Hi everyone, Eric Goldschein from Fundera,
here today to talk to you about one of the most popular topics on our blog: How to start
an event venue. I’ve talked to quite a few people in this
business over the years, and let me tell you: I get the appeal. You’re essentially in the party business. If you like helping people have a good time—whether
that’s weddings, concerts, or anything else that requires a beautiful space and food and
drinks—it’s the right line of work for you. But keep in mind, it’s still work. Making sure that every night’s event is
a success isn’t easy, and until you’re profitable enough to hire someone else to
manage day-to-day operations, you’ll need to be constantly on your toes to address any
issues that come up. Let’s not get ahead of ourselves, though. We first need to understand the logistics
of starting an event space, and learn what goes into building a successful business.
Here are five steps to starting your own event
venue: Step number one is do your research. I know, this isn’t the most fun step, and
it seems obvious. This step is pretty much the same for every
type of business that you’d want to start, but it’s especially important when opening
a venue. Questions about location, viability, competition,
target market, and local laws are crucial to address really early on. Your goal here is to put together a business
plan that addresses a few important questions. We’ve got some resources on our blog that
can help you write a solid business plan, but here are a few things to keep in mind. You want a business plan that covers: An executive summary of what your business
is, who’s involved in making it a reality, your current financing, and what your goals
are for the next 3-5 years.
A market analysis that describes the event
venue industry, gives an overview of your specific target market, outlines your target
pricing, and lists research on competitors. A marketing and sales plan so you can hit
the ground running when it’s time to get the word out about your business. Financial projections, like capital expenditure
budgets and cash flow forecasts. If you’re doing research and find yourself
stuck, try reaching out to organizations like the National Association for Catering and
Events or, if this will be a wedding venue, the Wedding International Professionals Organization,
or find a mentor via SCORE.
These organizations can provide you with guidance
and resources as you create your business plan. Step two is find your location. If you’re interested in starting an event
venue, you probably came to this video with a location in mind. Maybe it’s an old venue near your home that
you’ve dreamed about turning into a space of your own, or a building you’ve come across
in your travels around your city. Or maybe you don’t have a place in mind
yet, but you’ll know it when you see it. As you can imagine, your location is one of
the most important aspects of running a successful event venue business. Not only will your space and the surrounding
area play a big role in how well your business does, but it’s one of the few things you
won’t be able to upgrade as easily as other aspects of your business, such as what linens
or light bulbs you use. The kind of event venue you want to run will
also dictate the space you end up going with.
A concert venue and a wedding venue require
different spaces and additions—from available parking to dressing rooms. If you see a space available to rent or buy
that has visible contact information (like a sign out front or in the window), get in
touch with the owner’s point of contact that way. Otherwise, go online and find a commercial
real estate broker in your area, who can help you find a space that fits what you’re looking
to do. Give them your requirements—such as outdoor
space—and let them find something that works for you. Keep in mind: You should never sign a contract
to enter into an agreement on a space without having it reviewed by an attorney. This could be your personal attorney or a
recommended expert in the field of commercial real estate. An attorney that is an expert in this field
will also be able to help you navigate local zoning laws and regulations.
It’s a good idea to have an idea of what
upgrades or permits a space may need to get up to code before you make your down payment
on it. Step three is start acquiring your equipment
and making investments. Your biggest overhead expense is out of the
way, but now you have to get your hands on everything you need to outfit your space. Again, this depends on what kind of venue
you’re opening, but you might need things like equipment, tables and chairs, linens,
flatware, and so on. Taken all together, these can be hugely expensive
investments. You have a couple of options here. The first is to start small: acquire used,
refurbished, and otherwise-not-new equipment. If what you’re buying or renting is good
quality, or will be used behind-the-scenes, who cares if it’s brand new? It can take event venues years to build up
the financial wiggle room to buy everything brand new, and that’s okay.
The second is to look into equipment or inventory
financing through a business lender. This kind of financing is a good option because
the equipment or inventory itself acts as collateral, and you don’t need an extensive
business credit history to qualify. If you think that having the very best from
the get-go is imperative to your success, see what taking out a loan would do to your
budget. Keep in mind that you’ll have to make lots
of other investments and expenses, such as renovating your space, maintenance costs,
recruiting and hiring staff, and advertising and marketing. These costs should all be considered in your
business plan from step one.
Step four is get the ball rolling on promotion. When starting out, you may have to eat the
cost of promotion in order to get your name out there. That can mean anything from crafting and promoting
sponsored posts on social media, to attending events, parties, and conferences in order
to network, to throwing events at your new space in order to get the word out about your
venue. Sometimes all it takes is one well-shot Instagram
post from someone influential in your community to get the inquiries rolling in. As one event venue owner once told me, “You
have to get people to eat your product before they agree to pay for it.” Budget for this kind of expense early on.
Your only other option is to sit around and
wait for the phone to ring—which isn’t going to work well. Additionally, you need to have a robust and
inviting web presence at the ready when it’s time to start bringing in clients. If someone visits your website or social media
channels, they should feel confident that you run a legitimate venue, worthy of their
time to look into. Step five is to set your pricing and to start
accepting gigs. When it comes to pricing, you should already
have a good idea of what competitors in your area and at your level are charging.
Look to set yourself in line with, or a little
below, the market rate when starting out. When it comes to a business that is so reliant
on customer reviews and feedback like an event space, it’s more important to book events
than it is to make a fat profit in the beginning. If you’re not getting clients, you’re
making nothing, and your staff is making nothing. Be flexible in your pricing and do what you
need to do to get the business off the ground. As you continue to rack up events, you can
use subsequent profits to improve on the go: upgrading your equipment and amenities, expanding
the menus, and hiring more and better staff. You’ll also get better at identifying deals
on ingredients when you’re catering, or understanding how to repurpose food or other
items so nothing goes wasted. Just like with anything else, practice makes
perfect. That about does it for our rundown of how
to start an event venue. Of course, there is way more to learn about
the business, and starting a small business in general is something you can never research
enough.
We’re including some resources in the description
below to help you learn more about starting specific kinds of event venues, such as wedding
venues, as well as resources on how to start any kind of business. Let us know if you have any questions or thoughts
in the comments below, we’d love to hear from you. For more, subscribe to this YouTube channel
and visit us at fundera.com/blog. Thanks for watching..
