Start a comedy club by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your comedy club. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a comedy club?
Depending on the size of the space you lease and its exact location, start-up costs can be around $100,000. This includes about $30,000 for kitchen and bar equipment (including starting stock), $50,000 to build a new structure to your specifications, $25,000 to purchase land, and $5,000 to obtain relevant licensing. In competitive metropolitan areas, the amounts for everything (primarily construction and land) can be much higher. One way to reduce some of these starting costs is to lease an appropriate space rather than build a new one. You may still need to renovate (sometimes extensively) the inside, but this can cut these opening costs in half and sometimes make them even lower than that.
What are the ongoing expenses for a comedy club?
One of the largest ongoing expenses are the acts themselves; while the individual talent will have varying charges, some estimates are that you may spend 40 percent of your expenses on booking acts. Another 20 percent goes to keeping your food and beverages well-stocked, while 15 percent is a good estimate for the salaries of your staff. Ten percent of your expenses will likely go towards rent and licensing requirements, whereas the final five percent is likely to go towards various office expenses. Thus, while your exact expenses may vary, you can imagine a successful night in a venue with 300 seats bringing in about $7,500 in cover charges alone. However, it's more realistic to expect this to yield between $750 to $1,125 in actual profit for you.
Who is the target market?
While a comedy club will have all types of customers, your preferred clients will typically be young couples. This group is likelier to make your club a regular staple of their date nights together, and younger couples tend to go out most often. These couples are also likelier to take advantage of the meals and drinks you serve, meaning that they will help generate profit for you on three fronts.
How does a comedy club make money?
The comedy club business model is pretty simple: you charge clients an upfront amount to get into the club. Clients will typically pay extra for food and drink unless you are selling some kind of package deal. Similar to nightclubs, you may consider charging clients who are under the age of twenty-one additional money to offset the fact that they won't be purchasing any alcoholic beverages.
How much can you charge customers?
How much you charge clients is intended to vary based on which comedian(s) you have booked for that night. For instance, you might be charging $15-$20 to see a local comedian that is just getting started in his or her career. If you have a major name coming in (such as Jerry Seinfield or Louis C.K.), prices may be closer to $100 and will largely be dictated by the famous comedians themselves. Keep in mind that the talent will be getting a large chunk of each ticket sold: this is why, like a movie theater, it's really important for you to make a profit off of food and drink.
How much profit can a comedy club make?
As the estimates above indicate, your profit is largely dependent on how many nights you operate and how many of those nights you can fill the club to capacity (or close to it). Even on the low end, if you were to operate your club only four nights a week and make an average of $750 in profit a night, you could pull in $12,000 a month after your other expenses are paid. Ultimately, your first year or years may not be quite this profitable right away, but once you have established yourself with your community and with the community of comedians, the profit margin on a comedy club will be enough to make you smile each year!
How can you make your business more profitable?
To make your club more profitable, add things like “local nights” where amateur comedians can practice their craft: this builds up local enthusiasm and boosts your community. Depending on your area, you can have discount college nights in which someone's college ID lets them in for a reduced charge, which helps spread word-of-mouth about your club. As mentioned earlier, you can experiment with doing lunch at the club even acts aren't performing, which allows the restaurant portion of your business to become more profitable. Finally, make sure you have fully embraced online marketing: most comedians now have some of their sets online in various forms of media, so you can create a pleasant synergy between comedians and club by marketing their material, linking to their CDs, web pages, and so on. If done right, this increases profits for everyone!
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your comedy club is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
In most states, it is necessary to obtain a license to open a comedy club. Certain state permits and licenses may be needed to operate a comedy club business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
In addition, certain local licensing or regulatory requirements may apply.
In particular, if you want to offer complimentary alcohol at your comedy club, you will need a liquor permit, the specificities of which vary locally.
If you plan to sell food at your comedy club business, you will need licensing from a local health department. All establishments serving food are required to pass a health inspection. Tips for faring well on a health inspection can be found here.
