Buying a bar

Hi Will

I might be able to answer a few of your questions, email me at count888@yahoo.com if you're interested.

Dave

Dear Will,

It would probably behoove you to seriously reconnoiter the bar/restaraunt scene here extremely carefully and with the utmost due diligence before even minimally seriously contemplating an investment in such a venture.

Selling the Brooklyn Bridge?

Be wary, be very wary!

You can PM me at any time AFTER you've done your research.

There's an old saying - How do you get a $1 million operating a business in the islands? Answer - start with $2 million. Seriously, when buying a business you have to be very careful and do your due dilligence to fully check out everything. There are lots of pitfalls but if one is careful they can succeed. Whether you purchase an existing business or start up a new one from scratch depends on the individual. Also just because you purchase a successful on-going business doesn't mean it will continue to be a success. Much depends on the new owner and how hard they are willing to work. Keep in mind that oftentimes people are selling business for a reason and that should be enough to make the potential buyer sit up and take notice. Another thing to remember is on-going business are usually on the pricey side. If they are successful you'll pay a high premium for goodwill. If the owner has been loosing his shirt he still try to get some money back so the business might be overpriced. You should have a good business sense and knowledge of accounting in order to check out the books. If finance is note your forte consider hiring an accountant to help you evaluate the business prospects.

To answer your other question regarding housing, people rent simply because they can't afford to purchase a home. Real estate prices in the islands are significanty higher that you find in comparable areas back in the US.

If you are serious about moving to the islands and starting a business plan on bringing sufficient funds with you to cover all your start-up costs and still leave you with a comfortable cushion to take care of all those unforeseen expenses.

Good luck in following your dream.

Anyone who wants to own a bar, in my opinion, must have more than one screw loose. Hopefully, no one who already owns a bar and reads the messages here takes offense.
However, I don't think people who think they want to own a bar because it sounds like a good time and a way to meet cool people stop to consider what hard work it is. It's not all sitting on a bar stool waxing poetic and drinking fruity cocktails.
What do you do when the help doesn't show up? What do you do when someone gets drunk and stupid and starts a fight or worse. Have you ever had to clean up vomit? Who plunges the toilet after it's been clogged and others have gone on top of it? Have you ever had to stoop over after working a long hard shift all night on your feet to stock a beer cooler after carrying case after case from the storage area to the bar? Do you like working nights, weekends and holidays? Do you plan on going to the beach during the day because you work at night? Ha! Do you enjoy your healthy pink lungs?
I'm sure people who own or work in bars can come up with other examples of why you don't want to own one. I'm sure it's a dream come true for some. Obviously, there must be positive aspects to being the owner, but I'll gladly remain just an employee.

Read "Don't Stop the Carnival". Seriously. Read it.

The reality is that the businesses that make money don't come up for private sale very often. Some businesses scrape by if the owners personally put enough of their time into running them. Good help is hard to come by. Getting good help to show up on time every day is impossible. Many bar/restaurant businesses fail in the islands and go through owner after owner after owner. The reasons for failure have been many.

Some new owners don't have enough capital to make the initial investment plus extra working capital to handle overhead and cash flow... plus more in a reserve/contingency fund to replace/repair broken equipment, replace stolen product/equipment, pay for emergency supplies when the regular supplier doesn't get his shipment in, etc.

Some new owners have no idea how to run a business. They think this will be a game and they and their friends can hang out and drink shots all day and somehow the vacationers will keep them in business and they'll all get rich. It doesn't work that way.

Some new owners who are a couple when they start the business find themselves working opposite shifts to stay on top of things. The next thing you know their relationship/marriage is over and the business is back on the market.

Some new owners simply find out that there isn't enough profit in food sales to cover the costs of keeping a restaurant running. If you don't have enough income from alcohol sales to take care of the rest of the bills, you'll be in the red every month and soon go broke. A slow tourist season or a band not showing up for a major event can wipe you out quickly.

Even so, there are some businesses that make a go of it. I'd suggest finding such businesses and researching what it is that makes them different and able to stay in business. Some have a niche in the market such as a popular type of food or micro-beer. Others have a premium location. Some provide exemplary service that keeps both locals and tourists coming back again and again. In any kind of food/beverage business, the owner needs to be totally on top of the finances/costs/labor/supplies/menu/advertising/etc. Keep your costs down and your clientele coming back and you just might make it through your first year in business.

Hey Will

You asked a great question and got some great answers.

Some years ago...I bought a local's bar in a resort area..

My wonderful fantasy come true...

I tripled the gross income...

