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A nightclub business is known for night functions only and it plays very loud music even though now there are silent clubs where people are made to wear headphones, also it has a large dance floor, a Disk Jockey (DJ) playing from an excluded stand or a booth.
Nightclubs comes with different features, like paid dancers (Strippers), alcohols of different kinds are sold, some clubs allow their clubbers to smoke and while other don’t instead they create a place outside for smokers to stay and still enjoy the music from the club, games, celebrity features and lot more.
Nightclub license requirements
The nightclub business is a multi-billion dollar industry but there are rules, requirement, and license regulating the industry, some of which are issued by the state health service department which governs food establishments, the state authorities in charge of controlling alcohol distribution, fire safety department, and town planning/zoning departments will ensure that clubs are not cited in residential areas. With this requirements nightclubs will not spring up everywhere or anyhow considering the profitability margin.
- Business Registration: before you open a nightclub you will need to register a business, which means you will have to research if the name of your choice is available, choose a legal entity, it could be a sole proprietorship, partnership, corporation or Limited Liability. A night must obtain tax registration for all licenses and lastly a permit that includes an income tax, sale tax and unemployment insurance taxes.
- Licenses: a nightclub cannot operate if it doesn’t obtain several licenses permitting its operation. Some of those licenses include general business permit which are obtained from the state’s local office, an alcohol beverage licenses from the state alcohol beverage commission, in addition a music license is very important in other for a nightclub DJ to play music.
- Permits: it’s essential for nightclub owners to obtain a food service establishment permit, this will ensure that the clubs meets all health codes related to food preparation, it’s storage, and sanitation of the entire building. A building permit is imperative most especially if the building is going to be constructed, renovated or modify. The building plan must be submitted for approval no matter what construction that is going to be carried. The signage of the nightclub must be displayed in front of the building for all to see.
- Employment Information: nightclubs owners are to ensure they meet with the state’s employment and labor regulations, which means they have to keep the records of all their workers eligibility, employment tax (Federal income tax, and Medicare tax). It is also a must to obtain workers compensation insurance, post workplace safety, and procedural posters in other to comply with labor standard regulations.
Successful Nightclub owners
Owning a nightclub can be very tasking for the owners but if you learn the ropes it can produce huge profits, however it can there are mistakes to avoid.
- Ordering products that can’t be sold ties down your capital cost, it will be wise to take a look at what your competitors are selling this will give you a clue as to what to sell and price list.
- Avoid employing staff who don’t understand the terrine and the regiment of the business also train them as often as possible to avoid mismanagement.
- VIPs coroners bring in the most money if you don’t have a good floor plan that factors the VIPs and a bar close by, it will be difficult for your staff to serve properly.
- No matter how fine your nightclub is if it will be successful ensure that you carry out enough marketing and don’t underestimate the power of face to face marketing.
- Successful nightclub owners are discipline you, they have a policy for family and friends, lastly to be a successful nightclub owner ensure your staffs don’t drink or eat from the business at will, make provision for them and it should be accounted for in your daily ledger.
How to start your own nightclub
If you want to be successful in the nightclub business then you have to put your vision into a plan which is beyond registering your business name. In the next 9 steps will take you through a detailed process on how to start your own nightclub business.
- Business plan: every business starts with a plan which will detail all the things you need to start including your mission and vision statement. A business plan will help you strategically plan your finances and times.
Note that your plan should include your startup cost, targeted audience, your prices, business name, legal entity, cost of raw materials, market strategy.
List of essential equipment you will need to start:
- Bar coolers
- Draft beer equipment
- Ice machine
- Glass racks
- Glassware in sizes
- Glass washing machine
- Bar stools
- Liquors, soda, beer, wines etc
- Dancing poles
- Bottles coolers
- Bar blenders
Before you kick off you need to factor labor cost for employees, insurance, rent, utility bills and lots more. Ensure that whatever you budget should able to last for at least 6 months, until you begin to make back your capital cost.
Nightclubs make their money from sales of drink and food, their rate are usually very high, the business is high in profit and in other to sustain the tempo, you will need to infuse side attractions like comedy nights, live music, private party, open mic or karaoke, live band performance, live radio shows, ladies night etc.
Lastly pick a classy befitting name for your club, the name should be easy to remember and spell. Taking your nightclub business online is another way to attract tourist to your club.
- Legal entity: the cost of setting up a nightclub is very expensive, if you know that you can’t take up the sole responsibility of financing the entire project as a sole proprietor, you have the option of a partnership, corporation or Limited Liability Company.
- Tax registration: it is important you register for taxes both federal and state, failure to pay your tax can lead to seizure of business by the government. In addition open a business account and separate your business money from your personal funds, this will make accounting and tax filing easy.
- Finance department: it is very important you take account of your daily expenditure keep an update accounting record, this will help your annual tax filing easy and simple.
- Permit/License: you cannot operate a nightclub business without obtaining government permits, failure can lead to closure of the business.
- Music: nightclubs are known for good music and in order for the DJ to play songs in a club you will need to obtain license from the song composer or the license holder. But that task will be too cumbersome, instead you can obtain a blanket license that will allow your DJ or business to play a large catalog of artists and recording studios, the license can be obtained from performing Rights Organization and BMI.
- Food and Liquor License: if you choose to sell food in your nightclub a local health department is required to inspect and give your business a go ahead.
In the same vain a liquor license is required for a nightclub to operate, the license is dependent on the type of liquor you intend to sell to your customers, the percentage you are to sell your customers, the amount of people to be served par night, closing time, and whether clients can take their drinks home.
- Certificate of Occupancy: nightclubs are operated out of physical location. The certification is to ensure that all the building codes, zoning laws and government regulation are met.
If you choose to buy, rent or lease a building you will still need a Certificate of Occupancy. Before you rent a place ensure that the landlord has obtained the necessary CO.
In the same light if you are building a new structure you will need to obtain a CO.
- Marketing: your nightclub will succeed and bring in profit if you have a good marketing plan. Invest in creating a brand logo, building a website and adverting offline and online.
Train your staff on customer services their character will either keep your customers or chase them away, lastly your DJ is a key point, if he doesn’t mix well and is not conscious of the times you will look customers.
Owning a Nightclub Salary
There is no fix price on how much a nightclub owner earns but its all dependent on the price of drinks and the number of paying customers that frequent the club. A small club can make $900 to $4500 per week and in a year $50,000 to $300,000 after utility bills and tax.