Opening a bar or a nightclub can be a profitable venture, but many of these businesses go under in their first few years of opening. There a are a few main reasons why they go out of business. With a little planning and foresight, owners can avoid these common mistakes and have a profitable business.
The first mistake would be having a poorly designed bar. While many owners will pay contractors thousands of dollars to design a bar, the setup is often inefficient. While these contractors can often set up a space that looks great and adds to the aestheticism of the place, their setup can detract from the efficiency of the space. When planning the layout of your nightclub or bar make sure that the bar is both aesthetically pleasing as well as efficient. If your budget allows for it, partner the design team with a bar consultant or layout expert to ensure that this common mistake is not made. By takign this into account you can make sure that the space will flow well for the bartender, staff, and customers alike.
The second most common mistake is investing in too many products. Having a large selection of beverage choices is one of the first things owners think about when setting up their establishment, but more labels doesn't necessarily mean more sales. Numerous studies have shown that customers often become overwhelmed with too many choices and actually prefer having a limited number of options. Obviously there should still be a mixture of beverages and the menu should feature classic cocktails and signature drinks for your bar, just make sure you don't cross the line between a good selection and overkill. The actual number of drink choices will vary depending on the establishment, but consulting with similar businesses and looking at their menus will give a good idea of how many options should be available.
The third most common mistake is mismanaging the bar staff. The employees of the nightclub or bar are the ones that make the company successful as in the end the main thing your venue is selling is the service and experience. By having the right people employed you can ensure that your business is in for the long haul. Also when it comes to staffing a bar new owners will often hire too many people, which can lead to fewer hours and a less motivated staff. A consultant can help new owners to hire a reasonable number of staff without overstaffing or underhiring. Finally training the staff at your club is also a major responsibility. Waste, disloyalty, and theft are all common problems that new bar owners have to deal with but having training and written rules and regulations can help the staff to be well-informed and add to the operation of the business.
Staff members should always be trained to run the bar and be licensed to mix drinks and serve customers. They should be able to interact with customers well, ensure that service standards and safety procedures are being met, and practice responsible alcohol service. There will always be some turnover in businesses, but a good employer stands a better chance of keeping the best employees which will, in turn, result in a better overall business.
Finally the fourth most common mistake made by new owners is not taking their business marketing to heart. In a competitive marketplace such as clubs and bars you really need to differentiate yourself from the other businesses. One of the most overlooked things is marketing. Sure creating a great bar with an amazing selection of food, drinks, and a great atmosphere is the most important but if no one is coming to your bar then it doesn't matter.
We could go in depth about marketing for bars and nightclubs but the main things new owners need to understand is that they need to differentiate themselves. We recommend a few key marketing essentials: Build a brand, run creative promotions, and embrace internet marketing.
We assume you already have a good idea of the "brand" you want to build so we won't elaborate on that. Running creative promotions is another thing that you will need to determine for your unique situation, google some ideas to get a better idea of what would work well for your business. Finally embrace online marketing, we recommend working with a company with proven results such as BarSmash.com to handle the heavy lifting and get actual results. If I had a magic box that turned 20 dollar bills into 100 dollar bills would you be interested? Well that's the power of a good marketing firm.
Obviously these are only four of common mistakes made by new bar or nightclub owners but by recognizing these common pitfalls and avoiding them, opening up a successful business is much easier.