Pubs and bars can be real cash cows if you know how to plan and manage the business properly. Some people will make money and others will lose, what will you be?
Unfortunately, just like the majority of small businesses, most of the pubs that open will fail within the first few years of business.
However, for the few that get the formula right, a pub business can generate a steady income over many years to come.
So, the answer would be yes, you can make money by starting a pub IF you are the minority that have the knowledge, experience and expertise to run a pub efficiently.
In order to open a money making pub, you should have a very detailed business plan, an experienced team, a suitable location and a lot of luck.
There are many things that can be planned for, and also many issues that you cannot predict. By having a good plan, you can address the common problems from your business system and let the experienced team handle ad-hoc matters that arise in the day to day operations.
Try to focus on your pub’s business plan and financial projections in as much detail as possible as it will be your road map once the business starts. Take your time to plan well and thoroughly.
A lot of pubs are started and operated by owners that do not have experience in business, in running a pub or both. This can be a recipe for disaster unless the problem is acknowledged and addressed.
For example, there are pubs that are family owned and operated with the owners actually living on the premises above the pub. In these cases, if the pub is successful, the family will have found the right formula to run the business efficiently.
However, in many family-run pubs, the business is usually not as good as it could be because of the lack of business experience for marketing, cost control or various other management areas.
Another common problem is that family operated pubs sometimes stick to outdated methods that worked in the past, but are not so appealing in today’s market. Change and innovation is sadly lacking in pubs that have not evolved with the times.
Pubs started by a few friends who feel that it’s a good idea to own a bar usually fail miserably as they do not have experience in opening a pub or running a bar.
Having business experience from another industry is a head start to understanding the requirements of managing a bar but it may not be enough to fully understand the inner workings of a pub.
An Experienced Team
One of the best ways to gain direct experience in starting and running a pub effectively is to learn from someone who has years of experience in operating successful pubs. There will be many tricks of the trade that you can be taught rather than learning the hard way.
If you’re one of these inexperienced owners, try to surround yourself with good, experienced managers and staff to assist in the startup.
A well-run bar should have good systems for Cash Management, Inventory Management, Human Resource Management and Customer Relationship Management.
- Customers: Customers can be a problem for every industry, but when it comes to pubs and bars, they are normally intoxicated and behaving irrationally. This is part of the business and it is containable with good security systems and staff.
- Cash/Inventory: Bars are a cash business which is great, but is also requires careful cash management and corresponding inventory controls to prevent pilferage and theft. A well-monitored inventory and cash management system will detect most leakages but constant checks are required to minimise residual losses.
- Management Team: Getting the correct person to lead the team is absolutely vital. In fact, at least 2 very competent team leaders are required, one for the front-end sales and marketing and the other for back-end inventory management and cost control.
There are also issues from vendors, stakeholders and other minor problems, but the main challenges to running a bar revolves around maintaining a strong management team that delivers results.