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KC2004
03-17-2010, 08:52 PM
I've worked in this bar for 10 years. Just need a little business advice from anyone that has bought a bar or another small business as to how to go about it. I know my way around a bar i have ran it for years as the manager but I want to know the traps i could fall in as a owner.

Mr. Flopnuts
03-17-2010, 08:53 PM
If you've been managing it, you should already know.

CoMoChief
03-17-2010, 08:54 PM
Don't fall for the "everyone's my friend, I'll hook them up with free shit" all the time.

Pretty soon friends will bring their friends friends and so on.

BWillie
03-17-2010, 08:55 PM
I know 4 acquaintances that have owned or own a bar. 3 out of 4 of them failed. The other one appears to be on the verge of failing. I would guess it depends on if the area is saturated w/ similar establishments and if you have alot of relationships to get regulars in to start off w/

KC2004
03-17-2010, 08:55 PM
If you've been managing it, you should already know.

I know alot of it but im looking for any advice from people that have bought a bar.

milkman
03-17-2010, 08:56 PM
Sell beer.

bevischief
03-17-2010, 08:57 PM
How much to run and where?

Ebolapox
03-17-2010, 08:57 PM
just go take the BAR exam. :p

KC2004
03-17-2010, 08:57 PM
I know 4 acquaintances that have owned or own a bar. 3 out of 4 of them failed. The other one appears to be on the verge of failing. I would guess it depends on if the area is saturated w/ similar establishments and if you have alot of relationships to get regulars in to start off w/

2 bars in our town and we're the drinking bar. Its basically a built in business but i'm wondering how the loan process goes and all the other BS.

Mr. Flopnuts
03-17-2010, 08:57 PM
I know alot of it but im looking for any advice from people that have bought a bar.

My post wasn't meant to be condescending. Asking for advice is great, under any circumstances. Really I was just implying that you have all the knowledge you need to know if it's a good buy or not.

KC2004
03-17-2010, 08:57 PM
just go take the BAR exam. :p

:D

Mr. Flopnuts
03-17-2010, 08:59 PM
2 bars in our town and we're the drinking bar. Its basically a built in business but i'm wondering how the loan process goes and all the other BS.

Why is the current owner selling? Do you know if you're getting a good deal or not? I've never owned a bar, but I'm curious.

KC2004
03-17-2010, 08:59 PM
Sell beer.

Well yeah. :D

KC2004
03-17-2010, 09:00 PM
Why is the current owner selling? Do you know if you're getting a good deal or not? I've never owned a bar, but I'm curious.


He has owned the bar for 14 years he's getting burnt out.

notorious
03-17-2010, 09:00 PM
Be prepared to live there. Almost every waking minute (and sleeping minute) should be fully invested into the business for at least the first 5 years. People that are successful will put in even more time after that point.

Bartending is fun when you can leave every night. When you own the bar, though, things are a lot different.

Hire people that are as smart or smarter then you to help with management if your business grows to that point.

Hire as many hot waitresses as possible. An amazing male waiter will do an OK job at bringing back some business. Hot, dumbass waitresses will keep the place packed.

If you like control, and don't mind the sleepless nights, go for it. There is something very fulfilling about making the choice to go to work and making all the decisions.


Good Luck.

Mr. Flopnuts
03-17-2010, 09:02 PM
He has owned the bar for 14 years he's getting burnt out.

Hmm. I don't know, but I just tend to think with a mindset that questions people's motivations. Is the bar making less money? Does it require him to really work there at all? If you manage it, why does he need to be there? If he's burned out, why not go home and come collect money once a week? There has to be a real reason he wants out. Unless he's just filthy rich and this was all for fun in the first place.

Nightfyre
03-17-2010, 09:02 PM
Determine your cap rate and possible improvement in income. value accordingly, and you may come out ok

KC2004
03-17-2010, 09:05 PM
Hmm. I don't know, but I just tend to think with a mindset that questions people's motivations. Is the bar making less money? Does it require him to really work there at all? If you manage it, why does he need to be there? If he's burned out, why not go home and come collect money once a week? There has to be a real reason he wants out. Unless he's just filthy rich and this was all for fun in the first place.


