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How to Start an Escape Room Business

Start an Escape Room Business

Do you want to start an escape room company? If YES, here is a detailed guide on how to start an profitable escape room business with no money and no experience.

If you have a flair for social networking games and the likes and you are looking for a business to establish, then you should think towards starting an escape room business.

Starting an escape room business in an area that has loads of games lovers and socialites but fewer escape rooms and social networking gaming centers can be very lucrative.

Escape room is a social networking sport and people who love the game will always look for ways to play the game. Despite the fact that opening an escape room can be capital intensive, but if you are able to conduct thorough feasibility studies and market survey, you are sure going to make huge returns on your investment especially if you have been an active in the industry.

Opening an escape room business requires a complete project team and a solid capital base. As a matter of fact, it requires long term planning to successfully build an escape room or similar game facility from the scratch to finish.

But if you don’t have enough time to spend, you can source for escape rooms that are put up for sale. One of the drawbacks of buying over such center is that you can’t change the location.

So, if you are serious about starting an escape room business, all you need do is to read this article and you will be well equipped.

You can start your escape room business from a small town in the United States and if you are consistent and creative, it won’t be too long before your brand becomes nationally recognized and your business network spreads out.

20 Steps to Starting an Escape Room Business

1. Understand the Industry

An Escape Room which can also be called an Exit Game, Escape Game or Room Escape Game is a game that involves engaging a team of player(s) inside a closed space or room where they have to find clues, solve puzzles and take part in some activities within a specific time, usually 60 minutes.

Notwithstanding the name, it is not cast in stone for the theme to be escape-based. As a matter of fact, participants may be called upon to solve a crime/murder or even save a fictional character or find something. Interestingly, an escape room is a mental and physical adventure-based game and a good number of Escape Rooms do not actually ‘lock’ the participants inside a space and participants are free to leave the game anytime they want.

Escape room business falls under the Social Network Game Development industry and the industry is made up of businesses that offer puzzle games, role-playing games, gambling games and other related activities for adults. According to a report published by IBISWorld, since its inception, the Social Network Game Development industry has grown rapidly. Revenue is anticipated to grow at an annualized rate of 16.7 percent to $3.9 billion over the five years to 2018.

The surging adoption of the internet and the popularity of social networks, including social networking websites and mobile apps, have driven revenue growth during the period. Industry revenue is anticipated to rise by 14.3 percent in 2018 alone.

The industry’s growth has been stimulated by the emergence of new markets that have embraced social gaming. Social networks and their accompanying technology have placed gaming within reach of the average computer or mobile phone user. As a result, consumers who have not previously played video games are beginning to participate.

The report further reveals that over the past five years, the Social Network Game Development industry grew by 16.0 percent to reach revenue of $4 billion in 2019. In the same time-frame, the number of businesses grew by 19.9 percent and the number of employees by 16.2 percent.

The Social Network Game Development Industry is indeed a very large industry and pretty much thriving in some countries of the world, especially developed countries.

Statistics has it that in the united states of America alone, there are about 6,532 licensed and registered Social Network Game Development centers (Escape Rooms) responsible for employing about 14,498 employees and the industry rakes in a whooping sum of $4 billion annually with an annual growth rate projected at 16.0 percent between 2013 and 2019.

It is important to state that the companies holding the largest market share in the industry include Zynga Inc. and King Digital Entertainment PLC. Some of the factors that encourage entrepreneurs to start their own escape room business is that the business is profitable and it is open to fair competitions amongst players in the industry.

Escape rooms and other social networking game development centers have come to stay and it is indeed solving problems for people who have difficulties socializing and working as a team. Hence it is an industry that is very much open for new participants to come and establish their own business.

2. Conduct Market Research and Feasibility Studies

  • Demographics and Psychographics

A recent study conducted shows that over half (51 percent) of escape room players fall in the 25 to 30 years and 30 to 44 age groups. On the other hand, less than 3 in 10 (29 percent) of escape room players are younger than 18 or older than 45, making those the least common age groups.

According to reports gathered from operators, Escape Rooms are equally popular amongst both genders. Male players make up 47 percent and female players make up 53 percent of Escape Room Players. So, if you are thinking of starting an escape room business then you should make your target demographics all encompassing.

3. Decide Which Niche to Concentrate On

If you are interested in starting an escape room business, then you can choose to settle for a niche idea or what is known as a theme for your escape room because there are options for you. Here are some of the niche ideas cum theme that you can choose from;

  • Horror
  • Sci-fi
  • Thrillers
  • Questing
  • Scavenger Hunts
  • Treasure Hunts
  • Augmented Reality Gaming
  • Virtual Reality Gaming
  • Puzzle games
  • Role-playing games
  • Gambling games
The Level of Competition in the Industry

The competition that exists in the escape room line of business goes beyond competition amongst escape rooms, but also with every player in the alternate games, sports and leisure industry who also provide social networking games. So, it will be right to say the competition in the escape rooms industry is tough.

