Are you interested in starting a nightclub from scratch? If YES, here is a complete checklist for starting a nightclub with NO money and no experience.
Okay, so we have provided you an in-depth sample nightclub business plan template. We also took it further by analyzing and drafting a sample night club marketing plan backed up by actionable guerrilla marketing ideas for night clubs. In this article, we will be considering all the requirements for starting a night club business. So put on your entrepreneurial hat and let’s proceed.
Table of Content
- 1 What is a Night Club?
- 2 Starting a Night Club – Market Research and Feasibility Studies
- 3 Starting a Night Club Business With No Money – Legal Matters
- 4 Writing a Business Plan for a Night Club
- 5 Detailed Cost Analysis for Starting a Night Club
- 6 Starting a Night Club – Technical & Manpower Details
- 7 Starting a Night Club Business – The Marketing Plan
- 8 Tips for Running a Night Club Business Successfully
What is a Night Club?
A nightclub (also known as a discothèque, disco, dance club or club) is an entertainment venue which usually operates late into the night. A nightclub is generally distinguished from bars, pubs or taverns by the inclusion of a dance floor and a DJ booth, where a DJ plays recorded music. The busiest nights for a nightclub are Friday and Saturday night.
The music in nightclubs is either live bands or, more commonly, a mix of songs played by a DJ through a powerful PA system. Most clubs or club nights cater to certain music genres. From about 1900 to 1920, working class Americans would gather at honky tonks or juke joints to dance to music played on a piano or a jukebox. Webster Hall is credited as the first modern nightclub being built in 1886 and starting off as a “social hall”, originally functioning as a home for dance and political activism events.
In other parts of the world, possibly the first discothèque was Scotch-Club. In Occupied France, jazz and bebop music, and the jitterbug dance were banned by the Nazis as decadent American influences, so as an act of French resistance, people met at hidden basements called discothèque, where they danced to jazz and swing music, which was played on a single turntable when a jukebox was not available.
The same is also applicable to many parts of the world. Today, Night clubs are integral part of social activities in a modern city/town. They ensure that people cool off after stressful times in their places of work/studies. Night clubs are easy to find these days and they can be seen in different parts of many cities.
Starting a Night Club Business With No Money – A Complete Guide
- The Night Club Business Overview
The Night club industry is not an isolated one. In fact it is one of the few industries in the world today that boasts of carrying along all categories of people in the society irrespective of their social stratification. It is one of the looming businesses that we can find in any society that you can ever think of.
- Interesting Statistics About the Night Club Industry
The revenue of the bar, tavern and nightclub industry in the United States was forecasted to exceed 24 billion U.S. dollars in 2015, according to an industry reports by some experts.
This includes bars, pubs, lounges, taverns and nightclubs as well as other drinking places that primarily sell alcoholic beverages for immediate consumption. The National Restaurant Association estimated that food and drink sales in U.S. bars and taverns would reach 20.5 billion U.S. dollars in 2015. This is a relatively small figure in comparison to the wider restaurant industry, for which food and drink sales were expected to rise to approximately 710 billion U.S. dollars during the same year.
Bars and taverns are places that serve alcoholic beverages to paying customers who consume their purchases on-premises, either on a stool at the bar or around tables provided by the establishment. Nightclubs also serve alcoholic beverages, but, unlike most bars and taverns, are usually characterized by their late opening hours, loud music and dance floor facilities. More than 590 thousand bartenders were employed in the United States in 2015, and this number was forecasted to increase to 670 thousand by 2025.
The types of alcohol purchased in bars, taverns and nightclubs ranges from beers and wines to liquors and cocktails. A bi-annual survey by market research company Nielsen Scarborough found that the number of Americans purchasing wine in bars and nightclubs has been steadily declining since 2008. The number of consumers buying liquor, on the other hand, is much higher and appears to be rising.
In the United Kingdom, The night -time economy of restaurants, pubs, bars and clubs is worth £66bn to the UK, and is underpinning much of the UK’s economic growth, a report has found. According to a report which was produced by the Night Time Industries Association (NTIA), 6pc of the UK’s gross domestic product is generated by night-time businesses, which employ around 1.3m people. According to TripAdvisor, two of the top three destinations for night-life in Europe are in the UK.
