It’s well established that the Covid-19 pandemic has had a profound impact on bars and nightclubs around the world. As vaccines are rolled out worldwide, many nightclubs have been able to reopen under strict health protocols.
Despite these silver linings, opening and managing a successful nightclub in the current climate is more challenging than ever before. This is why creating a well-thought-out nightclub business plan is absolutely essential.
Doing so will help you lay out the steps you need to take to start a nightclub and plan how to get your target market through the door. However, it can be challenging to know exactly what to include.
This article is a sample nightclub business plan you can use as inspiration for your own. It will focus on a fictional venue called The Edge. Before we go into more detail about that, let’s first take a look at why a business plan can be useful.
Table of Contents
- 1 Why does my nightclub need a business plan?
- 2 Nightclub Business Plan – Executive Summary
- 3 Business Overview
- 4 Mission Statement
- 5 Start-up Expenses
- 6 Market Analysis
- 7 Market Challenges
- 8 Competitive Edge
- 9 Competitor Analysis
- 10 Customer Analysis
- 11 Sales Plan
- 12 Marketing Plan
- 13 Management Team and Personnel
- 14 Wrapping up
Why does my nightclub need a business plan?
If this is your first time writing a business plan, you may be wondering what the purpose of these documents are and why they are so important. Here are a few reasons why business plans are helpful:
Establish key milestones
When starting a new business, it’s easy to get swept up in the excitement of the process. A business plan will help you outline what your business’s long-term goals are and how you will achieve them.
Having a clear understanding of your long-term goals will also guide your decision-making process. For example, if you intend on expanding your business in future, a business plan will outline when you will need to secure funding to get this right.
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Identify the competition
Creating a business plan will also help you to identify who the competitors in your area are and what your nightclub’s unique selling proposition is. This section of your business plan will also help potential investors understand how your nightclub will stand out from competitors and why it will be successful.
Understand your customers
A business plan also gives you the opportunity to do extensive research into who your customers are to better understand their buying habits. This allows you to create better experiences for your customers and find out the best marketing strategies to reach them.
Assess the viability of your business
One of the other benefits of creating a business plan is that it allows you to critically evaluate whether or not your business will be viable. The process of creating a business plan involves researching the market and whether or not your business will be a good fit for it. This process will also help investors understand the underlying strengths and weaknesses of your business and whether it’s worth funding.
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Determine your financial requirements
Writing a business plan requires you to outline how much start-up capital you will need to get your business off the ground, what your projected profits are and whether or not you need additional funding. This is also useful because it might help you identify other revenue streams you can explore to make your business a success.
Nightclub Business Plan – Executive Summary
The Edge is a new nightclub in the growing downtown area of the city.
The area has seen several bars and music venues open up in recent years, and it’s becoming a popular place to go out. However, the city does not yet have a nightclub. This means there is an opportunity for The Edge to fill a gap in the market.
The nightclub will have space for 500 customers. It will specialize in high-energy electronic music and put club nights on from Wednesday through to Friday. The night club will also run after-parties for gigs and other events in the city.
The Edge will earn money through a cover charge and serving mixed drinks. The price of entry will vary depending on the night. We will offer discounts to those who arrive early or sign up to the guest list to help build an audience. We will also run a customer loyalty scheme to build a dedicated core customer group.
Other marketing ideas we will explore include being active on social media, building an email list, and collaborating with non-competing businesses near our location.
The nightclub will have two large bars that will serve spirits, soft drinks, mixers, and beer. We will also have higher-value drinks such as bottles of premium spirits and champagne for VIP customers.
The Edge will have start-up expenses of $275,000. In the first three years, we anticipate a total income of $511,200, $616,000, and $732,700.
This will lead to net profits of:
Year 1: -$62,040
Year 2: $8,750,
Year 3: $62,040.
Business Overview
The Edge will be a partnership between Jordan Craft and Anna Penn. Both owners have significant experience running clubs and will share management duties.
The nightclub will be located in an old office block on Second Street. This is a central location that is a short walk from several of the area’s most popular bars. It is also easily accessible by public transport from other parts of the city.
