The situation in the bar space is changing. During the pandemic, the industry suffered enormously. But 2024 has seen a turnaround, and it might be the perfect opportunity to step into the sector.
As with any industry, there are risks and rewards to consider. We start with the latter and then move on to the latter. This gives you a clearer picture of what to expect if you invest in this area.
Where possible, put up as little of your own money as you can. Use leverage or other people’s investments to test the waters and see whether your idea holds water. Experienced professionals can tell you whether there are genuine bar business opportunities in your area.
Why now might be the time to set up a bar in 2024
Now might be the right time to set up a bar in 2024 for all sorts of reasons. Conditions are moving in your favor in 2024, so it is as good a time as any for this type of venture.
So, what are the reasons why now is a good time to set up a bar in 2024?
1. Higher Profits
The margins on alcoholic drinks are considerably higher than in many other sectors, helping you generate profits over and above your expenses. Many high-volume establishments can claim margins over 30% on good nights, encouraging longer opening hours and more diversification in their offerings.
2. Post-Pandemic Rebound
It might also be a good time to set up a bar in 2024 given the recent post-pandemic rebound. Businesses in the sector are finding their feet again, discovering many opportunities that were hidden when times were bad.
That’s not to say that everything in the sector is back to normal. However, businesses are managing to gain some traction as individuals slowly start making their lives more social again.
The most successful businesses tend to set up during the toughest times. Therefore, if you can get going now, it means that your success will likely multiply going into the future as conditions improve.
3. The Sense Of Community
Entrepreneurs are also considering setting up bars because of the sense of community they generate. Companies that can bring people together often become indispensable hubs for local people, making it more straightforward to get to know neighbors and make friends.
Historically, this sense of community was central to life. However, more recently it hasn’t been center-stage, and people are noticing. Now, many individuals are realizing that bars and other communal spaces are integral to the life of towns and cities. Without them, places become atomized and people don’t know each other or have a support system in place when things get hard.
Therefore, if you decide to set up a bar in 2024, you could get a tailwind from this effect. After years of lockdown and isolation, we could see a change in people’s attitudes that prioritizes going out and drinking.
4. The Creativity
Finally, it might be a good time to set up a bar in 2024 if you’ve had a unique idea or concept you want to pursue. Often, it is bars that can do something a little differently from the competition who succeed.
Going down the bar route might be the ideal choice, for instance, if you’re the sort of person who loves experimenting with new drinks at home. If you can develop a taste people haven’t experienced before, the likelihood of thriving is much higher.
You might also have an interior theme you want to pursue. Coming up with an original idea can attract hip drinkers looking for somewhere interesting to talk to their friends.
What Are The Challenges?
Of course, while now might be a good time to set up a bar in 2024, there are significant challenges (as there are in any business). You will need to consider these one by one before moving forward and opening a location. Ideally, you want to develop ways to overcome these problems. Having solutions in place before you start can help you succeed later on.
1. The Competition
Unfortunately, the bar industry is highly competitive. Low barriers to entry mean that practically anyone with a license can enter the space and start trading. Often, you only need to rent an existing fitted unit to begin trading.
Therefore, check the competition in your area. See if there is an opportunity to open a location where you are and whether it would offer more convenience to customers. Try to avoid going head-on into an area with multiple established businesses unless you are feeling confident. The more you can offer convenience to people, the more traction you will gain early on. Later, you can branch out and join the strip alongside other taverns.
2. The Long Hours
Bar work is also demanding. Shifts often go on for ten hours or more as drinkers remain on the premises until the early hours of the morning. Furthermore, you will have to work all your weekends (at least until you can afford to hire staff to deal with operations for you).
Expect to work through the night most days of the week when you get started. Over time, things will get easier, but upfront labor requirements will be a significant commitment for you.
3. The Regulatory Hurdles
You will also need to overcome some regulatory hurdles, depending on where you are located. For example, in the South, you might need TABC certification for yourself and anyone employed by your company.
Regulations for the liquor industry change regularly, so you will want to keep an eye on the news as it develops. Falling behind could lead to fines or loss of your license, so the risks are significant.
4. The Economy
The economy might also be a challenge for bar owners going forward. Difficulties like inflation can squeeze profits and make it hard to know if you are making real money. Furthermore, these issues can make cash flow planning more difficult. It might be hard to track what you have coming in over the months in the current year if you don’t stay on top of it. Problems could cause your revenues to reduce, preventing you from breaking even.
5. The Staff Difficulties
You might also find it challenging to find staff willing to work at your bar. Qualified individuals with experience in the industry can be hard to find since so many people only use it as temporary work.
Bar work is particularly hard to recruit for because it requires people to work at night and on the weekend. The environment can be challenging, and companies don’t always pay fair tips. For that reason, many lower-paid individuals avoid the sector completely.
6. The Start-Up Costs
Finally, high start-up costs can also get in the way of setting up a successful bar. Even if you lease space, you have to pay ongoing contributions and fit it out using your dime. That costs a lot of money.
Getting results that approach professional standards can be hard. You often wind up spending considerably more money than you imagined, which isn’t good for business.
Even if you get a loan, most creditors will ask you to risk a substantial portion of your personal money. Setting up a bar can cost over six figures, making it unattractive to anyone who loves to operate capital-lite.
What to do before you set up a bar in 2024
As you can see, setting up a bar comes with many rewards, but also challenges. Therefore, you should always be circumspect before diving in and making any decisions.
Start by asking yourself whether you can cope with the demanding and active lifestyle. Bar work is often physical and requires you to keep going late into the night, often beyond your official closing time. You may have to spend time washing up or collecting glasses with trays.
You should also think about whether you have the skills to run a bar. While wait staff can enter the market without much experience, it helps if you know how to run a business and understand where the margins in the industry lie. Many new bars get into trouble because they don’t understand what actually makes them profitable.
As part of this process, you should do thorough market research. Understanding your audience and competition makes it more likely you will make profit-maximizing decisions.
Ideally, you want to create a customer persona for the average person who might come to your business. Then, you can arrange all your corporate decisions around this fictitious individual, aiming to serve them as best you can.
Finally, make sure you have a solid business plan in writing before setting up a bar. You should understand the risks and pitfalls, and what your establishment will stand for.
Getting to grips with the finance side of the business is also essential. You don’t want interest payments outweighing any additional revenue you gain from customers.
Check that you understand your cash flow for every month, projected out for one year. Not having enough money coming in every month is one of the biggest reasons viable businesses fail. Don’t be one of those people!
So, there you have it: why it might be time to set up a bar in 2024, some of the challenges, and what to consider before you go ahead.