There's some personal issues which is neither here or there. It makes money no doubt. Does it make 5 year ago money no. Its still a money maker just not to the level he's use to.

FAX
03-17-2010, 09:06 PM
Why do you need a loan? The current owner wants you to pay cash for the entire business up front? A bar business?

No way. Nope. Negatory. Proceed not in this regard.

FAX

notorious
03-17-2010, 09:06 PM
As the buyer, you are in the position of leverage.


Purchase the bar as an asset only capacity. NO BLUE SKY!!!!!! Especially in this economy.

Ask for at least 5 years of W2's, and income vs. expense reports. The banks will want the last 3 years anyway, and you can check to see if there is a bad trend developing. Have a business plan ready for the bank, too.


Business owners (especially bars) will try to fill you up with bullshit cash income claims. Tell them you only trust whats on paper, just like your bank.

Finally:






NEVER MAKE A BUSINESS DECISION BASED ON EMOTION. NEVER NEVER NEVER!!!!!!!

Mr. Flopnuts
03-17-2010, 09:06 PM
There's some personal issues which is neither here or there. It makes money no doubt. Does it make 5 year ago money no. Its still a money maker just not to the level he's use to.

Well, he could be ready to get out because he won't be around by the time the economy really gets going again. For me, as long as the place was THE place in town (I'm assuming by your avatar and location info you live in a small town) and I had a good relationship with the clientele, I'd be inclined to jump all over it. As long as the price is right.

FAX
03-17-2010, 09:08 PM
No. Do not go to a bank. Do not borrow money to purchase a bar. No.

FAX

Mr. Flopnuts
03-17-2010, 09:08 PM
Why do you need a loan? The current owner wants you to pay cash for the entire business up front? A bar business?

No way. Nope. Negatory. Proceed not in this regard.

FAX

Interesting. If that's the norm I wouldn't know it. However, of the many bar owners I've known and worked with over the years, none of them (where I had the knowledge of it anyways) ever paid for the business up front in cash. Maybe owning a bar is much more attainable than I once believed.

KC2004
03-17-2010, 09:10 PM
Well, he could be ready to get out because he won't be around by the time the economy really gets going again. For me, as long as the place was THE place in town (I'm assuming by your avatar and location info you live in a small town) and I had a good relationship with the clientele, I'd be inclined to jump all over it. As long as the price is right.

The price is right and the clients love me. I offered to quit over a disagreement years ago and the patrons offered to walk with me so i guess they have my back. lol

ClevelandBronco
03-17-2010, 09:10 PM
Employee theft is a huge concern in any cash business. Theft can come in the form of free drinks as well as the pocketing of cash intended for the till.

Also, you will never again experience "free" time.

Mr. Flopnuts
03-17-2010, 09:11 PM
The price is right and the clients love me. I offered to quit over a disagreement years ago and the patrons offered to walk with me so i guess they have my back. lol

If your clientele love you, and you want to be there every day, hey, it's already making money right? I'm still curious of Mr. Fax's stance on buying bars up front in cash.

KC2004
03-17-2010, 09:12 PM
If your clientele love you, and you want to be there every day, hey, it's already making money right? I'm still curious of Mr. Fax's stance on buying bars up front in cash.

Thats got me wondering to.

FAX
03-17-2010, 09:12 PM
Interesting. If that's the norm I wouldn't know it. However, of the many bar owners I've known and worked with over the years, none of them (where I had the knowledge of it anyways) ever paid for the business up front in cash. Maybe owning a bar is much more attainable than I once believed.

I look at it this way ... the failure rate of businesses is high. Very high. If this is a profitable business, the owner already knows it. If Mr. KC2004 is already managing the bar, the owner knows that, too.

It would be crazy to go into debt to pay the current owner if he wants out for personal reasons. Let the owner carry the note. If the business is successful going forward, everyone wins. If not, Mr. KC2004 isn't saddled with an indebtedness ... plus a friggin' failed bar business he can't get rid of.

No. Borrowing money from a bank to purchase a bar business is not cool. Not at all.

FAX

KC2004
03-17-2010, 09:12 PM
Employee theft is a huge concern in any cash business. Theft can come in the form of free drinks as well as the pocketing of cash intended for the till.

