Want to open nightclub but don't know where to start with licensing

[shents123]

I currently run an electronic music events company, currently operating as a sole trader. I book DJs to play at other venues that I've paid to hire and I take the money from tickets. However, now I want to take it to the next level and buy my own club. I've found there's a market for grundy/stripped down venues, particularly in electronic music, and I've found an old pub which no longer operates as a business but has the old owner still living there 9 years on and is keen to move out. The business model is relatively simple - I book the DJs into my own venue, take profits from drinks (which only need to be canned drinks and spirits, no need for draught beer with this type of club) and tickets. The premises should be relatively cheap because, however, I have no idea of the condition of the building as of yet but presume it only needs minor restoration, if I find it's substantial then I won't follow it through. I will also open the club up to be hired on other dates by other events companies and they will pay me a set fee.

Due to the fact I've only done events in the past I have no idea of the process of licensing a new venue to become a nightclub. What is the first step? Is there anyway of knowing whether a venue will get a license before committing to buying it? Does anyone have any advice on getting a license to play amplified music till early in the morning? There are 2 other clubs nearby, one is regularly open to 4am and one until 9am - there are no houses or residents nearby just a car garage. Also, does anyone has experience with licensing a new venue to sell alcohol? As I'm completely new to the whole nightclub industry, is there's anything else I should know that would be useful? I have access to some money but I will probably need more, some advice on how to go about borrowing around £100k for a business venture like this might be helpful too.

Let me know what you think. If I've been stupid and completely overlooked something please let me know. I'm only 20 and still learning at this. Cheers.

 

[Davidincognac]

you will need an entertainment licence as well.
In the first instance you need to contact the town hall and also the police.
Its not as easy as handing out a licence.
The town hall and police will want a lot more information including a business plan and risk assessments.

 

[shents123]

Will I need to have bought the venue before I do that? I'm most concerned with buying the premises (which I will never be able to sell again) and then finding out I won't be granted permission to open it as a club.

 

[Mark T Jones]

You can contact your local council for an overview / chat. They might have a strict policy on licencing for the type of premise you are looking for, or they might require you to apply formally before they can give feedback - there's only one way to know for sure!

 

[Gordon - Commercial Finance]

I have access to some money but I will probably need more, some advice on how to go about borrowing around £100k for a business venture like this might be helpful too.

You will certainly have to put in money of your own yes, but you will be able to borrow money against the property. Is the 100k the amount being asked for the purchase of the property?

 

[Mark T Jones]

I have access to some money but I will probably need more, some advice on how to go about borrowing around £100k for a business venture like this might be helpful too.

.

Sorry; I'd missed this bit. As @Gordon - Commercial Finance says, it largely depends what you are buying for £100K

Freehold buildings can be financed, as can the equipment to go in them.

On the other hand, if it's goodwill (hard to see what that might be, or lease premium or anything intangible, then you will struggle unless you can offer secondary security.

Start Up Loans might help with some of it, though feedback I get is that they don't look favourably on this type of venture

 

[shents123]

@Gordon - Commercial Finance the property isn't publicly for sale, however, he said he'll listen to offers around £60/70k. The extra 30k was for any restoration work and costs of equipment to go inside.

 

[shents123]

@Mark T Jones Oh ok I see, so I could either use my current house as security against the loan or just get finance on the property? I'll look into start up loans now.

 

[Gordon - Commercial Finance]

@Gordon - Commercial Finance the property isn't publicly for sale, however, he said he'll listen to offers around £60/70k. The extra 30k was for any restoration work and costs of equipment to go inside.

Whether it is publicly for sale or not, you would still be able to secure finance to purchase. However if you're looking to spend £100,000 total, I would expect that after fees and all are included, you would likely have to come up with around £40,000 of your own cash to put in the pot.
Could get a development loan so that refurb costs can be funded, but still you would need to come up with roughly £40,000 in cash.

What level of equity to you have in your home?

 

[Mark T Jones]

@Mark T Jones Oh ok I see, so I could either use my current house as security against the loan or just get finance on the property? I'll look into start up loans now.

Talk to @Gordon - Commercial Finance

 

[KAC]

Google "Licensing solicitors" and you will find lots of firms specialising in this field

 

[Davidincognac]

THis is how I would do it.

1. Privately host the DJs at a "hidden location"
2. stream it live on Facebook
3. get local people following you
4. just start with a 2 hour set and do it in different locations, you can even start in your own house before asking licenced premises if you can perform at their place
5. keep on pushing it on Facebook and build a following
6. Once your following is big enough, announce the locations where you will be at.
7. As your following gets bigger you can take your event to a bigger location, someone elses,
8. Then when you can see your following reached a certain point you can look at renting building for your own purpose. Secure a 12 month rent on a building, and launch your nightclub there

 

[Mr D]

Will I need to have bought the venue before I do that? I'm most concerned with buying the premises (which I will never be able to sell again) and then finding out I won't be granted permission to open it as a club.

Spending £100k buying and doing up a place you cannot sell again strikes me as a waste of £100k.


At least find somewhere you can sell later if you need to.

 

[Gordon - Commercial Finance]

Spending £100k buying and doing up a place you cannot sell again strikes me as a waste of £100k.

This is a very good point. Exit strategy of some sort would be useful.

