Side hustles are great because with time and effort they can grow into a sustainable business.
That DJ side hustleyou started because you liked music can lead you to connections with other DJs and a following of dedicated fans. Next thing you know, you’re renting out empty warehouses, inviting your DJ pals to town, and charging your fans money to enjoy the show.
With the right niche in a scarce market, a side hustle can become a sustained effort that converts your talent and expertise into a serious revenue stream. The riches, as they say, are in the niches.
From DJ to Promoter
As we’ve discussed before, developing a DJ side hustlecan create opportunities wherever you go. You can easily make hundreds of dollars a night doing something you enjoy all the while imbibing for free.
The nightlife business is fairly simple. DJs work for clubs or bars. Clubs and bars have owners. Those owners are looking for customer to drink their alcohol.
If you’re a DJ with a regular crowd and dedicated fans on social media, a bar or club will pay you not only to DJ, but to bring your following to their establishment. At this point, you’re no longer making a few hundred bucks a night in DJ fees, you also open the opportunity to make a cut of the bar sales and a portion of the entry fees.
At some point, you may decide that you don’t want or need to DJ. Those social media followers can eventually be directed to other people’s events. This is what led my DJ side hustle into a marketing and events company–Virus Marketing–and to throwing a series of warehouse parties.
My Story
My story began when I started DJing in Shanghai with my pals Adrian and Hans.
As I played more frequently, I made connections with DJs from Shanghai and around the world. These connections led me to meeting some other folks in the community and setting up a business to bring DJs to Shanghai (and eventually other cities) to play. This led to collaborations with corporate brands, and eventually product launches.
When you cover the DJ expenses and and bear the financial risk of an unsuccessful event, a venue owner will offer a cut of the bar and entrance fees. This creates equity in the event.
I was making some money, but there was still a revenue split with the venue owner. Thats the trade off. The venue owner is paying rent and stocking the alcohol inventory, so they expect a significant revenue share. But what if you cut out the venue completely?
If you control the venue and source your own alcohol, then you enjoy 100% of the profit.
So I settled on an idea. I would rent out large, empty spaces, bring in a dedicated sound system and controller set-up, build a VIP section, buy the alcohol, and enjoy the fruits of the labor.
A word of caution, this is not a phase one effort. You need a big social media following or outside promotion support to execute effectively. The costs of renting and managing a venue can be high.
Once those pieces are in place, this is a strategy can turn that few hundred dollars a night into a business that generates tens of thousand of dollars an event. Here’s how you do it.
Find a space
Shanghai, where I lived at the time, has a long history of manufacturing. As the city grew and moved up the industrial value chain, rents went up, manufacturing diversified to the high end (aerospace, R&D facilities, biopharmaceuticals) and the low-value added manufacturing (widgets, electronics, textiles) moved to central and western China. The spaces previously occupied by those manufacturers sat empty in parts of town, waiting to be redeveloped or knocked down to make space for the next high rise. Many of those old factories have the benefit of being mildly isolated, limiting the negative impact loud music will have on the surrounding community.
When empty, these spaces make their owners no money. Researching the owner, getting in touch, and renting the space for an evening was a win-win for me and the owner. The strategy was to approach the owner with an honest proposal to take over the space for a night to play a show. Many were happy for the business.
Source the Alcohol
Spaces are great, but the real money comes from selling drinks. The old expression “alcohol costs pennies and makes dollars” is at the core of revenue generation in the nightlife business. How do you find alcohol? You have a few options:
- Buy from the local store: Any store that sells alcohol would be pleased to supply a large order. But these are retail prices and costly.
- Buy directly from the distributor: Now you’re thinking. Distributors offer alcohol at wholesale prices to bars, clubs, and retail stores. They are also interested in talking to promoters who buy in bulk and become regular customers. Instead of paying 30 dollars for a bottle of Grey Goose, you’ve cut 30% off the price and are paying 20. That’s a major savings when you’re talking about the volume to supply a 1000-person party. We’ve established you’re boosting your profit, but this is still a significant sunk cost. What happens if you can’t sell all the alcohol? Then you’re stuck with inventory. How can you get the alcohol without the large up-front cost?
- Take the alcohol on consignment: Once you’ve proven to a distributor that you’re a reliable customer, they will offer the alcohol on consignment, collecting payment for sold products only after the event is over. Whatever you don’t use, you return. In this case, your fixed costs are low and you only pay for what you use.
NOTE: Make sure you keep a clear inventory throughout the night and secure the alcohol at the end of the evening. When you’re tired at the end of a long night you begin to make mistakes. At one of the events I threw I ended up losing 50 cases of champagne, vodka and whiskey. It was financially disastrous, setting me back thousands of dollars because of a stupid error.
Alcohol by the numbers
Alcohol purchases will have a significant impact on profit margins, so finding a steady wholesale supply is critically important.
To further increase profitability, distinguish between top shelf and off brand spirits. Lets take Diagio—the largest alcohol distributor in the world—as an example. It offers two brands of vodka in its collection; Ketel One and Popov. One is so called “premium” the other a “well.”
Lets break down the cost-benefit of these two options. The average shot of alcohol is 1.5 fluid ounces or 44 ml. That would mean a 750ml bottle would contain 17 shots. In a bar atmosphere it is generally unreasonable to assume every drink pour will be perfect. Some will be heavy pours, there will be some spillage, possibly evaporation. Lets say a 750ml bottle realistically contains 15 shots and thus 15 drinks. With the two options above, what are the numbers?
| Cost/bottle | Shots/bottle | Cost/shot | Cost/drink | Profit/drink | Profit/bottle | |
| Ketel One | $17.99 | 15 | $1.20 | $5.00 | $3.80 | 57 |
| Popov | $7.49 | 15 | $0.50 | $5.00 | $4.50 | 67.51 |
Well drinks are great and will be the bread and butter of any large show, but that doesn’t mean you shouldn’t also have Ketel One for your VIP section. Selling bottles is a big mark-up opportunity that makes even better returns.
