Need Advice - Going Into Business For Myself

[McG]

I used to encourage converting the financial statements into excel "what if" scenarios.

Many times, decisions are taken from only looking at the base costs of decisions, with unusually optimistic outcomes.

For example, what would increasing the cost of the hourly rate for staff do to things? Would it mean cutting into hours to keep wages down, or would it mean increasing costs of food/beverages to stay at the same level of profit?

I am a big believer of also plugging scenarios into that excel spreadsheet as well as keeping it as a living document to match your current financials as well as being able to compare it to your projections.

I really believe that small business people follow their passions and we are all better for it. Where new business owners fall down is when the necessary skills are outside of their passion area and therefore they either ignore or don't put the required effort into them, such as accounting, marketing, or staff management, for example.

Don't take your eye off of the numbers!

Best of luck in your new endeavour!

[calculoso]

Watch a lot of Bar Rescue on Spike TV... it's glamorized and exaggerated, but should give an idea of the kinds of issues that you'll find in bars across the US and what Jake Tapper and team do to 'fix' the business. If you can watch many of those and still think that owning a bar is a good idea, maybe get your owner friend to make you manager first with an interest to own later?

[Hockeyguy15]

Originally Posted by calculoso

Watch a lot of Bar Rescue on Spike TV... it's glamorized and exaggerated, but should give an idea of the kinds of issues that you'll find in bars across the US and what Jake Tapper and team do to 'fix' the business. If you can watch many of those and still think that owning a bar is a good idea, maybe get your owner friend to make you manager first with an interest to own later?

Is there a show on Spike that shows how the good bars are run?

[Hack&Lube]

Do you have any experience at all with running a bar? Or running a kitchen? I got pretty far into almost buying an old pub last year and lost a bunch of money because our restaurant manager with experience dropped out of it.

Can the old owner guide and coach you into how to run a pub successfully? Running anything in food service is a steep learning curve and while pouring drinks might be easy, managing staff, running a kitchen, managing spoilage/spillage, cleaning, marketing, etc. can be quite arduous. Factor in an extra 1-2 hours of cleaning every night before you can go home.

[FlamesAddiction]

Originally Posted by Hack&Lube

Do you have any experience at all with running a bar? Or running a kitchen? I got pretty far into almost buying an old pub last year and lost a bunch of money because our restaurant manager with experience dropped out of it.

Can the old owner guide and coach you into how to run a pub successfully? Running anything in food service is a steep learning curve and while pouring drinks might be easy, managing staff, running a kitchen, managing spoilage/spillage, cleaning, marketing, etc. can be quite arduous. Factor in an extra 1-2 hours of cleaning every night before you can go home.

My wife has experience and we are tag teaming it (assuming it actually happens). I have experience a long time ago with running a kitchen.

And yeah, the seller is going to lead us for 2 weeks (we made it a condition). Also, his accountant (who we are going to retain) is going to keep her office at our place, so we will be seeing a lot of each other. Not that he would want to be involved, but he is a smart guy to bounce things off.

The part about spoilage and waste is something that I thought of and it does concern me. That, and making sure you keep up with food prices and pricing things correctly. I expect to probably update menus at least 4 times a year. This is currently an issue he is having, because as I mentioned, he owns and operates 2 other places so he can't spend enough time at this establishment. His bar manager sucks at upselling and his heart is with his other two establishments now. He has noticed after opening his 3rd place, there are diminishing returns with the other 2, hence why he is selling one. The increased labour and stress isn't worth it. It has been making money, but not as much as it could. Some of the staff there apparently do not even know who he is, because that is how hands off he has been over the past year.

I know it comes with risk, as all ventures do. I hope I never gave the impression that I thought there was nothing to it.

[Hack&Lube]

Originally Posted by FlamesAddiction

My wife has experience and we are tag teaming it (assuming it actually happens). I have experience a long time ago with running a kitchen.

And yeah, the seller is going to lead us for 2 weeks (we made it a condition). Also, his accountant (who we are going to retain) is going to keep her office at our place, so we will be seeing a lot of each other. Not that he would want to be involved, but he is a smart guy to bounce things off.

The part about spoilage and waste is something that I thought of and it does concern me. That, and making sure you keep up with food prices and pricing things correctly. I expect to probably update menus at least 4 times a year. This is currently an issue he is having, because as I mentioned, he owns and operates 2 other places so he can't spend enough time at this establishment. His bar manager sucks at upselling and his heart is with his other two establishments now. He has noticed after opening his 3rd place, there are diminishing returns with the other 2, hence why he is selling one. The increased labour and stress isn't worth it. It has been making money, but not as much as it could. Some of the staff there apparently do not even know who he is, because that is how hands off he has been over the past year.