Also, you will never again experience "free" time.

I've fired more than one for stealing.

FAX
03-17-2010, 09:15 PM
If your clientele love you, and you want to be there every day, hey, it's already making money right? I'm still curious of Mr. Fax's stance on buying bars up front in cash.

My stance has nothing to do with buying bars up front in cash. It has to do with borrowing money to buy bars up front in cash ... particularly in a situation where you're already managing the bar in question and the owner wants out.

My concern in this situation would be whether or not there are liabilities Mr. KC2004 is unaware of ... old tax debt, equipment lease terminations, etc.

FAX

KC2004
03-17-2010, 09:15 PM
I look at it this way ... the failure rate of businesses is high. Very high. If this is a profitable business, the owner already knows it. If Mr. KC2004 is already managing the bar, the owner knows that, too.

It would be crazy to go into debt to pay the current owner if he wants out for personal reasons. Let the owner carry the note. If the business is successful going forward, everyone wins. If not, Mr. KC2004 isn't saddled with an indebtedness ... plus a friggin' failed bar business he can't get rid of.

No. Borrowing money from a bank to purchase a bar business is not cool. Not at all.

FAX


Question? Do you visit bars? Cause if you don't I could see your point but in my world you have to borrow money to get them. Im not independently wealthy.

KC2004
03-17-2010, 09:16 PM
My stance has nothing to do with buying bars up front in cash. It has to do with borrowing money to buy bars up front in cash ... particularly in a situation where you're already managing the bar in question and the owner wants out.

My concern in this situation would be whether or not there are liabilities Mr. KC2004 is unaware of ... old tax debt, equipment lease terminations, etc.

FAX

Fax i've been there 10 years I know the bills cause i pay them. I'm not blind in this.

DTLB58
03-17-2010, 09:17 PM
Never hire any dumbass workers despite
their level of hotness.

Seriously, if she's smoking hot but can't
make change.....

Baconeater
03-17-2010, 09:17 PM
Well I'm no expert about buying businesses, but I wouldn't pay any more than what the building and contents are worth. I was thinking about buying an established lawn service one time, and the owner wanted what the business grossed in a year which was far more than what the trucks and equipment were worth, but I was unsure about how many of his customers I would be able to retain so I declined. I basically would've been paying a lot extra for the name of the business, it just seemed very risky to me.

Mr. Flopnuts
03-17-2010, 09:18 PM
My stance has nothing to do with buying bars up front in cash. It has to do with borrowing money to buy bars up front in cash ... particularly in a situation where you're already managing the bar in question and the owner wants out.

My concern in this situation would be whether or not there are liabilities Mr. KC2004 is unaware of ... old tax debt, equipment lease terminations, etc.

FAX

Absolutely. I was going to bring up possible tax liens as well. That can be checked online probably. The equipment leases and so forth is another story that our OP should be investigating.

I just found the post interesting because it got me to thinking about all the stories I've heard from bar owners about how they took over. None of them paid the money up front. It was all in monthly installments with the original owners. I was wondering if that was the norm. I assumed these guys were all just in the right place at the right time.

ClevelandBronco
03-17-2010, 09:19 PM
I look at it this way ... the failure rate of businesses is high. Very high. If this is a profitable business, the owner already knows it. If Mr. KC2004 is already managing the bar, the owner knows that, too.

It would be crazy to go into debt to pay the current owner if he wants out for personal reasons. Let the owner carry the note. If the business is successful going forward, everyone wins. If not, Mr. KC2004 isn't saddled with an indebtedness ... plus a friggin' failed bar business he can't get rid of.

No. Borrowing money from a bank to purchase a bar business is not cool. Not at all.

FAX

Listen to this man.

FAX
03-17-2010, 09:19 PM
Question? Do you visit bars? Cause if you don't I could see your point but in my world you have to borrow money to get them. Im not independently wealthy.

Please, Mr. KC2004. I'm trying to help you ...

1. The owner wants to sell for personal reasons, right?
2. You already manage the place, correct?
3. The owner knows you can make a go of it, yes?

Sure ... the current owner would love for you to go into debt, pay him a lot of money for the business, and walk away. That's great for him.

