How to Start an Event Venue Business

how to start a new event space
 
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Event venues are often used for conferences, weddings, birthday parties, fundraisers and more. To start a venue there are many things to consider when opening your doors for business or the planning process to launch one in the near future.

If you plan on operating a venue, this article will provide some insights to help you get started.

Importantly, a critical step in starting an event venue is to complete your business plan. To help you out, you should download Growthink’s Ultimate Event Venue Business Plan Template here.

How to Start a Venue Business

Before starting your own venue, you should get an event venue business plan together. This will be useful when it comes to getting the funds you need and grants available for your business. To develop this business plan, there are some questions you need to ask yourself.

Where Will The Venue Be Located?

The location of your venue is the most important factor when it comes to determining if you will make any money or not.

You can choose to open in a high-traffic, well-known area along with the great potential for growth in your local market. The other option is to find an underused space that may not have much foot traffic but offers great rates on rent might just be right for you.

The downside to this strategy is that you will need to put together marketing campaigns and advertising methods to reel people in which always costs more than renting low and selling high.

Your rent will also determine how much profit you take home so be sure to do your research before signing anything.

What Types of Events Will You Host?

Depending on the type of events you host will determine how many employees you need, what equipment is needed, and how much money you will make.

For example, if you are hosting concerts at your venue then you will want to hire security for the safety of the attendees. If it is a smaller event with fewer guests expected, then maybe just one or two security guards should be good enough.

The amount of money you will make also depends on the cost of hosting the event. If it is a business meeting, you might not charge as much in fees as if it was hosted at your venue.

How Big is Your Venue?

The size of your venue will affect your bottom line in more ways than one when it comes to hosting events.

For example, if your venue is too small you will not be able to fit many guests so, therefore, charge less for the space and attendance fees. If it is too big, then you will need more staff to accommodate every guest promptly.

How Will You Be Different?

Before opening, you need to know the things that make you different from other venues.

This can be anything from competitive pricing, customer service, or the location itself. Think about how you will attract potential clients and what happens once they walk through the front door.

Will you have a restaurant with great food? Will you have an outdoor area for patrons to mingle and enjoy themselves? Many questions need to be asked before opening your doors.

The more, the better since it will set you apart from other venues which can only help your business succeed.

What Is The Price For Your Services?

When it comes to the price you charge for your services, this all depends on what type of venue you are running.

For example, if you are hosting a wedding at your place, make sure to check out different venues in your area that will host that specific event since their prices might be better than yours.

Start by looking at different venues in your area that offer similar services. Once you have a list of potential competitors, study their pricing model and come up with something comparable.

What is Your Budget?

The budget you have set aside is the fourth factor for opening your business.

This includes everything from advertising costs, equipment and staff salaries to rent and taxes. Without a proper budget in place, you will not succeed.

To calculate how much money you need to get started, add up all of your expenses then subtract that number from your income. This will help you fine-tune your venue and make it more profitable for the success of your business.

Before starting a venue, you need to know what type of events you want to host, how big your place is, the different types of people who will be attending your events, and so on and so forth. Knowing all the information before you even start thinking about your business is important to its success.

When it comes to figuring out what types of events, just make a list of all the possible things that can be done at your venue and narrow down the type of clients you want attending each event. Your budget also plays a huge role in starting a venue, so make sure to get the right number of customers.

Overall, just be marketable and study your competitors to find out their prices and what is successful for them to get your business off the ground.

 

How Big is the Event Industry?

The event industry is a massive market that does not stop growing. The market is currently about $3 billion with continued growth each year. This number includes all aspects of party and event planning including event venues, arenas, amphitheaters, clubs, bars/pubs/restaurants, etc.

 

What are the Key Segments of the Event Venue Industry?

The events industry can be segmented into these categories: music concerts, festivals, sports, exhibitions & conferences, corporate events & seminars, and others.

Music Concerts

Music concert venues are the biggest segment in the industry due to their massive popularity throughout the world, especially in live music venues.

Festivals

Music festivals are where people go to see a variety of different genres all at once and then party hard with other people who enjoy similar musical tastes.

Sport Venues

These events allow people to see their favorite players and teams compete against each other in a stadium or arena.

Exhibitions & Conferences

They provide a chance for companies to showcase their products and services to potential clients and customers.

Corporate Events & Seminars

These events allow companies to hold large meetings or conferences in an attempt to spread the word about their brand, products, and services.

Other Venues

Other venues include everything from restaurants and bars to nightclubs and hotels. These types of venues can be found in any major city and allow customers to do a variety of different things such as view sports games, listen to live music, or dance the night away with friends.

types of venue rental business

What External Factors Affect the Event Venue Industry?

As new event venues are created, there are new external factors that affect the industry. Taking a closer look at the external factors allows for accurate data from the industry to be produced. External factors include the following:

As with all industries, economic factors heavily affect event venues. The success or failure of an industry depends upon the state of the economy. If the economy is in a recession, then businesses are less likely to spend money on extravagant events, which means there will probably be fewer events at venues.

