[WestCoast]

Starting to do my due diligence on this. Seems like a lucrative opportunity. Wanted to see if anyone has done this before? If so and are willing to share thoughts please post/shoot me a PM.

This would be in a large metro city. Looks cash rich if done with the right clientele/bartenders/vibe.

[HiFlo]

2 out of 3 bars/nightclubs fail within 3 years.

Your best chance for being successful as a bar owner is to purchase a bar that has already been consistently popular and successful for the last 3 years. But then, a) you probably don't have the capital, and b) the likelihood of an owner of a successful bar owner selling is slim to none.

I've seen a number of successful bar owners open up 2nd and 3rd bars in the same town thinking that because their first bar was a success, the 2nd and 3rd ones will be too. Guess what? Their 2nd and 3rd ones failed.

Once you realize that you've got to make nearly ALL your money in only 2 nights (figure 8 hours total over Friday and Saturday) to finance the rest of your operations the other 5 nights, pay your employees, pay your vendors and creditors...you start to see its really not that lucrative.

[bacon]

delete

[Merenguero]

(09-12-2012 12:04 PM)HiFlo Wrote:  

2 out of 3 bars/nightclubs fail within 3 years.

Not at the Jersey Shore. People at the Jersey Shore, however, sue at the drop of a dime, creating all sorts of headaches for bar owners. New Jersey has a dram shop act which allows third parties to sue the bar for injuries causes by intoxicated and/or underage patrons. I wouldn't advise anyone to go into the bar business. In fact, I would probably advise against it.

[bacon]

yea in the us you have to get good insurance possible fights but more damaging is patrons who get too drunk and drive home. if they get into an accident they can and do sue the bar for over serving them.

[Merenguero]

(09-12-2012 12:38 PM)bacon Wrote:  

yea in the us you have to get good insurance possible fights but more damaging is patrons who get too drunk and drive home. if they get into an accident they can and do sue the bar for over serving them.

Thirty-eight states have some form of dram shop act, meaning bar owners or social hosts can be sued for injuries sustained by third parties as a result of serving intoxicated and/or underage persons. Even in states which do not have a dram shop law, bar owners can still be sued for other things such as bouncers assaulting patrons.

[el mechanico]

Stop being buzz-kills guys. Just get insurance and shadow corps for liability.

[BIGINJAPAN]

Bars can make alot of money. Usually you can make your original cash investment back in 3 to 6 months.

As finance guy though it is near impossible to get a loan to buy or start a bar. You have to use seed money from your savings and from family and friends. Once you get going and it is successful be sure to get an operating line of credit and things like that. Do not ever put your savings, house, other assests as collateral. Use the future earnings and equipment if you have to. Do this during the good times and not wait for bad times to have back up credit. Way harder to get approved if the bar is already failing.

Also keep a double set of books from the start. One for you and for the bank.

El mechanico has got it right, shadow corps will save your ass

[WestCoast]

You mind elaborating o shadow corps? Your description below is the numbers I was running. Not trying to buy a small thing this is a larger move, all cash, no bank loans, established track.

(09-12-2012 05:20 PM)BIGINJAPAN Wrote:  

Bars can make alot of money. Usually you can make your original cash investment back in 3 to 6 months.

As finance guy though it is near impossible to get a loan to buy or start a bar. You have to use seed money from your savings and from family and friends. Once you get going and it is successful be sure to get an operating line of credit and things like that. Do not ever put your savings, house, other assests as collateral. Use the future earnings and equipment if you have to. Do this during the good times and not wait for bad times to have back up credit. Way harder to get approved if the bar is already failing.

Also keep a double set of books from the start. One for you and for the bank.

El mechanico has got it right, shadow corps will save your ass

[presidentcarter]

I knew some guys that started one at the college I went to. I believe they raised $250k between the 3 of them (along with their parents help) and got the bank to match it, so $500k. They took an old closed down bar and overhauled it.

Place is packed every weekend. I'm sure they are cleaning up, last I heard they were playing golf about 4 days a week. I always said the town could use another bar or two downtown that offered decent prices, big screens, pool table, and outside deck/smoking area. Sure enough it worked.

Edit: their location is prime.

[Don_Johnson]

(09-12-2012 01:27 PM)el mechanico Wrote:  

Stop being buzz-kills guys. Just get insurance and shadow corps for liability.

No shit. Glad someone said it.

This is America, you scratch your ass you can be sued. As soon as they make a tort for hate speech, we'll all be sued.

[BIGINJAPAN]

(09-12-2012 05:24 PM)WestCoast Wrote:  

You mind elaborating o shadow corps? Your description below is the numbers I was running. Not trying to buy a small thing this is a larger move, all cash, no bank loans, established track.

(09-12-2012 05:20 PM)BIGINJAPAN Wrote:  

Bars can make alot of money. Usually you can make your original cash investment back in 3 to 6 months.

As finance guy though it is near impossible to get a loan to buy or start a bar. You have to use seed money from your savings and from family and friends. Once you get going and it is successful be sure to get an operating line of credit and things like that. Do not ever put your savings, house, other assests as collateral. Use the future earnings and equipment if you have to. Do this during the good times and not wait for bad times to have back up credit. Way harder to get approved if the bar is already failing.

Also keep a double set of books from the start. One for you and for the bank.

El mechanico has got it right, shadow corps will save your ass

Well I can only talk about what works in Canada. The laws are fairly similar but they aren't all the same. There are various structures to use, it all depends on if you have partners or going about it on your own.

Sounds like you are going it alone so what I would do is start a holding company that you own outright. Meaning you are 100 percent shareholder. Then start a second company in which the holding company owns all shares. This accomplishes 2 things, it keeps you personally off the hook for any problems and also the tax implications should be a lot lower as corporate income tax is generally lower than personal income. As for the exact structure I am guessing a limited company is the way to go but also maybe a LLC. Very important to talk to a tax lawyer or accountant. I am certain it varies from state to state.

Now in Canada we have a little loophole that exempts all capital gains on a company under $1.5 million. So with my companies I make sure I own 5% in my personal name. Now that exposes me to loses if I ever got married and then divorced or if I got sued for something else. But only 5%, so it is worth the risk. So the benefit is if I ever sell a company I get up to $1.5 million in tax free profit. So be sure to talk about that as well. Also income derived from a company is another tax issue. Dividends are usually taxed at a way lower rate and usually the best way to pay yourself. One other greasy thing I do is write up fake loans from my company to myself personally so I don't have to ever pay taxes. Then just declare default on the loan and whip it off the books down the line.

In any event structure everything first otherwise it is a headache to do it properly after and costs way more. Not only from a liability standpoint but a tax standpoint as well. Especially in AmeriKa, where I see daily they send the SWAT team after people who owe 4 cents.