by hiring expertise. Consider taking small business management classes or bartending courses to build relevant knowledge.

The key is recognizing your gaps and addressing them proactively.

Should You Start from Scratch or Buy Existing?

Both approaches have merit. Here’s how they compare:

Buying an existing bar offers:

Immediate revenue: Start earning from day one
Established customer base: Built-in demand for your services
Proven location: Reduced risk of location failure
Existing relationships: Suppliers, staff, and community connections in place

But also includes:

Higher initial cost: You pay for goodwill and established value
Inherited problems: Bad reputation, poor systems, or difficult staff
Change resistance: Existing customers may resist your improvements

Starting from scratch provides:

Complete control: Build exactly what you envision
Lower initial investment: No goodwill premium
Fresh start: No inherited problems or reputation issues

But requires:

Longer path to profitability: Time to build customer base
Higher risk: Unproven concept and location
More work: Creating everything from nothing

Consider your situation, resources, and goals when deciding. If you find an existing bar that aligns with your vision and is reasonably priced, buying might make sense. If you have a unique concept or want complete control, starting fresh could be better.

Should You Consider Franchising?

Bar franchises offer a “business in a box” approach. Corporate provides:

Proven business model
Standardized operations
Marketing support
Training programs
Ongoing guidance

This structure works well if you want to follow established systems and benefit from brand recognition.

However, franchising isn’t right for everyone:

Limited creativity: You must follow corporate standards
Ongoing fees: Royalties continue as long as you own the business
Restricted changes: Modifications require corporate approval
Standard experience: Your bar will be similar to others in the chain

Consider franchising if you prefer proven systems over creative freedom. It reduces risk but also limits your ability to create something unique.

For more detailed information about franchise ownership, explore our comprehensive guide on what you need to know about owning a franchise.

Essential Resources for Success

Starting and running a successful bar requires ongoing education and support. Here are valuable resources to help you succeed:

Industry Publications and Websites

Stay current with trends, regulations, and best practices through industry-specific publications and websites.

Professional Associations

Join bar and restaurant associations for networking opportunities, educational programs, and advocacy support.

Business Development Resources

Whether you’re just starting or looking to expand, these resources provide valuable guidance:

Common Mistakes to Avoid

Learn from others’ experiences by understanding common startup mistakes before you encounter them.

Your Next Steps

Starting a bar is challenging but rewarding. Success comes from thorough planning, understanding your market, and executing consistently.

Begin with research. Talk to current bar owners, study your local market, and develop a clear concept. Then work through each step systematically, building a solid foundation for long-term success.

Remember that opening day is just the beginning. Running a successful bar requires ongoing attention to customer service, cost control, staff management, and community engagement.

Take your time with planning—rushing leads to expensive mistakes. Invest in understanding your business thoroughly, and you’ll be much more likely to join the ranks of successful bar owners who love what they do and profit from their passion.