Bottom line...I worked 15 hours a day...ended up divorced and

"bankrupt"... I started my life all over...found new wonderful
wife ..etc...etc

If you are doing well investing ...keep doing it and enjoy your "buddys' bar...have fun. Come to the islands and enjoy them....do not buy a bar or restuarant...

Will,
I currently own (3) restaurant/bars in the Philadelphia area. It is a very tough business and there is NO guarentee you will make money. It requires alot of time to see things run the way they are suppose to run. If you never owned a restaurant or bar before I highly suggest you have someone, who was in the business and was successful, guide you through the first year. If not there will be many mistakes to be made. Another little thing you should be careful of: if your busy for the first few months, or even the first year, don't let that lore you into being complaintent. It is very easy to think the business will always be there. Guess what......it could disappear very quick. There's always the "new" place opening and everyone wants to go there. Sorry for being so negative but this business isn't as romantic as people think. Any questions feel free to email me.

BTW what type of trading to you do?

Lou

WIll,

Do you want to know how to leave the islands with a million dollars?

Bring TWO million!

An attorney friend of mine told me that when I first arrived. While it is an old cliche, it holds true here... especially in the bar business.

You have some good advice here on this thread.

I met a young man who came down with his inheritance looking to buy a bar, even though he had no experience. Even the realtor was hesitant to have him part with his money on such a venture. It turns out the landlord would not let him take over the lease because he didn't have experience, and they didn't want to have a business close up in their property. As it was explained to me, too many people come down here with a fantasy of owning a bar. Often, someone who had the same dream (turned nightmare), is the one selling you their fantasy. Sadly, some people will pay almost anything for their dream, and don't find out until the ether wears off they that paid too much.

Thanks for all the advice (weather its posotive or negative). Im not some inexperienced kid coming down to try and get rich opening a bar. Nor am i someone new to owning buisness and running them. Ive worked in bars for my family for 6 or 7 years now and learned all the ropes from financials to managment. When my parents would take vacations for weeks at a time i would run everything, people would think this 15 year old kid owned the bar and from that i would meet people who gave me opportunities to work at restaurants to telecommunication companies. I am very buisness oriented and i know the drawbacks of owning a bar. The long hours dont effect me seeing im young. I dont need to make my life off of the bar, like i said before my money comes from day trading and long term stocks, not owning a bar. I asked the questions because i wanted to know if you guys were open to having a mainlander come down and open a bar, i was planning on paying my employees very high wages and keeping my customers happy, im good at doing all this even though it could result in my not making a high return on my investment. I wanted to open the bar in the virgin islands to be around new people and have a good time in the beautiful US Virgin Islands. Sorry everyone is so negative thinking most likely I would just fail and thinking im just some stupid kid trying to get rich quick. Its not like that at all but then again im sure you guys have seen many people come to the islands and fail. Maybe ill start looking at other places to move. Thanks for the help though. Have a great day in paradise,hope its not snowing like it is up here.

~Will Longobardi

Will,
Help me understand the business sense of buying a bar that you "dont need to make my life off of" just so you can "be around new people and have a good time in the beautiful US Virgin Islands" when you can do that by simply being a patron?

Will: You are correct. When you live here, you see a lot of folks with starry-eyed ideas about life in Paradise. You asked about mainlanders buying businesses. IMHO- I will say that I am usually very suspicious of stateside folks opening new spots. Because of the huge difference in culture here, I would recommend that maybe you get a job in a bar, see what it is like for a bit before jumping in head first. You sounded a bit sarcastic in your response above. People were seriously trying to give you advice. Don't kill the messengers.

Will - your initial post asked about buying an established bar where you could make a decent amount of money. What everyone is trying to tell you is that the bars that do make money aren't the ones that typically come on the market. Yes, it is possible to make money with a bar. It requires an owner who will be very hands-on, realistic, financially stable without requiring the bar to be their only source of income, and preferably experienced in the industry. Having the right venue is also of paramount importance.

In answer to your other primary area of concern: No, people here will not object to someone from the mainland coming down and buying a bar/restaurant. It happens all the time and we don't boycott the new ownership. Most bars have a group of locals who hang out there and you will inherit those customers. Figuring out how to expand the business from there is up to you.

The concern expressed here by the other posters wasn't at all about saying you're some stupid, inexperienced kid hoping to get rich quick. We have all seen new restaurant and bar owners come and go with painful regularity. A few of them have been young, but by no means all. The younger ones usually have more energy and put more of themselves into the venture.

