How to Build a Strip Club

John Sauter

12/02/2002

I. Location

A small strip club is a retail business. In retailing, the three
most important considerations are location, location and location.
Look for a building in the Adult Entertainment zone at the edge of a
small town, with good parking. It should be close to an exit from
an Interstate or major highway, but the path from the exit to the
club should run through the neighboring town, not the one in which
you are located. That way the town with jurisdiction over you does
not have traffic impact. There should be at least one college with
a good women's athletic program no closer than 40 minutes nor
further than 80 minutes drive time from the club. Closer than 40
minutes and the dancers will be concerned about their fellow
students seeing them in the club. A commute longer than 80 minutes
becomes a hassle.

The only way to find a suitable town is to check out each town
personally. Read the zoning regulations, particularly the parts
about adult entertainment. Visit the parts of town where adult
entertainment is permitted. If you find a likely location, attend
the public meetings of the town's governing body to learn who the
important people are. They are not necessarily limited to elected
officials: notice who else attends and who is spoken of with
respect. Talk to those people about your plans for adult
entertainment. Based on their reaction, form a judgment about
whether or not you will be swimming against the tide in your
business venture.

You want the town to be small so the tax revenue from your business
makes you significant. The town politicians can be powerful friends
when (not if) the local moralists attack you. When the club starts
to develop serious revenue, allocate some to contribute to
reelecting incumbent politicians in your town, and some to
contribute to the women's athletic programs in nearby colleges.
Before buying or leasing property in a town, hire a local lawyer.
If he thinks you have a good chance at success, he will front for
you when dealing with the locals, until you become well known. If
the people that matter in a town are hostile, move on to the next
town.

You also want the club to be close to customers. Commission a
survey of people living within 30 minutes drive from your proposed
location to determine their reaction to adult entertainment. You
are looking for both positives and negatives, just like a
politician. Would they work there? Would they be customers? Would
they pressure the town to shut it down?

Find out if there is a local anti-sex pressure group, such as a
church or the PTA. Allocate some money for their pet projects in
your business plan.

II Attracting Investors

Do not put up any of your own money. You do not have enough to
matter. You are offering your time, energy, experience and
management skills. The investors offer the money. To attract
investors you will need a business plan. To have a business plan
you will need a location, permission from the local politicians to
have a club at that location, and a commitment from local builders
for the modifications to the building. That means you will need
building plans: figure on hiring an architect in addition to the
lawyer.

The initial investment should cover your startup costs plus one year
of operation. By the end of the first year, your weekly revenue
from operations should exceed your weekly operational expenses. To
attract investment your business plan should be conservative, and
should promise to start returning five to ten percent per year to
the investors, beginning at the end of the first year. Do not
forget to include your salary in the business plan. Plan to be
on-site whenever the club is open for the first year.

III. Staffing

The quality and quantity of staff is crucial to your success. You
must have regular hours so that customers can count on you being
open without having to call ahead, and that means that you will
sometimes be open when there are very few customers. You must have
a staffing plan that allows you to make a profit even when there are
very few customers in the club. I once saw a club with a minimum
staff of two, one male and one female. The male greeted me at the
door and took my cover. He then seated me at a table and brought me
a drink, which he made at the bar. Thus, he combined the functions
of host, bartender and waiter. The female danced on stage to music
from the jukebox until a customer asked her for a private dance.
She then closed the stage and took the customer in the back. When
the customer was finished she opened the stage and returned to
dancing. You will need to have a similar staffing plan for lean
hours.

I recommend you run a regular amateur contest, open to any female
over the age of 18. If a girl has guts enough to get up on stage
and take her clothing off in front of a bunch of strangers, hire
her. For your opening, of course, this does not work. Audition
your opening day dancers personally on the stage before the club
opens to the public.

Find out if there is a local brothel. The girls are good recruits
since they can tell their regulars to meet them at your club for
some personal time, and they can tell guys who hit on them at the
club to meet them at the brothel.

Run an advertisement for dancers in the local papers within an
80-minute commute. Tell prospective dancers who call that the
amateur contest is the audition. Make sure the advertisement
includes your club's hours and location, since it will attract
customers as well as prospective dancers.

For non-dancing positions, try to hire locals. This helps to
maintain a good relationship with the community. Some clubs have a
housemother who keeps order in the dressing room. In one club that
I visited, she was the DJ's wife. In another, the (female) manager
was also the housemother. Some clubs have a DJ, while others have a
jukebox from which the dancer chooses her songs. You might try
both: a DJ for the crowded hours and a jukebox for the lean hours.

It is customary in this business to treat dancers as independent
contractors. That means you do not control them: they can work in
other clubs as well as in yours. When they come in, you charge them
a stage fee, and you can rent them locker space. You can charge
them a fee for use of the lap dance facilities. You cannot exercise
the kind of control over them that would be normal in an employee
relationship, or the IRS will decide that they are actually
employees. You can tell them that they may not work at your club if
they break the rules, but make sure the rules are objective and
clearly posted.

Scheduling presents a tricky problem. In order to maintain
independent contractor status you cannot set a dancer's hours.
However, you can limit a dancer's access to your club to those times
when her services are needed. In addition, you can tell a dancer
that you will need her on Friday evening if she also works on
Wednesday afternoon, thus exchanging a good time for coverage of a
lean time.