If it were me, I'd let the owner carry the note for the purchase of the business. There are many reasons why this is the best route for both of you.

However, if you're dead set on borrowing money and investing that indebtedness in a bar, open a new bar of your own. You start clean.

FAX

KC2004
03-17-2010, 09:20 PM
Never hire any dumbass workers despite
their level of hotness.

Seriously, if she's smoking hot but can't
make change.....

Well i'm married and the wife will own the bar also so how far do ya think tits will get bartenders? Not very fair from me or her. Usally tits gets ya a thief.

FAX
03-17-2010, 09:21 PM
Fax i've been there 10 years I know the bills cause i pay them. I'm not blind in this.

Do you pay the taxes? Employee withholding? SS? All of that?

Do you know if any equipment leases are coming to term anytime soon?

FAX

FAX
03-17-2010, 09:22 PM
Absolutely. I was going to bring up possible tax liens as well. That can be checked online probably. The equipment leases and so forth is another story that our OP should be investigating.

I just found the post interesting because it got me to thinking about all the stories I've heard from bar owners about how they took over. None of them paid the money up front. It was all in monthly installments with the original owners. I was wondering if that was the norm. I assumed these guys were all just in the right place at the right time.

Yeah. I can't imagine a world in which a man would go to a bank, borrow money, and pay the current bar owner in full so he can walk away.

Frankly, I can't imagine a banker that would do that, so it's probably a moot point, anyhow.

FAX

Ebolapox
03-17-2010, 09:23 PM
fax is making sense, dude. listen to this sage.

KC2004
03-17-2010, 09:24 PM
Do you pay the taxes? Employee withholding? SS? All of that?

Do you know if any equipment leases are coming to term anytime soon?

FAX


Currently you get 1099 in our bar.

KC2004
03-17-2010, 09:25 PM
Currently you get 1099 in our bar.

2 leases one ice machine and a pepsi cooler. A whooping 32 bucks a month
.

Baconeater
03-17-2010, 09:26 PM
Currently you get 1099 in our bar.
How in the hell do you get away with that?

ClevelandBronco
03-17-2010, 09:27 PM
How in the hell do you get away with that?

Sounds illegal to me. I'd love to hear the explanation.

KC2004
03-17-2010, 09:27 PM
How in the hell do you get away with that?

Self employeed. It works. I wont employee it but.

ClevelandBronco
03-17-2010, 09:28 PM
Self employeed. It works. I wont employee it but.

No. You're not. There's a fairly strict definition for that and you don't meet it.

KC2004
03-17-2010, 09:29 PM
Ya just have to realize my boss is independtly wealthy, Him and his wife bought this place and she quit drinking and found god. He lost interst.

KC2004
03-17-2010, 09:31 PM
Self employeed. It works. I wont employee it but.

And yes I am. In missouri trust me i've filed my taxes. It sucks but its true. I wont do it ill pay a payrole

ClevelandBronco
03-17-2010, 09:31 PM
Ya just have to realize my boss is independtly wealthy, Him and his wife bought this place and she quit drinking and found god. He lost interst.

You just have to realize that what you said has nothing to do with the tax code.

And the rules for FICA and federal income tax don't vary by state.

ClevelandBronco
03-17-2010, 09:32 PM
And yes I am. In missouri trust me i've filed my taxes. It sucks but its true. I wont do it ill pay a payrole

There's no great trick to filing an incorrect tax return.

KC2004
03-17-2010, 09:32 PM
You just have to realize that what you said has nothing to do with the tax code.


Whats that got to do with a 1099?

ClevelandBronco
03-17-2010, 09:35 PM
Whats that got to do with a 1099?

You're asking what an IRS form 1099 has to do with the tax code?

Don't buy a bar. Don't buy anything.

Ralphy Boy
03-17-2010, 09:37 PM
I've worked in this bar for 10 years. Just need a little business advice from anyone that has bought a bar or another small business as to how to go about it. I know my way around a bar i have ran it for years as the manager but I want to know the traps i could fall in as a owner.

Don't do it. Your employees (you) will steal you blind.

KC2004
03-17-2010, 09:37 PM
You're asking what an IRS form 1099 has to do with the tax code?

Don't buy a bar. Don't buy anything.



