Not everyone builds a strip club from scratch. If you are in the market to buy a strip club that’s already been built, it is necessary that you know what to look for to improve your odds of a successful start in this business.
While it is always going to be theoretically possible to build a strip club from scratch, the difficulty is finding the right available location. You have to find an adequate piece of land that’s zoned correctly, gets the right amount of foot and road traffic, has ample parking available, and doesn’t already have two or three other strip clubs within sight.
Note that most towns and cities are already filled with lots of strip club competition, so it can be challenging to find the right land in most areas with a large enough population to support it.
Indeed, identifying smaller towns and cities on the brink of a population boom is a good idea. You can search for areas where maybe a large manufacturer is building a plant, tech companies are starting up, or a new highway is coming through. It could be a great opportunity to start fresh with a brand-new establishment in an area on the verge of growth.
However, buying an already running strip club is a great option, if developing one from scratch seems prohibitive. However, to determine which strip club is the right one for you to choose, you will need the help of a small team of experts, including an experienced business broker, a local commercial real estate agent, a lawyer, and an accountant. Their advice will prove invaluable as you do your due diligence in preparation for making an offer.
You can start by obtaining access to a reputable businesses-for-sale listing. While local newspapers or business periodicals and websites may or may not offer adequate details, national business listing services are most likely to have the widest range of listings available for comparison, especially if you are considering a wide geographic area.
If you already know where you want to own a strip club, your available selections are more limited. It simply means that you may have to be patient while waiting for the right type of strip club to go up for sale in that area. If you are not tied to a particular area, your selection will be much wider and you can prioritize listings based on other important factors.
It is important that you understand that buying a strip club and successfully transitioning into full ownership is likely to require more capital than just the purchase price. The history of the brand and any public reputation or issues that go with it can create challenges under new management. Always budget to cover a minimum of six months of operating expenses when starting out. Twelve would be even safer.
How to Buy a Strip Club in the United States
Given to the challenges associated with buying a strip club in the United States, here are six tips to help you with your search.
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Create Clear Criteria
Note that the best business buyers act quickly. With so many buyers searching for good strip clubs, and so few quality deals coming to market, you need to make decisions quickly. However, to speed up your ability to evaluate the deals, put together a clear list of your acquisition criteria. This list will act as your guide to help you determine which deals are worth pursuing and which deserve a quick pass.
Have it in mind that putting together a clear, well-thought out list of acquisition criteria will take some time and effort. Your acquisition criteria should be your objective guide to evaluate opportunities, but you should always apply a subjective element to your evaluation as well. This should be your basic “gut check” about a business.
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Register with Online Marketplaces and Brokers
Indeed there are numerous ways to find strip clubs or businesses for sale, and club brokers represent only a portion of the club or businesses that are for sale. Taking your time to find a good strip club or business for sale is a numbers game. You have to look at as many deals as possible in order to find the perfect acquisition target. Consider registering with online marketplaces and brokers that will provide alerts on any new listings. This will make your daily inspections relatively easy.
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Approach Strip Club or Business Owners Directly
In the United States, many buyers limit their search for a strip club to two places: marketplaces and brokerage firms. Nonetheless, why not write directly to strip clubs or business owners to see if they would be willing to sell their business?
Writing directly allows you to reach club or business owners who never considered selling. Indeed, it is a numbers game so if you write to enough people, you may find a club or business owner who is an absentee owner and no longer actively involved in their club or business. For these owners, selling their club has probably been on the back of their mind and your letter might just incite them to start a discussion with you.
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Network, Network, Network
The best way to get known as a serious strip club buyer is to network within the industry. Conferences and networking events are an ideal way to meet many people and get the word out, but it can be expensive, especially if you are travelling around the country. However, it is advisable that you network by telephone and email with a targeted list of industry leaders. Send them your acquisition criteria. Take your time to explain how much money you have to invest and the source of your capital. Then stay in touch with them on a monthly or quarterly basis to update them on your search.
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Hire a Merger & Acquisitions Advisor
Note that you could easily spend most of your time reading through email notices, browsing online marketplaces, and networking. Instead of spending your time doing this, you might find it simpler to hire a club broker or merger and acquisition advisor to conduct a buy-side search for you. These experts can either run a “passive” search or a “pro-active” search for you. In a passive search, they will screen their prospects and active clients, sort through notices and online marketplaces and contact you when they have something that they think might interest you. In a pro-active search, they will do the above, but also pro-actively reach out to club owners on your behalf using a combination of letters, emails and cold calls to find opportunities for you that meet your acquisition criteria.