The two owners have already received permission from the relevant authorities to open a nightclub business in the area. The new venue is well-placed to be used as a nightclub but will require renovations such as soundproofing, creating a bar and dance area, and adding fixtures to ensure the venue adheres to social distancing protocols.
The Edge’s main selling points are:
- It will be the only club in an area with a growing nightlife scene.
- Its location is near to other bars.
- The owners’ experience of running successful entertainment venues.
Mission Statement
The Edge aims to provide a Covid-friendly, inclusive space for those who want to dance and have a good time late into the night. It will showcase cutting-edge, high-energy music trends and host talented DJs. This will help establish it as a top music venue, not just locally but throughout the city.
Start-up Expenses
Jordan and Anna will each invest $150,000 in The Edge. This will cover the start-up expenses of $275,000. A breakdown of these costs is listed below.
| Start-up Costs | |
| Office Supplies | $ 1,000.00 |
| Insurance | $ 3,000.00 |
| Lighting | $ 4,000.00 |
| Legal | $ 5,000.00 |
| Rent/Deposit | $ 5,000.00 |
| Marketing | $ 5,000.00 |
| Fees/permits | $ 7,000.00 |
| Audio | $ 15,000.00 |
| Renting equipment | $ 20,000.00 |
| Accounting/banking | $ 20,000.00 |
| Building utility upgrades | $ 20,000.00 |
| Renovation and repairs | $ 70,000.00 |
| Purchase of property | $100,000.00 |
| Total Start Up Expenses | $275,000.00 |
Market Analysis
The popularity of high-energy Electronic Dance Music (EDM) in the U.S. has seen year-on-year growth. As a result of the pandemic, total revenue in the bar and nightclub industry has seen a decline.
This has also coincided with a decrease in the number of nightclub venues. However, with vaccines being rolled out and economies opening up again, the steady increase in demand suggests there is room for our business to be successful.
Additionally, nightlife in the local area has grown over the last five years, with several new venues opening and operating successfully. Before the pandemic the bars nearby were busy, especially on weekends, and many of them had to turn away customers on busy nights. We believe this shows there is room in the market for The Edge.
Market Challenges
In addition to the pandemic, we are aware of other challenges in the industry.
Drinking guidelines are in place that suggest limits for the amount of alcohol people should consume. Additionally, the latest figures show that young people are drinking less than in previous years. As a venue that will generate cash flow from liquor sales, this is a worry.
There are several policies we will put in place to overcome this challenge to make our venue attractive to our target market. First, we sell a variety of non-alcoholic drinks at the bar. We are especially excited about the trend for non- or low-alcohol beers.
Image: Crew/Unsplash
Additionally, by attracting strong local and national DJ talent, we expect to create events that appeal due to the music, not just as a chance to drink alcohol. By charging an entrance fee for these events, we will be able to monetize customers who do not purchase drinks.
Another challenge is the possibility that other clubs will open nearby. However, there are currently no planning applications for another nightclub in the area. While this could change, we believe that by being the first we will be able to cement our reputation as a high-quality venue.
Competitive Edge
There are several reasons why we believe The Edge will be a successful business.
Reason #1: The Owners
Jordan and Anna have been involved in the nightlife business for several years. They have experience of what it takes to open and run a successful nightlife venue.
They also have expertise in promoting and they know what makes a great event. Their experience means they have an extensive network and plenty of industry connections, including venue owners, DJs, promoters, and suppliers.
Reason #2: The Location
The club is located in an up-and-coming district with a high-energy nightlife scene. While there are other bars around, there are no other clubs in the area, which means no direct competition. While competitors may open in the future, being there first is a fantastic opportunity to cement The Edge’s reputation as a quality venue.
Reason #3: The Venue Itself
The club has a great location nearby other venues, yet it stands out due to being significantly larger and having space for customers to keep a safe distance from one another and still have an enjoyable time. The venue has not been used as a nightclub before, so it will require complete renovations—this is an excellent opportunity for Jordan and Anna to create a specialized music venue.
Competitor Analysis
While there are no clubs in the area, there are eight other bars as well as two live music venues. There are also several restaurants.
The Edge’s main advantage over these businesses is that it will be a place specifically for dancing. We will open later, and our competitors simply do not provide similar services.
