Sports Bar Project Issues - Essay Example

Sports Bar A. Project Premier Sports bar is a new destination that offers s with an opportunity to socialize, eat, and drink as they watch televised sports events. The bar location is at Chilton county in Alabama state. This will be the third sports bar in this region. Though there are other sports bar in the region, Premier Sports bar will be established in a way that will ensure that the customers have more fun and leisure during their dining time. The bar is expected to provide more televisions with a variety of sporting events. This will help differentiate the bar from other related businesses in the region that focus on men football sports. Premier sports bar will be organized as a partnership between James John and Peter James. The duo will be solely responsible for the day to day functioning, purchasing, staffing and scheduling. Partnering is essential to enhance the viability of the business especially in finances and management. The partners will contribute part of their personal saving in order to begin the business. In addition, the partners will take a loan to supplement their funds from their savings. The loan and the savings will provide a start up to cater for the business building, supplies, licensing, paying permits, training employees and any emerging issue. This sports bar is expected to be opened on December 10th, 2013. This date will create an opportunity to meet new customers at the beginning of the New Year. Customers will be prevented from background noise by developing state-of-the-art-table-top audio control. This will be placed on each table to enable customers select their program of their choice without interference form the background noise. Atmosphere, menu selection and lighting and other services will be combined in order to create a sense of excitement. This will help in achieving the business goal of integrating entertainment experience with dining. The business will employ a supply chain that provides market for both local and regional brewed beers. In addition, the food used will help in complementing a sports atmosphere. This project is beneficial in different ways. First, the project promotes the use of technology and hence enhances productivity. In order to retain customers, the project will be expected to use current forms of technology in entertaining customers. There will be special joints for children and adults. For children, it is expected that they should have their own sports instruments. The project will also promote healthy lifestyles by providing customers with varieties and customization. Third, the use of individualized audio gadgets will help in reducing noise pollution. This will make the business environmental friendly. This will create a positive image toward this form of business. Fourth, this project will promote the development of both the local and regional market. Through purchasing of both local and regional beers, these markets will expand and enhance chances of survival in the ever changing economy. Last, in three years period, Premier business aims at sponsoring one local community team in a step of giving back to the sporting community. The team will either be a hockey, soccer or baseball. The team will have a premier business logo printed on the back of their jersey. The management will provide drinks and special foods to the team they support during their game nights. B. Risks of the Project Opening a sports bar is an appealing idea. However, implementing this idea exposes one to certain risks that threatens the survival of the business. While developing Premier sports bar, there are a number of expected risks. The risks range from physical to financial situations. Premier sports bar expects to encounter financial risks in different situations. First, the business is aiming at maximizing the use of current technology in its entertainment. Maintaining consistency with current technology is not an easy task. It requires finances for evaluation and making changes where necessary. In addition, as the business aim to support a local team, it will require finances for sponsorship. As the business expands, it will require more funds to cater for the increasing needs. Last, like any other bar, a sport bar is exposed to tax obligations that are normally high especially toward alcoholic drugs (Liane 6). This risk will be managed through the development of different events in the bar that will help in generating extra income. For instance, it will offer a variety of sporting events. The second risk that Premier sport bar expects is the problem of assaults. Cases of fighting in bars are common not only in the United States but around the globe (Bieler and Roman 3). This risk can lead to the participants obtaining body injuries. In addition it may lead to destruction of property in the bar. Assault at bar is caused by different factors. They include racial, ethnic, or biasness, drug dealing, and underage drinking. Other factors include the drinking culture, aggressive bouncers and competitive situations. When these situations are not controlled, they result in fighting. Many bar managers normally do away with assault cases to maintain their reputation. In this project, the risk of assault will be managed by ensuring that strict guidelines are in place to reduce chances of assault occurring. In addition, the bouncers will receive training that focuses on customer protection. To avoid conflicts, the management will be conducting regular evaluations in order to organize the business in regard to customers’ specifications (Alonzo 15). The sports bar also expects the risk of environmental issues. Noise pollution is the main environmental risk that the business can encounter. While watching the sporting events, the customers may respond by screams and shouts as they celebrate their teams. It is not easy to limit the customers on how to celebrate and cheer their teams. This may be worsened in cases when the customers come in large numbers. To avoid the effects of noise pollution, the business will be located away from residential areas. Second, the building will be designed in different units that will separate children and adults. Most of audio devices will be in hands of customers to encourage customization and making personal choices. Finally, the project is likely to encounter political and community issues. This risk emerges from the location of the business (Liane 6). Both the political and environmental environments have different ways they receive the bar businesses. The risk varies depending on the nature of the bar. In this case, the risk of Premier sports bar being accepted is higher when compared to that of a night club. Communities are known not to tolerate businesses that compromise corporate social responsibility. With this project, the management will work hard to