It has been launched ahead of the London Underground becoming a 24-hour service, which will begin in September. Transport for London has said the move will support 2,000 permanent jobs and boost the UK economy by £360m.
“An increasing proportion of the population’s social activities either begin with or extend into the night,” the report said. Of the 1.5bn daily visits to the UK last year, 300m were focused on an evening meal or night out.
Starting a Night Club – Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who need the services of night clubs cuts across the public sector, the organized private sector, households, communities and people of different class and from all walks of life. Below is a list of the people and organizations that need the services of night clubs;
- The public sector (public facilities et al)
- Organized private sector (Corporate organizations)
- Businessmen and Businesswomen
- University Campuses and Schools
- Event Planners
- Estates and Communities
- Religious Centers
- Sport Organizations
List of Niche ideas Within the Night Club Industry That You Can Specialize in
When it comes to starting a night club business, there are a couple of niche ideas within the industry that an entrepreneur can choose from. Aside from the existing niches in the night club industry, an entrepreneur who is creative can carve a niche for himself / herself.
Here are some niches / areas that a night club outfit can be specialized in;
- Entertainment shows on University campuses
- Night-out parties for workers in the onshore oil and gas industries
- Special weekend parties for interested persons
- Beauty pageant shows in the clubs
- Top musical performances at clubs etc.
The Level of Competition in the Night Entertainment Industry
Surviving in the business world as a night club business outfit requires more than, your expertise, knowing how to deliver enjoyable night-outs but also how to network with key people that matters; decision makers that can decide who can attend the club also matters a lot.
Without a shadow of doubt, there are loads of big time investors in the night club industry; but one thing is certain, there is room big enough to accommodate both the big private night clubs and the small ones. What smaller night clubs need to do is to reinvigorate a lot of energy and power in ensuring that they carry along the youths especially and rebrand what they do, so as to bring a lot of participation.
List of Well – Known Brands in the Night Club Industry
There is no industry in the world that doesn’t have top players who have made a name for themselves in the business. The night club industry is also not an exception, as there are well known brands who have made a name for themselves and are making it big in the industry.
Here are some of the leading Night club business outlets;
- Viper room
- Blue Note
- Paradise Garage
- Studio 54
Starting a night club business is not a day’s job. It is indeed a serious business hence critical economic analysis must be conducted to ensure that the risks and other threats associated with starting a business from the scratch or investing in a business idea are curtailed.
If you are considering starting a night club business in the United States, your concern should not be restricted to just acquiring an arena or a public place and equipping the place or hiring the best hands in the industry, you should also be concerned on how to attract people to your club and ensure that they are satisfied with your services.
On the average, setting up and running a night club business in the United States can be cost effective simply because you don’t have to maintain a large workforce when you don’t have in most cases. With a very good location, highly trained, highly qualified and highly experienced staff members in your team, you won’t have to struggle much to attract people who will party in your club.
Is the Night Club Business Worth Starting from Scratch or is Buying a Franchise Better?
Although there is the possibility of buying a franchise from a successful night club outfit or even partnering with a big night club if you are considering owning an investment in the industry.
One thing is certain, people are motivated to start a business based on various factors and incentives. If you are looking towards building a business that you intend controlling, a business brand that you hope to one day transfer ownership to your children and perhaps also sell franchise in future, then starting from the scratch should be your best bet.
But if you only interested in making money and multiplying your wealth, then you may as well buy the franchise of a successful night club outfit that is willing to sell its franchise.
Possible Threats and Challenges You Will Face When Starting a Night Club
Generally in the night club industry, both the already established ones and start – ups are subject to threat and challenges from government policies, global economic downturn which usually affects spending and unforeseen natural disasters (disasters that may cause setback).
Another threat that you are likely going to face when you start your own night club business is the ability to attract clients who are used to partying in a particular club to yours. That indeed is the business of the industry and the threat that must be critically examined to ensure that one succeeds in the industry.