Citywide, there are six other clubs that we consider to be competitors. The population of the city means there is plenty of room for another new venue. We believe we can provide an experience that is better than the majority of the existing clubs.
Customer Analysis
The area has a high percentage of young professionals who enjoy nightlife and have money to spend on entertainment—as demonstrated by its growing nightlife scene.
Additionally, there are several new developments—both apartments and offices—being built nearby that means the size of the population is only likely to increase.
We have surveyed 1,000 members of the local community between the ages of 21 and 30, and they were receptive to the idea of a club. 85% said that if one opened they would be interested in attending, with 68% saying they would likely visit at least once a month.
Image: Samantha Gades/Unsplash
We may attract some students from the nearby college or older professionals on special nights out, but we anticipate the majority of our crowd being young professionals. As such, this is where we will focus our marketing.
Sales Plan
We will bring in revenue from both door takings and drinks. We anticipate setting door fees at between $5 and $15, depending on the night. On less busy nights during the week, there will be no entrance fee.
We expect the average cover to be $10.
Drinks will sell for between $2 and $6. Our VIP section will allow people to buy full bottles of spirits or champagne. The average cost of a drink will be $4.
We will also sell snacks at the end of the night. These will cost $8.50 on average.
Based on these figures, we anticipate bringing in $511,200 in year 1. This will go up to $616,500 in the year 2 and $732,700 in year 3.
Minus the cost of sales, this will result in a gross revenue of $428,560, $516,150, and $610,940.
| – | Year 1 | Year 2 | Year 3 |
| Unit Sales | |||
| Cover | 21300 | 25600 | 30100 |
| Drinks | 53300 | 64000 | 75200 |
| Food | 10000 | 12300 | 15400 |
| Unit Prices | |||
| Cover | $ 10.00 | $ 10.00 | $ 10.00 |
| Drinks | $ 4.00 | $ 4.00 | $ 4.00 |
| Food | $ 8.50 | $ 8.50 | $ 8.50 |
| Sales | |||
| Cover | $ 213,000.00 | $ 256,000.00 | $ 301,000.00 |
| Drinks | $ 213,200.00 | $ 256,000.00 | $ 300,800.00 |
| Food | $ 85,000.00 | $ 104,550.00 | $ 130,900.00 |
| Total Sales | $ 511,200.00 | $ 616,550.00 | $ 732,700.00 |
| Direct Unit Cost | |||
| Cover | $ – | $ – | $ – |
| Drinks | $ 0.80 | $ 0.80 | $ 0.80 |
| Food | $ 4.00 | $ 4.00 | $ 4.00 |
| Direct Cost of Sales | |||
| Cover | 0 | 0 | 0 |
| Drinks | $ 42,640.00 | $ 51,200.00 | $ 60,160.00 |
| Food | $ 40,000.00 | $ 49,200.00 | $ 61,600.00 |
| Total Direct Cost of Sales | $ 82,640.00 | $ 100,400.00 | $ 121,760.00 |
| Revenue | $ 511,200.00 | $ 616,550.00 | $ 732,700.00 |
| Direct Cost | $ -82,640.00 | $ -100,400.00 | $ -21,760.00 |
| Gross Profit | $ 428,560.00 | $ 516,150.00 | $ 610,940.00 |
Marketing Plan
We will promote The Edge using a variety of nightclub marketing strategies. We have already spoken to several local bars, and they seem open to collaborations. Ideas currently being considered include offering discounts on nightclub entry to people who can show drinks receipts from those bars.
Before opening, we will reach out to both local news outlets and local nightlife outlets to get press coverage. We will focus on our USP of being the first nightclub in the area, the owners’ strong connection to the scene and how we will adhere to Covid-19 protocols.
Once we are open, we will work to build a following on Facebook, Twitter, and Instagram, which we will use to promote our club nights. We will also develop an email list by providing discounts to people who give us their email address when entering the club.
We will use these platforms to build anticipation and promote events, as well as operate our guest list. In the future, we may sell tickets online for special occasions such as New Year or if we bring in well-known DJs to perform.
