The Ultimate Guide to Starting an Event Venue Business
“Wow, that was a great party!” Maybe you’ve heard this so many times that you’re considering opening your own event space, but you are probably wondering about the pros and cons of owning your own venue.
Irene Santia is the co-owner of Santia Hall, an event venue located in the small, waterfront community of Keego Harbor, Mich. After years of owning a restaurant, she decided to open an event space.
“The benefit of opening your own space is that you are both the planner and the host, which gives you more control over delivering a great event,” Santia said.
It’s a large industry: It generates $325 billion in direct spending and $845 billion in business sales — and it supports 5.9 million jobs — according to a recent report the Events Industry Council commissioned from Oxford Economics.
It’s not a bad time to get into the business, either. The U.S. Bureau of Labor Statistics forecasts industry growth of 11 percent from now to 2026, which is faster than the average growth rate for all other occupations.
Where to start?
Maybe you already have some of the key skills for being an event planner. You’re super organized, a great problem-solver, a people person with great communication skills and you have great vision in addition to an eye for detail. But starting a business requires much more, so before you jump in it’s a good idea to ask yourself some important questions:
- Will I be able to weather the challenges and persevere?
- 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?
Bottom line, it 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.
Research, research and more research
Research is a critical step because you 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, which is 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 organizations 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.
The fun begins: starting an event venue business
If, after conducting your research, you’re even more excited about starting your event space, it’s time to put pen to paper to create your business. There are a lot of steps — some creative and others administrative — but this is the first step toward realizing your dream.
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 offering and how your offerings can set you apart. Consider starting with a particular niche, then expand your offerings over time. Think through what is manageable, but don’t limit things so much that your event space is in the dark five days a week.
Who is your target audience?
In conjunction with defining your offerings, it’s a good idea to think about whom you’ll be serving. Make sure you design your services, location and customer experience based on who your customers will be and what they’ll need. For example, you don’t want to build the Cadillac of event spaces in a Chevy-type community.
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. The most common business structure is the sole proprietorship because it gives the owner complete control over the business — and it’s easy to form.
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 bridal parties can get ready. There are a lot of things to consider, such as: buying a building or leasing; 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; and, if there is adequate parking for guests. Consider all of these variables carefully because they will determine your initial capital expenses and your ongoing operational expenses.
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 will 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.
Although your building will likely be your biggest expense, there are other things you’ll need to be purchased or rent to be able to open the doors, such as furniture and 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 to keep what you need on hand to operate the venue.
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.
What will it all cost?
The 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 Peoria, Ill. 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.
“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.”
Creating your business plan.
Hopefully, you’ve been developing your business plan as you’ve been doing your research, because you’ll need it to get investors or financing. The plan should include an executive summary, company overview, industry analysis, customer analysis, competitive analysis, operations plan, marketing plan and financial plan with detailed expenditures and a three- to five-year revenue forecast.
Starting an event space is a capital expense, so you will most likely need financing to get started — and potentially for operations — for a period of time. There are various types of small business loans you should research to determine what works 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.
“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.”
You’re getting close to opening the doors, so marketing early is important so that 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.”