Starting a Night Club Business With No Money – Legal Matters
- Best legal entity to use for a night club
No doubt starting a night club business is indeed a serious business which is why the legal entity you choose will go a long way to determine how big the business to can grow. Choosing a legal entity for a business such as a night club is some worth straightforward especially if you decided to grow the business big.
When it comes to choosing a legal entity for your night club you have the option of choosing from a general partnership, a limited partnership, an LLC, a “C” corporation, or a “S” corporation. It is important to clearly state that these different forms of legal structure for business has its own advantages and disadvantages; which is why you must weigh your options properly before making your choice on the legal structure to build your night club outfit on.
These are some of the factors you should consider before choosing a legal entity for your night club; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and tax issues. If you take your time to critically study the various legal entity to use for your night club then you will agree that limited liability company; an LLC is the most suitable. You can start your night club as a limited liability company (LLC) and in future convert it to a ‘C’ corporation or even a ‘S’ corporations especially when you have the plans of going public.
Upgrading to a ‘C’ corporation or ‘S’ corporation will afford you the opportunity to grow your night club so as to compete with major players in the night club industry; you will be able to generate capital from venture capital firms, stock market, you will enjoy separate tax structure, and you can easily transfer ownership of the company; you will enjoy flexibility in ownership and in your management structures as well.
The Best Insurance Needed for a Night Club
In the United States and of course in most countries of the world, you can’t operate a business without having some of the basic insurance policies that is required by the industry you want to operate from. Besides, the nature of the night club industry requires that you have the proper insurance cover in place or else you will be forced out of business if anything goes wrong in your club.
So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best insurance policies for your night club; it is their duty to help you assess the risks involved in the type of night club business you intend running and then advice you accordingly.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own night club business in the United States of America;
- General insurance
- Risk Insurance
- Payment protection insurance
- Liability insurance
- Workers compensation
- Business owner’s policy group insurance
Intellectual Property Protection and Trademark
In the night club business, there is really no intellectual property that is been protected. The major thing that must be put in place is to ensure that all entertainments used in the club must be properly referenced to. This is because as an entertainment entity, there are needs to make use of others’ intellectual property, so on that note it’s necessary that the club protects the intellectual property of persons that will be made use of.
Is Professional Certification Needed to Start a Night Club?
There is rarely any professional certification that must be passed to become a certified night club business owner/ manager. The major thing involved in this business is the hospitality management certification/ food services management certifications that must be acquired if one must learn how to cater for night clubs very well.
List of Legal Documents You Need to Run ta Night Club
In The United States of America and of course all over the world, the night club industry is amongst the industries that is highly regulated because a breach of security there can lead to serious security breaches in other places. If you are considering starting a night club business, then you are expected to meet the legal documents requirements as stipulated in the constitution of your country.
These are some of the basic legal document that you are expected to have in place if you want to start a night club business in the United States of America;
- Certificate of Incorporation
- Security Clearance Certificate
- Business License
- Business Plan
- Non – disclosure Agreement
- Memorandum of Understanding (MoU)
- Employment Agreement (offer letters)
- Operating Agreement
- Company Bylaws
- Operating Agreement for LLCs
- Insurance Policy
Writing a Business Plan for a Night Club
If you are looking towards starting a night club, then one of the first steps that you are expected to take is to consult experts to help you write a good and workable business plan. The truth is that, in order to successfully run a night club, you would need to have a good business plan in place.
A Business plan is the blue print that is needed to successfully run a business; with a workable business plan in place, you will reduce the trial and error approach of doing business. You will be able to manage your business with purpose and perhaps precisions; you will know what to do per time and how to handle challenges, growth and expansion.
So if you want to start your own night club business, you are required to write a detailed business plan that can pass reality test when subjected to it; you should work with the facts, figures and other indices in the night club industry as it applies to the country you intend starting the business.
Detailed Cost Analysis for Starting a Night Club
There are several expenses that you would have to make before successfully launching your own night club business. It is important to state that the location you choose to launch your business will definitely impact on the overall cost of starting the business which is why it is very important to have concluded and analyzed your feasibility studies and market survey before drawing up a budget and sourcing for funding for your business.
