Taking over an existing bar is the quickest way to get up and running. The previous owner can leave customers, stock, and staff in place and hand you the keys. You have a built-in clientele and staff that know the bar, maybe better than you do.
You may pay more for an existing bar because assuming you buy a successful bar, it’s already making money. You won’t wait as long to make a profit, depending, of course, on how much of it you’ve had to finance.
Here’s a list of additional financial things to keep in mind if you’re taking over an existing bar:
Taxes: Make sure that all taxes incurred by the previous owner have been paid. If there’s anything outstanding, make sure you agree on a plan for taking care of those costs and put it in writing.
Stock: If you’re buying the stock (glassware, bottles of alcohol, appliances, furniture, and so on) in the place, make sure a detailed list is included in the contract. Then, the night before you close the deal, or maybe a few hours before you sign on the dotted line, make sure that everything that you and the seller agreed to is still in the bar.
At this walk-through, if the bar isn’t in the condition you’ve agreed upon or if the stock is missing, do not close the deal. Wait for the lawyers to work out the details. At a minimum, you should be compensated for any items that are missing or the cost involved in returning the bar to the condition you agreed upon.
Loans, liens, or tradeouts: Confirm that the current owners haven’t taken any cash advances against future credit card sales. Make sure that they don’t owe anyone any existing tradeouts that you’ll be responsible for.
A tradeout is often an unwritten agreement between two businesses to trade services rather than cash. So, for example, you may get free advertising in a local paper in return for sending the editorial staff lunch once a month. Also, double-check that there are no liens against the business.
Taking over an existing liquor license: The fewer licenses in your area, the more the liquor license will cost. Like any commodity, the laws of supply and demand apply. So before you look for a spot to buy or lease, see whether a liquor license is available or for sale.