That not what im saying. If your looking for a arguement im done.

Baconeater
03-17-2010, 09:38 PM
Whats that got to do with a 1099?
1099s are for subcontractors, not employees. If you set someone's hours they're not a subcontractor, they're an employee.

WoodDraw
03-17-2010, 09:40 PM
You need a laywer and an accountant, not Chiefsplanet. Some people have brought up some fair points.

Do your due diligence.

KC2004
03-17-2010, 09:40 PM
1099s are for subcontractors, not employees. If you set someone's hours they're not a subcontractor, they're an employee.


trust me thats been a sore subject for years. The wife will W-2 everyone working for us.

ClevelandBronco
03-17-2010, 09:41 PM
That not what im saying. If your looking for a arguement im done.

I'm looking only for a reason to think you have some idea of what we're talking about here before you waste your time and money. I'm truly not trying to ridicule you. I'm just thinking that you may not be prepared at this time to be considering purchasing a business.

notorious
03-17-2010, 09:42 PM
He lost interst.

In her or the bar? :)

Bill Lundberg
03-17-2010, 09:42 PM
It would be wise to get copies of his business tax returns for the past 3-5 years and have a CPA go over them with you before making any decisions. Someone who either you know has your best interests in mind or someone referred to you by a trusted source who is in no way associated with the bar owner. Sounds like if you pursue this you're going to need that accountant. They don't usually come cheap, but the good ones are worth their weight in gold.

KC2004
03-17-2010, 09:44 PM
It would be wise to get copies of his business tax returns for the past 3-5 years and have a CPA go over them with you before making any decisions. Someone who either you know has your best interests in mind or someone referred to you by a trusted source who is in no way associated with the bar owner. Sounds like if you pursue this you're going to need that accountant. They don't usually come cheap, but the good ones are worth their weight in gold.

Good thing my wife has a masters in Business and a minor in accounting.

Baconeater
03-17-2010, 09:44 PM
trust me thats been a sore subject for years. The wife will W-2 everyone working for us.
Yeah the current owner is pushing his luck by doing that, although I don't know what the penalties are for doing it or how strictly they are enforced as it seems there are a lot of businesses getting away with it these days.

FAX
03-17-2010, 09:47 PM
The purchase of an existing business is fraught with all kinds of potential problems. You have to know where all the skeletons are buried ... and there are always some.

The best way to proceed in this case ... since you and the owner are on good terms and he wants out and you want in ... is to simply transfer ownership based on a note that's tied to a multiple of past earnings or some other valuation that's sensible. Heck, I'd consider an interest bearing note that's retired out of a percentage of profits. That would be sweet for both parties.

It keeps you out of trouble and forces the owner to help you become successful.

FAX

Short Leash Hootie
03-17-2010, 09:47 PM
find a badass pizza recipe, and sell it by the slice throughout the day...especially at night

FAX
03-17-2010, 09:50 PM
Yeah the current owner is pushing his luck by doing that, although I don't know what the penalties are for doing it or how strictly they are enforced as it seems there are a lot of businesses getting away with it these days.

A guy I know very well and one of Nashville's most successful restaurateurs was hammered with a tax lien of over $400,000 a few years ago. Why? Because he was paying servers at one of his restaurants as "independent contractors".

I'm not an expert in that particular aspect of the tax code, but I am an expert in counting money and $400,000 is quite a bit.

FAX

notorious
03-17-2010, 09:52 PM
A guy I know very well and one of Nashville's most successful restaurateurs was hammered with a tax lien of over $400,000 a few years ago. Why? Because he was paying servers at one of his restaurants as "independent contractors".

I'm not an expert in that particular aspect of the tax code, but I am an expert in counting money and $400,000 is quite a bit.

FAX

Ouch. You can't escape the IRS either.

KC2004
03-17-2010, 09:55 PM
Thank you all for your opinions. I appreciate the input.

1moreTRich
03-17-2010, 09:55 PM
trust me thats been a sore subject for years. The wife will W-2 everyone working for us.

So when you file your personal tax return do you pay self-employment tax...aka FICA and Medicare that the business should be paying half of?

