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Where to Begin? 

What it Takes to Start a Successful Club 

Question: 

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

Answer:

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