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Opening a bar/nightclub and really need advice!

Discussion in 'General Business Forum' started by Touched, Nov 21, 2007.

  1. Touched

    Touched UKBF Regular Free Member

    Posts: 22 Likes: 3

    I've got my mind set on opening a bar/nightclub type business, a music venue to be precise, in a trendy part of my city centre and really need to get some help or advice.

    For the last 5 years I've been running a website selling goods to retail and trade, but this was setup during my college years to provide an income and has never really been something that I wanted to do although I've taken the business as far as I can in the current circumstances. My main interests are the music industry and entertainments business, therefore I feel its now time to move on and am in the process of selling this business to free up my time and release funds for another project.

    Now, I know alot of people will say theres already alot of trendy bars and clubs in city centres, but I have a very specific idea of what I want to do and have identified a huge gap in the market (in this city at least) where there are zero competitors. I think the closessed thing similar to what I want to do would be our theatre, and thats not really very similar :rolleyes:

    Whilest I feel fairly comfortable in most aspects of running a business, its the bar/alcohol side of things which I find a bit intimidating. I have worked in a bar once, but no experience other than that and I'm not really sure where to start. I do however have quite a bit of experience in running events and promotions, but like I say the bar is biggest issue to me! For this business I intend to be the sole owner (or MD I should say) but my partner who I've been with for 8 years (and trust very much) has a fair bit of experience working in bars. On top of this she has:
    • A degree in Hospitality Business Management
    • BA Hons in Business Administration (not the paper pushing admin)
    • Certificates for: BII, Health & Safety, Food Hygine
    So my idea would be to employ her as a manager of some kind, not sure yet, but this is only on the condition that I match her current office job salary of £25,000 a year.

    I'm thinking about doing the courses for BII, H&S, and Food at my local college, just purely for my own interest if nothing else. But in setting up this business I have absoluetly no idea where to start. I'm hoping somebody here will know what the first steps are and can offer some guidence. I'd love to get a mentor as well, I'm still young at 23 :D.

    Lastly, if I am going to do this then I'm thinking about setting up as a limited company instead of a sole trader because my long term goal is to own a number of bars and leisure businesses. So in theory I woud set up something like "Blah Blah Leisure & Entertainment Ltd" and then run the music venue with its own name under this company. Is this a good idea or would it cause any problems?

    EDIT: Forgot to mention, I'm all for opening an eco-friendly venue as well.
    • Thanks Thanks x 1
  2. Osiris

    Osiris UKBF Regular Free Member

    Posts: 29 Likes: 3
    Hi Pete

    Doing those courses is a good idea. If you're comfortable with running a business then it'll be the extra bits of red tape and regulation that you'll need to get your head round.

    For some general information you could do worse than start with a read through the information here - http://www.sidneyphillips.co.uk/guidancefornewcomers.php - but bear in mind that all the licensing info is now out of date.

    My bit of advice would be to get yourself your own Personal Licence as soon as you've passed the BII course. Although your managers are likely to have their own Personal Licences and be the people named on the Premises Licences (liquor licences) for their venues, if they leave at short notice you'll be very grateful for being able to step in yourself and keep trading. It seems to happen a lot and it's not pretty when there's no backup.

    If you need any specific licensing help further down the line then just give me a shout.

    • Thanks Thanks x 1
  3. Touched

    Touched UKBF Regular Free Member

    Posts: 22 Likes: 3
    Hi Chris!

    Great cheers, I'll look into that. What do you mean "my managers" though? Surely I'll be the top dog if its my own company?

    I'm looking to lease a new premises and change it to a bar, I dont want to manage somebody elses if you know what I mean.
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  4. Richie N

    Richie N UKBF Regular Free Member

    Posts: 3,956 Likes: 472

    You will defo need a personal licence, you might also want to offer her a bonus on profit etc made.

    All my clients that are bars or pubs are all limited companies so will definitely recommend going down this route.
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  5. PrivateInvestigator

    PrivateInvestigator UKBF Regular Free Member

    Posts: 280 Likes: 9
    do you have the money?

    if you don't there may be little point in being a limited comapny the banks will still want your house as collateral (if you own it?) or one of your family members.

