Running a business

I have a great idea for a dance club, I have a person that can build a great infrastructure, a person to market hte idea. But the question is how is money actually made, Im not talking big buck but just enough to cover the cost of the hobby. I understand tip boxes and donations and the such, but is that enough ?

My answer is so short . Buy a money sploder.

You do realise that there is about a jillion of dance clubs in SL?

There are a jillion texture stores, and clothing designers, and builders too - doesn't mean you should put people off trying their hand at something. Some things fail because they don't make the grade, others become hugely successful because something was done right. You don't know which you're going to be unless you try.

But I don't have an answer for the original question I'm afraid, since it's not something I know a lot about. But don't let people put you off your ideas. You could do a fantastic job and end up as the one and only dance club by this time next year whilst your competition cries in the corner

yes, I know that theres a million dance clubs, and theres a million housing communitys so why shold I try another ?? I dont have a clue but a havent ever seen the two together.

I would guess that less than 5% of paying residents actually make more money per month than they invest in Second Life (land tier/rental fees, premium account, purchasing stuff etc).

It's a great pity that much of SL's advertising seems centered around the 'commercial' side because there is so much more potential, largely untapped.

To me, when making money becomes the main reason someone is here... I feel they've lost the point of SL.

Broccoli

I totally agree with you on this one You see it all the time, when making money becomes the driving force here. People here as in RL forget that to enjoy ur work u have to not have money as the motivating factor and be prepared to invest RL cash first and foremost and success with a good product/idea will follow.

Reputation here is the most important factor imho and to get that u have to invest a lot of personal time being there for your clientele at ur place of business and most important remember that it takes time as there are no get rich quick schemes here, unless of course u r a scammer and run a dodgy business or a landlord that rips their clients off etc. again there are plenty of them here and getting worse by the month as u rightly say its the commercial aspect that LLs advertise that attracts the low lifes and the fact they can and do get away with it with the ease of creating accounts and the way its so easy to pay incomes to multiple accounts to cash out.

I got scammed by a fellow Mentor who also ripped off a lot of people here after a while LLs eventually caught up with him and his alts and banned him. Now im ultra careful with who i do business with here but it just goes to show you need to always be aware.

Peace

Well he did say we was just wanting to cover the cost of the hobby, whats wrong with that ? What confuses me is why would a person spend $300+ and 40+ bucks real money, and not make an attempt to recoup. Land prices are nuts in my humble opion

I'm in agreement about the attitude many people seem to have about making money here - that you can has been publicised so much that a lot of folk think there's nothing to it. But people don't just get into business because they want to make money. Strange as it may sound, I actually got started because it was something I enjoyed doing! And I imagine if I ever stop enjoying it, the business will go down too. I think that's the most important part - working in SL isn't like flipping burgers to pay the bills, it's taking on a role you enjoy that employs your talents because you want to. If you start a business that isn't primarily for your own enjoyment (e.g. is primarily 'to make money') then you're probably not going to do very well.

we got off base... what I was asking is, these clubs I see all over the place theres not really any being sold there... are these guys making money, if so where is the money coming from

Many people that I have spoken to that have run clubs say you end up having to pay out quite a bit of money running a club: hiring dancers.. event hosts..dj's.. paying for contest winnings. I think having people pay for advertisements placed in the club is one way they make money.

It is very rare for a "hobby" to pay for itself, once a "hobby" starts paying for itself it becomes a side business. I, too, have heard from some people that I respect greatly that clubs are a lot of work that MIGHT break even. If you want to cover costs, you need a plan for it. Where is the income going to come from? Tips are not something you can really rely on. So, do it for fun and figure out a longer-range business plan to get it to eventually pay for itself (which won't happen for months until you get established.)

According to the economic statistics site:

Only 17327 users had "positive L$ cash flow" across all their alts for the month - before tier costs and similar, not allowing for land sales.

If you take this as a percentage of the whole 2 million avatars on SL it comes out silly, at something like 0.6% of the population, but since that includes "try and see" avatars and alts, that's probably not a good reasoning. According to the same site, 144108 avatars spent money in December, so the number of people making money is around 12% of the number spending it - not quite as bad as suggested.

Unfortunately, the "Pareto curve" is actually worse in SL than it is elsewhere... based just on the minimum values of the profit tiers, the top 10% of businesses make 86% of the money.

I hear tip jars can work quite in clubs.

How they make money.

