Open after dark: starting a nightclub is tough, but with the right location, look, and a little bit of luck, you can make millions

Black Enterprise, June, 2005 by Wendy Harris

Bowyer found securing a location one of his biggest obstacles: "I had to research the market value or leases for that size space and the [type of business I wanted to open.] I had to [look into the business that was there previously,] the reasons why it had failed, and if those were systemic problems inside of the business or issues outside of the business. I had to check the flexibility of the neighborhood because [the property] was located inside of a residential neighborhood. I also had to make sure that I could get through planning and review for the type of liquor license that I wanted to hold."

After that came negotiations with the property owner, who wanted Bowyer to pay nearly $11,000 a month in rent. Not pleased with that amount, Bowyer walked away from the deal. A second round of negotiations wasn't much better, so he rejected the deal again. After holding out for three months for a better price, Bowyer received not only a reduced rent but the existing kitchen equipment, which saved him $200,000 in startup costs. "You have to use the art of negotiation when purchasing property and employ every resource you have to check and double cheek every aspect of the deal. That's what I did," he says.

Once you settle on a site, experts recommend that you clearly define your club's atmosphere and style. Every club has a theme, and deciding which one to adopt for your venue is entirely up to you. Rau says, first ask yourself, "Do I want to be drastically different from everything else in the area or do I want to not rock the boat and just focus on doing basically the same thing that everyone else is, only bigger and better?"

When it comes to developing a strategy for attracting customers. Eau says most new owners stick to tried-and-true marketing methods such as flashy fliers and catchy radio advertisements. But many also use what is known as street teams. "It's a form of guerrilla marketing that includes club employees going out on the street and passing out fliers and business cards, and putting up posters, and saying, 'Hey, have you heard about this new place down the street?'"

There's no doubt deciding on location and ambiance are two of the biggest challenges when starting a nightclub, but there are others. Harrelson says that while there are a lot of risks involved in opening a club, there are also several rewards. Unlike some businesses, nightclubs continue to do well during tough economic times. And their revenue potential is very good. "Clubs in top markets are doing at least $1 million. Marquee, in New York, will do $10 million this year," he says. "Smaller clubs can earn anywhere from $250,000 to $500,000."

In the club: 10 Steps to Opening Your Nightclub

1 LEARN THE ROPES. There's no substitute for hands-on experience--behind the bar, at the door, or in a management position. A good resource for information on the industry is the Nightclub & Bar/Beverage Retailer/Food & Beverage Convention & Trade Show (www.night club.com). This national event attracts thousands of people who work in the hospitality industry. The 2005 show will be held at the Trump Taj Mahal in Atlantic City, New Jersey, Oct. 10-12.