Running a nightclub.
Discussion
Does anyone have any experience of this at all who could give me a few pointers?
I've seen what I think is an oppotunity to re-open a nightclub thats been closed for over 2 years.
The club itself was geographically isolated from other drinking and entertainment establishments, which I think was the main reason for it closing in the first place - too little foot fall. Well that and its old target audience of chavs.
However in the last 6 months, there has been a large amount of redevelopment and bars have opened quite close to it which seem to be doing incredibly well. My thinking is that with a facelift to appeal to the demographic that's drinking in the new bars (which all close pre 12:00), this club (3:00 am licence) could be the natural progression to end the night out, aswell as catering for the early evening crowds too as it's split down into distinct areas inside.
So, sounds good to me, apart from my complete lack of knowledge in this area. Running businesses, VAT, etc etc - I'm fine with and have no shortage of ideas for the club. The area I'm lacking in is running any kind of drinking establishment and the specifics of club management. I'm already in the mindset of employing a good manager, but again, you need to know your stuff to keep an eye on them too.
Like most businesses, I'm sure that there are 100 and 1 things you don't ever think about if you've never had the experience.
So, to any one out there, main pit falls and issues that would make this a complete non-starter? Or that are common traps to this kind of thing?
Any help or advice appreciated. It is only a thought at the momment, but it's one I seem to be spending a lot of time thinking about right now.
Thanks,
JC
I've seen what I think is an oppotunity to re-open a nightclub thats been closed for over 2 years.
The club itself was geographically isolated from other drinking and entertainment establishments, which I think was the main reason for it closing in the first place - too little foot fall. Well that and its old target audience of chavs.
However in the last 6 months, there has been a large amount of redevelopment and bars have opened quite close to it which seem to be doing incredibly well. My thinking is that with a facelift to appeal to the demographic that's drinking in the new bars (which all close pre 12:00), this club (3:00 am licence) could be the natural progression to end the night out, aswell as catering for the early evening crowds too as it's split down into distinct areas inside.
So, sounds good to me, apart from my complete lack of knowledge in this area. Running businesses, VAT, etc etc - I'm fine with and have no shortage of ideas for the club. The area I'm lacking in is running any kind of drinking establishment and the specifics of club management. I'm already in the mindset of employing a good manager, but again, you need to know your stuff to keep an eye on them too.
Like most businesses, I'm sure that there are 100 and 1 things you don't ever think about if you've never had the experience.
So, to any one out there, main pit falls and issues that would make this a complete non-starter? Or that are common traps to this kind of thing?
Any help or advice appreciated. It is only a thought at the momment, but it's one I seem to be spending a lot of time thinking about right now.
Thanks,
JC
How do you know how well the newly opened bars are doing?
Have you seen their accounts?
Do you know what their premises and wages costs are?
Just observing people going and coming out of a business premises does not give you ANY indication of the business' viability.
As for running your own nightclub, you would have to do an awful lot of homework before working out whether it was a valid business opportunity or not.
Have you seen their accounts?
Do you know what their premises and wages costs are?
Just observing people going and coming out of a business premises does not give you ANY indication of the business' viability.
As for running your own nightclub, you would have to do an awful lot of homework before working out whether it was a valid business opportunity or not.
My old mand ran a club a few years agao - well actually he ran a hotel and it had a club in it.
What a f##king nightmare. Almost as soon as it opened there was trouble, so they upped the security who then started letting in only the people they liked / worked for etc etc.
Then the security are putting pressure on the bar staff to geive drinks ot their mates, handle a littel gear and so on.
All too soon you're not really running it all.
He came in after about a month and had no f##king idea who anyone was , and the night club manager didn't either.
It could have been a great money spinner for them , but wasn't worth the hassle, so they shut it down. No doubt the security/dealers etc just moved on to the next place...
What a f##king nightmare. Almost as soon as it opened there was trouble, so they upped the security who then started letting in only the people they liked / worked for etc etc.
Then the security are putting pressure on the bar staff to geive drinks ot their mates, handle a littel gear and so on.
All too soon you're not really running it all.
He came in after about a month and had no f##king idea who anyone was , and the night club manager didn't either.
It could have been a great money spinner for them , but wasn't worth the hassle, so they shut it down. No doubt the security/dealers etc just moved on to the next place...
