The best way to learn the nightclub business

Posted November 11, 2010 by pamela in Blog | 2 comments

The best way to learn the club business is to start at the bottom.  Working in a bar is the right start to give you a good grounding as to how it works on the frontline, and therefore be able to manage your staff effectively.  Only if you fully understand every aspect of the club business will you be able to run a profitable club of your own.

It really is necessary for you to understand exactly how every job in the club runs in order to be able to keep a professional eye on your staff.  You need to know if someone is too heavy handed when pouring drinks, or if your bartender is stealing from the till.  Managing the door correctly is another thing that club owners need to be able to do efficiently.  A lot of cash is involved and it’s easy for an unscrupulous employee to be able to pocket money without anyone knowing.

There are many books available with simple management tips and do’s and don’ts, but by far the best way to learn is to actually get out there and do it.  There’s just no substitute for hands on experience.  A fast track way of learning the grass roots of the business would be to enquire as to who may be interested in selling an existing business, and then mentor under one of the owners before you actually take over.

Make sure you visit numerous clubs and just watch.  Try to work out which areas run well, and where the weaknesses lie.  Then you can modify any good techniques for use in your own club.  If you keep a sharp eye out, it’s amazing how much you can spot.

When visiting clubs on fact finding missions, what is your initial impression as you enter.  Does it appear to be a fun place?  Is it cramped, smoky, crowded, empty etc?  Take a position at the end of the bar where you can watch people enter.  Do they buy a drink or leave without spending money?  Do they leave after one drink?  If you want to run a club, you need to have, or must learn, the ability to read a crowd.  If a nightclub is not run correctly it will prove extremely expensive and on a fast track to failure.

Take a look at the current ‘hot’ clubs.  Why are they so popular?  What draws people to them?  Look at the location.  Is it in an entertainment district or is the draw so good that the crowds flock to a not so accessible area just because of what the club offers?  What special nights are offered, are they successful and how long has the club been running them?  Take a look at the DJ’s the club uses and the type of music played.

These are all questions you need to ask, and tips and tricks you need to take on board if you want to become a successful club professional.

How to ensure there are no liens on the bar you want to buy

Posted November 11, 2010 by pamela in Blog | 1 comment

What exactly are liens?  Well, it’s a legal claim by a lawyer on any piece of property or real estate.  Lawyers have the right to place a lien on a client’s estate to ensure payment for any services they have carried out.  The amount of the lien will be equal to the sum of the amount of work they are carrying out for their client.  In essence, this means that a lawyer is ensuring a guarantee of payment in the form of an asset or property if the client does not pay them for their services.

Business liens should always be settled before you purchase a bar.  It is up to you to ensure that there are no outstanding debts owing that are guaranteed in this way.  You must be extremely rigorous in your investigations, as finding out after you have signed on the dotted line could prove a major headache, not to mention very costly, further on down the line.  If you take on a bar with an outstanding lien, you will then be taking on liability for the lien.

As well as asking the seller about any past legal proceedings involving the bar.  Check that all associated bills have been honoured and make sure you see as much paperwork to back this up as possible.  Every state provides rights to both attorneys and clients and has set rules and regulations regarding these.  The exact regulations in your particular state can be found out from the State Attorney’s Office.

You will more than likely find that the seller wants to move forward with the sale at the fastest possible pace.  Do not allow them to pressure you into making shortcuts in your investigations.  It is your responsibility to make these checks and to ensure that you have the details down in writing with each and every legal point marked down.  The safest way to make sure that this is done is to hire a lawyer to work on your behalf.

Choosing whether to lease or buy your bar

Posted November 11, 2010 by pamela in Blog | 1 comment

One of the main reasons for choosing whether to lease or buy will be how much capital you have to spend up front.  Your experience in the bar or nightclub trade can also be a big factor on your choice.

It is often recommended to beginners in the trade that they start off with leasing their chosen business.  That way you don’t risk any large sums of money and are able to pay smaller amounts on an ongoing basis to your landlord.  Leasing is the easiest way to get into the trade and it means you can budget your outgoings on a monthly basis.

When you lease, you sign a contract with your landlord for a specified amount of time – usually 5 years although this can differ depending on the region you are it, and then you pay rent on a monthly basis.

You can also choose to lease the equipment you need inside your bar.  This will enable you to build up an inventory as and when you need it in order to expand your business.  If you choose to go this route, only get the essentials you need to begin with as you can add to it if and when it becomes necessary.  This is a good way to begin without having to spend out large sums of money but will always prove more expensive in the long run than buying your own equipment.  However, if you buy and then decide you wish to change (for instance furniture, bar stools etc), you are stuck with what you have bought unless you want to make the cash outlay once again.

