BAR BUSINESS ANALYSIS
There is money to be made in this business and you can make quite a lot of money depending on your strategy and the persona your bar holds in the eyes of people.
Here are some pointers on how to run your bar effectively;
AVOID CREDIT SALES
If you run this business on credit you might as well just close up shop to save you time.
No matter how rich your customer is, do not give on credit. People pay credit until they stop paying. Know that your business is a small margin type of business and if you slip up, you will find yourself in a hole quickly,e.g. profit is 3ZMW on a castle lite, you have to run it strictly on this account.
If someone gets a castle-lite on credit then you have given them your capital plus profit. Instead of gaining 3ZMW profit. You have lost the 3ZMW Plus the capital of 12ZMW, Plus the absorption of the fixed costs for that castle lite. What I mean by fixed costs absorption is each beer you sell contributes a little to the rent, electricity and salaries.
Why chase people to pay up when you have already worked? Even the law does not consider contracts binding when someone was intoxicated when they entered into it, so why you, sir/madam?
DON’T GET HIGH OFF YOUR OWN SUPPLY
I have seen bar owners who drink more than their customers. What is that? You need to conduct business sober and serious. How can you drink on the job and expect to be successful?
You find that you drink beers worth 500ZMW and that is a 100% loss. As a business owner, if you drink 1 castle, not only do you drink your profit, you also drink your capital, because there is no cash paid for it. When you drink your capital you have to replace it making it double.
So Dyna drinks a castle lite for 15ZMW with 3ZMW profit. Tomorrow he has to look for that 12ZMW again. Making it cost him 27ZMW (12ZMW + 15ZMW) per castle lite that he drinks from his own bar.
Some say that I pay for my beers! If you are using the money from the bar to pay that doesn't make sense.
Conduct your business with respect, you are a gentleman.
HAVE AN ACCOMMODATING PERSONALITY
If you don’t like people, please do not start this business. Bar business requires you to be a people person. You should be able to get along with loud people, quiet people, angry people and the best of them all, drunken angry people.
The more likeable you are, the more people will flock to your bar. Be warm and accommodating. Full of love, and compassion. Some people come to your bar just to socialize and get away from everything. If you are kind, people will seek you out.
Create positive relationships with people and they will bring their friends to your bar. Be a rude person and they will take their friends, too.
PERFORM DAILY STOCK COUNTS
Daily stock counts help you reconcile your sales with the inventory. If you don’t perform stock counts on a daily basis, you won’t know what went out versus how much you got. You won’t know if staff are stealing. Daily stock counts also allow you to see a trend in what’s moving and what is not. For example, you can see that Spin is not moving at all because ladies are drinking breezer more. So next time when you go to buy it’s better to buy more breezers.
Remember you need to maximize your revenue and not let beers stay for too long in the fridge because they spoil. Moreover, beer not moving is trapped in the capital.
Also, don’t go buying whiskeys that cost 1500ZMW and stay on the shelf for 7 months. Let every kwacha you invest in your business work for you.
Ensure that the person selling is not the one performing the stock counts. This is to create independence and verify that what the person was doing is true. Fire staff in pairs, not one by one that way you will have a system in place and it's harder for staff to steal in groups. It is also wise to rotate staff on the counter. Sometimes you should also count.
BE PRESENT AT YOUR BUSINESS
Most owners like to be away from their business but this is wrong. The best is to be close to your business. Staff sometimes come up with dubious methods to steal from you. They will sell your beer and replenish stock and keep the profits and you won’t even know.
In this case, put a control on the business such as just having one supplier for the beer and that supplier should be giving you some kind of reports of what you bought from them. This will help you make further reconciliations so that staff do not dare sell your beer and replace it.
HYGIENE
Drinking alcohol means lots and lots of toilets. Some people will not even dare approach a place with poorly sanitized toilets. Ladies won’t like your joint and ladies make men make rounds they can’t afford, so dirty toilet, equals no ladies, and no ladies equals no men with cash.
Ensure you have clean toilets, with water running from the taps, not a drum and enough tissue. Also, hire a general worker to be cleaning it on standby for the whole shift.
Apart from that, your premises should be clean, glasses should be clean and all surfaces should be wiped clean. Teach yourself and staff proper hygiene.
Lack of hygiene might put you in trouble with the authorities, too. You might also have an outbreak of a disease which can affect your business.
SPORTS AND ENTERTAINMENT
Beer is a socializing activity. People like to dance, watch football matches together. If your bar is dull, without music, or TV, people will get bored and leave. Get a DJ to engage with the audience and some TVs in your place and pay for DSTV. You will be surprised by how much that can increase traffic to your business.
PRICING IS KEY TO STRATEGY
Price determines what kind of services you will be able to provide to people and the quality your bar will hold too. You won’t be able to provide waiting services, TVs, and proper sanitation services if your profit for one bottle is 1ZMW.
Your pricing also determines what kind of people you will attract to the business. If your beer is too cheap you will attract the wrong people, who have bad manners which in turn will chase away buyers or a certain type of people who have money but don’t like nonsense.
Price your drinks with a healthy margin that not only helps you run your business properly but attracts a certain crowd. Do not aim to be the cheapest bar, aim to be the Cleanest and the Most customer-oriented bar. Low Price isn’t the determining factor for success in this business, it’s the quality of service that I receive and the social events that you hold that determine it. I remember going to G GREENS on weekends. I didn’t care how far it was and the prices were normal. How about Hollywood back in the day, it was in the middle of nowhere but people go there. How about Chicago’s? People go there knowing very well that a mere castle is 25ZMW to 30ZMW.
HYPE YOUR BUSINESS (MARKETING)
People love hype; they love where it is happening. Get a social media page and get a following. From there you can coordinate events easily and let people know what you are doing for them this weekend. (I can make one for you).
Share images of some of the cocktails/drinks that you mix-up at your bar on social media.
Post some of the foods you prepare on social media and invite an artist to perform occasionally if you have the space to do it. These people have a following and that following knows about your bar when they are in town. Another thing I caught on is, bar owners in America actually let superstars drink say a bottle for FREE to hype their business.
(Be careful on this point though)
PROVIDE FOOD SERVICES
People like eating when they are drunk, in order to keep them at your bar. You need to provide some restaurant services, have a grill, and prepare some snacks. You don’t want customers to go and buy food elsewhere, they might not come back especially if your bar is not central.
I almost cannot enjoy a drink at a place where they don’t sell food. Because I'm not trying to get drunk, I am trying to just socialize.
Some people need to eat before downing a bottle of Jameson. Some come hungry from work, and for some, that is where they will have their supper.
Serve food, this could also prove to be a profitable line of business for your bar. Goat meat, sausages, chicken, beef, chips etc.
In summation, you will succeed if you maintain discipline, strict internal controls and innovation.
GOOD LUCK!