The population of a certain area also affects the industry. If there are very few people in a certain area, then that can limit the number of events held at a venue.

Another external factor is the number of competitors within a specific area. This directly affects prices and what kind of special events will be hosted as well as how often they are hosted. If there are fewer competitors, then this means higher demand and prices for customers.

Social media is another external factor that affects the industry. Event venues need to be aware of what their clients are saying about them on social media. There should not be any negative comments because it could cause potential customers to think negatively about the venue as well.

The last of the major external factors is the weather. Bad weather can cause people to have less of an urge to attend events at outdoor venues, which means there will probably be fewer people attending these types of events during unfavorable conditions.

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Event Venue Business Plan Template and complete your business plan and financial model in hours.

Who are the Key Competitors in the Event Venue Industry?

The key competitors in the event industry are primarily hotels, convention centers, and exhibition halls.

Hotels

In the event industry, hotels serve as a primary competitor for event venues. Hotels typically offer similar services to that of an event space, such as catering and transportation.

In addition, convention centers work closely with hotels in promoting their facility through advertising and marketing opportunities. The hotel-convention center industry is a close-knit one, with many large hotel corporations also owning a convention center.

However, when it comes to developing relationships with potential clients, it is important to note that clients perceive hotels and exhibition halls to be more convenient than convention centers when planning meetings.

Convention Centers

The main competitor in this space is convention centers, which are generally larger venues that have more capacity for hosting gatherings. Convention centers are seen as a valuable marketing tool by many businesses for holding trade shows and attracting new customers.

However, there is often little incentive to hold smaller-scale events at convention centers due to their relatively high cost. Most convention centers are tied to cities or states that help pay for their upkeep. They are used not only by exhibitors but also by individuals looking for venues for wedding receptions, parties, family gatherings, etc. Convention centers also can host concerts and provide audio-visual equipment.

Exhibition Halls & Event Centers

Most of these large halls are considered “public assembly facilities” where people can gather together to listen to political or commercial speakers or watch performances. The type of event held depends on the size of the hall and its amenities. The more amenities provided in connection with an exhibition hall, the more expensive it will be to hold an event there.

 

What are the Key Customer Segments in the Event Venue Market?

The key customer segments in the venue market are businesses and individual consumers.

Businesses

Businesses use event venues for a variety of purposes, including meetings, conferences, trade shows, and product launches. Businesses account for the majority of event venues’ revenues. Many corporations, especially larger ones, have a dedicated meeting department that typically oversees their needs in this area.

Individuals

Individual consumers also rely on event venues. They use venues to host weddings, engagements, birthday parties, fundraisers, showers, and family events such as reunions or holiday gatherings. Individual consumers account for the second-largest source of revenue for event venues. In recent years, there has been an emphasis on attracting individual potential clients because they spend more money than businesses do per event.

 

What are the Typical Startup Costs for a New Event Venue?

Event venues and related businesses, such as catering and photography, require a significant investment.

The average startup costs for an event space range from $200,000 to $500,000.

Here are a few key costs that are associated with launching a venue:

Rent/Mortgage

This is the number one cost associated with launching a venue business.

Depending on where you get your real estate, your rent will vary quite a bit. Depending on how large of a space you need to buy or build and its location, this cost could be thousands upon thousands of dollars.

Luckily, there are many different types of commercial loans and other ways to finance this expense so it’s not impossible to get started without all the cash upfront.

Operating Expenses

These expenses are ongoing throughout the life of your business, so you need to make sure you plan accordingly to not go broke over time. You’ll have things like insurance, equipment replacement or rental (if you choose), employee wages/benefits, taxes, etc.

All these ongoing expenses add up very quickly if you’re not managing them well.

Employee Costs

You need to have the right staff members on your team to be successful. You can pick and choose who you hire for each position, but don’t forget that there’s a cost associated with every employee on your team.

Build-out/Renovations

You’ll probably need to renovate or build out your facility to turn it into the type of space you want it to be. This is an ongoing expense, but you’ll see a large spike here during the initial buildout of the business.

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Event Venue Business Plan Template and complete your business plan and financial model in hours.

How Much Do Event Venue Owners Make?

It is hard to estimate how much venue owners make because the amount of money that a venue owner can make varies depending on a few different factors.

Location

One of the biggest factors that affect how much a venue owner can make is their location. Venues located in larger metropolitan areas will typically bring in more revenue than those located in smaller towns.

Size of Venue

The size or square footage of the venue is also a major factor. Venues that can accommodate a lot of people will generally bring in more revenue than those that are on the smaller side.

Type of Events

The type of events that a venue hosts also has a big impact on how much money the owner can make. Venues that host a wide variety of events will typically have higher revenue than those that specialize in hosting one type.

