Best Advice About Buying a Bar or Night Club, Don’t Do It

Posted: June 6, 2010 in advice on owning a bar
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 There seems to be a preponderance of people planning to make a run at the nightclub game in the Valley. Our old place has a couple of guys getting ready to reopen the place, McQ’s has a retired couple wanting to invest their life savings , Bottoms Up is about to become the new Rock. I wish them all the best of luck but I would gladly send them all this email that I sent to a friend a few years back who was determined to get into the night club business with a parner. He did not take my words to heart and they lasted nine months. Here is my warning to them and anyone who thinks that running a nightclub is a bright idea:

My Dear Determined Friend,

 I want to put in written form my strong warning, so that I will have a record of just what I said. After this, I promise to leave you alone and simply support your efforts. It fascinates me how owning a bar is such a common dream and how it can sometimes cast a spell over a person. I speak from experience. The idea is appealing in so many ways, it’s a creative opportunity, it’s an opportunity for self-expression, it’s an opportunity to create an exciting new identity, to create a fun new place for people to come in and enjoy. There is the dream of making a lot of money and tons of new friends. And for you there is the added benefit to showcase your talents and really put your showmanship and people skills to work. There is always a chance your dreams will come true.

     However, it has been a sad thing to watch people like Ken Ripley, or J.R. and Betty at the Alpine and Shawn at Panama Jack’s, go for their dream and then pour their heart and soul and money into it, only to see it all turn into a big expensive, heart-breaking disappointment. In the time we were at the Rock Inn, Bobby D’s, now known as the Edge went through 4 owners. Don Gologoski opened two places, one he sold after a year (which failed) and the other he had to shut down after about 6 months. Don told me he has opened 18 bars and only made money at 2. These are just some of the people I knew.

    There were many places I watched fail that I did not know the owners. I can only think of about 3 places that have opened in the last 5 years that made it longer than 1 year. But each of the  20-plus failures I have watched had the belief they had what it took to succeed where so many failed. As Gologosky put it, they always think they are smarter than the last guy.

    The truth is you and your partner have been bitten bad and you are not using prudent  decision-making methods or wise negotiating techniques. There is no way you have gathered enough information to make any decisions and yet you are putting out money to tie up the building. Where is your business plan? Where are your recipes? What is the cost of insurance and can you actually get it? Have you looked at how much is required to get a liquor license ? If you can get it, how long will it take.  What this is, is a game you are dying to play.

     You are both only kidding yourselves if you believe you are making a smart career move. The main reason, I have concluded, that so many places fail is that anyone with the business skill to make a place run is too smart to get into the business in the first place.

     .)

     I could probably go on and on, but I think you get the idea. The biggest mistake I see is you rushing in. I would give you much better odds if you told the landlord to go ahead and try to lease it to the other party he says he has interested and if it is still available in a few months then you’ll talk. Then you have time to make a level-headed, well-thought out decision. The landlord might then be more flexible, and besides you are hurting your chances by opening up going into the summer.

     But you are going to do what ever you are going to do. Elaine and I would be available to consult on any area for a tab.  I don’t expect you guys to pay much attention to anything I have to say, people with the personality traits required to attempt such an endeavor such as this, tend to think they know best.

    One of the reasons we did as well as we did is because I paid for consultation and listened very carefully to anyone who had been in the business. One time a customer who had owned a place told me a secret to building a great happy hour and I followed his advice and could not believe how well it worked. Another customer told me a tip about sales tax that Elaine followed up on and got a $5,000 reimbursement.

     Also Elaine is without question the best bartender in town and she might be interested in being a working bar manager. I know an excellent cook that is taking a medical related break. He just set up Big Slick’s kitchen and he might be interested in getting you guys going.  I also have a $15,000 point of sale system that you could lease-to-own for about $300 a month or buy out right for $7,000. And we still have an ATM machine we could sell.

     I know you think I have something against the landlord and that is influencing my opinions. That is completely untrue. I am only telling you all this because you are my friend. I have nothing to gain by talking you out of this. I can easily see how we will benefit by having you go in. And when you do, we will be there for you in anyway you can use us, even if that is just being loyal customers.

                                        Good Luck, Craig

  That is the email I sent my friend, begging him not to jump in. They are friends of ours but they did not listen to a word I had to say. (They didn’t hire Elaine, and they bought a new point-of sale system for $25,000). I had friends trying to warn us about going into the Rock Inn and I did not listen either. We were kind of lucky in that we made it 4 years and left because we chose to. But we chose to leave because we finally figured out that we should never have gone into the nightclub game in the first place and I will lay odds that these well-meaning folks that are about to enter the game will eventually come to the same conclusion.

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