Let's build a business.

[xxThe_Lebowskixx]

adsman's bar thread

http://forumserver.twoplustwo.com/showfl...ue#Post11722348

"The reason for this is that the plan now calls for $543,108 in capital, but some of my assumptions are off."

Holy [censored]! Regardless of the outcome, I think its cool that you have the balls to make such a huge investment.

How do taxes work with this type of business investment? If you make $100K in profits the first fiscal year, how much will you pay to the IRS? How does your initial investment come into play in terms of taxes? Have you researched this aspect of it? If anyone has any links or an explanation, that would be cool.

[Chaostracize]

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Ithaca is a very small town and it's easy to get a general feeling for the place after being here for as short as a week.

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How small are we talking here? Population?

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Ithaca essentially doubles during the school year.

City of Ithaca has around 30k, Town of Ithaca has 20k. IC undergraduates numbers 6k, graduates 350, CU undergraduates number 15k, and graduates 6k.

All of it in a relatively small area with downtown right in the middle.

And I believe all of Ithaca is within a 6 sq mi radius.

[En Passant]

Awesome that you're doing this. Good luck

[Taylor Caby]

1. I think you absolutely need at least one manager that knows the area (people) better. College kids go out to bars because they know their friends are there, drink specials (hear from friends working at places), and because places are the "cool" place to go. Places don't start out being cool, you have to make people believe that. You need staff that is well connected in the social scene, preferably a manager that has an incentive to get business at the bar (maybe manager gets a small cut of revenue on his shift).

I could be wrong, but I thought I read awhile ago that you hadn't talked to this English guy in months and when you last spoke with him on the phone it was hard to understand him. If this is true, imagine him trying to communicate with drunk people at a crowded bar with loud music.

All this means I think you should have one "Student manager" to go along with this Stu guy.

2. You are going to need to be putting SERIOUS hours into this business for the first year. First of all, you are going to get robbed blind if you aren't there that often. That's just the way it goes in the bar industry, especially on college campuses.

To avoid getting all of your drinks given away for free you need to create an incentive for employees to not give too much away (incentives or penalties) and you also need to have good enough specials that kids will actually come out even if they can't get drinks for free from their bartending friends. This isn't easy, and requires you to be there to make sure it works right.

After a year or two, then you might be able to only come in a couple nights a week, but I'd plan on being there 6-7 days a week for the first year.

tc

[Zeestein]

Chaos,

wow, 16 staff?

I assume there won't be 16 people on full-time arrangements, so can you just quickly outline your staff structure?

On a similar vein, have you worked out what kind of revenue you need to generate to breakeven?

[adsman]

Chaos,

So can that population base sustain a half million dollar investment?

Also, a town this size makes having a manager from the area even more important. If you don't listen to me, listen to Taylor. He really knows his stuff.

[Chaostracize]

[ QUOTE ]
1. I think you absolutely need at least one manager that knows the area (people) better. College kids go out to bars because they know their friends are there, drink specials (hear from friends working at places), and because places are the "cool" place to go. Places don't start out being cool, you have to make people believe that. You need staff that is well connected in the social scene, preferably a manager that has an incentive to get business at the bar (maybe manager gets a small cut of revenue on his shift).

I could be wrong, but I thought I read awhile ago that you hadn't talked to this English guy in months and when you last spoke with him on the phone it was hard to understand him. If this is true, imagine him trying to communicate with drunk people at a crowded bar with loud music.

All this means I think you should have one "Student manager" to go along with this Stu guy.

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This is really helpful, and a great idea. It works because we essentially start training another manager for when Stu leaves, so we won't be in a rush to do so. The synergy between someone who understands the system of running a successful bar and someone who doesn't, but knows the clientele could work really well.

Regarding understand Stu, it was much more an issue of talking to him on my craptacular Razr on cingular...when we talked on Skype I could understand him just fine.

I'm also definitely a major proponent of profit sharing. I think for the first few months, I'm going to have to see how it goes...tips should be great for the managers (I plan on having Stu do some bartending, although it's certainly not his entire job description), so until we see how profitable we are I will hold on on profit sharing.

[ QUOTE ]
2. You are going to need to be putting SERIOUS hours into this business for the first year. First of all, you are going to get robbed blind if you aren't there that often. That's just the way it goes in the bar industry, especially on college campuses.