You should install surveillance cameras so you have evidence to show
a dancer if you see her breaking a rule. However, once the
punishment for rule breaking is fulfilled, erase the tape. You do
not want these tapes to be used against you in court.

Traditionally, the dancers pay the DJ. The housemother and bouncers
also get part of her tips. This makes economic sense, since the
dancers are the source of the revenue, but I am not sure it is a
good idea. You want the staff loyal to you, not to the dancers. If
a customer, who may be working for the police, asks for a girl to
take home, you do not want the bouncer to pimp his favorite dancer.
Instead, he should refer the customer to your competition. I think
it would be better to let a dancer keep all of her tips. You pay
the staff from the stage fees, locker rental and private dance
fees. This means that the fees will be higher than in places with a
15% tipout, but there is an appeal in being able to keep all of your
tips.

IV. Contact, Dress, Prices

The degree of contact you should permit between dancer and customer
depends on local custom, which varies widely, as does the amount of
clothing required and the prices for various services. Before you
open, survey the situation in other, nearby clubs, and aim for about
the middle. If you allow too much contact, the dancers will leave
you for the other clubs. If you allow too little, or your prices
are too high, the customers will patronize the other clubs.

If there are no other clubs near enough to be competition, you are
in the enviable position of establishing the norm. I suggest you
start very low, and slowly increase the sexiness allowed until you
start getting pressure from the community. Begin with dancers in
swimsuits, then replace the bras with opaque pasties, then
transparent pasties, then topless. Once you have gone topless start
increasing contact, from none to a caress to breasts in the face to
lap dancing to mutual caressing to genital contact to intercourse.
At some point in that progression, you also permit full nudity.

Prices are based on what the traffic will bear. One dollar per song
for sitting at the stage is widespread in the United States.
Personal dances should probably start at $10 or $20 per song, with
more for extras. I was offered a dildo show at Mitchell Brothers'
O'Farrell Theater in San Francisco for $200.

In many jurisdictions, the allowable amount of contact and clothing
depends on whether or not you serve alcohol. In addition, serving
alcohol requires additional licensing and staff training. You
should carefully consider the pros and cons of serving alcohol when
writing your business plan.

V. Maintain Good Community Relations

Even if the local politicians are on board when you open, they will
not be in office forever. You must make your business good for the
town, in a way that any new politician can learn to appreciate.
Contribute to all the local charities. A few years ago, I was
visiting a legal brothel in northern Nevada. While I was there, a
kid came in looking for support for his little league baseball team,
or something like that. He was told to come back when the owner
would be in. You want the same attitude towards you: always willing
to help. Do not insist on recognition. Some organizations may
worry that a public contribution from you will offend the local
churches, which give them more than you do. Even without public
recognition the organization will know who you are, and is likely to
support you (or at least not join the opposition) when the national
anti-sex forces come to town.

Whenever anything bad happens, take up a collection to relieve the
suffering of the victims. The public does not have to know you are
behind the effort, but the powerful people in town will know.

Make it a priority to give low-skill jobs to locals who are down on
their luck: bouncer, DJ, waitress, dishwasher, whatever. That gets
them off public support, and the politicians will notice without you
having to say anything. If you can teach the town drunk to show up
for work and look presentable, even the churches will start to
notice you with approval, though they may not have the courage to
say so.

In short, be a good citizen and the town will support you when the
national anti-sex forces arrive. If you can get local law
enforcement to speak positively about you, on the record, you are
succeeding in community relations.

VI. Litigation

No doubt, you will be involved in litigation. Remember that local
lawyer you hired when you were scouting locations? Keep him on
retainer. He should also keep track of any proposed ordinance that
would put you out of business, so you can counter it before it
passes. In general, you cannot be deprived of your property by the
government without just compensation. However, you need to guard
against creative ways around this principle. I heard of a case
where a strip club mysteriously burned to the ground one Sunday,
when it was not open. The fire chief investigated for a long time
but could not determine the cause of the fire. Be sure you have
business interruption insurance.

VII. Physical Plant

Upon entering your club, the customer should encounter an
entranceway with no visibility into the main space. There should be
an employee there to collect the cover charge and check ID. Provide
a separate entrance, not visible from the main entrance, for dancers
and employees, and let them park near the employee entrance. In
some places, dancers are escorted to their cars when they leave.

Make the interior décor erotic without being offensive to the female
staff. Install a good sound system, so that every customer hears
the music at the same volume. Make the sound loud enough to provide
conversational privacy between tables, but not so loud that a
customer cannot look a dancer in the face while talking to her.
Light the stage well so customers can see the dancers easily.

Provide a semi-private space for personal dancing. It should be
visible to the security staff but not to customers who have not paid
for a personal dance. You might use booths that conceal below the
shoulders or a special room with soft chairs. At PT's in Denver,
the personal dancing area has couches that face away from each other
with backs that arch overhead, giving a high degree of privacy.

VIII. Be Flexible

As your club becomes established, you will learn things that you did
not know when you started. You should be prepared to update your
business plan as the situation and your understanding of it
changes. If you become convinced that you cannot return a
reasonable rate to your investors, no matter what you do, it is time
to close your doors.

Anyone who wants to own a strip club should subscribe to the
industry's trade magazine, Exotic Dancer Bulletin. Their web site
is http://www.ExoticDancer.com. Follow the Directory link and then
Order. The order form lets you buy any of their products, including
a subscription to Exotic Dancer Bulletin.