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Q: I have read that no matter how bad the economy, people still go out to nightclubs to relieve tension and stress. I really would enjoy getting into that as an entrepreneur, but I am not familiar with the industry. Can you give any information or advice on this?
–D. Anderson, Atlanta
A: The first thing you should do is learn how the nightclub business works and understand the day-to-day operations. Visit clubs and talk to people who work there.
I also suggest reading How to Setup and Operate a Successful Nightclub: An Entrepreneur’s Guide to Running a Profitable Club Operation by Robert Smith (Upland Publications, $29.95). It offers money-saving ideas and tips on topics such as how to acquire an accountant and attorney, raise business capital, select a location, and hire competent employees.
But be prepared. Although it may be true that nightclubs can be recession resistant, it’s still a very difficult business. Margins are tight with expenses that include rent (which can run $6,000— $8,000 or more per month), liquor, labor, utilities, insurance, legal fees, repair and maintenance, equipment leasing (for things such as lighting and audio/video systems, and ice machines), advertising and promotion, administration, and other costs too numerous to mention here.
Once you feel you’ve learned enough about the business environment and the challenges of nightclubs in the area where you intend to open one, tackle the business plan. Be sure to be as detailed as possible, specifying the type of crowd you’re looking to attract and the type of music your club will offer.