If you choose to buy your bar, then you purchase what is called the freehold property.  This obviously involves a large initial outlay but you then own the bar outright.  In the long run, this would turn out to be the cheaper option rather than leasing, but it all depends if you have the funds to front the purchase to begin with.

It is wise to consult a tax advisor to help you with the choice of leasing or buying.  They will make you aware of the tax implications of both options and help you chose which is most advantageous to you.

Whichever option you choose, it is imperative that you hire a lawyer to look after the legal side of things.

Do not buy a bar without seeing these figures first

Posted November 11, 2010 by pamela in Blog | 1 comment

So, think you’ve found the perfect bar?  It seems like a little gold mine, with a great clientele, great name acts and must be making a mint – right?  The owner wants a quick sale, for personal reasons, so he says, so he’s willing to let it go for a ‘once in a lifetime, can’t be missed price’, but he needs to shake on it without delay.

You’re poised, pen in hand, about to do the deal and sign on the dotted line.

STOP RIGHT THERE!  And take a deep breath.  Buying a bar is a huge commitment, so you need to make damn sure you have done your homework and left no stone unturned.  After all, you’re buying this bar to make a profit, yes?  Maybe it really is the deal of the millennium, but before you commit, make sure you have the following figures and information.

At an absolute minimum, you must have seen and digested the following:

• Daily cash outs
• Supplier invoices
• Profit and loss figures
• Tax returns

You also need to take a good look at the economic climate, or if any major competitor is about to move into town.  These are two very valid reasons for your ‘deal of a lifetime’ to be end up being the complete opposite.

A recent news article told the tale of a nightclub owner who was informed by the Fire Marshall that if he didn’t install a new sprinkler system (costing $40,000), that his capacity of 800 people was going to be reduced to a maximum of 300 people. This raises a hugely likely scenario of the nightclub owner selling for a good price, based on the current throughput and income, but the poor unsuspecting buyer being saddled with a massive bill soon after taking possession of the keys.  It sounds a bit far fetched?  Well stranger things have happened.

So, you need to ensure that you have done as much digging into your potential new investment as you possibly can.  If the vendor is not happy to provide you with all the figures and paperwork you need to convince you that it’s a good buy, then walk away.  They’ll always be another project somewhere else for you to invest your hard earned cas

What is the best way to approach an owner to sell?

Posted November 11, 2010 by pamela in Blog | No comments yet

So, you’ve spied a venue that you’re interested in purchasing.  Maybe it’s a place you regularly frequent, or somewhere that has come to your attention as being in a prime location, but not pulling in the amount of trade that the location warrants.  Of course, it goes without saying that you’ve done your homework and put in the time to check the place out.  You’ve noted the type of clientele that frequent the establishment, the footfall through the door, the style of music, and the age of the crowd they pull in (or fail to pull).   From your in depth detective work you think you may have spotted why this place is not proving to be the gold mine that it has the potential to be.

The next thing to do is to find out if the owner will be responsive to selling.  So how do you find out who the owner is?  After all, it’s pretty common for the owner to not actually work in the establishment.

The easiest way to find out who owns the venue is to ask the State Liquor Authority.  They can tell you who holds the licence for the property.  Alternatively, you can go to the local courthouse with the address and ask the County Appraiser to help.  Some counties have tax information displayed on the internet.

You can also try online, at the offices of the Secretary of State.  Here you can search by business name to find the registered agent for the venue.

Try calling the Assessor’s Office and ask for the website to which they subscribe.  On here you’ll find lots of information such as the age of the building, the size and other useful information such as previous owners.  If you’re lucky, you may find that the last purchase price is listed here, a great nugget of information.  If the property was, or is, leased, then the owner may still share this information with you.

Of course, the most upfront way is to go into the venue and speak to the bar staff.  Ask who the manager is, or to speak to the owner.  You can also glean a whole host of information from the bar staff, especially when trade is slow.  Just buy a drink, pull up a stool and start chatting.  This is probably the easiest and most direct way of finding out information about your proposed new project.

How to compete with established bars in a college town

Posted November 11, 2010 by pamela in Blog | No comments yet

If you’re considering purchasing a bar in a college area, and you want to target the college crowd, then you need to look hard and deep at your strategy.   Firstly – the location is imperative.  If your bar is half a mile away from the main bar area that the college kids frequent, then you are starting off at a major disadvantage.

The college crowd is one of habit.  They drink where their friends drink, where the alcohol is cheap and plentiful and where the atmosphere and entertainment is great.  These kids want fun fun fun, fortified by cheap and plentiful booze.

Promotions; they need to be well thought out, regular and need to be specifically targeted to make the kids come to your bar.  Use every holiday, special day, college event etc to your advantage.  A promo for term end, one for the beginning, Christmas, Easter, Halloween, mid-term exams, end of term exams – each and every one needs to be exploited for advertising and promotion.

