Alcohol sales permits usually only cost a few thousands dollars, but to fully set up a new nightclub probably costs at least a 100 times and possibly more. Thus, a nightclub is not something you can start with a small budget and you need months of planning before you can open for business and welcome customers.
The average cost to start a nightclub varies so much that it is impossible to have an exact figure. In 2011, you can expect to pay anywhere from $240,000 to $837,000, according to PowerHomeBiz. You probably will pay close to the lower end of this spectrum if you purchase an existing nightclub, especially if it is located in a medium- to smaller-sized city.
Between the security deposit and first month of rent, nightclub owners tend to spend at least $3,000 a month on rent, according to Entrepreneur. Most owners spend the most on leaseholds -- expenses you pay to upgrade the facility -- such as new air conditioning, redecorating and electrical work. Also, plan to spend at least $40,000 on equipment, such as a booth for a disc jockey, special lighting and bar equipment. If you need to build a structure housing the nightclub, you might spend hundreds of thousands or millions of dollars more.
Whatever your anticipated budget is to start the place, you should have a 10 percent cushion for miscellaneous expenses. For example, you might have an opportunity to market your club through the media or find unexpected problems with your building. This is in addition to about $50,000 to $150,000 in cash reserves so you can cover operating costs for the first couple months until your business starts earning revenue.
Go to a tax professional who can help you plan your business to take advantage of tax incentives for new businesses. For example, you probably can depreciate the property you use to start your club, such as bar equipment and the building itself. The Internal Revenue Service also lets you deduct employee pay and interest on the money you borrow to start your club.