You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your speakeasy bar business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a speakeasy bar business?
Your startup costs are directing tied to geographical location. A 2,000 square foot building, including buildout and supplies will generally require from $100,000 to upwards of $1 million, with $400,000 being the average, depending on your location. In certain areas a space this size can go for as much as $1.5 million. Once you’ve found your location, you will need to make any necessary additions and repairs, a point-of-sale (POS) system, and decorate with your speakeasy’s theme. Once you have obtained your liquor license, which ranges anywhere from $15,000 to $400,000, you will also need to invest in glassware and liquor to stock the shelves. Successful speakeasy bar owners encourage new investors to over-capitalize. Overestimate how much you will need, and add 20% to that number.
What are the ongoing expenses for a speakeasy bar business?
In addition to the standard expenses most establishments face, such as utilities, phone, and payroll, you will need to restock the shelves with liquor and supplies to mix quality drinks. Maintenance and cleaning should be addressed daily and broken glassware will need to be replaced regularly. Lastly, a good marketing strategy will help keep guests coming back and good insurance ensures your business is protected should an unfortunate event occur.
Who is the target market?
Patrons of your establishment will enjoy beverages and the atmosphere of a speakeasy bar. They range in age from young to retired professionals who are looking for something different and a little more exclusive than your neighborhood sports bar.
How does a speakeasy bar business make money?
A speakeasy bar generates money from the drinks sold to customers. Some offer additional services like live entertainment, food, and/or games.
How much can you charge customers?
Pricing varies, depending upon geographical location, ingredients, and overhead costs. A cocktail in New York City can cost up to $20, while a speakeasy drink in a smaller city may run $12 before tip.
How much profit can a speakeasy bar business make?
Entrepreneurs in the hospitality industry suggest planning on breaking even by your third year. While factors such as size and location should be considered, the average revenue generated each week is between $20,000 and $30,000. This adds up to more than $1 million, before expenses, annually. New owners, however, are encouraged to keep as much cash available after expenses are paid, as maintenance and other unforeseen events do occur.
How can you make your business more profitable?
Increase your earnings by hosting special events, selling branded merchandise, and creating special nights that appeal to your patrons. Many speakeasy bars have found success offering limited food options and having live entertainment. Even if you decide not to charge an entry fee when live bands are performing, they could draw in a set of patrons that might not have frequented your establishment before.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your speakeasy bar business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a speakeasy bar business
Traditional marketing strategies such as a website, social media, printed ads, and radio advertising are effective when first starting out. Cocktail competitions are gaining popularity and are a great way to get your name out in the community. Ultimately, word of mouth will be your strongest marketing tool. Make sure you have a devoted team and that everyone is on the same page regarding the business’ vision. Interact with customers to learn what is working and adjust accordingly.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Consistency is key. The atmosphere should be inviting and have the look and feel of a traditional speakeasy. Staff should be attentive, making each customer feel like they are number one. Attention to detail, positive attitude, and efficiency should be consistent with each patron that is served.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Speakeasy Bar Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Owning a speakeasy bar requires hard work and dedication. The people-oriented entrepreneur with extensive industry experience is highly recommended.
What happens during a typical day at a speakeasy bar business?
The standard workday for a speakeasy bar owner starts in the early afternoon, where you will review the nightly reports, handle accounting, check on inventory, order supplies, and restock shelves for the evening. If any issues came up the night before, such as a broken sink or sound equipment, those must be addressed before patrons start lining the bar. The last thing you will do before leaving is check in with your bar manager for a status report. Interacting with patrons is also a necessary and critical part of your job.
What are some skills and experiences that will help you build a successful speakeasy bar business?
As previously mentioned, extensive industry knowledge and business management skills will go a long way in leading your speakeasy to success. Some owners choose to act as bartenders, while others hire a staff. Whichever path you choose, understanding liquors and how they blend with other ingredients will allow you to create a unique drink menu that draws in repeat customers. Strong interpersonal skills are critical, as you will interact with patrons, staff, and distributors. An understanding of industry trends will help keep your speakeasy on the cutting edge and ensure a hospitable environment.
What is the growth potential for a speakeasy bar business?
Mixology has gained popularity over the last decade, opening up new opportunities for speakeasy-type bars. To ensure your bar stands out from the competition, owners are encouraged to create a unique atmosphere and offer specialty drinks. This, coupled with the right location, will offer enough opportunity to meet your growth goals.
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One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a speakeasy bar business?
While you may feel confident that you can run the entire establishment yourself, new entrepreneurs are encouraged to invest in an experienced bar manager. This hands-on experience will help in managing the staff and patrons, ensuring your vision comes to fruition. Your liquor license can be one of the most difficult and costly investments. Get involved in the community and attend meetings. Communicating your vision and intentions and listening to their concerns will go a long way in obtaining the license. Lastly, expect the unexpected. Be prepared for the inevitable, because if it can go wrong at some point, it will.
How and when to build a team
It is critical that you have a staff that is professional, yet fun, capable of ensuring a quality experience for each patron. Experienced speakeasy business owners recommend retaining an attorney when working to obtain your liquor license, as every detail must be addressed. As mentioned, it is also important to hire an experienced bar manager, particularly if you do not possess the hands-on experience needed to run a successful bar.