Here are some of the basic costs you must look towards fulfilling when starting a night club business in the United States of America;
- The Total Fee for incorporating the Business in United States of America – $750.
- The budget for Insurance, permits and license – $5,000
- The Amount needed to rent a suitable office facility with enough space in the United States of America (Re – Construction of the facility inclusive) – $50,000.
- The Cost for equipping the office (furniture, telephones, filing cabins, safety gadgets, musical gadgets and electronics et al) – $30,000
- The Cost of Launching an official Website – $700
- Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) – $2,500
- Other miscellaneous – $1,000
Going by the report from our research and feasibility studies, we will need about $100,000 to set up a small scale night club business in the United States of America.
On the average, you would need over 180,000 US dollars to start a medium scale night club business in the United States of America. If you choose to start a large scale night club business, then you should look towards budgeting about 1.5 million US dollars and above. This money include paying entertainment experts that will be on your employee / payroll.
- Financing your Night Club Business
If you choose to start your night club business on a small scale, you might not need loads of resources to launch the business, but if you decide to start on a large scale, you will sure need to raise the required start – up capital to launch the business. If you are starting your night club business on a large scale, you will need a decent office facility, office equipment and furniture, and money budgeted for the payment of salaries and utility bills for at least a period of 3 months and you will also need money to purchase essential musical gadgets, employ DJs etc.
When it comes to financing a business, one of the first thing and perhaps the major factors that you should consider is to write a good business plan. If you have a good and workable business plan in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for start – up capital for your night club business;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Applying for loan from your bank / banks
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends.
Choosing a Location for Your Night Club Business
Choosing a location for your business is not what you should do without due consultation. The truth is that if you get it wrong with the location where you have decided to pitch your business tent, you are more likely going to struggle to make headway with the business. One of the major reasons why businesses struggles, fails and eventual close shop is the fact that the owners decided to choose a wrong location for the business.
Thus as a person just starting out in the night club industry; especially if you are a newbie in the night club industry, it is important that you locate your business in an area with healthy business activities. These are some of the factors that you should consider before choosing a location for your night club business outfit;
- The demography of the location
- Accessibility of the location
- The numbers of night clubs in the location
- The local laws and regulations in the community / state
- Traffic, parking and security et al
Starting a Night Club – Technical & Manpower Details
If you are tinkering with starting a night club business, then you should be ready to purchase entertainment gadgets that will be the envy of all, and ensure that you attract big celebrities to your club.
When it comes to choosing between renting and leasing an office space, the size of the night club you want to build, and your entire budget for the business should influence your choice. If you have enough capital to run a night club, then you should consider the option of leasing a facility for your office; when you lease, you will be able to work with long – term planning.
Regarding the number of employees that you are expected to kick start the business with, you should consider your financial capacity before making the decision. But good enough, you don’t have to maintain a large workforce if you run a night club; you can recruit and train employees when you have the need to. Averagely, you would need a Chief Executive Officer or President (you can occupy this role), an Admin and Human Resource Manager, Business Development Executive / marketing Executive, Customer Service Officer or Front Desk Officer, and Accountant.
The Services Process Involved in the Night Club Industry
The services process involved in the night club industry depends on the niches of night club services a company is into. On the average, the process starts with getting people attracted to your club, and also their willingness to make use of the services you offer as opposed to that offered by others.
On the average, night clubs charge their clients based on the type of services offered. In fact there are some clients who will just come to catch some fun and leave afterwards without actually making use of any service. It is thus the prerogative of the management of a club to define what their company does and how they go about it.
Starting a Night Club Business – The Marketing Plan
- Marketing Ideas and Strategies for a Night Club
Night club business is not a business that you have to retail products which is why you must do all you can to maximize any opportunity that comes your way.
So when you are drafting your marketing ideas and strategies for your night club business, make sure that you create a compelling personal and company’s profile which must include the profile of your board of directors and management team. The truth is that if you have a very good package on offer for your clients, it will definitely give you leverage in the market place.