    To be honest, I'd talk to a solicitor about exactly what to do if you can make the limited comapny thign work it'll certinly give you much added protection.
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  6. Osiris

    Osiris UKBF Regular Free Member

    Posts: 29 Likes: 3
    Absolutely, but you said...
    Although your company might hold the Premises Licence for each place you'll need a Personal Licence holder in day-to-day contact with each place too - more often than not it's the managers.

    It applies to when you've just got one place though - having more than one Personal Licence holder is basic contingency planning. I always bang on about it because of having to tell (very unhappy) people to shut up shop when they've been left in the lurch.

    Anyway, getting financing, leasing/fitting somewhere out and dealing with the breweries is pretty important too!
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  7. Jayne

    Jayne UKBF Regular Free Member

    Posts: 2,921 Likes: 8
    If you start off at a sole trader or in a partnership, you can always go Ltd later when the biz pics up. It may not even take off as you wish, so unless your lady friend goes in as an equal partner, i'd be wary of asking her to leave her job. It is very physical and mentally hard to do this sort of hands on business, as you'll not afford staff as easy in the beginning. Therefore I suggest getting a bar job full time for a while first and maybe do a management pub landlord course? Just to test the water. You may hate it and want to do something else?

    Good luck though :)

  8. Touched

    Touched UKBF Regular Free Member

    Posts: 22 Likes: 3
    Chris - ah yeah I get it now, I misunderstood your post. It would certainly make sense to have more than one person hold a license, for backup as you said. I didn't realise though that there were two license types (premises and personal), I thought it was just one license for all. I'll do some reading up on this...

    Jayne - I know what you mean, although I've never actually asked her to do it she just offered. She's very into the hospitality and catering industry so I think for her it would be much more motivating that her current line of work. For me getting full time bar job would be a no no as I couldnt live off the wages it pays, and besides I'm more into marketing, accounting, and event management so it wouldnt be in my interests to get into the nitty gritty of bar management. Plus with all the other business tasks it could also be to much work for a one man operation.

    I'm going to have a look around Amazon for some books right now. Anyone know a good one?
  9. tax-sorted

    tax-sorted UKBF Regular Free Member

    Posts: 83 Likes: 11
    Don't jump in on the limited company bandwagon straight away. Do you have a business plan? A cash flow forecast? Profit projections?
    If you do and you can see there may be losses in the early years they will be stuck inside a company. But if you make losses as a sole trader or partnership they can be offset against other income and years and generate positive cash flow whilst you are building up your empire!
    Thats just very general but of you think you will be making stacks of cash then maybe Ltd is the way for you. Speak to your accountant and get some feedback and ideas - I know I would.

    apart from that just Go for it:)
  10. Touched

    Touched UKBF Regular Free Member

    Posts: 22 Likes: 3
    No I haven't got a business plan yet or cash flow forecast, or projections simply because I'm not at the stages of planning yet. I haven't done enough research yet to be able to make profit projections and I cant make those anyway until I know costs involved etc.

    It looks like it will be a long process and I'm not entirely sure where I'll get all my information from. However, I do have rough estimates of how much money I will be able to invest in this before considering loans etc. Thats pretty much all I have at the moment until I learn more.
  11. An Oasis

    An Oasis UKBF Regular Full Member

    Posts: 9,904 Likes: 1,681
    I would start to compile CFF, PLA, BP... now as you say it will be a long planning campaign and along the way you will forget vital bits of info and financial data, so start now.

    Potential suppliers will give you an idea of the costs involved, e.g. alcohol suppliers will give you an idea of costs - 50 barrels per week = ?, 250 per week will obviously have a lower unit cost...

    We supply plants to pubs and night clubs and whilst I have no idea of the set-up costs, just looking at the venues we dress I would say the average start up spend is IRO £1M+
  12. Touched

    Touched UKBF Regular Free Member

    Posts: 22 Likes: 3
    Think I better grab my coat and get the hell outta here :D

    From the research I've done around my city (in other words by being nosey) most independently owned bars and clubs seem to be on a lease and its only the huge pub chains which buy their buildings.