Eric Mc said:
How do you know how well the newly opened bars are doing?
Have you seen their accounts?
Do you know what their premises and wages costs are?
Just observing people going and coming out of a business premises does not give you ANY indication of the business' viability.
As for running your own nightclub, you would have to do an awful lot of homework before working out whether it was a valid business opportunity or not.
Very good point Eric.Have you seen their accounts?
Do you know what their premises and wages costs are?
Just observing people going and coming out of a business premises does not give you ANY indication of the business' viability.
As for running your own nightclub, you would have to do an awful lot of homework before working out whether it was a valid business opportunity or not.
You're correct it IS an assumption. It's one based purely on my own and several others observations. They appear to be doing well as they seem to have a the balance right. It's once of the few bars I could go into with my wife and bump into my daughter with her mates too.
I agree I've got my homework cut out, which I've already started but didn't want to dive into if I got 30 replies going "Don't do it your mad!!!"
Cheers,
JC
Off the top of me head:
- could you create THE place to be and keep it as THE place to be. That game is very much, in now, nothing 6 months later. You have to have a lot of creativity to keep a place at the top of its game.
- it failed previously in isolation, if it is now removed from isolation, how sure can you be of keeping it as the only club in the area.
- we all know the difference between what a classy club looks like and a grotty one. do you know anything about licencing, security, PR and DJs? They are all critical and your personal taste in music may be very different from what would generate the best footfall.
- what involvement do the local mob have in the running of other clubs in the area and how likely are they to take exception to a new kid on the block? (this would be very relevant round here, I dont know about your locale)
Dont mean to sound patronising at all in saying that, just the immediate thoughts that sprang to mind. Every mans dream to run a club / strip club. Best of luck if you do go for it!
- could you create THE place to be and keep it as THE place to be. That game is very much, in now, nothing 6 months later. You have to have a lot of creativity to keep a place at the top of its game.
- it failed previously in isolation, if it is now removed from isolation, how sure can you be of keeping it as the only club in the area.
- we all know the difference between what a classy club looks like and a grotty one. do you know anything about licencing, security, PR and DJs? They are all critical and your personal taste in music may be very different from what would generate the best footfall.
- what involvement do the local mob have in the running of other clubs in the area and how likely are they to take exception to a new kid on the block? (this would be very relevant round here, I dont know about your locale)
Dont mean to sound patronising at all in saying that, just the immediate thoughts that sprang to mind. Every mans dream to run a club / strip club. Best of luck if you do go for it!
Eric Mc said:
How do you know how well the newly opened bars are doing?
Have you seen their accounts?
Do you know what their premises and wages costs are?
Just observing people going and coming out of a business premises does not give you ANY indication of the business' viability.
As for running your own nightclub, you would have to do an awful lot of homework before working out whether it was a valid business opportunity or not.
I'm trying not to be offensive here (although i fear i am going to be), but those comments are typical of an accountant and not a business owner. Have you seen their accounts?
Do you know what their premises and wages costs are?
Just observing people going and coming out of a business premises does not give you ANY indication of the business' viability.
As for running your own nightclub, you would have to do an awful lot of homework before working out whether it was a valid business opportunity or not.
it is very very easy to tell the viability of a business just by looking at it- in fact it is the ONLY way of doing it with small businesses. The last 4 companies i bought i purchased solely off analysing footfall and they have been extremely succesful- on paper they were failing businesses though- that was solely down to the management! Accounts tell you virtually nothing about the viability of a business but only how well that business is being run.
You are totally right that a lot of work is needed- i would be talking to as many other succesful night clubs as possible (in your target market) to find out average spend/head and finding out about common pitfalls (as the OP is doing here). one of the most important things to work out is how much money it will cost to kit the place out, and how many staff you need to service X numbers of customers.
it's really quite a simple business i would think- you're not exactly selling a huge amount of different products are you?
What I was getting at is that, underlying the actual throughput of customers would be whatever finance costs were involved in setting up the business and/or whatever premises costs were being incurred. Some well funded and well managed business could do very well with the a particular number of customers. Another business with the same number of customers could be doing very badly because of poor financing or poor management.
That information would be totally unknown to an outside obderver who did not have access to the financial data of the business being observed.
