So you’re looking into starting a bar, but are having enough of a hard time getting the cost for the down payment, the liquor license, the costs of advertising, the cost of redesign and costs of hiring a staff, before you even start thinking about the bar equipment.
One of the major costs that goes into to Starting A Bar or nightclub comes from the upfront bar equipment costs. Not only are there large upfront costs to buying coolers, ice machines, coffee makers and dishwashers, but there are additional costs for insurance plans, maintenance and costs for replacement when they break down.
As an attempted solution to this problem you may be tempted to buy used bar equipment. Many new bar owners fall into this trap only to find that the cost of maintaining and then replacing used bar equipment ends up being more of a headache than it is worth. Not only that, but broken equipment does not make for the best bar experience for customers and employees either.
One solution to consider for this problem then, is leasing bar equipment.
The Benefits of Leasing
There are certain key benefits to leasing your bar equipment:
- If your leased bar equipment breaks, you don’t have to go to the expense of fixing it. If the bar cooler suddenly stops working, for example, you just return it and order a new one. It is one of the benefits of not owning.
- Leasing bar equipment will also save you on start-up costs. This is a big one. A bar cooler, an ice machine, a kegerator—these can all run you into the thousands of dollars. Even if you decide to buy used bar equipment, you are still looking at a substantial increase in your starting cost. In addition, as mentioned before, used bar equipment is more likely to break, forcing you into repeated expenses.
- When your lease is up, you can usually choose to renew with a newer model, thus never having to worry about having old, unreliable equipment.
- There are also some pretty good tax breaks for leasing, since this counts as a recurring fee year on year.
What bar equipment to lease.
Generally speaking there is some bar equipment that is ideal for leasing:
- Bar Cooler: Bar coolers are good items to lease because they tend to be so expensive. Additionally, if you are looking to get more than one cooler—say a larger cooler for the back room and a couple of under bar coolers, you can often get a lease deal that is a little better for the three together rather than getting them individually. This will also simplify payment and other transactions since you will only have one company with which to deal.
- Ice Machine: Many bar owners if they choose to buy just one item, choose the ice machine. This is because of all the bar equipment, this is the one that is the most likely to cause problems. Something about the combination of creating ice and keeping things just the right temperature seems to be hard to balance. Having a leased ice machine can often save a lot of financial headaches. (Also, generally speaking of all used refrigeration equipment, the ice machine is definitely not one to get unless you really like to tempt fate.)
- Underbar Kegerator: I am not a huge fan of leasing a kegerator, since it is the least expensive of the equipment I have mentioned so far, and since kegerators are such simple equipment they are unlikely to break. But if you really need to save money early on, you might consider this when first buying a bar and then purchase a kegerator later.
Tip from the Pros: Remember, however to read the fine print when it comes to your lease since not all leases are created equal. You want to make sure that the terms of your lease suit your needs and your business. Get your financial consultant to check it out before signing on the dotted line.
There are also some kinds of equipment that I am not quite as crazy about recommending anyone lease. I am not a big fan of leasing a personal computer since should something go wrong, they might be able to take your computer along with your personal information.
I am also not completely sold on leasing your Bar or Nightclub POS system for a few reasons. In my experience these tend not to break very often, so you don’t really need to pay a recurring monthly fee for them. Second, I’m not sure how beneficial it is to upgrade a POS very often since doing so tends to cause havoc in terms of efficiency as your employees are forced to relearn the system.
Leasing, however, can definitely be an option for some bars as cost savings measure.
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