The truth is that no matter the level of competition in an industry, if you do your due diligence and you brand and promote your business properly, you will always make headway in the industry. Just ensure that you provide highly secured and safe escape rooms for your clients and you know how to attract and reach out to your target market.

But over and above, there are several escape rooms scattered all around the United States of America. So, if you choose to open your own escape room in the United States, you will definitely meet stiff competition in the industry. Besides, there are larger escape rooms that determine the trends in the industry and you should be ready to compete with them for customers.

4. Know Your Major Competitors in the Industry

These are some of the leading escape rooms in the United States of America and in the globe;

  • In LA’s ‘The Basement’ Escape Room
  • Black Plague-Themed Escape Room
  • The 13th Escape In Louisiana
  • Oregon Escape Room
  • Mission Escape Games
  • The Bunker Experience
  • Exodus Escape Room
  • Level Games
  • Real Escape Game
  • Room Escape Live
  • The Birmingham Escape Game
  • House of Hints
Economic Analysis

If you are looking towards successfully launching a business and maximizing profits, then you need to ensure that you get your economic and cost analysis right and try as much as possible to adopt international best practices in the industry.

Escape room business has been in existence from a while and it is indeed a competitive business. As a matter of fact, you will come across several escape rooms when you go out there sourcing for a facility where you can play social networking games. So, if you are mapping out your economic and cost analysis, you should carry out thorough market survey and research on what it will cost to build a standard escape room.

The bottom line is that if you are considering starting an escape room, then your concern should not be limited to the cost of registering the business, securing the required license, leasing and equipping the facility, etc. but also on branding and on how to build a robust clientele base. The truth is that if you are able to build a robust clientele base and far reaching business network, you are sure going to maximize profits in the business.

5. Decide Whether to Buy a Franchise or Start from Scratch

If you are looking towards starting an escape room business, you would have to start from the very scratch because you can hardly get a franchise of an escape room to buy except you want to buy an existing escape room that is put up for sale.

Please note that most of the successful escape rooms around started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success.

6. Know the Possible Threats and Challenges You Will Face

If you decide to start your own escape room today, one of the major challenges you are likely going to face is the presence of well – established escape rooms and other players in the alternate leisure, gaming and sports industry that also offer same services as you do. The only way to avoid this challenge is to create your own market.

Some other challenges and threats that you are likely going to face are economic downturn and unfavorable government policies.

7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)

When considering starting an escape room, the legal entity you choose will go a long way to determine how big the business can grow.

You have the options of choosing a general partnership, limited liability company, or even a sole proprietorship for your business such as escape room. Normally, sole proprietorship should have been the ideal business structure for a small – scale escape room especially if you are just starting out with a moderate startup capital and covering just a city.

But if your intention is to grow the business and offer your services to customers all across your state and throughout the United States of America, then choosing sole proprietorship is not an option for you. Limited Liability Company, LLC or even general partnership will cut it for you.

Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorships and general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.

These are some of the factors you should consider before choosing a legal entity for your escape room; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.

If you take your time to study the various legal entities to use for your escape room with the ability to offer your services to customers all across the city and state that you operate and throughout the United States of America, you will agree that limited liability company; an LLC is most suitable.

You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or ‘S’ corporation especially when you have the plans of going public.

Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your escape room business so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company.

8. Choose a Catchy Business Name

As it relates choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. If you are considering starting your own escape room business, here are some catchy names that you can choose from;

  • Carson Hall® Escape Room, Inc.
  • Hankins Garrison™ Escape Room, Inc.
  • Corner Parks© Escape Room, Inc.
  • High Point® Escape Room, LLC
  • Pro Games© Escape Room, Inc.
  • Believe Paulson® Social Networking Gaming Center
  • Lemon Branch™ Social Networking Gaming Center
  • Green Floor© Social Networking Gaming Center
  • Light Weave® Social Networking Gaming Center
  • Inner City® Escape Room, Inc.

9. Discuss with an Agent to Know the Best Insurance Policies for You

In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your escape room business.

Here are some of the basic insurance covers that you should consider purchasing if you want to start your own escape room business in the United States of America;

  • General insurance
  • Health insurance
  • Liability insurance
  • Risk insurance
  • Workers Compensation
  • Overhead expense disability insurance
  • Business owner’s policy group insurance

10. Protect your Intellectual Property With Trademark, Copyrights, Patents

If you are considering starting your own escape room business, usually you may not have any need to file for intellectual property protection/trademark because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.