Don’t forget sports, as these are a huge part of college life.  Support the teams – football, baseball, basketball and anything else which is popular.  Pick a couple of the most popular teams and print up tee-shirts with both the team name and your bar name.  Run promos when they play.  The kids will either be wanting to celebrate or commiserate, and you can provide them the venue in which to do so.  You could even consider running shuttle buses from the sports grounds straight to your bar.

Think about running a regular college band night where different college acts can play in your bar. Live music is a real pull for the college crowd.  Plus, the acts will probably be very cheap, or even free, as they’ll be glad of the exposure.

If you run promos for fraternities and/or sororities, make sure you pick the largest crowd and advertise, advertise, advertise.  But make sure they show their ID to qualify for the promotion.

On the subject of advertising, you need to exploit every outlet possible.  College newspapers, local radio, flyers, posters, tee-shirts; anything that keeps the name of your bar mentioned and seen over and over again.

Make sure you keep well up on the ‘in’ drinks and fads.  For instance, if the big towns are pushing ‘fish bowls’ or certain shots, make sure you follow suit so the kids can keep up with what’s all the rage.

It’s an ongoing task, keeping the college crowd keen on your venue.  But with good research and targeted advertising, you’ll be in with as good a chance as possible.

5 things you would want to know before buying a bar or nightclub

Posted November 11, 2010 by pamela in Blog | No comments yet

There are many aspects to be taken into account before you part with your cash.  Once you’ve decided that you really do want to run your own bar or club and can cope with the incredibly long hours, huge amount of stress and physical toll of hours spent on your feet, then you need to consider the following:

1. Why is the property for sale?  If it is a going concern, is the business profitable?  How long has it been under the present ownership, and do the owners have a hospitality background?  Are there future plans for competition opening up close by?

2. Location.  Of course, you know the physical location of the property, but how accessible is it?  Are there good transport links so your customers can get there easily?  Is there a demand for a bar/nightclub in that particular location?  For instance, if you’re planning on catering to the college crowd, there’s little point in having your venue in a residential family area.

And make sure you check out condition of the building itself and the workings.  You don’t need to get lumbered with a huge restoration or repair bill a few months down the line.  Get expert advice.  For example, have a Fire Marshall come and confirm the safety of the building, and get professionals to check the heating, air conditioning, kitchen equipment and refrigeration etc etc.

3. Check out existing contracts.  You’ll need to find out if you will be tied to  these when you take over.  And not just the alcohol contracts, what about staff?  If they are all due a pay rise in 3 months time, are you obliged to honour this?  However, if you find you will be tied into existing contracts, you can use this as a bargaining tool when negotiating the purchase price.

This is only an issue if the business is a going concern.  If it’s been closed for over a year, then it does not apply.

4. Marketing.  How much effort do the current owners put into marketing?  All of the big, successful clubs have a decent marketing budget, and if the current owners have cut back (perhaps due to financial difficulties), then the marketing budget is always the first to be cut.  Find out how much the owners have invested, and if there is any publicity material already printed but not distributed that you could utilise.  Although if you are re-branding this would probably not apply.

5. Finances.  Obviously, is the place running at a profit or a loss?  How much access will you be allowed to the current accounts?  What are the day to day running costs?  What is the current structure of the company?  Is it a sole trader, or a partnership?  Maybe you could negotiate a gradual buyout, therefore giving you a level of security if things don’t go to plan.  This has the added advantage of forcing the current owners to stay on for a while and benefiting you with their expertise.

What you need to consider when opening a bar or club in NYC

Posted November 11, 2010 by pamela in Blog | No comments yet

New York City can be a tough place, so it’s imperative that you put as much groundwork as possible into your preparations to give your business the best chance of success.