    Theres an organisation called One North East, run by the council I think and they seem to own most of the property in town. So contacting them might be a good starting point. I certainly think for the time being its going to be better for me to lease rather than get a business mortgage. But again, I dont know all the facts yet so wont rule anything out.
  13. An Oasis

    An Oasis UKBF Regular Full Member

    Posts: 9,904 Likes: 1,681
    Just refurb costs for a nightclub can easily run into half a mill and that's before you look at getting serious.
  14. tax-sorted

    tax-sorted UKBF Regular Free Member

    Posts: 83 Likes: 11
    Loks like the sole trader option would be the most cost effective intially. And then you can work on how to transfer any godwill into a company in the future. good luck:D
  15. Cleveregg

    Cleveregg UKBF Regular Free Member

    Posts: 199 Likes: 16
    Hi Pete,

    As well as Cleveregg I am also director of another limited company Citrus Ventures.
    A bit of background...there are 4 directors and we set up to open a bar in Liverpool city centre, 2 of the directors have 20 years experience in the license trade already.

    We've doing everything from scratch. Found the building, agreed Heads of Terms, hired a licensing lawyer, hired a lease lawyer, architect, Engineer for your M&E drawings, QS firm to put the fit out / building works out to tender and manage, Accountant to help with forecasts, etc etc...the list goes on.

    Banks want collateral, they also want to know that the building work has gone to tender (i'm assuming of course you'll want to borrow a few hundred thousand).

    We had a pretty good idea from the off what it was going to cost, but there's things we'd not accounted for and some things have already (before the fit out has started) gone over budget, although not massively.

    It's hard work, a lengthy process and expensive, BUT, it's also fun, a challenge and hopefully will be rewarding.

    If you wish to have a look at what our 'vision' is take a look (although it has altered a little) www.citrusventures.co.uk/manolisyard/index.html

    Best of luck.

  16. Touched

    Touched UKBF Regular Free Member

    Posts: 22 Likes: 3
    Hi Kerry,

    Sounds and looks great but alot of work. The thing is, I noticed from those 3D plans it looks like another example of a pub chain that rips a building down to its bones and rebuilds frorm the inside out. I personally dont see the advantage of spending that amount of money.

    Take this for example, in my city a big pub company bought an old cinema and spent £6m ripping the place apart including floors. It now has 3 bars and a nightclub above but the place never fills up, and to be honest it isn't THAT great. One year on they are in a panic because they aren't seeing any of that money coming back, they've already applied to change the club into a casino but been denied. The service is now also terrible because they've cut back on all the staff. The managment dont give a toss because if the bars close down, the company will send him/her to another place. Thats another thing that annoy's me around here as well, they bring in these managers from god knows where and they have little understanding of the people or scene here.

    Its the same with other bars, companies spending millions and then a year down the line its changing ownership whereas some of the indepenently owned bars have had the same owners for 10 years. I know theres people who've set up bars for under £200k, even £100k.

    I just dont want to end up in the situation where I'm at the bank asking for £3million, promising to open the worlds best bar ever only to find a year later im in trouble because we cant make the money back.
  17. vvaannmmaann

    vvaannmmaann UKBF Regular Free Member

    Posts: 12,462 Likes: 3,204
    Pete,The fact that this venue you mention is never full - that would worry me.
    Why would yet another bar/club be any different?
    I guess the smoking ban has not helped,and the supermarkets selling cans at less than cost is also a possible problem for you.Good luck.
  18. Touched

    Touched UKBF Regular Free Member

    Posts: 22 Likes: 3

    Sorry, I was getting on my soap box a bit there. :rolleyes:

    I dont want to open a bar or nightclub, I just want to open a certain type of leisure facility that has a bar in it. People will need drinks and like I say theres no competition for what I want to do.
  19. vvaannmmaann

    vvaannmmaann UKBF Regular Free Member

    Posts: 12,462 Likes: 3,204
    Sorry,been a long day,will pay more attention in future.
  20. FantasyCouriers

    FantasyCouriers UKBF Regular Free Member

    Posts: 48 Likes: 3
    Watch the council with change of use. I used to have an antique shop, before we moved in it was a "secondhand shop" council had no problem with that. When we sold lease it was to a bloke who wanted to sell new furniture. Council deemed that "Change of Use" had to apply for relelvant permissions, advertise, and then put it all through the council legal department (one person who works wednesday afternoon, everyother week, when she wasn't off sick!!!). And we had to pay the council's costs for it. It added three months to the transfer of the lease.

    So, if it's not a nightclub already, then build this cost, and more important, this delay, into your plans.