To avoid getting all of your drinks given away for free you need to create an incentive for employees to not give too much away (incentives or penalties) and you also need to have good enough specials that kids will actually come out even if they can't get drinks for free from their bartending friends. This isn't easy, and requires you to be there to make sure it works right.

After a year or two, then you might be able to only come in a couple nights a week, but I'd plan on being there 6-7 days a week for the first year.

[/ QUOTE ]

My plan as of this moment is to be there every night for the first month so I can get a very good feel about how the business will be run, and so I can formalize a systems op manual with Stu (plus the newbie manager as well, which should help with integration further down the road). Once that initial set-up has ceased however I plan on being there no more than 4 times a night, but as you said, this may be pushing it. Having 2 managers for this place is most likely going to end up being a necessity, so we'll see what happens.

[Chaostracize]

[ QUOTE ]
Chaos,

So can that population base sustain a half million dollar investment?

Also, a town this size makes having a manager from the area even more important. If you don't listen to me, listen to Taylor. He really knows his stuff.

[/ QUOTE ]

Yes, I believe it can, but it will require lots of marketing $$ to get students from CU to come downtown. I already have a few ideas for promotions to get this to happen, and one milestone that I have is to have at least 1/3 of our clientele be CU students, which we'll measure through signing up on the website (which will be to get monthly updates on promotions and ability to vote on DJs).

Ads, I'm listening to you. :-)

[TheRedRocket]

Could you summarize your new start up costs. I'm confused with the new over projections. Additionally could you provide your estimated operating cost (fixed costs, payroll, inventory. etc)

[Chaostracize]

[ QUOTE ]
Chaos,

wow, 16 staff?

I assume there won't be 16 people on full-time arrangements, so can you just quickly outline your staff structure?

On a similar vein, have you worked out what kind of revenue you need to generate to breakeven?

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Straight from the business plan as it stands right now:

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The company will have 18 employees.

Owner - Will be available to fill in for the manager on his night off. Will also be in charge of all accounting to before a system has been created for this position.
Manager - The manager will be in charge of personnel and the daily running of the establishment. Over the course of the first year we plan on having operations manuals so we can look to expand our business aggressively.
4 Bartenders - On weekend nights we plan on having 3 people behind the bar. On regular weekday nights we plan on having 1 plus the manager.
2 Coat Check - They will switch off according to their schedules.
2 ID check- One person will be checking IDs at the door.
2 Waitresses - One person a night will walk around with cheap shots to hand out dancers on the the dance floor.
4 Panini Grillers - We will have 2 people working at all times on the first floor. On busy nights we will up this number to 3.
3 DJs - There will be 1 DJ on duty every night to keep the latest beats going on the dance floor.
Once I've worked as fill-in manager for 6 months, the current manager and myself I will have written up an operations manual for a new manager, to allow the main manager another night off, and time to think about the business strategically in terms of new promotions, general marketing, and growth.

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Couple notes:

-We'll most likely end up with a second manager.
-I'm cutting the number of bartenders to 2. This plus the manager on a busy night will be plenty, and then on slower nights, we'll alternate.
-1 Waitress will be enough, since we're only going to use her services 3 nights a week. Likewise with the coatcheck.
-Panini Grillers, going to shave one number off this as well. Will most likely half a part-time manager for this role, plus 2 part time employees. The head manager will oversee both the bar and the downstairs, and a part-time manager down there should be in place for future growth, even we don't hire out that way to start off.

Regarding DJs...I plan on having DJs 3-4 nights a week, and they will be students. As of this moment I'm not sure how we're going to go about this...whether or not we're going to hire them as employees, or contractors. I really want input from our customers on who they want to see in DJing, so that will play a major role. So right now to say we'll have "x" DJs doesn't make sense to me, so for ease I just said we'll have 3 DJs on the roll.

So when I say 16 or 18 or whatever number, it's just an estimate, and for the time being it's an overestimate to see if the business can handle the payroll strain, and the numbers show that it can.

I'll throw up the numbers once this week is up and I will know much better the costs of construction, so that I can be sure of cashflow.

As of this moment the B-plan is putting monthly expenses at approximately $30k, and the breakeven point is different from month to month (we'll be in the red for 4 months of the year as well) so I'm not sure how helpful that would be.