- Challenges: Just like any other business, the challenges are quite a number like the high overhead costs.
There are people who want to take drinks on credit.
“Once in a while, you have to give debts but don’t make it a habit because you are running a business which has to sustain itself,” Mr Ssali shares.
He adds that you should know the customers’ drinking cap and when they reach it, don’t add them another debt.
Have you saved money but wonder where to invest it to make a profit? You could consider selling juice and alcoholic products in a bar. This is a place where drinks such as beers, soft drinks and some eats are sold and it can be set up in any place especially trading centres with many people.
Bar market structure is wide since people like convening together after a long day over some drinks. This also happens throughout the year, peaking during public holidays and festive seasons.
So, what does it take to start a bar business?
For starters, if you want to attract good clients, you need to set up a friendly “home away from home” facility and this needs money.
Mr Henry Ssali, who has a wealth of experience in bar business, tells Prosper Magazine that it is a profitable investment if you follow certain principles.
On average, according to Mr Ssali, you need about Shs30 million to operate an attractive bar. This means you need a good sound system because bars go hand in hand with music, a TV screen for people to watch football matches, cozy furniture and uniforms for employees, stock and glasses among other things.
For those who can start small, say along the roadside or in open places, Mr Ssali says the investment can be between Shs10 million and Shs15 million.
To do it on a big scale, you need an investment worth Shs200 million.
According to Uganda Investment Authority estimates, this business idea on a large scale is premised on selling five crates of beers and soft drinks, 10 bottles of spirits and five boxes of water per day.
With such a breakdown, the total investment requirement is $7,480 (Shs27 million) for the first year of project operation.
The revenue potential is estimated at $665 (Shs2.4 million) per day translating into $207,480 (Shs757 million) per year with a net profit margin of 19 per cent.
A bar has no complicated technology involved because it involves a working table, refrigerator, waiters and waitresses for serving the customers.
Its process description involves purchasing crates of beers, crates of soft drinks and boxes of water in large quantities and selling them to customers in small quantities for immediate consumption.
Mr Ssali shares: “Location matters a lot when establishing this business, in terms of clientele you are going to host. It should not be set up in residential areas or in slummy areas if you want to attract good clientele,” Mr Ssali shared.
The other issue you should consider when establishing this kind of business is having a variety of products to serve.
“People want to have different experiences from different products on the counter. So variety is very important,” he adds.
Good customer care like any other business will keep and bring you more clients in this business. Make sure the employees are honest and quick at serving the clients.
Supplementing on this, Mr Newton Buteraba, the chief executive officer of House of Wealth –a local firm that offers business advisory services, said in this business you must manage the inventory well and the employees.
He adds that in order to survive in this business, it would be wise to start where there are other bars.
“This means you will be able to tap into the customers of other bars who may not like a thing or two about your neighbours. So you will keep in business instead of operating in isolation,” Mr Buteraba adds.
The government has set up institutions and associations to train people on how to generate profits from their businesses, for example, the Private Sector Foundation of Uganda.