How do you start an exciting escape room business?
Well, now is the right time to go for it because, post-pandemic, people finally want physical engagement after a period of social separation.
Whether you’re an entrepreneur looking for a new opportunity.
Or a puzzle enthusiast looking to turn your passion into a career, creating an escape room can be a challenging and rewarding experience.
This blog post will explore the steps you need to take to launch your own successful escape room business from scratch.
From researching the market and creating a business plan to sourcing materials and finding the perfect location.
We’ll also cover everything you need to know to get started on your escape room adventure.
Let’s dive into it.
What is an Escape Room?
An escape room is a fun activity in which a group of people is trapped in a space that is made into a particular location.
It could be a prison, a pirate ship, a castle, a tomb, or some planet in the solar system.
The group has to work together, seek cues, and solve riddles to escape from that room in a given time.
As an escape room owner, it’s your responsibility to manage the rooms and ensure everybody’s safety while making it a fun and interactive experience for the participants.
Escape rooms are a relatively new business opportunity with little competition.
With the right strategy, it could turn into a profitable business.
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Breaking into the Escape Room Industry – Step By Step Guide
Any business requires time and effort, and you need to hustle to make it work and reap the rewards.
An escape room business is no exception; if you are willing to give it that effort, you are good to go.
Here are the steps you need to take to start an escape room business;
Market Research
Understanding your market is the first thing to do.
Because escape rooms need elaborate set-ups, you need to ensure enough demand for such an activity in the area before starting your business.
If there isn’t enough demand for your services, sustaining such a business would be hard, far less making any profit.
So you need to see if enough people like amusement park-like experiences rather than going shopping.
They will be your ideal customers.
Escape Room Business Plan
A business plan is essential if you want to launch your business because;
- It will locate the gaps you have overlooked.
- If you are looking for investors, a business plan will be of immense help as it will give your potential investors an idea of what you are going to do.
- It will also help in collaborations.
- It will also help in predicting how the escape room business will run.
So when you write down every aspect of your business, it will clarify your thoughts and your implementation.
How Will an Escape Room Business Make Money?
For people who enjoy adventures and trying new things, an escape room is a great place to visit.
People who come to play the escape room game will give a participation fee, and that is how an escape room will make money.
How much can you charge for an Escape Room Game?
The charges depend on the type of games you are offering, the size of the game’s location, and a few other factors.
For an hour of the game, people are usually charged $25 to $30.
Bigger locations can allow 12 people at a time, while smaller sites can fit up to 6 people per game.
What’s the cost of starting an Escape Room business?
It can cost up to $7000 to start an escape room business cost, $7000 for a more straightforward set-up, and $30,000 for an elaborate one.
It depends on a few factors, like;
- Business Location
- The rental cost of the space
- The complexity of the set-up design
- The cost of a business license
- Business insurance cost
- Props and equipment cost
Some escape rooms also offer extravagant costumes and prizes for escape room winners.
Recurring Cost of Escape Room Business
The recurring expenses of an escape room include:
- Rent
- Utilities
- Personnel salaries
- Replacement of props and equipment
- Website upkeep with information about escape room gaming
- Promotional expenses
Profit Margins of an Escape Room Business
The escape room business is relatively new, and there is little competition so it can be highly profitable.
An escape room business that started in 2013 in Dallas now earns around $70,000 per month.
Another escape room business called Puzzle Break started in 2013 with only $7,000 and now brings in $600,000 annually.
Legal Entity
If you plan to run your escape room business as a sole proprietor, it is a wise decision to make for the time being, as you will have low paperwork requirements.
However, forming a Limited Liability Company (LLC) is also a good idea because you will be legally protected if your escape room business gets indebted.
Registration for Taxes, Permits & Licenses
These requirements will differ based on your country or region.
People in the US can consult the SBAs website for necessary information on permits and licenses.
Make sure to fulfill all the legal requirements before you start your business because failure to do so can result in your company being shut down.
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Financing
An escape room business, like any business, needs financing.
Now before we look at the sources of funding, let’s see what expenses you will incur in running your escape room business;
- Property buying cost
- Cost of electrical fittings, flooring, painting, etc
- Security systems costs
- Legal Cost
- Advertising costs
- Furniture cost
- Website upkeep cost
- Consultation cost
- Logos, flyers, and social media advertising costs.
Now let’s see what financing opportunities are available to finance your escape room business.
Self Financing
Because you are not accountable to anyone, self-financing gives you the most freedom when it comes to funding your business.
But being able to raise all the financing from your fund is highly unlikely for most people.
Informal Financing
In this form of financing, you ask your relatives and friends to fund your business.
This is the second most desirable type of financing because you have personal relations with your investors, which gives you leverage.
Still, it could also ruin your relationships if you can’t offer any returns for long periods.
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Formal Financing Types
Here are some formal types of financing;
Debt Financing
In this type of financing, you apply for a loan from a bank.
When you apply for this loan, the bank will want to know everything about your business. Different parts of your business will be looked at closely.
After judging you and making sure you meet their legal requirements, banks will only give you a small portion of the money you asked for.
In most cases, the bank will ask you to provide guarantees and mortgages on your personal and business assets.
The biggest downside of this type of financing is that you need to repay the loan with interest within a specific time.
In case of not able to do so, the bank has the right to confiscate your assets.
Government Financing
You can take advantage of the loan programs, grants, or incentives that your government may be providing for helping small enterprises.
Government financing is subject to fewer restrictions than bank financing.
Equity Financing
You can offer equity to other people to finance your business.
In this case, these investors will only contribute to the funding part and won’t be liable to extend any help beyond that.
The best thing about equity financing is that you don’t have to pay back the money to your investors right away.
You have to split the profits among the investors and partners.
Settling for a Location
Your escape room business’s location will depend on the type of people you think will use it.
If you want corporate clients, set up your business in a commercial area.
If you want a large number of clients, then your ideal location would be a retail complex like a shopping mall or an entertainment venue like an amusement park, etc.
The Characteristics of an Escape Room Business Location
Some of the characteristics that every escape room location must have are as follows;
- It’s better to avoid having escape rooms on street level; they could be in a basement or on upper floors.
- Escape rooms should have a separate entrance from the main door of the building.
- Escape rooms don’t need to have windows.
- The managers set up escape rooms afterward, so it’s better to buy them simple and empty.
Escape Room Design
It is one of the most crucial factors in determining the success of your escape room business.
The primary selling point of your business is the escape room game, the more exciting and fun it is; the more people will want to experience it again and again.
When designing your escape room, you need to see how long you want the game to last.
On average, a game lasting 40 minutes to an hour is recommended.
The storyline of the game room is also important; people should feel that they are actually in a real-life situation, which would add to the appeal of the game.
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Final Thoughts
Starting an escape room business is an attractive way to start a profitable business.
The barrier to entry is minimal, and it attracts most people who will prefer a better adventure.
But as enjoyable as it looks, it takes work.
You need to keep up with the competition and keep improving your stories and sets to keep your customers interested and bring in new ones.
So plan, keep upgrading, and dominate in your industry.
