Buying a sports bar is a game with high stakes. If you buy the right bar at the right price you're a winner. Fumble the transaction and you lose. An existing sports bar has an advantage over starting one from scratch. The established bar has current customers, sales and a reputation with sports fans you can build on.
A sports bar requires a liquor license. Check with the state office and the city where the bar is located to see whether that license is transferable to you or if it stays with the business. If you must apply for a new license find out what's required. Some sports bars are franchises. The franchise may be sold with the business or be granted to the owner of the business on a personal basis. That means you have to apply, be approved and pay the franchise fee. Search court records to see if the bar has any outstanding lawsuits. The insurance company may require new applications from you as the new owner.
The current owner of the bar you're looking to purchase wants to present his property in the best light possible to get the highest price. Review the financial statements carefully. Compare them to industry standards. For example, cost of beverage should be between 20 to 30 percent. Cost of food should be between 25 to 30 percent and labor costs around 20 percent. If costs are considerably different, find out why. Look at accounts payable to see if the average days outstanding is increasing, a possible indicator that the bar isn't paying its bills because of financial difficulties. The more you find out about the bar, its finances and performance, the better your negotiation position. Check out other sports bars in the area to determine the level of competition. Review what marketing strategies have been implemented for the bar.
The owner of the sports bar most likely has put together a presentation package to sell the sports bar. You need to develop a business plan of your own for the bar's future. That plan should cover your concept for the sports bar, which may not be the same as the current approach. For example, the current bar may appeal to older sports fans, while your concept is to develop the bar to appeal to a younger, trendier, upscale crowd. Include the concept, market niche, marketing strategies, competition and projected profit and loss statements for the next three years in the business plan.
Line up a source of funds for the acquisition. Unless you're paying for the bar completely with your own funds, you most likely will need a loan. The lender will request the business plan you developed, three to five years of the bar's financial statements and your personal financial statements. Don't be surprised if the lender also requires you to personally guarantee the loan.
Your objective is to buy the bar for the least cost, while the owner wants to maximize his proceeds. Finding out why the owner wants to sell may give you some insight into negotiating. One option is to agree to a higher price in exchange for the owner receiving part of the payment over time, effectively requiring her to lend you some of the money to buy her out.