Jazz clubs have enjoyed ongoing popularity over the past 70 years. It is a unique form of music that has found a wide audience in the United States. As such, a number of jazz clubs continue to be developed in order to provide live musical entertainment and access to premium nightlife services. These businesses enjoy a mix of revenue, not only from the sale of admission fees for events but also from bar service.
The first step in creating a jazz club business plan is to complete the market research. Given the unique nature of these businesses, there are usually only a handful of competing enterprises within any target market area. The vast majority of competing businesses are entertainment companies that provide substitutive services such as nightclubs, sports bars, and other types of nighttime entertainment venues. As part of the analysis that we conduct, we always examine the median household income, median home price to determine area wealth, age demographics, population density, as well as reviewing employment statistics for the target market area. This allows us to understand the size of the market, which we then apply national level statistics to determine the number of people that have an interest in attending a jazz club.
We always develop assumptions driven financial models in the business plans that we create. Using the information that we produced from market research, we then developed the full-scale jazz club financial model. This includes a profit and loss statement, cash flow analysis, balance sheet, business ratios, and breakeven analysis. We also include information about the use of capital and how will be allocated to establish the operations of the jazz club.
We then move into developing the jazz club marketing plan. Here, we focus on the extensive use of online marketing strategies in order to promote certain jazz artists that will be performing at the location. It should be noted that one of the benefits of operating this type of venue is that the artist will concurrently promote their attendance at the venue. This significantly reduces the ongoing marketing cost associated with the business over the long run. We also extensively discuss the use of search engine optimization, targeted social media, video marketing, mailed advertisements, and ongoing relationships with touring management companies.
The fourth phase of the business plan development process is the writing of the jazz club operating plan. Here, we discuss the hours of operation, how jazz artists will be sourced to play at the location, human resources matter, as well as regulatory compliance for operating this type of enterprise.
Our business plans also always include a SWOT analysis. This is an overview of the strengths, weaknesses, opportunities, and threats that are faced by jazz clubs. For strengths, these businesses are able to produce significantly high contribution margins from admission fees, special event fees, and bar sales. For weaknesses, these businesses can be impacted by a severe economic recession, and they also have moderately high operating costs related to advertising in payroll. As it relates to opportunities, the company can work with established entertainment firms in order to place high visibility jazz artists to perform. For threats, this is relatively minimal for a jazz club, although there can be competitive issues that occur.
We also address certain ongoing risks associated with the business, which include general operational risks, well also discussing the pre-launch marketing risk and a need for having a very large scale marketing plan in place in order to create brand visibility.
Now that all the primary chapters of business plan are completed, we then move into developing the executive summary. Here, we discussed the operations of the jazz club, the target market area, the experience of the founder, noted jazz musicians that are expected to play at the facility, and providing an overall snapshot of the anticipated revenue and profit of the business over five year timeframe.