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.