 

[Chawton]

I often consider something along these lines myself. I've an indoor five a side football venue in Manchester City Centre with a licensed bar, so have considered partnering with promoters to utilise it outside of core business hours. As far as I recall you can get about a dozen temporary event notices (TENS) per annum without having to go through enhanced licensing, so may do something of this nature over the World Cup. Can you not look at an alternative/more informal arrangement with a venue and apply for TENS while you road test the viability? Ie rather than jump right in with a lease of existing premises?

 

[Gordon - Commercial Finance]

Hi @Chawton does your bar have a kitchen?

 

[The Byre]

20 years of age and no experience of the bar trade = disaster.

Rule One - any business that requires a physical location means you are in the real-estate business. If you rent, you are on the wrong side of the table. It's about creating equity.

Rule Two - work in the bar trade first. It is made up of a series of tricks and wheezes that you MUST know, as that is where the profits are made.

Rule Three - if you don't know why a barman is counting straws, or why he comes to work early or leaves late, why he uses crushed ice, why he's not closing the till properly, why he's not up-selling often, why he takes a case, bag or satchel to work, why he checks his cell-phone and sometimes needs to go outside for fresh air or a smoke, don't walk away from the bar trade - run!

 

[Chawton]

@ Gordon: No kitchen (i.e. cooking) facility, no. We've always contracted in catering etc for any corporate events (tournaments etc).

 

[Gordon - Commercial Finance]

@ Gordon: No kitchen (i.e. cooking) facility, no. We've always contracted in catering etc for any corporate events (tournaments etc).

Reason I ask is I have a close friend who owns soft play units. Restaurant grade kitchens that lay unused for 12 hours of the day while soft play was closed. He got them on to just-eat etc, employed kitchen staff and someone to do marketing, and now the kitchens he spent thousands of pounds on are working for him 24 hours a day.
Was wondering if you could do something similar so that you wouldn't need to worry about a late licence etc.
I don't play football myself but I always hear about friends going to play at like 9pm....so I presume your premises aren't really closed that much of the day?

 

[Chawton]

Reason I ask is I have a close friend who owns soft play units. Restaurant grade kitchens that lay unused for 12 hours of the day while soft play was closed. He got them on to just-eat etc, employed kitchen staff and someone to do marketing, and now the kitchens he spent thousands of pounds on are working for him 24 hours a day.
Was wondering if you could do something similar so that you wouldn't need to worry about a late licence etc.
I don't play football myself but I always hear about friends going to play at like 9pm....so I presume your premises aren't really closed that much of the day?

Nice pivot that, especially as an add on to a core business! Sounds like a smart lad!

No, we have bookings really quite late into the evening (people still on the pitches at 11pm), however the weekend is lighter so that's when I was thinking for something of the nature I touched on above. Basically people have family commitments on the weekend so less inclined to play football as opposed to after work in the week. Obviously that's when drinking/live music type events are in demand though, hence my thinking.

 

[Gordon - Commercial Finance]

Nice pivot that, especially as an add on to a core business! Sounds like a smart lad!

He's a genius. It blows me away. Pockets full of money as well of course.

No, we have bookings really quite late into the evening (people still on the pitches at 11pm), however the weekend is lighter so that's when I was thinking for something of the nature I touched on above. Basically people have family commitments on the weekend so less inclined to play football as opposed to after work in the week. Obviously that's when drinking/live music type events are in demand though, hence my thinking.

That's the part that seems crazy to me - well past my bed time!
Why don't you look at having some kind of music festival type of event - single day, so no one camping on the astroturf or anything, but making great use of the space and the bar at a time when football is in low demand and drinking is in high demand.
Or hire in a massive screen or two and do a "fan-zone" kind of situation for the bigger games?

 

[Chawton]

20 years of age and no experience of the bar trade = disaster.

Rule One - any business that requires a physical location means you are in the real-estate business. If you rent, you are on the wrong side of the table. It's about creating equity.

Rule Two - work in the bar trade first. It is made up of a series of tricks and wheezes that you MUST know, as that is where the profits are made.

Rule Three - if you don't know why a barman is counting straws, or why he comes to work early or leaves late, why he uses crushed ice, why he's not closing the till properly, why he's not up-selling often, why he takes a case, bag or satchel to work, why he checks his cell-phone and sometimes needs to go outside for fresh air or a smoke, don't walk away from the bar trade - run!

Agree with the basic principles espoused there, however I think something like the OP mentions is potentially the exception. It's a very unsophisticated business model with potentially very high profit margins. Entrance fees/extremely short opening hours/canned drinks with huge margins/temp or agency staff as required-contrast that with the bar trade proper: long opening hours/potential tied arrangement/low profit per drink/permanent staffing obligations with high staff turnover issues

 

[Chawton]

Nice pivot that, especially as an add on to a core business! Sounds like a smart lad!

No, we have bookings really quite late into the evening (people still on the pitches at 11pm), however the weekend is lighter so that's when I was thinking for something of the nature I touched on above. Basically people have family commitments on the weekend so less inclined to play football as opposed to after work in the week. Obviously that's when drinking/live music type events are in demand though, hence my thinking.

@Gordon: It's definitely one I've considered, mate! Food for thought. I have a friend who owns a fairly popular/'credible' (in the urban sense) radio station so considering a tie in with him.

As ever its about having the time/hours in the day!

Full of respect for your mate. Love hearing stories like that!

(Apologies, appear to have quoted myself in error. Hopefully not some underlying psychological explanation for that! Ha!)