Ask Taffer
What it Takes to Start a Successful Club
By Jon Taffer
Hello Jon: I am an aspiring future club/bar owner, and I
wanted to know the many steps required to start this specific
operation. What are the ups and downs, and are they profitable if
marketed and structured properly? How much will it eventually cost me
to start this? Any advice, being a young woman inquiring on such
a big goal? Thanks! — Ebonie
Ebonie,
Your question would take a book to answer and cannot be addressed fully
here, but I’m going to give you my most important thoughts. The
nightclub and bar business has one of the highest failure rates of any
industry, especially with first-timers. Without professional
experience, (candidly) your chances are about one in eight to be
successful (still operating six months after opening). Conversely, with
a professional team with proven experience, your chances are about
60/40 to be successful.
Even with a great concept, design and location, there are about 30 key
factors including entertainment formatting, promotion, marketing,
product purchasing, human resources, product development, cost
controls, legal factors, facility management, security and many others
that can make or break your success.
Don't Go it Alone
I strongly suggest that you first gain experience by being an employee
(waitress/bartender). Then, move your way into management to gain real
hands-on experience in effecting real management results. In about
three to five years of working in the industry, you should have enough
operations experience to operate your business. But, creating
concepts, financial models, realistic budgeting and developing your
facility within budget requires a different set of skills.
Even with management experience, I strongly recommend that you engage
professionals to develop your concept and design and manage your
development budget. And, hiring those professionals or key professional
will never cost you money in a savings sense. Remember the old Fram oil
filter commercial, “You can pay now (image of a new oil filter) or pay
later (image of a car on a tow truck).”
Hiring a well-known and respected consultant is even better than that
–– it should not cost you anything. As I mentioned above, a quality
consultant should justify their fees before your opening. Then, your
benefits from their input and involvement last a lifetime. So, if you
understand that a professional really does not cost anything, you’re
not being fair to yourself and your own goals by going at it alone.
Costs to Consider
Regarding costs, different types of facilities and concepts have very
different costs. So, I’m going to be on the high side here. As a
general rule of thumb, if you are looking to open a neighborhood bar,
the cost of the full development process will be between $120-$180
dollars per square foot, including all hard and soft costs. For a dance
or live music nightclub, the costs can go up considerably to $160-$220
per square foot. But, don’t bank on these numbers only. Different
concepts, interior finishes and other factors can increase or decrease
these estimates. And, there are cost saving options such as
cost-effective design, used equipment, value engineering and others.
These are the things that a great consultant can help you with.
Finding capital has its own challenges. It is very hard to find
traditional money (bank loans, investment groups, etc.) for a nightclub
or bar venture, especially for a first-timer. Normally, for a first
venture, I recommend that a client get a money backer before spending a
lot of money putting a package together because in most every case, the
money comes from someone they know (family member, friend, past
associate, etc.).
Participate
You also may want to purchase a “Grand Opening Toolkit” book from the
Taffer Dynamics Management Toolkit Book Series (can be found at
tafferdynamics.com). Among other things, it lists virtually every item
to be performed or implemented during the eight weeks before opening.
This will, at least introduce you to the depth of work needed to open
your facility.
Lastly, you MUST come to the Nightclub & Bar Show in Las Vegas this
March. At the show, there literally are thousands of booths, seminars
and programs that will be very helpful to you. You can get more info on
the show at nightclub.com.
Don’t let my comments scare you. Attend the show, get your experience
and hire the right professionals, and your goals can become reality.
Good luck! NCB
