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The Ultimate Guide to Starting an Event Venue Business
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If you’ve got a knack for hosting great parties, you may be considering opening your own event space. But you’re likely weighing the pros and cons of owning your own venue. While you would have the ability to choose the types of events you host, you’d also assume responsibility for financing the business, obtaining the proper licenses and promoting your event space to build your customer base.
Before you begin
The U.S. Bureau of Labor Statistics has forecast event business growth of 7% through 2028, faster than the average growth rate for all other occupations.
But starting an event venue business requires much more than the key skills you may already have — being super organized, a problem-solver, a people person with great communication skills and a great vision, in addition to an eye for detail. It’s a good idea to ask yourself some important business-related questions before you start:
- Will I be able to weather the challenges of owning a business?
- Am I ready to accept the risks and sacrifices of starting my own business?
- Do I have (or can I develop) the business acumen necessary to start and run a business?
Owning an events business takes guts and dedication. If you’re convinced you have what it takes to start your own event space, you’ll need to prepare an action plan to guide you through the journey of turning this dream into a reality.
Do your research
Research is a critical step, as you’ll need to determine the viability and requirements of starting an event space in your desired location. The information you gather will also help you develop a business plan, a must if you’ll be seeking financing. You also need an understanding of the economics of starting your event space.
As a first step, reach out to professional trade associations, such as the National Association for Catering and Events and the Wedding International Professionals Association. These professional groups can provide data on the industry, information on becoming a certified planner, mentoring programs and the opportunity to network with other professionals that have started their own event spaces. There are other associations out there, but most are geared more toward large conventions, so they might not be best for entrepreneurs who are starting small.
Next, start finding the best location for your event space. It’s important to understand the potential of your market and your competitors. Is there enough business available to support another venue? What are your competitors offering? Will you be able to stand out from the competition? The last thing you want to do is start a business in an area that can’t support it.
Create your event venue business plan
As you do your research, develop a business plan for your event venue. Your business plan should act as a road map for your startup, and it’ll be a crucial tool to secure investments and outside financing. An event venue business plan should include:
- Executive summary
- Company overview
- Industry analysis and competitive analysis
- Customer analysis
- Operations plan
- Marketing plan
- Funding request
- Financial plan with detailed expenditures and a three- to five-year revenue forecast
Starting an event venue business in 6 steps
After conducting your research, it’s time to put your event venue business in motion. There are a lot of steps — some creative, others administrative — but this is the first step toward achieving your goals.
1. Define your offerings.
What types of services do you want to offer? Do you want to own a wedding venue or focus on corporate events? Think about what your competitors are providing and how your offerings can set you apart.
Consider starting with a particular niche, then expand your offerings over time. Think through what’s manageable, but don’t limit things so much that your event space is unused five days a week.
2. identify your target audience?
In conjunction with defining your offerings, it’s a good idea to think about the people you’ll be serving. Make sure you design your services, location and customer experience based on who these customers will be and what they’ll need. For example, you don’t want to build a luxury events business in an area where residents are looking for middle-of-the-road prices.
3. Take care of the business legalities.
There are various legal business structures to consider that will determine your taxes, personal liability and how much paperwork you’ll need to complete. A sole proprietorship is a popular business structure because it gives the owner complete control over the business — and it’s easy to form. However, as sole proprietor, you’ll be personally liable for your company’s debts.
You could also choose to form a limited liability company if you are interested in liability protection. An LLC structure would separate you from the business, protecting your personal assets and allowing you to avoid personal responsibility for business debts.
4. Find a location.
This will probably be the most important and expensive decision you will make. Your location needs to fit with your business model. For example, if you’re focused on weddings, you might want a space where there’s ample indoor and outdoor ceremony areas and rooms where bridal parties can get ready. There are a lot of things to consider, such as:
- Buying or leasing a building
- The amount of money it will take to get the space in good condition
- The amount of square footage you need
- The type of kitchen space you need
- Adequate parking for guests
Consider all of these variables carefully — they’ll determine your initial capital expenses and your ongoing operational expenses.
5. Obtain permits and licenses.
When you register your business with your state, you’ll have to get business permits and licenses, such as permits for construction and a license to sell liquor. You’ll also have to meet laws and requirements regarding maximum capacity, noise levels and inspections to ensure the building is up to code and not a fire hazard.
6. Purchase operational assets.
Although your building will likely be your biggest expense, there are other things you’ll need to purchase or rent to be able to open the doors — these may include furniture, computers, a stage, dance floor, audio-visual equipment, podiums, dishes, glasses and silverware.
Make an exhaustive list and determine what you need to purchase and what you might want to rent or outsource to other vendors. In the beginning, it might not be feasible to buy everything, so you’ll need to find cost-effective solutions like leasing to keep what you need on hand to operate the venue.
How much will it all cost?
Your costs are going to vary widely, based on your location and type of venue. Opening a venue in Chicago, for example, would be a lot more expensive than opening one in a small town a few hours outside the Windy City. As you go through the steps for creating your business, keep a running list of all the things you’re going to need so you can research costs specific to your location.
If you’re considering food service at your events, you may want to take a moment to think about hiring out your catering, said Irene Santia, co-owner of Santia Hall, a waterside event venue in Keego Harbor, Mich.
“The biggest cost aside from the building is the kitchen,” Santia said. “You could outsource the food to a caterer, which would significantly reduce your kitchen expenses.”
There will be ongoing expenses that you’ll need to account for when you’re running your day-to-day business. These will include things such as office supplies, utilities, maintenance, cleaning services, taxes, insurance, professional fees if you need an attorney or accountant, marketing costs and, most important, your team. All of these types of expenses will make up the monthly budget that you’ll need to run the business.
Event venue business financing
Starting an event space is a capital expense, so you’ll most likely need financing to get started — and potentially for operations — for a period of time.
“It takes time to get the business going,” Santia said. “People plan events months ahead, so it takes time before you make any money. You need to plan on how you are going to stay afloat while you’re getting established.”
There are various types of small business loans you should research to determine what might work best for your situation. LendingTree is a valuable resource from which you can learn about different types of loans and what you need to apply — then compare loan offers from multiple lenders.
Marketing your event space
As you get close to opening your doors, market your business early so you can start booking events. Use your social networks to get the word out. You might also want to consider hosting an event at your new venue and inviting potential clients to see your space. You have to get creative to keep your marketing budget down while getting as many bookings as possible.
“You absolutely have to be booked on weekends to pay the bills,” Santia said. “You need to work to book events during the week, too, because that will be your gravy.”