1. Most (if not all) clubs have a Vendor area where they rent out stalls for people to sell their products.

2. Sploder. When people buy into the sploder, the club gets a portion of the money.

3. Tip Jar. Some clubs put up tip jars to help defray the cost to run the club. (these are separate from the DJ/Host/Dancer/Escort tip jars)

4. Escorts/dancers. Those clubs that offer escorts/dancers, receive a percentage of their pay/tips.

5. Skyboxes. Escorts need someplace to go, so clubs will offer skyboxes for rent.

6. RL money. The owners probably won't make money, they'll have to spend some of their RL money to keep the club going. But hopefully items 1-5 will keep that RL spending to a minimum.

Well.. thanks to all that has replyed, you have given me alot of information to digest, Im still excited about this and ready to go to work on it. thank you, thank you, thank you.

Amen

To be frank, you have to decide whether you have a hobby or a business (business definition - a way of selling/marketing/providing a servce, which produces revenue to pay overheads and (optional) make a profit)

To have a Hobby, you don't need a business plan, a cashflow forecaster, funding or securities, just a talent for fun, invite only those that share your vision and expect nothing more in return.

To have a Business, you have one of two ways to proceed.

1) Start a business on the basis that you firmly believe other people will want to pay for your talents/skills, stand about and become confused why no one is knocking on your door.
2) Carryout research, find a market, explore the competition, workout what your product/skill costs you to produce and what the markets perception of value for money is for that. If that shows a potential profit margin, form a business plan, a strategy, setup a cashflow forecaster with time limited budgets from which to measure your success/failure in meeting your goals, if required seek and secure funding/investments, purchase/recruit/develop all resources required to meet your production, network your product, advertise and most of all - deliver a professional service that can be backed up by more than mere words. Be prepared to modify your business plan, update your cashflow forecaster, look for ways to extend/expand your markets and services, pay your bills, keep a firm eye on the competition, inovate, honour your contracts, work longer and harder hours than you originally thought without complaint, always look a unhappy client in the face and tell the the truth and offer a way where both can live with any mistake (even if it costs you money or it's theirs), don't ignore problems.. they don't go away..... oh and did I mention Smile and Have fun, you are your own Boss

The moment you stop enjoying either of the above, do something else... I think There.com is still trading...

The good thing about programmes of the Second Life ilke, is they allow someone without a full business accumen to start a company. It's how you behave running that company, that falls short with some. If you are confused why you are/have failed, then you have followed route (1), if you know you are failing (because you followed route (2)), then you know when to give up and try something else, or allow yourself to take up the Hobby route.

I was going to send you an IM but looks like you don't have that on.
At http://talksecondlife.com/ there is a professional DJ and the owner of Teddys Club would be glad to talk to you about that area of business I'm sure.

My advice, DONT.

There are so many big clubs out there and even more failing ones. All of them will try to shut you down.

Once they're at the top of the search list due to massive traffic, its almost impossable take business away from them since people will simply go to the most popular places first. Icedragons and those other huge clubs have massive vendor areas that dwarf the attractions, and people scramble to get a vendor there and pay top dollar.

If you so much as get on the same page as these huge clubs, they will do everything in their power to DESTROY you. Few have the capital to sustain their business while getting griefed/crashed/harassed by the big club kingpins who dont want anyone biting off a chunk of their pie.

So either get used to being crapped on by the higher ups, sell your soul and join them by using their own tactics against them, or save yourself the trouble and try a diffrent business.

"If you so much as get on the same page as these huge clubs, they will do everything in their power to DESTROY you. Few have the capital to sustain their business while getting griefed/crashed/harassed by the big club kingpins who dont want anyone biting off a chunk of their pie."

I can imagine 2 people sitting about in a garage some years ago strecthing their own imaginations in entering the feild of computers. Perish the thought that they would hold back on taking on the giants IBM, Data, Lotus etc.... if they hadn't actually taken the advice above, then the Windows and Mac Platforms would not exist today. It's doubtful we would be entering thoughts on this forum. Food for thought.

Lag is your friend. No, seriously, I mean it - mega-huge clubs can quickly be lagged down to nothing when they become highly popular, which is why there often is a call for more and social locations for different groups of people.



If you are claiming that top club owners engage in systematic griefing to keep competitors down then you would need more evidence to back that up. Of course they should be ARed in the usual way. If what others are saying here about RL taxes is really true, it's possible that RL legal charges would be viable as well (!)