How To Start an Event Venue Business
If you’re considering opening an event venue business, you’ll need to find financing, choose a good location and obtain the proper licenses. You’ll also need to handle all the details that come along with opening a new business.
1. Do your research
As a first step, reach out to professional trade associations, such as the National Association for Catering and Events (NACE) and the Wedding Industry Professionals Association (WIPA). 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 who have started their own event spaces.
Next, research the potential of your market and your competitors. Is there enough business available to support another venue in your area? 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.
To research prices you can charge, first start by looking at how much your competitors charge and what kind of customers you’re catering to, such as luxury weddings or budget-friendly family reunions. Next, tally up your own cost of operating the business and compare the two numbers: your projected earnings versus costs.
Organize your research as you go – you’ll need it as you create your business plan and take your first steps towards launching your business.
Tip: When researching costs, remember to factor in marketing, kitchenware, utility bills and all the other miscellaneous costs that can add up.
2. Create your event venue business plan
Once you have your research done, you’ll need to create 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 an:
- Executive summary
- Company overview
- Industry analysis and competitive analysis
- Customer analysis
- Operations plan
- Marketing plan
- Financial plan with detailed expenditures and a five-year revenue forecast
Now’s a good time to hammer out the nuts and bolts of what your business will look like. For example, will you have a kitchen on-site, or will you work with outside caterers?
Take the time up front to make your business plan as detailed as possible so you’ll have a roadmap to follow.
3. 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.
In addition to renting your venue, look for other ways to use that space to generate income during slow times of the year. Consider becoming an event producer to bring people to your venue via concerts, fairs and expos, which can also help boost your bottom line.
While outlining your offerings, consider 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.
4. 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. An LLC structure separates you from the business, protecting your personal assets and allowing you to avoid personal responsibility for business debts.
If you choose to form an LLC, you’ll likely want to decide on a business name and file your incorporation paperwork to protect yourself from liability before purchasing any business assets.
5. Find a location
This will probably be the most important and expensive decision you will make. You can buy or lease a location if you don’t already own one. You may need to build an entirely new facility, as well, or at least remodel an existing structure. Here are some things to keep in mind as you consider your options and how much they’ll cost:
- Adequate parking for guests
- The type of kitchen space you need
- The amount of square footage you need
- Regulations governing food and fire safety
- Bathroom facility types, location and management
- Creating flexible and unique spaces to attract event planners
- Support for ancillary services, such as sanitation workers, party rental companies and other vendors
Consider all of these variables carefully — they’ll determine your initial capital expenses and your ongoing operational expenses.
6. Obtain permits, licenses and insurance
Making sure that you have all the official paperwork in place helps protect everyone and keep your business running smoothly. Each of the three levels of government — federal, state and local — may have different small business requirements to comply with the law. Here are a few important ones to be aware of with an event venue business:
- State and local alcohol licenses
- Local fire and building code inspections
- State, county or city business licenses and seller’s permits
- Noise ordinances
Figuring out legal requirements isn’t always easy, but a local Small Business Development Center, small business attorney or your Secretary of State can help.
Remember to consider what types of business insurance you’ll need as well, including:
- General liability insurance
- Professional liability insurance
- Commercial property insurance
- Workers’ compensation, unemployment and disability insurance (required by the federal government for all businesses with employees)
7. Purchase equipment
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, lighting, 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.
You can also consider purchasing equipment with assistance from an SBA loan or equipment financing from an alternative lender.
8. Market your business
Potential customers need to know about your business before you open your doors so they can book your venue. Here are a few ways you can market your business:
- Offer a discount for the first few customers
- Create and distribute posters in high-traffic areas around your town
- Create and run advertisements in your local paper and on social media
- Create a website, social media profiles and add your business on Google
- Reach out to local event planners and let them know you’re available for booking
- Attend trade shows and conferences in your area to network with potential customers
- Schedule an open house with prizes, snacks and perks to attract potential customers
9. Open your business
It’s a good idea to have everything on hand that you’ll be using in your business at least three months before you first open. Holding trial runs or “dummy events” can help you and your staff work out any potential snags before you have real, paying customers.
Rent anything you won’t be offering at first, such as tables, linens and chairs, and hire a good photographer and/or PR firm who can take advantage of these trial runs to take high-quality photos that you can use in marketing materials.
You can also consider sending out press releases to local news organizations in order to get the word out. Donating unrented event space to worthy causes can be very helpful as you’re first starting out because it will build goodwill with your local community, and help get future customers in the door to see your offerings.
How much will it all cost?
The cost to start an event venue business varies widely. Depending on your location and the type of venue, you can expect to pay anywhere from $50,000 to $1,000,000 or more. 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 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. It’s a good idea to keep a copy of your projected costs in your business plan.
Operating 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.
Can you start an event venue business with no money?
Anything’s technically possible if you try hard enough. But starting an event business with absolutely no money — and no way of getting any — will be extremely difficult unless you’re renting out an empty field to someone who already has all of their own equipment.
Instead, you’ll typically need to invest some amount of capital into your event venue business. If you don’t have any money — and you’re far from alone, if you don’t — seeking out small business grants, investors or crowdfunding opportunities can be excellent options. It may be harder to qualify for a small business loan if you haven’t yet opened your business, but it may be possible with some lenders offering loans specifically geared towards startups.
Other tips for starting an event venue
Getting your business off the ground is one thing, but if you want to start an event venue that will stand the test of time, you’ll need to build a solid foundation. Here are a few additional tips to help you get started.
- Focus on customer service: Word of mouth is one of the best ways to market a new business, which means customer service must be a top priority as you’re getting your business off the ground. This could mean offering a more flexible reservation policy or hiring additional staff to keep up with inquiries.
- Prepare for seasonal and economic fluctuations: It’s likely that every event venue will experience slow seasons. But while seasonal fluctuations may be relatively easy to predict, the state of the economy can also have a big impact on the event industry. It’s important to have a plan for how you will sustain your business during these downturns.
- Leverage event management software: This software can automate manual tasks, streamline communications and make it easier to manage events, sales, billing and other important parts of your business. This may be particularly helpful for business owners who are new to event management.
Compare business loan offers
- 1. Do your research
- 2. Create your event venue business plan
- 3. Define your offerings
- 4. Take care of the business legalities
- 5. Find a location
- 6. Obtain permits, licenses and insurance
- 7. Purchase equipment
- 8. Market your business
- 9. Open your business
- How much will it all cost?
- Can you start an event venue business with no money?
- Other tips for starting an event venue