How to Start an Escape Room Business
Are you planning to start an escape room business? While the industry has been hit rather hard by the COVID-19 pandemic, the escape room industry is getting back stronger than ever and is expected to grow even bigger in the years to come with more and more people looking to experience physical, “real” interaction after a full year of physical distancing.
So, it’s definitely a good time to plan and start your escape room business.
You might already have your perfect escape room game design and are 100% committed to starting the business. However, you’ll still need proper planning and the right strategy to ensure success.
The steps below will ensure you can start your new escape room business successfully, and let us start with the first step right away.
Step 1: Market Research
Before you commit to starting your own escape room business, it’s best to first confirm whether there’s enough demand for escape rooms in your area. If the market size is not big enough, then you’ll have a tougher time keeping the business profitable.
The ideal target market for escape room businesses consists of those who love interactive experiences (i.e. amusement park visitors) and might prefer these experiences rather than buying products.
Also, escape rooms might be attractive for coaches and business owners who want to provide team-building or just recreational experiences. You might be surprised that close to 20% of escape room customers are corporate clients, so if there are a lot of businesses in your area, you might want to target this potential market.
Nevertheless, perform proper market research and competitive research to estimate the size of your potential market, and also how competitive the market is in your area.
Step 2: Develop Your Business Plan
A business plan is especially important if you are planning to secure outside funding (i.e. investors) in starting your escape room business. However, even if you are going to fund the business by yourself, a business plan will still be useful as a roadmap in achieving success.
Here are some key areas to consider when developing your escape room business plan:
The majority of your startup investment will go to your property (i.e. cost of rent) and also to room design. The bigger the property, the better the location, and the more complex the escape room design is, the more capital you’ll need.
You’ll also need to consider costs for getting the required business license and permit depending on your location. Equipment, furniture, furnishing, and digital infrastructure (i.e. ticketing software, CMS) may also be substantial cost elements.
In general, you can expect to spend at least $8,000 to more than $40,000 of startup capital in starting your escape room business.
If you rent your property, then rent cost will be a major part of your regular expenses, other major elements would be your employee payroll and utilities (electricity, water, etc.). Depending on your game design, you might also need to replace props and equipment regularly. Content development (i.e. for your website and social media) is also a common necessity in today’s digital marketing environment.
How much can you charge your visitors? If there are other escape room businesses in your area, you can check out their prices and use them as your benchmark. If you offer more complex and interesting games, don’t be afraid to charge more than your competitors as long as you can deliver.
In general, the average ticket price for escape room games is $25 per person for a 1-hour game. You might also offer group discounts (i.e. charging only $15 if they bring a group of 10) depending on the capacity of your rooms.
Choosing the right brand name is obviously very important. Choose a catchy brand name that is easy to remember, and if possible choose a brand name that fits your theme (if you are planning to stick with one theme). When choosing a brand name, you should consider:
- The availability of the name, check state and federal trademark records
- Availability of the handles in social media platforms
- Availability of web domain
Step 3: Form a Business Entity
If you are planning to start this business by yourself, then you can start it as a sole proprietorship. It will be more affordable than starting a corporation and will involve less paperwork.
However, it is usually recommended to start your business as an LLC (Limited Liability Company) or a corporation so you’ll get adequate legal protection as an individual in the event of disputes, or for example in cases when your escape room business is in debt.
You’ll also need to register the business for a variety of state and federal taxes before you can legally run the business. Depending on which business structure you’ve formed, you might have different options in registering your business for taxing purposes.
Also, check your legal tax regulations for specific taxes that might apply to your escape room business.
Step 4: Obtaining Required Permits and Licenses
Again, the legal requirements for permits and licenses might vary depending on your location, so check with the SBA’s page for state permits and licenses if you are located in the US or your local trade associations to ensure you are getting the right information. You can, for example, check with your county’s or town’s clerk’s office.
Failure to acquire the required permits and licenses can result in various legal issues, and in a worst-case scenario, your business might be shut down.
If you are located in the US, then most states will require you to obtain a business license, and you might also need to acquire a Certificate of Occupancy (CO). If you rent a location, then it’s typically the landlord’s responsibility to obtain this document, but check with your landlord whether they have or can obtain a CO. A new CO might need to be issued in the event of a major renovation (which is common in designing your escape room).
If you plan to purchase your own property, then you’ll be responsible for obtaining a valid Certificate of Occupancy from the local authority.