For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
When selling food, you will need licensing from a local health department; all establishments serving food are required to pass a health inspection. Tips for faring well on a health inspections
There are federal regulations regarding what can and cannot be added to, sold as, and processed with food. Attached is a resource from the Food and Drug Administration detailing the process of starting a food business: How to Start a Food Business
Businesses involved in the sale of alcoholic beverages are required to obtain a liquor license from the appropriate state or local agency. A comprehensive list of laws by state (including necessary licenses, zoning laws, etc), curated by the Alcohol and Tobacco Tax and Trade Bureau, is included here.
In order to play music in a business setting, permission must be acquired from the composer or license holder. Typically, it is possible to obtain a “blanket” license allowing a businesses to play music owned by a large catalog of artists and recording studios. Such licenses can be obtained from Performance Rights Organizations, such as ASCAP or BMI.
Certificate of Occupancy
A comedy club is usually run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease office space:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a comedy club.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build office space:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for you business’ location to ensure your comedy club will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a comedy club
It's tough to go wrong with traditional marketing: for your grand opening, make sure that you advertise via newspaper and radio. It's important that you have a professional-looking website that has pertinent info for customers, and make sure that you advertise extensively via social media. Social media allows you to you to be just a smartphone touch away from potential customers. If you have the budget, feature some of your upcoming comedians in TV spots for your club. This can help with name recognition for the comedians and also give customers a small taste of the experience they can have at your club.
How to keep customers coming back
In addition to the above ideas, one tried and true method of attracting customers is free tickets. Make sure that local businesses who you have a good relationship with offer limited numbers of free tickets to customers. However, the tickets should require that customers purchase a meal or a certain number of beverages so that you aren't completely losing out. If they have a good time, they will want to come back and be willing to pay; better still, they will serve as good word-of-mouth promoters, turning satisfied customers into free publicity for you. To keep returning customers happy, try to change things up when you can: experiment with different comedians, different dishes, and different drinks. All of this builds anticipation for customers who are curious as to what you'll do next!
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Comedy Club In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Obviously, this business is perfect for people who love comedy. Those who are comedians themselves will have an easier time getting started and finding other comedians to perform, while those who have lived in a community for many years can make sure the venue and comedy material is tailored for a specific audience.
What happens during a typical day at a comedy club?
Because a comedy club is like several jobs rolled into one, any given day may have many different activities. This can include receiving food and drink supplies, stocking them, and cleaning the respective eating and drinking areas such as dining tables and the bar. Part of your days will be spent communicating with comedians and making sure that you have a well-coordinated schedule for the evening. You will also often be advertising your business via traditional methods like fliers and via social media. You will also be in charge of coordinating your employees.
What are some skills and experiences that will help you build a successful comedy club?
Previous experience working at a comedy club can be invaluable in helping you get this business started. It's even more advantageous if you have worked as a comedian, as you will know what the performers expect in terms of payment and service. Your prior experience may also help with initial networking which will allow you to book the first weeks or even first months without having to rely on complete strangers to perform.
What is the growth potential for a comedy club?
Such a business has modest growth potential. One industry report claimed that comedy clubs as a business are projected to grow nearly two percent through the year 2020. There is also sideline business potential to run the place as a restaurant in the daytime and full club at night, or even as a bar on nights where no comedians are scheduled to perform.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a comedy club?
Make sure you hit the ground running with a dynamic logo, slogan, and slick advertising. As with most business ventures, it's important to establish your brand within the community as quickly as possible. Make sure to choose the best location possible—a location that has a lot of parking and is easy to drive to when people are heading home from work or out shopping will help lure in impulsive customers. Finally, be patient—as with ventures such as bars, restaurants, and nightclubs, it may take a while for this business to become profitable.
How and when to build a team
Unlike some businesses, you will need to have a team right away. You will need cooks, servers, and bartenders as well as a bouncer or two and front desk clerks. It's possible to start with a small, well-coordinated team, but this is not a business where you can start out doing everything yourself.