Here’s How to Start a Venue Rental Business
A venue rental business, like all businesses, requires grit and determination. It’s not enough to simply own a building—you’ll have to keep up with accounting and permits, do your own marketing, and stay on top of customer service. In other words, even though it’s a fun (and rewarding) endeavor, it’s still a business. However, it’s also one that’s booming! According to a report from Oxford Economics, the event planning industry generates $325 billion in direct spending and $845 billion in business sales. Of course, a lot of that money is going to venues. The U.S. Bureau of Labor and Statistics expects this trend to continue, estimating an impressive 11% industry growth between now and 2026. Like all industries, there’s a lot to learn. Nobody’s born knowing how to start a venue rental business, but we’re here to help. We’ll break down an overview of phases and get you well on your way to hosting the city’s best bashes.
Know what kind of venue you want to create. It sounds obvious, but many proprietors of mixed-use venues don’t have a realistic picture of where their monthly income is going to come from. Do you intend to cater to a corporate crowd for off-site meetings and workshops? Do you hope to pack out a banquet hall for wedding receptions? Is your goal to create an art gallery but keep it booked for frequent performances and parties? Knowing how you want your space to be used—not just how it will look—will inform all the decisions you make going forward.
Location, location, location.
Of course, you’ve got to find the actual building you want to turn into a venue. It’s likely that your creative juices are really going to get flowing as you enter different spaces, imagining what they can become. And that’s great. It’s good to get excited, to dream big, and to visualize everything your venue could become. But there are concrete considerations you need to keep in mind when looking for a location, too. These include:
- Is parking going to be an issue?
- Is the building in a location that’s easy to get to and from?
- If you’re hoping for tourist traffic, is it in a part of town already trafficked by visitors?
- Is the location near other popular places?
- Is the building likely to require expensive upkeep (such as if it’s particularly old or historic?)
- What’s the surrounding neighborhood like, and how might that affect business a few years down the road?
Can the area even support another venue? For example, if you were opening a small concert venue, it might behoove you to look for buildings in a different part of town than other competing venues.
Once you know what kind of venue you want to create and you know what building you’re working with, you can start getting into the nitty-gritty.
Know what your expenses will look like ahead of time
This is going to vary depending on what type of venue you’re creating, but you’re going to have fixed monthly expenses. These include:
- Any payments you’re making on the building itself
- Taxes and insurance
- Maintenance costs
- Staff payroll
Depending on the nature of your specific business, you may choose to rely more on word of mouth than spending a lot on advertising, you may have more or less maintenance (is it an old building?), and you may get away with not having much of a staff. You can also save yourself a lot of time and money using Peerspace’s platform, but we’ll talk about that a little later.
Regardless of the details, there’s going to be a number you need to hit each month to break even, and you need to know that number as early in the process as possible. That will give you an indication of what you need to charge. And if that price is too high to compete with similar businesses in the area, you have to figure out either where you can cut costs or how you can gain an edge over the competition. This kind of thinking isn’t particular to how to start a rental venue business: it’s generating a basic business model, and though it’s not the “fun” part of building a business for most people, it’s absolutely critical.
Don’t forget one-time expenses
You may also need to make capital investments in other one-time expenses, like installing security systems, putting in lighting fixtures, furniture, etc. The list can go on forever, and a common beginner mistake is spending too much too fast. It would be awesome to have top-tier audio/visual equipment, for example, but is it really a requirement right out of the gate? Another example: for catered events, you might like to provide high quality silverware and plates, but in the beginning these are expenses you can do without. Let the caterers handle it. After you’ve got steady income rolling in from regular bookings, you can take a look at your finances and make some strategic purposes to upgrade your offerings
Know your responsibilities
Part of knowing how to start a rental venue business is knowing how to stay legal. Chances are good that you’ll need a number of local permits and licenses. If you’re going to sell alcohol on the premises, you’ll need a liquor license. You’ll need a Fire Inspector to come and confirm that exits are properly marked and everything’s up to code. There will likely be restrictions on the maximum legal capacity, and you may have to close at a certain time. You may also have to keep noise down after a certain time. You’ll need the right types of insurance for your business. It’s going to vary, but this might include General Liability Insurance, Umbrella Insurance, or Liquor Liability Insurance, among others. Dig into your city’s regulations for venues of your type, and make sure all of your ducks are in a row before you open your doors.
Make it beautiful!
Once you’ve got all of the legal and financial nuts-and-bolts squared away, you get to move on to the fun stuff: actually designing and preparing your venue. This can be a construction-heavy process with expensive contractors and lots of demolition, or it can be as simple as adding fresh new paint and changing up the interior décor. Either way, have a plan. Have a vision, and you can follow through every step of the way. We can actually help you out with some inspiration here. If you check out our listings by browsing by event type and look at venues similar to yours, you’ll be met with thousands of beautiful photos of some stunning spaces, which should give you plenty of ideas.
Making your venue the kind of place that people can’t wait to plaster all over Instagram and Pinterest, and it will pretty much book itself.
Get the word out and start partying
Once you’re all set up, it’s time to open shop. By now, you’ve got a great idea of how to start a venue rental business and have tackled all the pre-opening challenges. It’s a great idea to throw a soft opening party or something similar, ideally inviting local journalists and influencers. This can be specialized depending on the type of venue you’re starting, too—for example, if you envision primarily serving weddings, you might invite local wedding planners to a cocktail hour to show off the space. It’ll put your venue on their map as a place to suggest to couples, and everyone loves being wined and dined.
You might try digital advertising via Facebook or Google ads, which some people have had great success with. And of course, try Peerspace! We’ve developed our platform for this exact purpose, allowing you to simply list your space and let our system work on your behalf. Customers will be able to find you, make a reservation, and pay all through Peerspace, which you’ll find will save you a great deal of time. That, in turn, will allow you to focus on the most important job of all: being an awesome host.