strengthen its relationship with the surrounding community. For instance, the management will be keen to ensure that there are no drug dealings, respect for environment, and protection of children against the use of drugs. C. Project Plan As explained earlier, Premier Sports bar will be located at Chilton County in Alabama State. The business building will be rented in Thorsby town. Its dimension will be 3400 square feet in size. Some remodeling will be done on the building as a preparation for its grand opening. This location is suitable because the joint is one of the best in Chilton County. It attracts numerous visitors in the region. Placing the bar in this town is a strategy to win walk-in customers especially during summer time events as they come to view the most interesting landscapes in this region. Its location near the road will help customers walk in for entertainment or simply take a drink. The business will require different facilities in designs as some improvements is made on the building. The purpose of this project is to come up with a unique sports bar that will provide customers with an experience and atmosphere like no other bar. The kitchen area will be about 1000 square feet. The rest 2400 square feet will be left for other different sections of the sports bar. The bar will carry 50 people who can sit around the 12 tables. There will be extra stools located in front of the bar. This is to create space and open room for socialization. There will be game areas for hockey table, and pool table. A room will also be set aside for setting up of special events like a band. Customers will be provided with many viewing options to ensure the successes of the bar. Every seat will be placed in a position that every customer will comfortably watch a television. There will be four televisions in the bar area, three over the game area. Finally, the biggest television will cover the wall of the Kitchen area. The walls will be covered with memorabilia that can be changed frequently in order to excite the returning customers. The old memorabilia will always be auctioned in a moment of remarking a particular special event. Generally, the sports bar will need tables, chairs and bar stools. A touch screen point will be used by customers to ensure that transactions and orders from customers are made easier. In this project, there are specific hours of operation. Premier Sports bar will be operating seven days a week. This is to ensure that customers can watch their sports during any day of the week. The business will be operating weekly basing on the time schedule below: Monday to Thursday 11:30am to 11:30pm Saturday 10:00am to 2:00am Sunday 12:00pm to 11:00pm The bar will be closing by 11:00pm from Monday to Thursday because it is expected that in these days most customers will be going home immediately after a sporting event. Conversely, the closing time for remaining days will be beyond 11:00pm because customers are likely to remain after a sporting event and buy some drinks as they enjoy music. Finally, the project will require a number of human resources for the success of its tasks. During the first month, the business expects an increase in the number of labor costs. The cost is expected to reduce as the business stabilizes. Employees will be hired through a competitive and secure hiring process that will enhance the business competition place. The key human resources include the bartender, head chef, servers, bar manager, and cooks. D. Financial Plan This project growth will obtain support from contribution of $3,000,000 from the partners. In addition, the project will also take a short term loan of $900, 000 all totaling to $390,000,000. This will help the management to take control over the pub as it grows slowly. Assumptions This financial plan is based on three assumptions. First, there will be a slow-growth in the economy and no most important recession will occur. Second, it is assumed that sports will remain popular in America and that there is a need to develop more sports theme venues. Finally, it is assumed that the project will have sufficient access to capital. The following is a summary of the assumptions. Project assumptions Year 1 Year 2 Year 3 Current interest rate 12 12 12 Long-term interest rate 15 15 15 Tax rate 20 20 20 Other 0 0 0 Financial indicators Inventory turnover is the key financial indicator. In restaurant businesses, it is believed that turnover is normally more than 50 (Alonzo 86). In most cases, products are bought and sold within a week. Therefore, the food cost will be maintained below 33 percent. Conversely, beverage costs will below 22%. With this indicator, it is estimated that sales will be increasing from year to year. Operating expenses will also increase. Finally, inventory turnover will also reduce as time changes. See the following chart Benchmarks Revenue sources Premier will generate revenue from sporting events, and selling of drinks and foods. It is estimated that during the first year, revenue will be $1 million. In year two and three, it will be $1.5 and $1.8 million respectively. Break even is expected in year two. See the following table which provides a summary of financials in dollars. Year 1 Year 2 Year 3 Revenue 1,045,250 1,590,589 1.784,690 Gross profit 152,000 394,000 495,000 EBIT 70,388 112, 600 186,900 EBITDA 31,605 169,500 117,500 Net Earnings 95,001 92,354 113,320 Growth (Revenue Growth Rate – CAGR: Net earnings Growth rate – CAGR: 50% 12% Ratios (Current Ratio) 3.7 1.9 2.0 Profitability (Gross Profit %) 13.3 24.7 29.4 Operating expenses % 15.4 16.6 17.7 Net earnings -2.1 8.1 11.7 Revenue Drivers Premier sports bar expects a number of drivers on its daily revenue. The business is expecting to serve an average of 200 customers each day during the first year. The number is expected to vary during different kinds of days across the week. He number is obtained from the overall sitting capacity and hours operated per day. In addition, capacity utilization and turnover rate has also been used. Turnover rate is derived from the respondents who said that they are likely to stay in a bar for a minimum of 3 hours. The project also has cost on some cost of revenue assumptions. They include cost of sales and salaries. On average, the cost of sales is expected to take 25% of the revenue. Salaries will cost 23% of the revenue. Salary percentage may vary in cases where extra personnel is needed Works cited Alonzo, Roy. The Upstart Guide to Owning and Managing a Bar or Tavern. 2nd ed. Fort Lauderdale: Kaplan Publishing, 2006. Print. Bieler, Sam, and Roman, John. Addressing Violence and Disorder around Alcohol Outlets. Columbia: The Urban Institute, 2013. Print. Liane, Cassavoy. Start your own Bar and Club: Sports Bar, Night Clubs, Neighborhood Bars, Wine Bars, and more. Irvine: Entrepreneur Press, 2009. Print. Read More