Putting up and running your own bar sounds like a good business idea in Kenya at the moment. But are you up to it? Running your own bar requires careful planning, hard work and long hours. All you have to do is research carefully and set your goals properly. In this post, we are going to highlight some of the factors you have to put into consideration before starting a bar business in Kenya.
The most important aspect of starting a bar business in Kenya is the location. Before location hunting, decide on what you want your bar to look like and the kind of customers you want. Then make sure it is accessible and has sufficient parking.
After you’ve found a location, study the area and its demographics, your competitors, and other factors like rent. Rent is important because your bar may be packed night after night, but you’ll have to close it eventually if you’re making just enough money to pay the rent. You don’t require a huge space to start a bar business, it can be expanded later as the business grows.
In the recently passed Alcoholic Drinks Control Act 2010 — commonly known as Mututho Law — the alcohol industry has become more regulated and, consequently, the initial high start-up cost is required to cover licenses.
Basically, the following legal procedures and licenses are required;
- A liquor license that costs Sh50,000 in urban center / 15,000 for rural areas – This will be renewed yearly.
- Approval by National Environment Management Authority NEMA – Ksh3,000MCSK License – Ksh3,000
- Nairobi City Council license for registration of the business that attracts Sh3,500.
- Furthermore, you will be required to pay for a health certificate that attracts Sh3,500.
Requirements for setting up
The requirements for setting up depend on your long-term goals and capital constraints. An average bar requires up to Ksh 500,000 while a big one can cost you up to Ksh 2 Million.
On average rent, prices range from Ksh 70,000 – Ksh100,000 depending on the location. For employees, you can start with four to six waiters and waitress, remember that you are just starting up. For the decor and layout, you can spend up to Ksh 100,000 because they determine the atmosphere that customers experience. You will also need to have an automated payment system (POS) so that you can track the sales easily. As the proprietor, it’s advisable to be controlling matters of finance and management at the start. Alternatively, you can hire an effective manager. The competition is stiff, and you will have to be always on your toes to stay ahead.
On Fridays, you can hire a DJ for the purposes of entertainment. Remember that this is an investment, you must learn to give all it needs to make it a success ( good ROI)
- Licenses – Ksh70,000
- Furniture (Shelves, Display area, Tables, Chairs etc.) – Ksh 100,000
- Insurance – 30,000 ( 1.5% to 2% of gross sales)
- Music system – 70,000 + 2 Flatscreen Tv – 90,000
- Salary for the Waiters- 60,000 – 4
- Security – 30,000 – 2 bouncers
- Stock – Ksh200,000
- Miscellaneous – Ksh100,000
The first challenge you are going to face is intense competition. You will need to provide quality services and best prices in order to retain old customers who will, in turn, keep coming back with their friends. You also need to appreciate the challenge that you can only open your business from 5.00pm – 11.00pm on weekdays and 2:00 pm – 11:00 pm on weekends and public holidays.
At the start, it will be difficult to procure your products directly from the manufacturers as you have to gain a relationship with them, which will be built with time as your yearly turnover also grows. You must also learn to deal with dishonest or inefficient staff and customers fighting or using drugs. Here, I recommend tight security and good relations with the police station in your area.
You will need to invest significant resources in marketing your bar. The idea is to create buzz about your business and to bring large crowds into your establishment as soon as possible. Discount are useful startup marketing idea, but they may require enough reserve capital to absorb operating losses during the first few months of operation.
Another challenge you will face is the time commitment and hours of operation. If you are an early riser, you might not enjoy having to work until 3 or 4 am at your bar. If you have a family, you need to discuss how owning a bar will affect them. Many days you will have to be at your bar from the time you wake up–say, around 10 or 11 am to the time you go to sleep that is around 4 or 5 am.
As you can see, this could take its toll on your family life. Also, if you’re the kind of person who would rather deal with paperwork or sit in an office where you don’t have to talk to people, this business is not for you. You will need to be out there talking to people and shaking hands!
All the best!