I know it comes with risk, as all ventures do. I hope I never gave the impression that I thought there was nothing to it.

The economy is also in bad shape right now and there is less disposable income so make sure you take into account the location you are in, what your target market is, and if there is potential for growth or if will just be neighborhood regulars.

Keep it a traditional pub? Or try to go for something new and more hip to create some buzz?

If it's afloat right now while the owner is almost totally hands off, is there a general manager or staff with experience that you will get along with purchasing it? Figure out what the total overhead is and if you can maintain that profit margin. The most killer things are rent, staff, and inventory costs.

[DoubleF]

Since you've already decided...

I'm not sure how close to the original owner you are (though it seems you're more than just acquaintances) But I'm wondering if chatting with the owner to see if there's ways to save some money for you and him would be a worthwhile conversation.

If I were taking over such a business, I would see if there was an opportunity to get in on some group bulk purchases on certain foods or share transport costs by sending everything on the same truck. It could be cheaper and a win win for both parties. Maybe offer to pick up his order when you pick up yours and charge him a reasonable fee lower than typical rates if his locations aren't a ridiculous detour from yours/vice versa if possible. Only if it's not a bother to you of course.

Or, if he's looking to take some of the money from the sale to upgrade his other two locations and is replacing things you can use, why not see if you can acquire it for pennies on the dollar/free (Pint glasses, cutlery etc.). Sometimes people offer insane discounts to move certain items at their convenience.

Also research into seeing if there's some quick ways to make some money other than the main business that's relatively hands off (no matter how little, it does stack up). Things like allowing someone to advertise on your premises for $20 a month for a letter sheet advert or something like that could work. Or see if you can bring in repeat traffic by offering $30 a month but offer food or drink incentives to get them to come to your place often?

Maybe if the economy is low and you don't need all the seating, you could clear out a section and rent that space somehow. Vending machines or arcade games or something. No risk to you, you're just collecting rent. Pure risk to whoever is renting that space. Paint nights might be an option as well.

Anyways, good luck on your business venture. I hope it works out.

[AltaGuy]

Having worked in bars for many years, my main question when people buy an existing bar is this: are you confident that you will maintain the staff - management and foh mostly?

Sounds like you are losing at least the general manager to his other two bars.

If your sale price is based wholly or mainly on existing sales/customers, you need those staff because without them you are paying a premium for a bunch of furniture, some used kitchen stuff, and a lease.

If you lose 25% of staff under your new management, and 25% of regulars go with them, you're likely also losing more than 25% of the old profits. If you change concepts, and retain no regulars and few staff, you're not buying the old "profits" and business at all.

I could never understand why some new restaurant and bar owners would buy a business based on sales, change everything, and start at zero again, having then bought an imaginary business.

I have many friends who have opened bars for almost nothing - find a space that's empty, buy used kitchen stuff, make a deal with your landlord (you can often get them to do many renovations), hire staff, and promote. Spending less than a couple hundred thousand on a new bar or restaurant opening sets you up for a much easier time getting started.

Buying an existing bar or restaurant for the owner's ask, only to lose the customers and spend the startup money anyway, is a bad start for anyone. It happens again and again. Bars and restaurants fail all the time for a myriad of reasons - buying one of the failed ones for the costs of assuming a lease and some renos is often a much better way to go.

Just my .02.

[puckedoff]

Not everyone can or wants to run a bar, as you can see from the majority of the responses in this thread. But obviously some people DO make it work, and if you think you could be one of those people then go for it, and all the best luck.

[OMG!WTF!]

Originally Posted by FlamesAddiction

The food isn't daunting to me. I worked in a kitchen for a few years and this place has a very simple menu. It's on a strip when people basically go bar crawling.

This kind of makes me worry a bit. I might be wrong but it seems like you are thinking maybe the food element is secondary to your main focus. In short I've seen so many people just do food that is passable, or good enough. In my opinion, you've done 99% of the work just to get to passable food. Why not put a little extra effort in and make like one thing absolutely spectacular? People will come for that one thing. You could be creating it in your kitchen now so you can add it from day one. It takes relatively little extra effort to make an amazing burger. Crave cupcakes is an example. Do one thing well and you have a business. Everybody has a favorite spot for whatever reason. Create a reason in your place. Master the French fry. I'll fund your research into the perfect fish taco.

[driveway]

Originally Posted by OMG!WTF!

