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 and the Wedding Industry 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 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, 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. This research will help you with the next step, as well.
2. 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 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 flesh 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?
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. Donning an event producer hat to bring people to your venue via concerts, fairs and expos can also help boost your bottom line.
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.
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.
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 discriminating 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
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
- Worker’s 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, 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 them 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 $16,000 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 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.
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 SBA loans, which don’t have a specific minimum time-in-business requirement.