I'm not sure how this bar is organized, Sole Prop, LLC, etc. or how you are planning on transferring ownership, but I would be worried if the business has not been filing payroll tax returns if you purchased this business that the IRS could come back on you for past payroll taxes.

Sandyskc
03-17-2010, 09:56 PM
And, if you buy the business, you may become liable for the actions of the previous owner.

FAX
03-17-2010, 09:57 PM
Ouch. You can't escape the IRS either.

It was actually an interesting case. The "servers" at this particular restaurant were also entertainers in that they sang and danced and did table magic and stuff. As a result, this guy had the great idea that he could prove them as "independents" to the IRS.

The situation went untested for a long time until one of these "servers" got pissed off and declared to the IRS that they were, in fact, employees ... under his direction and guidance, provided with a workplace, etc. Then, the hammer came down. Made the papers and everything.

FAX

WoodDraw
03-17-2010, 10:01 PM
It was actually an interesting case. The "servers" at this particular restaurant were also entertainers in that they sang and danced and did table magic and stuff. As a result, this guy had the great idea that he could prove them as "independents" to the IRS.

The situation went untested for a long time until one of these "servers" got pissed off and declared to the IRS that they were, in fact, employees ... under his direction and guidance, provided with a workplace, etc. Then, the hammer came down. Made the papers and everything.

FAX

A good friend of mine works as an accountant and he always tells stories about how he'll tell a business they're doing something illegal. They'll respond saying, "Okay, but what's the chance of anyone ever finding out?" - "Fairly small until you piss off one worker and they decide to report you."

KC2004
03-17-2010, 10:04 PM
A good friend of mine works as an accountant and he always tells stories about how he'll tell a business they're doing something illegal. They'll respond saying, "Okay, but what's the chance of anyone ever finding out?" - "Fairly small until you piss off one worker and they decide to report you."

If I own it it will be a payroll job. period!

Baconeater
03-17-2010, 10:07 PM
If I own it it will be a payroll job. period!
Well that's good, but keep in mind what was said in post #69 and #70. I would definitely talk to an accountant about that, that may very well be the real reason the current owner is wanting out.

ClevelandBronco
03-17-2010, 10:07 PM
If I own it it will be a payroll job. period!

The taxes that your employer is illegally shirking won't count as profits for you then. Take that into account. I wonder what else may be contributing to his bottom line that he really shouldn't be counting as his.

At any rate, it appears that he can't be counted on to provide you with legitimate revenue figures. Your accountant really needs to see both sets of books.

Bill Lundberg
03-17-2010, 10:15 PM
This isn't meant to sound crass, but you need a certified public accountant reviewing his books. An accounting minor is nice and all, but odds are she knows very little about current tax laws.

stlchiefs
03-17-2010, 10:16 PM
And, if you buy the business, you may become liable for the actions of the previous owner.

Exactly what I was getting ready to say when I got to this point in the thread. You'd be smart to get an impartial accountant and attorney in on this. I know it's a small town gig, but it can have a big time impact on your life if it goes south unexpectedly.

stlchiefs
03-17-2010, 10:17 PM
This isn't meant to sound crass, but you need a certified public accountant reviewing his books. An accounting minor is nice and all, but odds are she knows very little about current tax laws.

yeah, someone that knows about TPS Reports. :D

KC2004
03-17-2010, 10:18 PM
This isn't meant to sound crass, but you need a certified public accountant reviewing his books. An accounting minor is nice and all, but odds are she knows very little about current tax laws.

My wife has done taxes. Shes very aware of tax law and how soon it can screw you. Thats why if we buy this its a payroll deal.

WoodDraw
03-17-2010, 10:22 PM
My wife has done taxes. Shes very aware of tax law and how soon it can screw you. Thats why if we buy this its a payroll deal.

You need a lawyer too, though. She can't possibly know the complexities involved in buying a business, especially one that you openly admit has cooked books on the record.

Ebolapox
03-17-2010, 10:26 PM
My wife has done taxes. Shes very aware of tax law and how soon it can screw you. Thats why if we buy this its a payroll deal.

so you're aware of the fact that you'll be liable for back-taxes when (not if) the IRS finds out about the 1099 issue? as such, there's absolutely no WAY I'd take the bait.

jspchief
03-17-2010, 10:32 PM
Lol at the people up in arms about the 1099...

you guys have no idea how much this happens

DaneMcCloud
03-17-2010, 10:33 PM
I'm not going to read this entire thread but unless you have another source of huge income, do not by a bar.