But if you just want to protect your company’s logo and other documents, unique games that you developed or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO.

11. Get the Necessary Professional Certification

There are no professional certifications for running an escape room business. Please note that you can successfully run an escape room business in the United States and in most countries of the world without acquiring professional certifications but you would definitely need a business license.

12. Get the Necessary Legal Documents You Need to Operate

The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations. If you do, it won’t be too long before the long hand of the law catches up with you.

These are some of the basic legal documents that you are expected to have in place if you want to legally run your own escape room business in the United States of America;

  • Certificate of Incorporation
  • Business License
  • Tax Payer’s ID / Tax Identification Number
  • Business Plan
  • Non – disclosure Agreement
  • Employee Handbook
  • Employment Agreement (offer letters)
  • Operating Agreement for LLCs
  • Insurance Policy
  • Online Terms of Use
  • Online Privacy Policy Document (basically for online payment portal)
  • Company Bylaws
  • Memorandum of Understanding (MoU)
  • Contract Document
  • Franchise or Trademark License (optional)

13. Raise the Needed Startup Capital

Starting an escape room business can be capital intensive even if you choose to start on a small scale. If you choose to start the business on a large scale with standard facility and over a handful employees, then you would need to go source for fund to finance the business because it is expensive to start a standard large – scale escape room business.

No doubt when it comes to financing a business, one of the first things you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.

Here are some of the options you can explore when sourcing for startup capital for your escape room business;

  • Raising money from personal savings and sale of personal stocks and properties
  • Raising money from investors and business partners
  • Sell shares to interested investors
  • Applying for loan from your bank/banks
  • Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
  • Source for soft loans from your family members and your friends.

14. Choose a Suitable Location for your Business

Even though you can afford to start an escape room business from any part of the United States of America, but when it comes to choosing a location for your escape room business, the rule of thumb is that you should be guided by the access to securing the required license in the location. If you are able to start your escape room business in the right location for such business, you won’t struggle to make headway with the business.

If you make the mistake of starting your escape room business in an area where you will find it difficult to secure the required license, and accessing those who know how to play social networking games, you will struggle to grow the business.

It is important to note that a business facility in good location does not come cheap hence you should be able to allocate enough fund for leasing / renting in your budget. If you are new to the dynamics of choosing a location for your escape room business, then you should feel free to talk to a business consultant or a realtor.

Most importantly, before choosing a location for your escape room business, ensure that you first conduct a thorough feasibility studies and market survey. The possibility of you coming across similar business that just closed shop in the location you want to open yours can’t be ruled out.

These are some of the key factors that you should consider before choosing a location for your escape room business;

  • The demography of the location
  • The demand for gaming services in the location
  • The purchasing power of the residents of the location
  • Accessibility of the location
  • The number of escape rooms and related services in the location
  • The local laws and regulations in the community/state
  • Traffic, parking and security

15. Hire Employees for your Technical and Manpower Needs

There are no special technology/equipment needed to run this type of business except for gaming boards, costumes, inventory-management software and other relevant software applications. You will also need computers / laptops, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst others and all these can be gotten as fairly used.

As regard leasing or outright purchase of an escape room facility, the choice is dependent on your financial standing, but the truth is that to be on the safe side, it is advisable to start off with a short – term rent/lease while test running the business in the location. If things work out as planned, then you go on a long – term lease or outright purchase of the property.

When it comes to hiring employees for your escape room game facility, you should make plans to hire a competent Chief Executive Officer / Manager (you can occupy this role), Admin and Human Resource Manager, Professional Social Networking Game Instructors and Trainers, Sales and Marketing Officer, Accounting Clerk, and Front Desk Officer. On the average, you will need a minimum of 5 to 10 key staff members to run a medium – scale but standard escape room.

The Services Delivery Process of the Business

An escape room set up a room or space where participants must solve a series of puzzles and complete various challenges in order to escape the room within a limited amount of time. Every so often the rooms are themed, creating a haunted house-style effect of full immersion and mystery, and can include elements of genres like horror, sci-fi, and thrillers.

In extreme escape room games, they usually have actors chasing after participants in intricately designed costumes. The bottom line is that for an hour or less than 60 minutes, participants will be locked in a room and left to find hidden clues, keys or puzzles, and solve them to escape.

16. Write a Marketing Plan Packed with ideas & Strategies

Running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch an escape room business facility, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands determining the market direction for the social networking gaming industry.

