The nightclub business is not as simple as selling alcohol, counting the cash, or just dreaming up the “next hip idea.” It is a complex business that requires a tremendous amount of personal and financial investment. Success in this business depends on what your goals are and what you think you can execute to make the guests extremely happy, have a great time and come back to patronize your club.
1. Understand why people come to nightclubs — and give it to them.
Success in the nightclub business entails an acute understanding of people. Your understanding of what customers’ want will form the basis of your concept, your layout, your operational policies and others.
It is important to remember that different markets patronize nightclubs for different purposes. Some customers go to clubs to be seen at a hip and cool spot. Some come to dance and enjoy, while others love the exceptional service. Some come to find a relaxing place to unwind. Some go to meet people, while some check out the great drinks and food. If you are planning on generating a high-volume business, your nightclub needs to focus on themes that have mass appeal. The key is to understand why customers would come to your club, and then give it to them.
2. Have a clear understanding of the nightclub business.
You need to have a realistic understanding of the inner workings of the nightclub business. Many nightclub businesses fail because their owners simply thought that a nightclub would be a cool business to earn lots of money, without understanding the complex requirements this business needs. You need to have the financial smarts and a thorough understanding of its logistics – things that you can only gain from totally immersing yourself in the business. Some business owners even apprentice or work in a nightclub business (not just go to the club regularly), while others surround themselves with people who actually know the business.
3. Provide exceptional service.
To be successful, you must provide exceptional service that leaves positive impression to your customers. There must be adequate service employee to customer ratios, including wait staff for the dining area, beverage servers, bussing personnel, and valet staff (if provided). Quality service is a result of various strategies, including continuous service training to all employees (even managers), employee recognition program (e.g. employee of the month, etc.), and higher service employee to customer ratios (e.g. separate beverage servers & bussing personnel, adequate table count for each wait staff, etc.).
4. The right looks for the right market.
Decor plays a large role in determining who the clientele will be; the target market should be one of the first considerations when deciding the decor of a nightclub. You need to consider your location, the number of people in the town, and demographics of your neighborhood. If you live in a low-income neighborhood, a ritzy five-star nightclub will be beyond the reach of the immediate market; and upper class folks may not be too willing to travel and party in a low-income neighborhood.
5. Consistent entertainment atmosphere and product quality.
You need to ask yourself what the target market can afford and what they want in terms of food, beverage and entertainment – then consistently give them the same kind of quality (or better yet, keep on improving) every single day. The nightclub business is very affected by fashion, so you’ll need a good sense for how to make your club “the” place to be.
6. Safeguard money handling and operations.
One of your biggest concerns as a nightclub owner is “who is and who is not handling the money.” Theft is always a concern in this business with cash on hand. To minimize your loss percentage, it is essential that you trust your money handlers, if you cannot personally oversee this aspect of the operation (although many nightclub owners prefer to handle money issues personally themselves).
7. Smart financial sense.
A nightclub business demand adroitness in managing internal finances and cash flow to meet daily operations and attain capital growth. Your role therefore includes understanding the business side of things. Spend time learning the basics of accounting and bookkeeping in order to understand where your money is coming from. You will be more equipped to manage cash flows, control inventory, and make financial decisions that affects your business. It is critical that you are able to maximize your sources of revenues (e.g. is your biggest slice of income coming from events or bar charges?) and minimize the costs. It is important to maintain strict control of all costs, at all times, without exception, the first step of which is to set targets for food costs and total beverage costs.
8. Flexibility and proper space planning.
You can maximize your nightclub’s potential by creating different atmospheres to attract varied clientele. Through proper space planning, your club can be a restaurant by day and a club by night. At night, you can transform part of the unused diner’s area to a dance floor. You can further subdivide the floor plan by creating a quaint mezzanine where customers can relax, underneath of which bars and DJ booths can be created. A section can be cordoned off for a VIP area.
9. Security and safety.
Maintaining security and safety is paramount to the successful operation of any nightclub. Your management team and staff should be keen to explore any methods that create the safest environment possible for customers to continue to enjoy their nights out. Make sure that your facility is in accordance with fire ordinances in your area, including number and size of exits. It is extremely important to plan in cases of emergency — e.g. the size, number and locations of exit doors, fire safety tools and equipment, among others. Do not wait for a tragedy such as fire resulting in the death of your patrons to occur before making a thorough evaluation of the safety of your premises.
It is also your role to ensure that assaults and other crimes do not occur in your premises involving your customers. To tackle anti-social behavior, a major nightclub in Scotland even went so far to introduce plastic beer bottles in a bid to cut down on violent assaults.
10. Invest in the right people
The success of the nightclub business hinges a great deal on the front line service personnel — the waiters, bartender, etc. They are the face of your nightclub business. They are the people your customers interact with the most. Hire staffers who have excellent personal skills, positive personalities, with great sense of humor. They need to genuinely love being with people. Invest in training them properly on how you want your staffers to deal with customers, cleanliness standards of the club, and teach them about professionalism.
For more information on the nightclub business, read: the following books:
- The Professional Bar & Beverage Manager’s Handbook: How to Open and Operate a Financially Successful Bar, Tavern, and Nightclub With Companion CD-ROM
- How to Setup and Operate a Successful Nightclub: An Entrepreneur’s Guide to Running a Profitable Club Operation
- Start Your Own Bar and Club (StartUp Series)
- Running a Bar For Dummies
- How to Become a Nightclub Promoter