90% of all food service restaurants and bars fail within the first year, leaving the owners bankrupt.

Unless it's a "toy" (i.e., you have hundreds of thousands of dollars coming in annually, let alone millions), don't do it.

DaneMcCloud
03-17-2010, 10:35 PM
Lol at the people up in arms about the 1099...

you guys have no idea how much this happens

1099 are standard business in Hollywood. From gaffers to electricians to set and costume designers and so on, 1099 is a standard practice.

wutamess
03-17-2010, 10:37 PM
Please, Mr. KC2004. I'm trying to help you ...

1. The owner wants to sell for personal reasons, right?
2. You already manage the place, correct?
3. The owner knows you can make a go of it, yes?

Sure ... the current owner would love for you to go into debt, pay him a lot of money for the business, and walk away. That's great for him.

If it were me, I'd let the owner carry the note for the purchase of the business. There are many reasons why this is the best route for both of you.

However, if you're dead set on borrowing money and investing that indebtedness in a bar, open a new bar of your own. You start clean.

FAX

This.

Read it. Study it. Live it. & Abide by it.
Burn out my ass... the owner wants a meal ticket because he's sick of the headache. His headache will become yours (with a shitload of debt).

If you want to do something like this, PLEASE PAY CASH FOR IT. Save up for it (the opportunity will ALWAYS be there. This isn't a once in a lifetime thing.

~ Learning the hard way.

ClevelandBronco
03-17-2010, 10:38 PM
Lol at the people up in arms about the 1099...

you guys have no idea how much this happens

Those of us who understand the law are throwing up a red flag in a thread that asks for our expertise. Nothing more, dimwit.

Renegade
03-17-2010, 10:41 PM
Watch Roadhouse. That's all you need to know about owning a bar.

Saul Good
03-17-2010, 10:43 PM
My wife has done taxes. Shes very aware of tax law and how soon it can screw you. Thats why if we buy this its a payroll deal.

I think you are missing the point. It's not just that you need to w-2 the employees. It's that the actual profitability of the bar may be substantially inflated versus what it would be if the wages were handled properly.

You've received a lot of really good advice in this thread, especially from FAX.

Don't take out a loan. If you must by the bar, pay the owner off via a percentage of the profits for the next X years. Interest on a note can eat you alive.

Beware of the owner's motives for leaving. If YOU run the place, why is HE burned out? Is he just tired of cashing checks from a profitable bar that he doesn't even have to run? Probably not.

Make him open up his tax returns. Screw his books. He'll probably want to show you how profitable he is in his books. He'll probably also want to minimize the importance of his tax returns by saying that he was able to finagle things to beat the IRS. Don't believe what he tells you. Believe what he tells the IRS. If his books don't match his tax returns, he's either lying to the IRS, lying to you, or both. If someone isn't worried about lying to the IRS which can throw his ass in prison, he's not going to be worried about lying to you.

Get a REAL accountant. Businesses fail because they can't keep their books as often as because they can't get customers.

I wish you luck, but some of your posts make me nervous. Let us know what bar it is if you buy it. I'd love to support the cause.

Buehler445
03-17-2010, 10:50 PM
Lots of good advice in this thread.

Getting P&L statements and Balance sheets are absolutely critical. You must get these. Or at least the information in them.

The biggest problem people run into is operating capital. You need a hell of a lot of it, and if you don't have it, it's expensive. I think most operating notes are 6-8%. That takes a huge nasty chunk out of margin.

Other things you should consider,

What and when capital expenses are needed.
Any seasonality necessary.
Regulations (beyond just liquor license) that are required.
Gross margin.
Breakeven <-- You should most definitely talk to a banker first and work out a cash flow with him so you can include interest expense.


There are a kajillion things you should do when you make a business plan, there are too many to list here.

On the whole though, I would recommend you not buy it. The fact is that it takes one hell of a lot of money to buy the shit you need to operate before you sell one damn drink. And I'd guess you probably don't have it (nothing against you, I know my fat ass doesn't have it.), and like I said before, getting it is expensive.