Find the DJ
To put on a successful warehouse show it helps to have a big name DJ. Challenge is that most big name DJs charge huge performance fees. Any DJ with the name recognition to make the DJ Hot 100 list can command thousands of dollars a show, some at the high-end like Calvin Harris, can make north of a hundred thousand dollars for a set. So what are the options?
- Hire someone local: Every city has local DJs. With the right promotion you can drive folks to see them. You can look as well in nearby cities. I collaborated with a group of hip-hop DJs getting big in Beijing; we flew them down to Shanghai and hosted a series of great shows.
- Hire a big brand up and comer: There are lots of big DJ brands out there. I partnered with Ministry of Sound to bring one of their newest DJs to Shanghai. He was largely unknown outside the UK, but the Ministry of Sound brand had a big profile so I was able to promote the event for a lower cost.
- Bring a serious producer: There are a ton of producers out there who make music for the most well known artists in the world but have less individual name recognition. What do Kanye West, Jay-Z and Chance the Rapper all have in common? The producer No I.D. His booking costs are a fraction of those artists and your paying for the creative genius behind each.
- Go big: While booking fees can be high, you can aim for some of the more established big name DJs. Look for someone in your country or region to save travel costs. Recommended only for shows where you’re bringing in more than a thousand people.
Research the local regulations
Producing a warehouse party is likely legal in your jurisdiction, but its good to check the local regulations and with the local police or security department. For example, in Shanghai, an organizer must apply for an event permit from the local police department. In most U.S. states a temporary liquor license is also required. Many of these permits can take up to 30 working days to approve, so make sure you’re planning the timelines out in advance. Understanding your local regulations is a critical step. If ignored, your event could be over before it begins.
Contract a Security Service
If you’re inviting 1000 people to drink alcohol in a confined space the chances of fights, theft, or other unexpected security incidents are high. It will be critical to ensure you have a professional team on site to monitor the situation and respond if a problem arises. Professional security are almost always trained in first aid, as well, so that will cover unexpected medical incidents too. Indeed many local regulations mandate security as part of a license approval.
Develop a concept, make a flier
When I first started throwing parties I had to find an outside designer to make my event flier. Design and edits cost a few hundred dollars. In the modern era of crowdsourcing, it’s never been easier to find a qualified professional willing to work at a reasonable rate. Fiver, for example, has a top 25 list of event flier designers. You can sign up to begin using the site here.
Before you seek the outside assistance, make sure you have a clear theme and concept in mind; it will ensure you get what you need from the designer. When throwing Ministry of Sound parties in Shanghai the theme was “seasons” each design represented Winter, Summer, Fall, and Spring and required a new design within the confines of a thematic element. Finding a cohesive theme is a key component of an event’s brand that will become the core across all platforms.
Find the hardware
There are plenty of set-ups to deliver music: digital controller, CDJs, or turntables. But building a sound system for a large event requires a more robust set of equipment. You need to find suppliers for loudspeakers, subwoofers, and amplifiers, as well as a qualified sound engineer to set it all up. Depending on the type of event, you may need a microphone.
You don’t need to know anything about sound equipment to build the right audio set-up for your event. There are hundreds of companies that will set-up a plug and play solution for you. All it takes on your part is identifying the right supplier.
Find a sponsor
Throwing a warehouse party is costly (we’ll look at some numbers at the end). The good news is that most of the participants in such events—young, liquid, trendy young people—are a core demographic brands are seek to influence. Begin by thinking through the type of sponsor you would seek to attract.
Is it a major alcohol brand? These companies are experienced party sponsors and budget to contribute to large events like yours.
Perhaps an audio equipment manufacturer? These companies are interested in exposing crowds to their technologies. Instead of paying a few thousand dollars for an audio set-up, perhaps a major audio company will offer an in-kind donation to meet your speaker and amplifier needs in exchange for a shout out on the event materials.
Best way to approach a sponsor is with a clearly articulatedsponsorship proposal. In a nutshell, you need to know what the sponsor’s objectives are, what you have to offer, how you measure the benefits to the sponsor, and how much that is worth to them. Developing a sponsorship relationship takes time and an established network. Cold calling is extremely ineffective if you’re looking for someone to invest in you.
The best way to prove your worth to a potential sponsor is to have a verifiable track record of success. A sponsor would much rather invest in someone who has put on a number of high quality events and prove a steady stream of potential customers in their desired demographic.
The Ministry Party Profit and Loss
Lets take a look at the numbers for one of the warehouse parties thrown in Shanghai. All costs are in Chinese Renminbi (RMB) at an exchange rate of around 6.3 RMB per United States Dollar.
All told, the costs for this warehouse party were $28,769 dollars. The event brought in revenue of $24,682. You might be asking yourself, why Mr. FIRE Power did I read all the way to the end of this article to be exposed to your extravagant loss of $4,087?
Remember the point above about taking alcohol on consignment? Thats what happened here. Of the $10,714 of cost spent on alcohol, only 35 percent was consumed. That would mean that $6,964 would be returned, offering a net profit of $2,877. Not Rockefeller money, but not bad for a nights work!
The problem was that I left the cases of alcohol in a poorly secured room and had the entire $7,000 inventory stolen.
Thus the story ends with a theoretical profit of $2,877, but alas, a very very real loss of $4,087. Learn from my mistakes.
