How Much Does it Cost to Start an Event Venue?
An event venue might be the perfect business for you. You get to hold parties, weddings, and other events of all kinds, giving people a great time while earning money. However, there are some costs associated with this type of business that it’s important to be aware of before opening up shop.
So, what costs are involved in starting an event venue? Some of the costs include licensing and permitting fees, rental of space, renovations, parking and transportation, staffing and labor costs, supplies and inventory, insurance, security, repairs, maintenance, marketing, advertising, and more.
Keep reading to learn more about the many fees you may encounter as you start your event venue.
Licensing & Permitting Fees
These are fees that you will be required to pay based on what type of event space you want to sell or rent out as well as your geographical location. Fees such as liquor licensing may cause large chunks of cash flow for those who decide they want to open up venues such as nightclubs and bars which serve alcohol.
In other cases, people choose office space rentals where office supplies now become inventory requiring you to purchase this supply upfront. This could run into high numbers before even receiving revenue.
Rental of Space
This is where you will rent out any available space that can be used for such purposes as renting a banquet hall or ballroom, leasing office space for administrative functions. Space rental is not an unreasonable expense. However, it requires you to start with a large initial investment to cover the costs per month.
For example: If you want to rent a 1000 sqft room and require $2000/mo in rent and utility fees, you must have $20k on hand just so your business can open the doors and start marketing itself without acquiring too much debt before making money off of actual sales.
In this case, It is recommended that if possible, invest some money from previous ventures into this new project. If you own land or property yourself rather than rent it, you’ll have to factor in the cost of maintaining and repairing it, as well as property taxes.
Even if you do find the perfect space for your business, it will likely need some renovations to make it presentable to the public.
These renovations depend on how much you plan to invest in your space at first. However, they can range from a few thousand dollars up to $15,000 or more depending on how much work needs to be done.
This is a large investment but one that is necessary for making your space look professional and appealing to clients.
Parking & Transportation
As many consider, parking can be a hassle especially in metropolitan cities where space is limited. Business owners will need to factor in the cost of parking permits, meters, and taxi fares. And, if the event venue is in a remote area, they will need to account for the cost of transportation to and from the site.
When you have your own event space, the last thing you want to hear about is someone complaining they cannot find a parking spot when they go out to an event at your establishment. It takes away from the overall experience of your business which will result in fewer sales/revenue which could have been saved by having more available spots.
Transportation may also include mileage reimbursement for guests who choose not to drive themselves or pay for their taxi cab because there are no taxis nearby. This typically adds up over time depending on traffic patterns around your area. Have good estimates for this expense to make sure operations run smoothly in general.
Staffing & Labor Costs
When operating an event venue, you must think about all of the logistics that go into running the business. One expense that is often overlooked by many is staffing/labor expenses.
These costs include hiring people to man your front desk, answer phones, greet guests, and more. They are typically accounted for in labor fees. This may come out to around $10-20 per hour depending on how much staff you need for certain shifts.
To save yourself some money, it is recommended that you start with smaller crowds at first so there are not as many people or staff needed to run operations smoothly before buying bigger if needed later on due to continued success.
You might also want to hire additional employees such as DJs and bar staff. These individuals can help make your events go more smoothly and attract more customers for you. However, they can also be a cost that you incur from month to month.
The average salary for an assistant manager is $41,000 per year as of January 2015. Of course, times have changed a lot since then. If you pay employees $15 per hour and they work 40 hours per week (a fairly standard number), the monthly cost will be around $4,500.
Supplies & Inventory
Naturally, you’ll need to purchase supplies and equipment if you want to hold events at your venue. This might include things like tables, chairs, tents, sound systems, catering supplies, and more. The cost of purchasing all of this can easily run into thousands of dollars.
As any business owner knows, the supplies & inventory you buy for your business will vary depending on what type of event or venue you run. For instance, if your space is a bar that serves alcoholic beverages then there would be separate inventory required from that of an event hall that holds weddings and higher-end events.
In some cases, it can even cost more to run a bar due to separate taxes from the State Liquor Authority. This varies from state to state. It’s best to find out these costs beforehand to avoid surprises later down the road when it comes time for tax season.
Insurance is an important expense to consider when thinking about starting your event venue. In the case of a fire or accident, you might have hundreds of thousands of dollars worth of property loss to deal with. Having insurance will protect you from these sorts of financial disasters and help ensure that your business continues operating even in difficult circumstances.
Depending on the type of business, you will need different types of insurance. For event venues, it is best to have general liability insurance in case somebody slips and falls or if there is damage done to the property.
In addition to general liability insurance, event centers also require additional coverages because they handle unique equipment and supplies unique to this industry such as glassware, china, linens, and catering equipment.
You will also need to have liquor liability insurance if you plan on serving alcohol as well as workers’ compensation coverage for your staff.
Unfortunately, this can be a highly variable expense that depends on which types of insurance you purchase as well as the value of your property. This can be a costly expense but it’s definitely worth the investment because it gives you peace of mind when something unexpected happens.
The cost of hiring a security guard will normally be a one-time expense. This is something that you should factor into your overall expenses when planning to open an event venue. You’ll have this expense for as long as you run the business.
It costs approximately $200-100 (ranging from experience) to hire a private security guard in the United States. If you need to pay security guards every month, the cost will be a few thousand per month.
Repairs & Maintenance
Over time, you may experience some wear and tear on your venue or equipment. This might necessitate some repairs or maintenance, which can be a costly expense. You should try to budget for this sort of thing so that it doesn’t catch you by surprise down the road.
Marketing & Advertising
Marketing and advertising expenses are also important for event venues. To attract customers, business owners will need to invest in marketing and advertising campaigns. This can include everything from printing promotional materials to purchasing online ads or sponsorships.
There are other costs that you might incur when running an event venue. These include things like advertising and marketing expenses, legal fees, and accounting costs. It’s important to be aware of all of these potential expenses so that you can plan for them properly.
There are many other costs associated with running an event venue. However, these are some of the more common ones that business owners face when getting started. By being aware of these costs, you can start to plan and budget for your business much easier and avoid any surprises down the road.
It is important to remember that there are many other costs associated with starting an event venue that may not be initially apparent. All in all, starting an event venue can be a costly business venture. However, if done correctly it can be a lucrative one
Always consult with a tax advisor or accountant to get a better understanding of what your specific business needs before opening your doors to the public.