Start a speakeasy bar business by following these 10 steps:
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 guide to starting your speakeasy bar business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
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 much can you charge customers?
- 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 important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Speakeasy Bar Business Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your speakeasy bar business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
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?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
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.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
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.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
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
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
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.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
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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.
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: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
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.
Is this Business Right For You?
Owning a speakeasy bar requires hard work and dedication. The people-oriented entrepreneur with extensive industry experience is highly recommended.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
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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Take the Next Step
Find a business mentor
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.