Here are some of the platforms you can utilize to market your night club business;
- Advertise your business in relevant business magazines, TV and radio station and also make yourself available for entertainment related talk shows and interactive sessions on TV and Radios)
- List your business on local directories / yellow pages (both online and offline)
- Attend entertainment related expos, seminars, and business fairs et al
- Leverage on the internet to promote your business
- Create different packages for different category of clients in order to work with their budgets.
- Engage in direct marketing, referral marketing and also email marketing.
Possible Competitive Strategies for Winning your Competitors
It might be challenging competing as a newbie in the night club industry especially in a highly organized market like that of the United States of America, which is why you must be deliberate in choosing the packages and services you offer.
As a night club business, if you have the required expertise and equipment in the industry, then you are likely not going to struggle to compete in the industry. Hence, ensure that you put in your best whenever you have the opportunity to handle any client. You should be known for delivering excellent packages and services at all times.
Lastly, ensure that your organization is well positioned and if possible form strategic partnership with other key stakeholders in the entertainment industry; it will sure give you competitive advantage over your competitions.
Possible Ways to Increase Customer Retention in your Night Club
When it comes to business no matter the industry you choose to pitch your tent in, one of the easiest ways to increase customers’ retention and perhaps to attract new customers is to satisfy your customers always. If your customers are satisfied with your services delivery, they can hardly source for alternative service provider or products.
Statistics has it that one of the major reasons why customer’s source for alternative service provider or product is when there is a drop in quality. Another reason is poor customer service. If you can continue to improve on the quality or your services and your customer service delivery, then you won’t struggle to maintain your loyal customers.
Since this is an industry that involves mostly the youths, and considering the generation that we are currently in, it’s necessary that you consider making use of the social media platforms such as Facebook, Twitter, Hangout, Whatsapp, Youtube etc. to let the whole world know what your business entity is all about.
Strategies to Boost your Brand Awareness and Create a Corporate identity
When it comes to creating brand identity for a night club business, the caliber of clients you have worked for and the nature of entertainment stuffs you have handled is always a major brand booster.
It is pretty important to work with your consultants to help you map out publicity and advertising strategies that will help you walk your way into the heart of your target market. First and foremost, you should ensure that your brand is visible and well communicated which is why you should make provisions to work with different class of people in the society. All your publicity materials and jingles should be done by some of the best hands in the industry.
Below are the platforms you should leverage on to boost your brand awareness and create a corporate identity for your night club business;
- Advertise your business in relevant magazines and websites
- List your business on local directories / yellow pages (both online and offline)
- Promote your business on satellite TV stations and radio stations.
- Attend entertainment related expos, seminars, and business fairs with the aim of creating awareness and promoting your brand
- Engage in direct email marketing
- Leverage on the internet (social media platforms and your official websites) to promote your business
- Ensures that your workers wear your branded shirts at all times during working hours and also make sure you brand all your company’s official vans, trucks and cars et al.
Creating a Suppliers / Distribution Network for your Night Club
The nature of the entertainment industry gives room for night club outlets to network amongst themselves. This is so because the issue of social activities cannot be handled in isolation.
It is important to state that there will always be room for a night clubs to form strategic alliance with one another which is why it is important to maintain a good network within the industry. For example, you may have need for a particular entertainment gadget, or you want to collaborate with another night club business outfit for the successful staging of a particular social activity.
Tips for Running a Night Club Business Successfully
The truth is that, irrespective of the kind of business you run, your ability to get all the members of your team on same page at all times is one of the keys you need to successfully run the organization.
As the chief executive officer or president of a night club business, it is you responsibility to give direction to the business. Part of what you need to do is to ensure that you create time for office meetings; a time where challenges, feedbacks, projections and relevant issues are discussed. The meetings could be daily, once in a week, twice a week or once in a month. The bottom line is that there should be consistent meetings in your organization.
Carrying out appraisals on a regular basis and training your employees will help you run your organization effectively. Encourage your employees to pursue certifications in their various area of specializations; it will help your organization’s profile and of course it will help the individuals. You can choose to fully or partially sponsor some of the certifications.
Lastly, you should keep your doors open for suggestions from members of your team and your clients. It is very important to reward excellent performance in your organization; it will go a long way to encourage healthy competition in your organization.