Guest post by Sara Mackey
Just about every adult aged social drinker has sat around a table with a group of friends and talked about how fun it would be to start their own bar. No doubt about it, it would be fun, but in today’s economy it is harder than ever to get financed for a new bar. Bars are considered a high-risk industry and most new bars fail within a very short period of time, but there are business financing options available.
It is nearly impossible to get standard small business loans through a bank or lending institution for starting a bar, so one of the best options is to look at alternative business financing such as equity financing. Equity financing is funding received in exchange for equity ownership.
The Bank of Family and Friends
While family loans are not typically in the amounts available through traditional small business loans, starting a family business is one of the hallmarks of small businesses in America. While there is not a lot of legal hassle associated with a loan from your friends or family, it should still be treated as a professional loan to avoid problems down the road. Hire a lawyer to draw up the papers and have all parties present when they are signed.
Angel investors are private entrepreneurs who fund small businesses that they are familiar with and in an industry in which they have experience. Angel investors earned their name by being a friendlier version of an investor. They invest their own funds and bring experience and an already established network in exchange for their part in the ownership of your bar.
If you already have a successful and established bar business and are looking to expand your current bar or open additional bars in new locations, venture capitalists may be just what you need. Venture capitalists are also private entrepreneurs, but rather than invest their own money, they invest their client’s funds in businesses that promise to yield a high return on the investment.
Once you have secured business financing for your bar, the next step is to develop a great marketing strategy. In order for your bar to be a success, you need customers. In order to get customers in your bar, you need good marketing. The best marketing campaigns target a niche market, and you need to know which niche your bar fills so that you can focus on that market. There are many low cost ways for a bar to bring in new and returning customers from social networking, your own website for your bar and more. Research and understand your market, this will allow you to strategically capitalize on targeting your customer.
Starting your own bar can be a dream come true, but it takes time, commitment and diligence. Do not be discouraged if you cannot obtain financing on the first try, there are many available options to get you from talking around the table at a bar to starting your own.