Step 5: Get Business Insurance
In most locations in the US, you’ll need to be insured before you can legally open the escape room business.
However, even if insurance is not a legal requirement, getting the right insurance policies can significantly help in protecting yourself, your business, and your partners in the event of accidents and losses.
At the very least, you should get General Liability Insurance and Workers’ Compensation Insurance (assuming you’ll have employees).
Step 6: Design Your Escape Room Games
This step is arguably the most important one. Your escape room game is your business’s main (if not only) selling point, and will literally make or break your business.
Most escape room games typically follow the traditional 3-act structure: the game usually starts slow with relatively easy puzzles in the first act (and prologue), and the puzzle will get harder with faster time limits in the next acts.
When designing your escape room, it’s also important to decide on how long the game will last on average. Most escape rooms last around 45 to 60 minutes, but younger teenagers and children typically get bored after 30 minutes.
The shorter the game, the more players you can squeeze in (which will translate into more revenue). However, if the game is too short, you’ll get bad reviews and lower chances of repeat customers. Finding the right balance here is very important.
Also, don’t forget the importance of a good story. The escape room’s story is more than just an intro for the puzzles but should be a foundation you’ll build the rest of the game on and should provide an overall theme and feel for the game.
Step 7: Build Your Digital Infrastructure
Even if an escape room business is a brick-and-mortar business, don’t underestimate the importance of your digital presence.
Make sure you have a professional and functional website. Nowadays, there are various affordable and easy-to-use website builders like Wix or Weebly, and creating a WordPress-based site is also easier than ever. You no longer need to hire a professional web developer and/or designer to have a well-designed and functional website, so there’s simply no reason not to have one.
In this age of social media, it also makes sense to build your presence on relevant social media networks your target audience frequents. For example, if you are targeting a younger audience, then you should build a strong Instagram, Facebook, and Twitter presence. Again, strong market research will significantly help here.
However, your social media accounts are not a replacement for a professional website.
Also, make sure it’s as easy as possible for your target visitors to book your escape room online, both on your website and via social media interactions. Comprehensive escape booking software can help in this aspect so your visitors can book your escape room easily, and on the other hand, you can easily monitor the booking and schedules to eliminate the possibility of double bookings and no-shows.
Step 8: Marketing and Promotion Plan
Now that you’ve properly planned and designed your escape room, congratulations!
However, no matter how good the escape room business and your game designs are, it won’t be a profitable business unless you can attract enough visitors to play your games.
Thus, a proper marketing plan is still very important.
Start by creating a strong brand with a memorable logo. This can help your business stand out from your competitors and for your potential visitors to recognize and remember your brand.
While your escape room marketing strategy can be a very deep subject to discuss, here are a few tips you can follow:
- Social media is definitely a great way to engage your target visitors. Use both organic and paid social media marketing efforts (including influencer marketing) to get the word out and build brand awareness for your escape room.
- Strengthen your Google Maps SEO. This is very important for an escape room as a local business targeting a local audience, as “near me” and location-based searches are now the primary way people learn about local businesses. You can do this in a fairly simple four steps:
- Claim and verify your Google My Business listing
- Optimize your listing. Focus on providing complete and accurate information for your target visitors, and don’t forget to include well-taken photos and images of your escape room
- Build local citations by listing your escape room on relevant online business directories
- Get more (positive) reviews from your visitors, especially on Google Maps/Google My Business, but also other relevant review sites and platforms
- Partner with other businesses to cross-promote. Also, partnering with other escape room businesses can actually benefit your business. It’s highly unlikely for your visitors to play one escape room game over and over again, so you can offer new experiences at your competitor’s and vice versa.
- Renew your games regularly. Again, most escape games will only be played once by each player, so renewing your games and keeping innovating are very important if you want to ensure repeat business.
Starting an escape room business can be a great business opportunity especially for those who also enjoy playing interactive games themselves. It has a relatively low entry barrier and is also a good business for creative people who enjoy designing puzzles and games.
By following the steps we’ve shared above, you’ll have a clear roadmap in planning and starting a successful escape room business
Disclaimer: This post does not constitute legal or financial advice, is not intended to be a substitute for legal or financial advice, and should not be relied upon as such. This post is for general informational purposes only. You should seek legal and financial advice or other professional advice in relation to any particular matters you or your organization may have.