Baconeater
03-17-2010, 11:03 PM
Lol at the people up in arms about the 1099...

you guys have no idea how much this happens
Oh, I know it's pretty common in the construction industry and other service type jobs, but I've never heard of a restaurant or bar doing it.

jspchief
03-17-2010, 11:14 PM
Oh, I know it's pretty common in the construction industry and other service type jobs, but I've never heard of a restaurant or bar doing it.A lot of bars do it.

In fact, when it comes to paying taxes bars may be just about the dirtiest industry out there. Too much cash floating around, inventory thats impossible to track closely, cover charges, etc.

Mr. Flopnuts
03-17-2010, 11:22 PM
Heh, running a bar is a cash business.

Groves
03-17-2010, 11:27 PM
I think you are missing the point. It's not just that you need to w-2 the employees. It's that the actual profitability of the bar may be substantially inflated versus what it would be if the wages were handled properly.

This-ity This

sodcat
03-18-2010, 07:27 AM
I did'nt read thru all the post but I would offer up that good food is a big plus, not a 4 page menu but things that would make people return and non-drinkers come in to eat. A signature burger, finger food that kind of thing. Good luck to you!

Iowanian
03-18-2010, 07:58 AM
Have a 3 year business plan?
Fully understand your expenses for operation?
Does the building require any maintenance or repair?
How much are the taxes?
Have there been any incidents at the bar that put your license at risk?
Will existing deals with vendors come along for the ride?

Do you know many truely happy people that own bars?

SenselessChiefsFan
03-18-2010, 08:07 AM
My bar of choice has always been the crow bar. It comes in handy in many, many situations. Got a nail to pull? Crow Bar. Got a wall to tear down? Crow bar. Got a trunk to break into? Crow bar. Got a house to break into? Crow bar. Got a car to vandalize? Crow bar. Got a fight with someone who is twice your size? Crow bar. Got a friend locked in a coffin? Crow bar. Need to lock someone in barn that has two handles on the door outside? Crow bar. Got a woman that doesn't get you a beer when you ask? Crow Bar.

See, of all the kinds of bars in the world, the crow bar is the best. If you need any other advice, just let me know.

King_Chief_Fan
03-18-2010, 09:12 AM
Have a 3 year business plan?
Fully understand your expenses for operation?
Does the building require any maintenance or repair?
How much are the taxes?
Have there been any incidents at the bar that put your license at risk?
Will existing deals with vendors come along for the ride?

Do you know many truely happy people that own bars?

those are excellent.... I would add liability risks, insurances etc.

Dave Lane
03-18-2010, 11:29 AM
I've worked in this bar for 10 years. Just need a little business advice from anyone that has bought a bar or another small business as to how to go about it. I know my way around a bar i have ran it for years as the manager but I want to know the traps i could fall in as a owner.

The 10 richest people in America started and failed 7 businesses before they succeeded. Expect failure and prepare for it. That being said look for a niche Lady Gaga is a great example. Do something different, make the bar an experience. Cater to a certain type person not a bar for everyone and you will have a much better chance of success.

Iowanian
03-18-2010, 11:49 AM
be sure to get the sign that says "We fix $6 haircuts"

Mr. Flopnuts
03-18-2010, 12:08 PM
Have a 3 year business plan?
Fully understand your expenses for operation?
Does the building require any maintenance or repair?
How much are the taxes?
Have there been any incidents at the bar that put your license at risk?
Will existing deals with vendors come along for the ride?

Do you know many truely happy people that own bars?

I think the problem with bar owners is they spend their days trying to fuck over anyone they can, while worrying that everyone is doing the same thing to them. I don't think it's the business nearly as much as the type of personality it takes to run one.

Demonpenz
03-18-2010, 12:09 PM
Sometimes you eat the bar and sometimes well the bar eats you

Iowanian
03-18-2010, 12:13 PM
You'll find it's very difficult to borrow money for a bar right now too.

I know someone who has backing, is building a bar and didn't have an easy time. This person is planning on working a job and running the bar but I think the person underestimates the time it takes to run a business.

Whatever time you spend now working for someone else to run their bar...figure on adding 50% to your input time.