Footfall is only one indicator of what a business is doing. Anyone who used it a sole criteria for measuring a business' performace would be very naieve. In reality of course, nobody does.
That information would be totally unknown to an outside obderver who did not have access to the financial data of the business being observed.
Footfall is only one indicator of what a business is doing. Anyone who used it a sole criteria for measuring a business' performace would be very naieve. In reality of course, nobody does.
Eric Mc said:
Footfall is only one indicator of what a business is doing. Anyone who used it a sole criteria for measuring a business' performance would be very naieve. In reality of course, nobody does.
Have to agree with Eric here....
A small newsagents on the street corner might have 200 customers per hour, but they are selling mostly cigs and sweets with fairly low profit margins, but the exclusive kitchen furniture shop round the corner has twenty prospects per day through the door, converts one or two into actual sales, netting 2/3k profit on each sale.....
They may not even be buying ANYTHING. How many people wander into a retail premises and walk out again without having opened their wallet or purse. I'd say over 50%.
Nightclubs are different - at least they will (probably) have paid an admission fee. But how much EXTRA they spend once inside might vary massively.
Nightclubs are different - at least they will (probably) have paid an admission fee. But how much EXTRA they spend once inside might vary massively.
Eric Mc said:
What I was getting at is that, underlying the actual throughput of customers would be whatever finance costs were involved in setting up the business and/or whatever premises costs were being incurred. Some well funded and well managed business could do very well with the a particular number of customers. Another business with the same number of customers could be doing very badly because of poor financing or poor management.
That information would be totally unknown to an outside obderver who did not have access to the financial data of the business being observed.
Footfall is only one indicator of what a business is doing. Anyone who used it a sole criteria for measuring a business' performace would be very naieve. In reality of course, nobody does.
The OP isn't looking at buying the existing business though. He's looking at reopening a non-trading club in the same area. Whilst not totally irrelevant the operating and financing expenditures of the existing bars are not the OP's concern. In my experience when creating a business case/plan expenditure is relatively easy to forecast, the hard part is forecasting income. Footfall in similar, but complementary establishments is IMHO a very valid input for a sales forecast model.That information would be totally unknown to an outside obderver who did not have access to the financial data of the business being observed.
Footfall is only one indicator of what a business is doing. Anyone who used it a sole criteria for measuring a business' performace would be very naieve. In reality of course, nobody does.
Once the OP has a reasonable idea of his income, he can then look at modelling the expenditure. Some operating expenses are likely to be similar i.e. rent and staff, but if the nightclub is a freehouse it's stock costs will be very different to the brewery-tied bar down the road. Insurance and security costs are going to be higher etc. Again IMHO, it is much better to try to fit your expenses around your sales (and give up if it isn't possible), than to have a cast iron idea of expenses and hope you can get the sales to match them. The financing question for the OP is completely different to any of the other businesses. He has his own acceptable rate of return and borrowing costs (if necessary).
Wacky Racer said:
Eric Mc said:
Footfall is only one indicator of what a business is doing. Anyone who used it a sole criteria for measuring a business' performance would be very naieve. In reality of course, nobody does.
Have to agree with Eric here....A small newsagents on the street corner might have 200 customers per hour, but they are selling mostly cigs and sweets with fairly low profit margins, but the exclusive kitchen furniture shop round the corner has twenty prospects per day through the door, converts one or two into actual sales, netting 2/3k profit on each sale.....
an indicator of income levels is FAR more important when initially assessing the viability of a startup than worrying about costs. you don't make any money until someone makes a sale- sorting out the back end costs is what differentiates a very succesful business from a merely average business- but no business can be succesful without "footfall".
of course this doesn't preclude the need for a huge amount more work- but "footfall" is the primary and most important concern.
pugwash4x4 said:
Wacky Racer said:
Eric Mc said:
Footfall is only one indicator of what a business is doing. Anyone who used it a sole criteria for measuring a business' performance would be very naieve. In reality of course, nobody does.
