To operate a water park business smoothly, you should at least set aside about 35 percent of your initial start-up cost. For example, if you plan to open a water park with a million dollars, then you need to set aside $350,000 as your running cost. In this article, we will look at several factors that can influence the running cost of a water park business yearly.
Factors That Influence the Running Cost of a Water Park Business
From available data, labor costs are usually the largest expense for water parks, as they require a significant number of staff to maintain the facilities, including lifeguards, ride attendants, maintenance personnel, and administrative staff.
The average pay for workers in the amusement park and water park industry in the United States is about $21.70 per hour and $45,000 per year.
It means that if you have 10 workers, you should look towards budgeting about $450,000 per year on labor costs. Please note that it can be more, and it can be less.
Water parks consume a large amount of water and electricity to operate their rides, pools, and other amenities. We can’t fix a price on this because the cost of these utilities can fluctuate depending on local rates and usage patterns.
Available data shows that in the United States, it will cost you between $20,000 to $150,000 per month to take care of the utility bills of a water park.
Maintenance and Repairs
The constant use of water park facilities can lead to wear and tear, hence it will require regular maintenance and repairs.
You are expected to replace water pumps, water filters, and other components that would have worn out. You should also have a budget for painting, and cleaning under your maintenance costs.
Of course, there is no fixed price on how much you can budget in this regard because the cost of these maintenance and repair activities can vary depending on the size and complexity of the water park.
Available data shows that the average cost of maintenance and repair work in a water park is between 5 to 10 percent of your total operational cost. That will translate to about $300,000 to $500,000 annually.
Water parks are at risk of various liabilities, such as accidents, injuries, and property damage. Insurance premiums can be significant to protect the business from these potential losses.
Note that the amount you should budget for insurance premiums will be dependent on the size of your water park, and the risks the business is exposed to.
Averagely, in the United States, water parks usually pay about $9,500 annually in premiums, but liability insurance premium usually ranges between $1,000 to $50,000 annually.
So also, you should budget around $40,000 yearly for property insurance, and between $2,000 to $10,000 per year for workers’ compensation insurance.
Marketing and Advertising
Marketing and advertising expenses are necessary for a water park if indeed you want to attract visitors and generate revenue.
Of course, we cannot have a fixed cost on this because the cost of marketing and advertising any business will depend on the park’s location, target audience, and competitive landscape.
Even though you are at liberty to budget any amount for marketing and advertising, the available report shows that most water parks spend between $150,000 and $200,000 annually on marketing and advertising.
Property Taxes and Rent
In the United States, and in most countries of the world, water parks are often subjected to property taxes or rent payments for the land they occupy.
Of course, we may not be able to put a figure to these fixed costs, but it is certain that this cost can be substantial and can vary depending on the property value and local tax rates.
The only reason why this should not be part of your running cost is if you generated your startup capital without collecting any loan. But if the water park was financed through a loan, the business would have regular loan payments to make.
Of course, your loan payments are a fixed cost that cannot be easily reduced, and it will depend on how much you loaned, and the payment package.
Under your fixed cost, you should have your depreciation cost. This is important because, over time, your water park facilities and equipment will depreciate in value. Depreciation is an accounting expense that reflects this decline in value and it can impact the business’s profitability.
Key factors influencing these costs include the park’s infrastructure, water attractions, and equipment. As rides and facilities age, their value decreases, necessitating periodic adjustments in financial statements.
Accurate depreciation accounting is vital for financial planning, reflecting the wear and tear of assets and aiding in the allocation of funds for future replacements or upgrades to maintain the park’s overall appeal and safety standards.
Supplies and Amenities
Water parks need to purchase a variety of supplies and amenities, such as chemicals for water treatment, towels, life jackets, and food and beverages.
Of course, we cannot put a fixed figure to these costs, hence the cost of these supplies can vary depending on the park’s size and operational needs.
However available data shows that on average, a water park spends between $150,000 to $300,000 per year on supplies and other materials needed to run the water park.
The amount of your budget for professional services should be part of the running costs of your water park. This is so because water parks may need to hire professional services for legal counsel, accounting, and IT support. The cost of these services can vary depending on the complexity of the park’s operations.
Special Events and Programming
Most water parks usually organize special events and programs, and this can be grouped under “other expenses”. The fact that water parks can host special events or programs to attract additional visitors means that there should be a budget for this.
We cannot put a figure to how much a water park can spend on special events and programs because the cost of these events can vary depending on the scope of the activities and the number of participants.