David Kaplan does not have a business degree. The partner of Proprietors, LLC, has a fine arts background and the drive to be a successful entrepreneur. Kaplan would likely say that he doesn't even have a business background but with Death & Co. reaching their tenth year in operation, we would beg to differ. He would also say that he's only an expert in what has worked for him, that there are a million ways to approach the opening of a bar. At an industry conference that took place this year he gave insight into his first bar deal, a deal that has led to the opening of many more successful bars.
The Fundamentals
If you're planning to open a bar you'll want to come up with a business plan, also known as a prospectus. While many people have been trained to think of the prospectus as a way to entice investors into funding their business, Kaplan sees it as a tool for the hopeful bar owner. In his eyes, the business plan is a resource that allows the person seeking funds to know their business backwards and forwards; it's a valuable road map that lays out the what, the how, the why, and the money needed.
There isn't any hard and fast rule for a prospectus but Kaplan shared a business plan that consisted of an overview, a section on atmosphere, one on offerings, the layout, the location, the neighborhood, competitive set, demographics, transportation, why the concept works, the money, projections, and a thank you at the end. While some of those sections may seem self-explanatory, Kaplan explained others. Because our industry is a visual one, the atmosphere section should contain anything that contributues to the overall vibe. View the prospectus as a passion play intended to get investors excited and share your passion. An offerings section explains what will be on your menus. The layout is obvious but Kaplan shared some very valuable information in securing a space while explaining this section. It's likely that you'll need to offer your first investor a sweetheart deal in order to get them to give you the money to lock in the space you want to occupy. While it isn't always possible, try try to get the landlord involved in the deal to help secure your ideal location. You can also look for new development deals because they're likely, according to Kaplan, 6 to 8 to maybe 12 months out, which gives you the time to stockpile investors and capital. If you have the means, which usually means having already opened a few bars, create a nightlife fund by gathering many investors so you'll have the capital on hand to accomplish several projects in rapid succession. In terms of the neighborhood section, know the neighborhood in which you plan to operate because you will be investing in it in terms of time and money; become part of the community. When explaining why your concept works, share personal accolades, tell investors why you're the right person for this project, and what other success projects you have under your belt. You'll need to break down exactly what the money is for and how much you need, plus what type of corporation you plan to form. Now, projections can be overwhelming and boring, so Kaplan suggests finding a way to get into them. To do this, find an easy point of reference. If you already work in a bar, you should know some numbers that can get you started, and you probably know people in the industry who can help you. Consider this section a very well-informed best guess.
"You will need to lawyer up at some point," added Kaplan. He has two attorneys. One is an alcohol attorney and one specializes in general business. As Alba Huerta, owner of Julep, said of her ownership experience, it's more expensive to not have a lawyer than to have one.