Have to agree with Eric here....A small newsagents on the street corner might have 200 customers per hour, but they are selling mostly cigs and sweets with fairly low profit margins, but the exclusive kitchen furniture shop round the corner has twenty prospects per day through the door, converts one or two into actual sales, netting 2/3k profit on each sale.....
an indicator of income levels is FAR more important when initially assessing the viability of a startup than worrying about costs. you don't make any money until someone makes a sale- sorting out the back end costs is what differentiates a very succesful business from a merely average business- but no business can be succesful without "footfall".
of course this doesn't preclude the need for a huge amount more work- but "footfall" is the primary and most important concern.
Short of actually going round said bars and asking people direct, I dont see how you could gauge this. From what the OP has said, with regards to running in to their daughter and friends on a night out, I dont think its a safe assumption they'd all be after clubbing.
You dont really need to worry about prospects converted in a club, if theyre in, they will spend and pay cover to get in anyways, the question is how many need to come in to cover costs.
Thank you ALL for some excellent replies - it's good to get different perspectives on things like this.
There is obviously a lot to think about here, and a HUGE amount of research to be done before even seriously contemplating this.
Thanks for all the comments so far. Its been very intresting reading.
Cheers
JC
There is obviously a lot to think about here, and a HUGE amount of research to be done before even seriously contemplating this.
Thanks for all the comments so far. Its been very intresting reading.
Cheers
JC
Why not spend a couple of Saturday nights going round the bars in the vicinity and asking the people in them if they are going to a club after the bar closes? Would they go to one round the corner? If so, what sort of music yada yada yada. Just because the bars have good footfall doesn't mean a nightclub would.
Would this be a sole form of income for yourself or do you have any other ventures on the go? I personally think it would be FAR too risky as a sole venture. All you would need is some coked up nutter in a bad mood shooting someone in the queue (happens in London with some regularity!) and your license is down the toilet or in serious jeopardy.
Managing external risks that you have little control over is a big piece of running a successful business. When those risks haven't slept for 2 days and have just had a good burn on the crack pipe would make me somewhat nervous...
Would this be a sole form of income for yourself or do you have any other ventures on the go? I personally think it would be FAR too risky as a sole venture. All you would need is some coked up nutter in a bad mood shooting someone in the queue (happens in London with some regularity!) and your license is down the toilet or in serious jeopardy.
Managing external risks that you have little control over is a big piece of running a successful business. When those risks haven't slept for 2 days and have just had a good burn on the crack pipe would make me somewhat nervous...
Another question worthy of an answer is why aren't there any clubs open till 3am? Is it a licencing issue or a real or perceived lack of demand?
The location alone might not have killed the original venue, after all clubbers have been know to travel a fair distance in search of the right venue. Also if it was the only place to go after the pubs shut you'd have thought it would have been packed. If it wasn't I'd steer well clear.
The location alone might not have killed the original venue, after all clubbers have been know to travel a fair distance in search of the right venue. Also if it was the only place to go after the pubs shut you'd have thought it would have been packed. If it wasn't I'd steer well clear.
dabeeeenster said:
Why not spend a couple of Saturday nights going round the bars in the vicinity and asking the people in them if they are going to a club after the bar closes? Would they go to one round the corner? If so, what sort of music yada yada yada. Just because the bars have good footfall doesn't mean a nightclub would.
Would this be a sole form of income for yourself or do you have any other ventures on the go? I personally think it would be FAR too risky as a sole venture. All you would need is some coked up nutter in a bad mood shooting someone in the queue (happens in London with some regularity!) and your license is down the toilet or in serious jeopardy.
Managing external risks that you have little control over is a big piece of running a successful business. When those risks haven't slept for 2 days and have just had a good burn on the crack pipe would make me somewhat nervous...
this is very good advice. Would this be a sole form of income for yourself or do you have any other ventures on the go? I personally think it would be FAR too risky as a sole venture. All you would need is some coked up nutter in a bad mood shooting someone in the queue (happens in London with some regularity!) and your license is down the toilet or in serious jeopardy.
Managing external risks that you have little control over is a big piece of running a successful business. When those risks haven't slept for 2 days and have just had a good burn on the crack pipe would make me somewhat nervous...
i couldn't run a nigthclub as i just don't know what attracts that sort of punter- and the "in-fashion" side of things really gives me the shits.
If it's going to be your only source of income, only get into it if you are totaly confident in your ability to make it work and you aer in no way risk averse. Protecting yourself from business failure (and/or having avery effective exit strategy) would be high on my priority list.
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