This kind of makes me worry a bit. I might be wrong but it seems like you are thinking maybe the food element is secondary to your main focus. In short I've seen so many people just do food that is passable, or good enough. In my opinion, you've done 99% of the work just to get to passable food. Why not put a little extra effort in and make like one thing absolutely spectacular? People will come for that one thing. You could be creating it in your kitchen now so you can add it from day one. It takes relatively little extra effort to make an amazing burger. Crave cupcakes is an example. Do one thing well and you have a business. Everybody has a favorite spot for whatever reason. Create a reason in your place. Master the French fry. I'll fund your research into the perfect fish taco.

Buy doing that 'one thing fantastically' you've actually created a pile of headaches for yourself. If you do one thing really well, almost everyone will order it, meaning now you have to have huge amounts of that thing in stock - but you still need to keep other things around in case they are ordered. This creates a slew of logistical headaches. Let's say you dominate the fry game, well then that fills up all your deep fryers, maybe you even need to get a couple more to keep up with demand - filling kitchen real estate. Does that impact how well you can deliver burgers? Fish and chips? Suddenly you're the fry place, but you're ONLY the fry place.

You've also set yourself up to maintain people's expectations. If you make the best fry in town, you better make the best fry in town Every. Single. Time. You need to figure out a way to make and deliver the best fry in town regardless of who is working in your kitchen - you can't rely on that one cook who knows how to do it to be there forever. What if that perfect fry oil is suddenly no longer imported into Canada? What if the news gets out that the secret to the best french fry is horse fat? (It seriously is, the best fries in the world are made with horse fat) Suddenly you're on the front page of the Herald as a horse-murderer.

Your "99% of the way there" math is way off. It takes exactly the same effort to be great at one thing as it does to be good enough at several things. So, you could double the amount of work you're putting in and have one great thing and the rest be good enough, or you can do the same amount of work and have one great thing and literally nothing else.

Crave is the perfect example of this. They do cupcakes and they do them well, but do they do anything else? Can you get an apple pie at Crave? They're a bakery, they have all the ingredients, why can't they do an apple pie? Because even making a half-decent apple pie would throw such a monkey-wrench into their processes it's completely not worth it.

[Peanut]

Crave does cookies and cakes. And gluten free things.

I don't think Crave is really comparable to a bar - the poster was just saying they do cupcakes exceptionally well and thus are successful.

[OMG!WTF!]

I think being overwhelmed by orders for my one specialty item is exactly the kind of problem I would want to have.

I get that maintaining a high standard is difficult, but wtf are you in business for if that isn't your goal.

It doesn't even have to be anything truly mind blowing, maybe just a chicken burger that isn't one part soy, one part water, one part chicken and frozen to death. That's becoming a true insult in many places now because you need it to be cheap, and so easy a dim wit can do it for 12 bucks an hour. Keep the menu simple but do it right.

[Locke]

Originally Posted by OMG!WTF!

I think being overwhelmed by orders for my one specialty item is exactly the kind of problem I would want to have.

I get that maintaining a high standard is difficult, but wtf are you in business for if that isn't your goal.

It doesn't even have to be anything truly mind blowing, maybe just a chicken burger that isn't one part soy, one part water, one part chicken and frozen to death. That's becoming a true insult in many places now because you need it to be cheap, and so easy a dim wit can do it for 12 bucks an hour. Keep the menu simple but do it right.

Thats illegal now.

[OMG!WTF!]

Originally Posted by Locke

Thats illegal now.

Nope. I'm very stupid and I have not been arrested yet. So...check your facts maybe?

[Locke]

Originally Posted by OMG!WTF!

Nope. I'm very stupid and I have not been arrested yet. So...check your facts maybe?

Well, I was just making a joke kind of tongue-in-cheek but....

Upcoming changes to minimum wage 2016-2018
October 1, 2016

Type of employee - Most employees – General minimum wage $12.20/hour

https://work.alberta.ca/employment-s...imum-wage.html

[LIP MAN]

For the love of God, if you're playing Flames games or other sports just train staff to turn the damn sound on without the customer having to harass someone.

[Locke]

Originally Posted by LIP MAN

For the love of God, if you're playing Flames games or other sports just train staff to turn the damn sound on without the customer having to harass someone.

Ha! This!

When you have to ask the server or bartender to turn the sound on and then they glare at the remote control as though it's functions are engraved in Ancient Babylonian....

Turn on the sound. This is how.

[FlamesAddiction]

It on the Sens Mile, but I will still make a point of showing Flames games when I can.

[Weitz]

Originally Posted by LIP MAN

For the love of God, if you're playing Flames games or other sports just train staff to turn the damn sound on without the customer having to harass someone.

To be fair not every bar wants sound on. Even for flames games.