Key Things to Look Out For When Buying a Strip Club in the United States
Buying a strip club and finding out few months later that you must spend an additional $150,000 to repair critical systems you weren’t previously aware of can kill your enthusiasm and greatly eat into your wallet. If you know what to look for during your initial inspection, you’ll avoid many expensive problems. Here are some important things to watch out for when you are buying an existing strip club.
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Deteriorating Infrastructure
Remember that equipment has limited shelf life and you must be able to evaluate the condition of all systems prior to buying. People with no prior background in hospitality struggle with this task and it can be disastrous. Without first – hand experience, it can be very challenging to know what state a system is in just by looking at it.
It is also very crucial to know how to notice subpar, code violating or failing construction. Before you buy a strip club it is a good idea to bring in your team of contractors and staff to examine everything. If something isn’t right, tell the owner to fix it before you buy, or negotiate the payment so that it is lower. You must ensure that the venue is functional before you purchase it.
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Lease Agreement
Note that if you are buying an existing strip club, you have to know all the details of the lease. Bring out time to extensively examine the lease agreement. You must know what term is left on the lease and exactly what’s included. If you are assuming the lease, you are responsible for all the conditions agreed upon by the previous owner.
Moreover, it is a very necessary to send the lease agreement to your lawyer for a cross examination, as they can bring up some points that you may not have considered. You don’t want to sign an agreement that leaves you on the hook for things you weren’t aware of.
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Adequate Business License
Some strip clubs operate under an incorrect business license. This can become a major problem if the license needs to be updated, keeping the strip club from realizing its maximum potential. Before you buy a strip club, make sure you understand the different kinds of business licenses and make sure you have the right one.
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Keys and Access Codes
It is important you know everyone who has access to your venue just in case you get broken into. People like janitors, managers, and even some delivery companies typically have keys and alarm codes. That means they’re able to get into the building when no one is around. Experts advice you change all alarm codes and locks as soon as you take possession. This will ensure that only authorized parties will be given access to your building and remove uncertainty if and when a break in happens.
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Personnel
Take your time to get to know the existing employees and managers very early in the transition process, and determine if they are the right fit for your business. Also review employment records and financials with a keen eye for potential efficiencies. This is not the time to be sentimental. If one or more employees needs to be let go in order for the rest of the team to reach greater levels of success under your new ownership, now is the time to make that decision and act on it.
- Customers
Let’s imagine the previous owner is not selling his strip club due to a complete lack of patronage, make just as much effort in getting to know the regular customers as you do getting to know the employees. Regulars are the basis of any strip club, and are easily your most powerful marketing resource. Understand that they may be nervous about a change in ownership, and gaining their trust and loyalty needs to be high on your priority list.
Where to Find Strip Clubs for Sale in the United States
Finding successful strip clubs for sale can be a great way to get into this business for yourself without having to gamble your investment on an unproven start-up. Nonetheless, here are key places to find strip clubs in the United States.
- Local Businesses
Before trying any other options, consider calling some local businesses directly to get leads. If you strip clubs in your area, call up a few in your area and ask the owner if they are selling or know anyone who is. Note that this method can be very effective because a lot of businesses don’t prominently advertise that they are for sale. Existing owners may not want customers or employees to know that they are considering selling the business, so they might not even involve a broker until very late in the process.
- Online Business-For-Sale Sites
Many business buying experts agree that online business for sale marketplaces are a great place to search for a business opportunity, including a strip club. These websites allow you to look at a wide range of strip clubs all in one place, which is great for comparing and contrasting clubs.
With these sites, you can set filters to find clubs that meet your search criteria and receive alerts when businesses come up for sale that meet these criteria. You can also instantly view details and photos of the property for the sale before deciding if you want to move along in the purchase process.
- Newspaper Classifieds
If your area still has print-newspapers, the classifieds section can be an option for finding for-sale strip clubs. Some of the owners who are not as tech-savvy often prefer advertising in the local newspaper over putting their business online.
- Business Brokers
Business Brokers are a universal acceptable way you can find strip club for sale. In most cases, you want to find a local broker who has knowledge of your local market. Local business brokers should know what businesses are for sale in your area, and may even have leads on businesses that are not officially on the market yet.
Conclusion
As with any entrepreneurial effort, buying a strip club – even one that’s already successful – is not a guarantee of financial or personal success. But, by paying attention to the points outlined and by making an effort to learn all you can about successfully buying and running a strip club, you’ll be in the best possible position to make it a thriving business.