• Take a close look at the amount of funds you have available.  Include your equity, any partner’s equity, savings, loans and any other possible sources of funding.  Then you need to work out your budget and business plan.  In doing so, if you over estimate your perceived costs on absolutely everything, you may come close to your actual costs in reality.
• Seek out the ‘perfect’ location.  This will, of course, depend on your budget, your target crowd and the type of venue you wish to open.  Although New York is a city, it’s essentially made up of lots of neighbourhoods, each with its own individual ambiance and style.  You’ll need to ensure that your establishment will fit into the neighbourhood you choose.  You also need to take into account the size of the property and that the zoning won’t restrict your needs.
• If your chosen property does not already posses a liquor licence, then it is imperative that you check you’ll be able to obtain it BEFORE you sign anything or part with any cash.  Whether the licence is for a new one or a transfer, start the application at the earliest opportunity as it can take months to be finalised.  You may be well advised to use an expediter to deal with the NYS red tape.  Make sure he is also up on the local community board and any other possible issues.
• When negotiating the terms of your lease, use a lawyer.  You should have already agreed on rental terms etc, but ensure you have a lawyer to sort out the fine detail.  Making sure you sort out your lease before you sign.  This prevents any nasty surprises further down the line.
• Talk to contractors at an early stage.  Ensure that your plans for the building are actually feasible, and get a basic idea of what it is going to cost.  Do your homework on these guys as well to make sure you get the best architect, building contractors and audio/visual installers that you can afford.
• Okay, so things are progressing well and you sign the lease.  Now is the time to finalise your liquor application and start putting the build and changes into place.  The extent of any changes you are making will determine if you need to get permits from building departments.  Again, this can be time consuming so it may be worth your while to once again use an expediter.
• Once you have sorted all the above you can start buying the fixtures and fittings, furnishings and equipment.  As all the pieces of the jigsaw begin to come together, you need to start thinking about staff, inventory and promotions.  The final step is to open the doors and start selling.

Good luck.

Why it can be so difficult to run a bar/club

Posted November 11, 2010 by pamela in Blog | 2 comments

It’s easy to find helpful hints and tips to make your bar or club successful, but let’s take a look at some of the difficulties you may encounter.

• Traffic

And we’re not talking cars driving past, we’re meaning the footfall of paying customers coming through the door of your venue.  Right now, pretty much no matter where in the world your bar or club is located, times are tough.  This means people are cutting back and not spending so much on the little luxuries of life, such as going out and spending their money in your club or bar.  This is currently your biggest challenge, and you need to ensure that you’re place is offering something that your competitors are not.  Say to yourself, what is my unique selling point?  If you can’t work it out, then you need to get your thinking cap on and create one.

• Employees

This is a biggy!  Finding hard working, decent, honest people to work for you is an ongoing headache for any bar or club owner.  When you find decent staff, you need to make sure you treat them well to make sure they remain loyal and remain working for you.

• Your own attitude to the business

Because that’s what your bar or club is, a business.  It can be difficult when you are constantly surrounded by people enjoying their leisure time.  You put a lot of time and effort into making your bar/club into a fun place, which encourages people to relax and kick up their heels.  It takes a strong will not to allow yourself to be drawn into this atmosphere as well.  You need to remember that although you have created this wonderful place, that it’s actually your place of work.  It’s all too easy get caught up into the party lifestyle, and then before you know it you’re kicking back with your punters, drinking the profits and forgetting exactly what it is that you set out to do in the first place.

• The ever changing shift in the customers wants and needs

Just when you think you’ve got it cracked, and you’ve created the perfect venue for your loyal customers, one of your competitors will come up with a cracking idea or promotion, and all your regulars will toddle off over there to find out what the crack is.  Never become complacent, always be thinking of your next move to attract the customers, because you can be damn sure that’s what the competition is doing.  Remember, fads and fashions change overnight, so you need to keep up and adapt with them.

The basics of buying a bar business

Posted November 11, 2010 by pamela in Blog | 1 comment

As in any business, you need to understand the basics.  So, if you have no background in running a bar, the very first thing you need to do is to gain some experience.  The easiest way of doing this would be to go and actually work in a bar.

Once you are happy that you have got to grips with the basics, it’s a good idea to decide exactly how you want to go about getting into the business.  You can choose from buying a business outright – known as freehold, or renting on leasehold, in which case you will sign a lease for a specified amount of time (say five years) and pay the landlord rent on a monthly basis.  If you don’t have a large amount of cash to begin with, then leasehold is by far the easiest way to start in the industry and would be the recommended course of action for the first time bar owner.

The you can begin your search for that perfect premises.  Obviously, the first thing to do is to choose your area, and then you can start the hunt for any businesses for sale.  Word of mouth, real estate agents, newspaper adverts, or just go right out and ask people, there’s many ways of searching these out.

Don’t expect the business of buying or leasing a bar to happen overnight.  You need to understand that the formalities will take a few months to complete, and that you will need to hire a lawyer to take care of the legal side of things.  You lawyer can also handle other issues such as licences, tax, insurances etc.

The various taxes and licences you have to pay will depend on many things, such as the type of bar you run, how many names on the licence and also vary depending on the area you are in.

In general, you will have to pay on the following:

• Community tax
• Bar and alcohol licences.  These are an ongoing cost.  You may have to pay for a name change to begin with, and then there will be a yearly cost.
• National Insurance costs will have to be paid, not only for yourself, but also for each and every one of your staff.

Other general costs you will need to factor in will be for any restorations, renovations and design, furniture, bar accessories, advertising and promotions, and salaries for your staff.