Generally, owners of professional, full-service banquet halls and meeting facilities can expect to make $45,000 to $100,000. Those that do not have banquet facilities can expect to make significantly less revenue.

 

What are the Keys to Launching a New Event Venue Business?

There are a few keys to launching a new venue business.

Plan ahead.

This is a big one and takes time. You need to have some sort of business plan as far as how long things will take for each step of your own business. You need to know how much things will cost you in terms of rent, utilities, equipment, insurance – everything that your operation will require.

You also have to think about what you’re going to do differently from everyone else in this space so figure out where your target audience is and how you can fit into it with a great product or service offering. Be sure to make comparisons based on similar businesses in different markets when doing this market research.

Stand out.

There’s a lot of competition out there, but if you do something better than the others, people will come to your venue. Have a great idea for a venue that is different from what is currently available in the market. This can be something like a unique theme, location, or type of event that you plan to host.

Scale.

You don’t necessarily need to invest a huge amount upfront. Think about how much revenue you can bring in and then think about whether that justifies the investment down the road. Be open to this growth and start small, but to grow and scale your business over time (and hire help as needed).

Determine your target market.

You can create marketing materials that cater to different types of customers (like brides, corporations, festivals) but it’s not enough just to know your target audience – you need to understand their wants and needs so you can communicate these effectively in everything from sales calls to venue website copy. Find out what’s most persuasive when marketing to customers with this type of business.

 

How to Finish Your Ultimate Event Venue Business Plan in 1 Day!

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With Growthink’s Ultimate Event Venue Business Plan Template you can finish your plan in just 8 hours or less!

Click here to finish your event venue business plan today.

 

How to Start an Event Venue FAQs

Businesses in this space can be highly profitable, but profits vary depending on several factors. Location, size of the venue, and type of events hosted are just a few of the many things that influence how much revenue the owner will bring in.

Like with most businesses, if you are investing in starting a venue business on a shoestring, it may be difficult to get things off the ground. It's not impossible if you're creative (a garage sale can be used to help raise funds), but the risk is that you won't have enough money to cover monthly expenses throughout the first year of operation.

There are several ways to obtain the funding you need to start a successful venue business. You can apply for a loan, utilize your local SBA office for guidance on writing a business plan and obtaining funding from the government.

In this tough economic climate, it's important to be creative if you want to launch a new idea or venture with very little money involved. If you have a great concept paired with a well-written business plan, your chances of obtaining a loan to help you get started are greatly increased.

Venue operations vary greatly depending on the size of the event facility and its target audience.

For example, some event venues may charge a flat fee for hosting an event which allows them to focus on catering to individuals or companies that host events regularly (such as universities). Other venues may choose to work with outside caterers and allow them to take care of the day-to-day operations.

There's no foolproof way to ensure that you'll earn a profit as a venue, but it's important that you understand the needs and wants of your target market so that your business can be profitable.

One way that venue owners can maintain a competitive edge is by offering discounts for customers who are willing to book events well in advance of the date they want the event held. This idea might help venue managers compete with hotels, convention centers, and exhibition halls that offer business travelers rooms at discounted rates if they book well in advance.

Using social media accounts, such as Facebook and Twitter, also helps customers find out about upcoming bookings. Keeping customers informed is good customer service, but it also builds loyalty for those customers who have never used a venue before. Reach out to satisfied clients to obtain positive reviews for your website and social media profiles.

Event insurance for an event space can be complicated. It's important to know the type of events you are hosting. Some event spaces host only private events, while others are licensed for public events. Your city may have specific laws restricting the types of events you can host at your venue.

Ultimately, you can't go wrong with purchasing a basic liability insurance policy for your business. This will cover losses incurred due to injury or property damage sustained on your premises during your event.

One of the biggest expenses for any business is equipment. When starting an event space, it's important to find a balance between investing heavily in new technology and using existing equipment that you already own.

For example, if your space can seat 50 people and you want to host weddings, you'll need dishes, glasses, and flatware for each guest. If these items are not planned for, they can increase the cost of hosting an event substantially.

For most venues, it's crucial to have enough furniture and other equipment to host an event for 50 people. This ensures that you'll be able to accommodate customers during peak hours without scrambling to find extra seating or tables.

Many businesses making the transition to hosting their events don't advertise because they are unsure of the best way to go about it. There are many different options available when advertising, so use your creativity and brainstorming abilities to figure out which ones will work for you.

A few options that can be considered to find customers are hosting open houses, sending out flyers to local businesses, listing your event space on business directories and social media websites, and visiting popular spots in your area to leave fliers.


 

Helpful Videos

HOW TO START AND OPERATE AN EVENT VENUE with Bonnie Hawthorne (Atlanta, Georgia)


 

How To Turn Your Home Into An Event Venue


 

Creative Venue Marketing Ideas


 

Additional Resources

Event Manager Blog

Cvent

Professional Associations for Event Venue Owners

 

Other Helpful Business Plan Articles & Templates

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