Image: Zac Bromell/Unsplash
Creating a community and a base of repeat customers as a new venue is important to us. We will increase the chances of this happening by operating an app-based VIP loyalty scheme, which will see regular customers receive benefits such as priority entrance and drink discounts.
Management Team and Personnel
The owners, Jordan and Anna, will manage the day-to-day running of the nightclub. As well as their industry experience, Anna studied management during her undergraduate degree and Jordan has spent time as a touring DJ.
The Edge will require six bar staff on busy nights and three bar staff during the week. Each shift will have one senior employee to supervise the team. For nights with a door fee, we will hire someone to receive payments.
We will also hire a house DJ as well as other special DJs for events. We anticipate hiring three security staff to man the door and perform security inside.
Jordan and Anna will each pay themselves $25,000 per year in the first year, with this increase in the following years. Bar staff, security, and other help will be paid $12 per hour, with the average shift lasting from 9 pm till 5 am at weekends or 9 pm till 3 am during the week. This includes prep time and post-closing processes.
Total expected personnel costs for the first three years are listed below.
| Personnel | |||
| Managers | $ 50,000.00 | $ 55,000.00 | $ 57,500.00 |
| Bartenders | $ 80,000.00 | $ 80,000.00 | $100,000.00 |
| DJ | $ 20,000.00 | $ 20,000.00 | $ 22,000.00 |
| Cooks | $ 60,000.00 | $ 60,000.00 | $ 60,000.00 |
| Cleaning | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 |
| Serving Staff | $ 40,000.00 | $ 40,000.00 | $ 40,000.00 |
| Attendants | $ 15,000.00 | $ 17,000.00 | $ 17,000.00 |
| Promoters | $ 5,000.00 | $ 10,000.00 | $ 10,000.00 |
| Door Staff and Security | $ 60,000.00 | $ 60,000.00 | $ 80,000.00 |
| Total Payroll | $ 370,000.00 | $ 382,000.00 | $ 426,500.00 |
Financial Plan
We have included detailed financial projections for The Edge in the table below.
| Accounts | Year 1 | Year 2 | Year 3 | |||
| Income | ||||||
| Sales | $ 511,200.00 | $ 616,550.00 | $ 732,700.00 | |||
| Total Income | $ 511,200.00 | $ 616,550.00 | $ 732,700.00 | |||
| Less Cost of Sales | ||||||
| Direct Expenses | $ 82,640.00 | $ 100,400.00 | $ 121,760.00 | |||
| Total Cost of Sales | $ 82,640.00 | $ 100,400.00 | $ 121,760.00 | |||
| Gross Profit | $ 428,560.00 | $ 516,150.00 | $ 610,940.00 | |||
| Less Overheads | ||||||
| Payroll | $ 370,000.00 | $ 382,000.00 | $ 426,500.00 | |||
| Sales and Marketing | $ 20,000.00 | $ 23,000.00 | $ 27,000.00 | |||
| Leased Equipment | $ 30,000.00 | $ 32,000.00 | $ 35,000.00 | |||
| Utilities | $ 4,000.00 | $ 4,000.00 | $ 4,000.00 | |||
| Insurance | $ 15,000.00 | $ 15,000.00 | $ 15,000.00 | |||
| Rent | $ 50,000.00 | $ 50,000.00 | $ 40,000.00 | |||
| License | $ 600.00 | $ 400.00 | $ 400.00 | |||
| Maintenance | $ 1,000.00 | $ 1,000.00 | $ 1,000.00 | |||
| Total Overheads | $ 490,600.00 | $ 507,400.00 | $ 548,900.00 | |||
| Net Profit | $ -62,040.00 | $ 8,750.00 | $ 62,040.00 |
Wrapping up
Opening a nightclub in the current climate will be no easy feat. Not only will you need to make sure you get enough customers through the door to make a profit, but you will also need to ensure all health protocols are followed to a tee.
By following the structure of the business plan in this article, you’ll better understand the steps you need to take to make your nightclub venture successful and the challenges you will need to overcome. For nightclub promotion ideas, take a look at this article.
If you’re planning to open a nightclub and are interested in building an app to encourage customer loyalty, get in touch with AppInstitute today.
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