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You might consider targeting a niche market by specializing in a certain aspect of your industry, such as corporate retreat escape rooms or family escape rooms.
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Written by: Carolyn Young
Carolyn Young has over 25 years of experience in business in various roles, including bank management, marketing management, and business education.
Published on April 7, 2022
Updated on October 7, 2022
Investment range
$9,550 - $21,100
Revenue potential
$234,000 - $700,000 p.a.
Time to build
1 – 3 months
Profit potential
$47,000 - $140,000 p.a.
Industry trend
Growing
Commitment
Full-time
Escape rooms are places where participants solve puzzles to get clues to escape from a room, hence the name. The first escape room was started in 2012 in San Francisco, and since then the industry has boomed, doubling every year from 2015 until the pandemic. Today we even have virtual escape rooms, in which participants use virtual reality equipment to solve online puzzles and get out. You could start your own escape room, get in on an exploding industry and provide countless people with mind-challenging fun while also making good money.
But first, you need to understand the business you’re getting into. Luckily, this step-by-step guide details all the entrepreneurial insights you need to escape your current reality and start running your own successful escape room business.
Starting an escape room business has pros and cons to consider before deciding if it’s right for you.
Trends in the escape room industry include:
Challenges in the escape room industry include:
Startup costs for an escape room business range from $10,000 to $20,000. Costs include a space rental and the design and preparation of the rooms.
Start-up Costs | Ballpark Range | Average |
---|---|---|
Setting up a business name and corporation | $150 - $200 | $175 |
Business licenses and permits | $100 - $300 | $200 |
Insurance | $100-$300 | $200 |
Business cards and brochures | $200 - $300 | $250 |
Website setup | $1,000 - $3,000 | $2,000 |
Space rental deposit | $3,000 - $7,000 | $5,000 |
Escape room design and preparation | $5,000 - $10,000 | $7,500 |
Total | $9,550 - $21,100 | $7,575 |
The price of an escape room experience is about $30 per person for one hour. Each room is designed for about 5 to 10 people to work together, so your revenue per hour will be $150 to $300 per room for an average of $225. Your profit margin after rent, overhead, and labor should be about 20%.
In your first year or two, you could have 2 rooms used for 10 hours per week, bringing in $234,000 in annual revenue. This would mean $47,000 in profit, assuming that 20% margin. As you get referrals and repeat business, you could add a room and have them used 20 hours per week. With annual revenue of more than $700,000, you’d make a tidy profit of $140,000.
There are a few barriers to entry for an escape room business. Your biggest challenges will be:
Now that you know what’s involved in starting an escape room business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Research escape rooms in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a virtual escape room or an escape room for team-building events.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as corporate retreat escape rooms or family escape rooms.
This could jumpstart your word-of-mouth marketing and attract clients right away.
Your services will essentially be your themes and designs of the room. If you have multiple rooms, you should create each one differently and let people book the theme that they want. This allows you to get repeat business, as people can book rooms they haven’t experienced yet.
The average price for an escape room experience is about $30 per person for one hour. Your costs will be for rent, overhead, and labor so you should aim for a profit margin of at least 20%.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will be broad, but you can specialize in something like corporate events. You can find local business owners on LinkedIn.
You’ll need to rent a space for your escape room business. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
When choosing a commercial space, you may want to follow these rules of thumb:
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to escape room businesses.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your escape room business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using ZenBusiness’s online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best option, other than friends and family, for funding an escape room business. You might also try crowdfunding if you have an innovative concept.
Starting an escape room business requires obtaining a number of licenses and permits from local, state, and federal governments.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your escape room business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as Clubspeed, Cluetivity, or Escape Room Master, to manage your bookings, game management, and payments.
Some of your business will come from the casual passerby or online visitors, but you should still invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.
Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products:
Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your escape room business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your escape room business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running an escape room business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in escape rooms for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in escape rooms. You’ll probably generate new customers or find companies with which you could establish a partnership.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for an escape room business include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Ready to get in on an exploding new market? Escape rooms are popular for nights out with friends, corporate team building, and family outings. If you can come up with clever games and designs, you can start your own escape room business and cash in on the trend. It takes a bit of an investment to get started, but you can recover your money quickly and make a good living, all while having and providing fun.
You’ve solved the business puzzle, so now it’s time to find the perfect space and escape to the new world of entrepreneurship!
You can start an escape room business for about $10,000. Costs include a deposit on a space for your escape room, and the design and preparation of your escape rooms.
An escape room business can be very profitable. You just need creative designs for your escape rooms, and an effective marketing plan to get the word out.
You may need various business licenses and permits at the state and local levels. Check with your local governments for requirements or visit MyCorporation’s Business License Compliance page.
The average price for an escape room experience is about $30 per person for one hour. You should check other escape rooms in your area to make sure your prices are competitive.
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