Why closing down a nIghtclub is a lot harder than calling last orders
The majority of revellers and patrons still remember nightclubs as fun and vibrant places to go and dance, hang out, drink and watch the beautiful people.
Working and running a club is at the opposite end of the scale to visiting one however.
Owners have to make sure they’ve got good, trained staff who can handle a busy bar, licensed security staff, enough supplies to meet demand, working lighting and sound systems and a hundred other tasks too mundane to list but essential to ensuring that the clubbing experience is an enjoyable one.
They’ve also got to make sure the club is cleaned up after the last partygoers leave and that any damages are repaired or replaced until they do it all again, probably the very next night.
It takes a special kind of mindset and skill set to successfully operate a nightclub profitably, but the rewards are worth it. Or at least they used to be.
We’ve had the pandemic, endured the year of lockdowns that followed and are still weeks away from nightclubs being allowed to reopen to the public again provisionally from June 21st.
Some clubs with outdoor areas could theoretically open from May 21st but in the UK, the quintessential nightclub experience is indoors.
Every nightclub owner and operator will be looking at how they can operate a covid-safe environment in a location that’s designed to encourage close contact with others, assuming that the appetite for clubbing returns and can command public confidence again.
From being among the first businesses to close to being the last allowed to reopen, it’s been the worst of all worlds for nightclubs and it’s not over yet.
The UK’s night time industry – the collective term for nightclubs, takeaways, bars, restaurants and theatres that operate mainly after dark – generate at least £66 billion for the economy, as much as the airline industry.
Between them, they employ 8% of the country’s workers and support an additional 1.3 million suppliers and freelancers but they were already coming up against some fierce headwinds before anybody had heard of Covid-19.
The economic effects of the pandemic have devastated many clubs and some owners have already taken the decision not to reopen.
Some operators have been able to access some of the various support measures provided by the government including the Coronavirus Job Retention Scheme that allowed them to furlough staff and keep them in their jobs through closure.
Luckier establishments might have been able to secure rent holidays or reductions from landlords while some may have taken out funds through the bounce back loan scheme – although repayments will now be coming due unless they have been deferred.
These will not be the only debts coming due about now. Business rates and utility bills need to be paid regardless of opening status and if the business has built up any VAT or other tax arrears then they will either need to be settled or an arrangement made with HMRC to pay over a longer period.
All the accrued debt has been building, is liable for repayment and the vast majority of nightclubs are still weeks away from being able to reopen and generate funds to begin to repay them.
If you run a nightclub, what options do you have?
If you’re really committed and believe that given time, you can return to profitability, then toughing out these next six weeks is for you.
Though on top of the historical debt, you’ll also have the increased expense of getting everything ready for opening and increased costs in remaining Covid compliant moving forward..
For some, the truth is that it’s often easier to start afresh then try and to climb all the way back to the starting point.
Whether you want to fight for your right to charge customers to party or you think it’s time to close a chapter before beginning another, there are various ways we can help you.
The first step is to get in touch and arrange for some professional insolvency advice.
One of our expert advisors will be able to fully assess your situation and recommend optimal courses of action depending on what you ultimately want to do.
They will run through scenarios with you based on your current and projected figures and be able to tell you what realistic courses of action you have.
If the business is already in debt, has creditors already asking for repayment and is unlikely to be able to make a profit when it could resume trading then a company liquidation might be the easiest and simplest solution.
If the debts are low and the nightclub could be viable once it reopens then an administration or company voluntary arrangement (CVA) might be the best way forward through the current difficulties to a brighter future for everybody concerned.
Choosing to take a decision and resolve the future of your business is key.
By the time nightclubs are allowed to reopen without restrictions, you could already have begun your next venture – but only if you take action now.