Your marketing strategy should center on reliability, creativity, safety, pricing, secured payment platform, and above all excellent customer service. You should ensure that whenever customers make use of your escape room game facility, they will get excellent service and it will show in how thrilled they are.

The truth is that, if you are able to put the above stated in place, you won’t struggle to retain your old customers and at the same time win over new customers. Here are some of the platforms you will utilize to market your escape room business;

  • Open your escape room with a big party in other to attract residents who are your first target
  • Advertise your escape room on local TV and local radio stations
  • Promote your escape room online via your official website and all available social media platforms
  • Introduce your escape room by sending introductory letters alongside your brochure to sports clubs, schools, households and key stake holders in and around the city where your escape room is located
  • Print out fliers and business cards and strategically drop them in offices, libraries, public facilities and train stations et al.
  • Deliver consistent customer experience; make your first impression count positively to those making use of your escape room for the first time
  • Make use of attractive hand bills to create awareness and also to give direction to your escape room
  • Adopt direct mailing coupon marketing approach
  • Position your signage/flexi banners at strategic places in and around the city where your escape room is located
  • Create a loyalty plan that will enable you reward your consistent clients especially those that registered as a family or as a group
  • Engage in roadshows within your neighborhood to create awareness for your escape room.

17. Work Out a Reasonable Pricing for your Services & Products

One key factor that will help you offer your escape room/services at rock bottom prices is to ensure that you cut down the cost of rentals. If possible, make use of your own facility to start your own escape room business. With that, you would have eliminated the exorbitant amount needed to rent a standard facility.

If you must rent a facility and you need to access loans to start your escape room, then you should ensure that you don’t access loan from sources with high interest rates and one that will put undue pressure on you.

Another strategy that will help you offer your services at the right price is to ensure that you cut operational cost to the barest minimum, and channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your services.

You can also try as much as possible to work with independent contractors and marketers; it will help you save cost for paying sales and marketing executives.

18. Develop Iron-clad Competitive Strategies to Help You Win

The availability of a wide range of thrilling, mental and physical adventures, the theme of your escape room, accessibility of your escape room, your business process and of course your pricing model are part of what you need to stay competitive in the industry.

Another possible competitive strategy for winning your competitors in this particular industry is to build a robust clientele base and business network. Over and above, ensure that your organization is well positioned, key members of your team are highly qualified and your escape room gaming facility can favorably compete with some of the best in the industry.

19. Brainstorm Possible Ways to Retain Clients & Customers

When it comes to business, no matter the industry that you choose to pitch your tent in, one of the easiest ways to increase customers’ retention and perhaps to attract new customers is to produce results and satisfy your customers always. If your customers are satisfied with your services delivery, they can hardly source for alternative service provider or products.

Statistics has it that one of the major reasons why clients source for alternative service providers is when there is a drop in quality. Another reason is poor customer service. If you can continue to make available mental and physical adventure-based games, secured and safe escape room game facility and your customer service delivery is top notch, then you won’t struggle to maintain loyal customers.

Ensure that you offer your customers incentives if you want to retain them and of course continue to generate repeated sales from them. Part of what you need to do to achieve this is to track progress, results or outputs with the aim of improving on them quickly as the case demands. When it comes to managing your customers, and building loyal clientele base, you should purchase a customized CRM software.

With a customized CRM system, you can easily stay in touch with your clients (you can carry out quick surveys, you can introduce new products and prices to them without any hitch, you can felicitate with them on their birthdays and other anniversaries, you can keep track of their progress, you can send bulk sms and customized e – mails and above all, you can easily receive compliant and feedback from them).

20. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity

If you are in business and you are not deliberate about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portrays your business to be. One of the secrets of larger corporations is that they are willing to spend fortunes to boost their brand awareness.

If your intentions of starting an escape room game facility is to grow the business beyond the city where you are going to be operating from to become a national and international brand, then you must be ready to spend money on promotion and advertisement of your brand.

Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your escape room game facility;

  • Place adverts on both print (newspapers and magazines) and electronic media platforms
  • Sponsor relevant community – based events / programs
  • Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your escape room game facility
  • Install your Billboards in strategic locations all around your city or state
  • Engage in roadshows from time to time in targeted neighborhoods to create awareness of your escape room game facility.
  • Distribute your fliers and handbills in target areas
  • List your escape room business facility in local directories / yellow pages
  • Advertise your escape room game facility in your official website and employ strategies that will help you pull traffic to the site.
  • Position your Flexi Banners at strategic positions in the location where your escape room game facility is located.
  • Ensure that all your staff members wear your branded shirts and all your vehicles are branded with your company logo.