If you're young enough to battle the odds and have enough income to keep you going while you figure out how to cope with the way things are done in the islands, then there's no reason you shouldn't give it a try and chase this dream. It would be harder for someone in their 40's or 50's to recover from the potential financial loss if they tried this and ultimately failed.

Go in with your eyes wide open and do your homework up front. There is a lawsuit right now where the buyers of one bar want to sue everyone who ever owned it before they did because they didn't have the business savvy to complete their due diligence before buying a bar.

Best of luck with whatever you ultimately decide to do. I can provide you with info on some of the bars/restaurant opportunities that are currently available on STX if you want to pursue this further.

Dear Will,

I do take umbrage at your perceiving the advice given to you as "negative" and then postulating about all your experience (and I'll even forgive you all your misspellings!)

You posted to ask for advice and you were given it from some very knowledgeable people who also offered options in an effort to get you off on the right foot, as in come here for a PMV and do your research, discover what the islands are all about.

You may be a whizz in Connectcicut doing your thing there and you're all gung-ho about fulfilling this dream - but allow me to tell you, m'son, that doing business either here in the USVI or on any other Caribbean island will be toadally wasteful for you unless you properly do your research.

Will, you're very young but I don't think that anyone who initially responded to your post considered that to be an issue. The posters on this board really don't care what age you are, what you've done, where you come from or who your family is - it matters nothing here at all and it's too bad that you just don't get it.

You asked for advice and you got it. Hey, we tried. Humility is a virtue but virtually biting the hand of those who amiably try to assist you is really not very nice at all.

The very best of luck to you!

I would just throw my $.02 here - Your statement might be true for Texas or Idaho but from my research USVI housing costs don't hold a candle to where I live, in one of the 3-4 US real estate markets (Boston, New York, San Fran). In these places it's hard to buy a 1 bedroom apartment for under $200K, and it extends into the suburbs as well. I live 60 miles west of Boston and my modest raised ranch in the middle of nowhere cost about $300K.

Getting to the poster's original question - the pitfalls of bar ownership and starting a business have been discussed in detail so it's really not worth belaboring. Let me just ask the obvious here -
If you're making good money trading stocks, why stop and risk all your hard earned assets trying to recreate The Complete Angler? You can trade stocks from anywhere - particularly a sunny tropical island.

Isn't Duffy's up for sale?

A newspaper recently reported that Kon Tiki Party Cruise in St Thomas just closed its operation. Contact the owners and see if you can revive it.

Many good businesses available for sale are never publicly advertised. So check with various brokers, or hire one to find one for you.

Given your passion, entrepreneurial education & your prior business experience, you'll do well in this biz anywhere.

RUMOR is Kon Tiki cruise boat was unsafe for the seas and coast guard would not allow them to take passengers out.

Just a small scrap of info re: Kon Tiki. One of their destinations was Honeymoon Beach. Water Island residents were none too keen on trash left on the beach from Kon Tiki passengers. So, my understanding that there were discussions and WICA & Kon Tiki agreed to help each other to keep Honeymoon Beach clean - mutual sharing of costs for clean-up. Each party sharing responsibility. Also, Kon Tiki Captain needs to be encouraged to take charge of the "red tongues" (i.e., tongues that have swallowed 151 Rum Punch) as they can have "too much fun" and create problems (safety and otherwise - like taking joy rides in golf carts and/or other vehicles). Both issues are easy to fix but can snowball if left unattended.

Gosh I remember my first Kon Tiki....say it isn't so. Are they really closed?

YES!

Oh Lord and how the gossip-dem fly. The annual inspection by the Coast Guard of such recreational marine transportation has been upped ad nausea by the Bush administraton via Homeland Security. As in travellers on the ferry from St Thomas to St. John being subjected to "random searches" and being required to show identification or passport or both - all for a simple ferry trip from one small island to another, within the same jurisdicton!

To stay on point, it seems that the Coast Guard inspectors came up with a whole bunch of reasons for the owners of the Kon Tiki to spend a whole lot of money to improve and fix things that had never before been an issue. John and Judy obviously took the business-like practical approach and finally said, "f*** it." They have other Kon Tiki operations going on elsewhere outside U.S. territory so leaving here isn't exactly going to break their bank.

And thus departs yet another great and popular business basically "done in" by the Bush administration's directives...

The owners have opted out of doing all the improvements necessary for Coast Guard approval, so it's no longer going to be around unless you want to buy it and bring it up to code.

RL

Buy what? If they're going out of business there is nothing to buy...although they had a good relationship with the cruise ships. I wonder why they aren't just fixing the boat?