Opening an escape room can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful escape room.
Importantly, a critical step in starting an escape room is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
15 Steps To Start an Escape Room:
- Choose the Name for Your Escape Room
- Determine the Type of Escape Room You Will Launch
- Develop Your Escape Room Business Plan
- Choose the Legal Structure for Your Escape Room
- Secure Startup Funding for Your Escape Room (If Needed)
- Secure a Location for Your Business
- Register Your Escape Room with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Escape Room
- Buy or Lease the Right Escape Room Equipment
- Develop Your Escape Room Marketing Materials
- Purchase and Setup the Software Needed to Run Your Escape Room
- Open for Business
1. Choose the Name for Your Escape Room
The first step to opening an escape room is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your escape room:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your escape room.
2. Determine the Type of Escape Room You Will Launch
The next step is to determine the type of escape room you will launch. The four main types of escape rooms are:
- Traditional Escape Room – Traditional escape rooms require players to find clues and solve puzzles in order to escape a room.
- Virtual Reality Escape Room – Virtual reality escape rooms incorporate the use of virtual reality technology to create an immersive experience for players.
- Interactive Storytelling Escape Room – This type of escape room requires players to work together as a team to solve puzzles and advance their story.
- Escape Room Adventure – Escape room adventures require players to use clues, riddles and other elements to escape or complete an adventure.
3. Develop Your Escape Room Business Plan
One of the most important steps in opening an escape room is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your escape room.
- Company Overview – this section tells the reader about the history of your escape room and what type of escape room you operate. For example, are you a traditional escape room, virtual reality escape room or adventure escape room?
- Industry Analysis – here you will document key information about the escape room industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing services like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your escape room? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your escape room make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
4. Choose the Legal Structure for Your Escape Room
Next you need to choose a legal structure for your escape room and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the escape room and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to open an escape room together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for an escape room include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for an escape room is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your escape room, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
5. Secure Startup Funding for Your Escape Room (If Needed)
In developing your escape room business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for an escape room to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in an escape room that they believe has high potential for growth.
6. Secure a Location for Your Business
Having the right space can be important for your escape room. Your escape room should have a safe, reliable environment that is suitable for long hours of play. You also may need to account for how much space you will need to accommodate both your guests and the puzzles/props needed in each game.
To find the right space, consider:
- Driving around to find the right areas while looking for “for lease” signs
- Contacting a commercial real estate agent
- Doing commercial real estate searches online
- Telling others about your needs and seeing if someone in your network has a connection that can help you find the right space
7. Register Your Escape Room with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
8. Open a Business Bank Account
It is important to establish a bank account in your escape room’s name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
9. Get a Business Credit Card
You should get a business credit card for your escape room to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
10. Get the Required Business Licenses and Permits
In order to open an escape room, you may need to obtain certain business licenses and permits, such as:
- A business license from the state or local government
- A liquor license (if you plan to serve alcohol)
- A health department permit (if you plan to serve food)
Nearly all states, counties and/or cities also require:
- Sales Tax License or Seller’s Permit: for selling products
- Zoning Approval: typically at the city or county level, this provides authorization for construction or use of a building or land for a particular purpose
- Fire Department Approval: a process by which the local fire department reviews and approves the installation of a fire alarm system.
Depending on the type of escape room you launch, you will have to obtain the necessary state, county and/or city licenses.
11. Get Business Insurance for Your Escape Room
Business insurance is important for any business and should be one of your top priorities when starting up. There are a number of different types of business insurance, so it’s important to find the right one for your escape room.
Some of the most common types of business insurance include:
- General liability insurance
- Property insurance
- Employer liability insurance
- Business interruption insurance
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
12. Buy or Lease the Right Escape Room Equipment
When opening an escape room, there are a few key pieces of equipment you will need. Here is a list of some of the most important items:
- Escape room locks
- Escape room props
- Escape room clues
- Escape room furniture
You can buy or lease most of this equipment, so it’s important to do your research and find the right suppliers.
13. Develop Your Escape Room Marketing Materials
Marketing materials will be required to attract and retain customers to your escape room.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your escape room. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional escape room website provides potential customers with information about the services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your escape room.
14. Purchase and Setup the Software Needed to Run Your Escape Room
There are a few different pieces of software that you will need in order to run your escape room. The most important piece of software is the locks that you will use on your escape rooms. You will also need software for managing reservations, tracking customer information, and generating invoices.
There are a number of different lock manufacturers that offer software to manage their locks. Some of the most popular manufacturers are Kaba, Medeco, and ASSA. You can find more information about their software offerings on their respective websites.
You will also need to purchase reservation software to manage your bookings and track customer information. There are a number of different reservation software providers, but the two most popular are Rezgo and Tely Labs. Rezgo is a cloud-based solution that offers a free trial, while Tely Labs offers both cloud-based and desktop solutions.
Finally, you will need invoicing software to generate invoices for your customers. The two most popular invoicing software providers are QuickBooks and FreshBooks. Both offer free trials so you can try them before you buy them.
Research the software that best suits your needs, purchase it, and set it up.
15. Open for Business
You are now ready to open your escape room. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Open an Escape Room FAQs
Is it hard to open an escape room?
There is no one-size-fits-all answer to this question, as the ease or difficulty of opening an escape room will vary depending on your skills, experience, and resources.
However, if you follow the steps above, you should be able to open your escape room without too much difficulty.
How can I open an escape room with no experience?
The best way to open an escape room with no experience is to start small. You can offer your services to friends and family members, or to local businesses. Once you have a few clients, you can then start marketing your business more aggressively.
What type of escape room is most profitable?
In general, the most profitable escape rooms are the ones that are the most challenging and offer the best experience for customers.
If you are located in a major city, then you may want to consider offering a themed escape room such as a zombie apocalypse or a murder mystery. If you are located in a smaller town, then you may want to focus on more traditional escape room puzzles such as logic puzzles or word games.
No matter what type of escape room you choose to offer, make sure that it is challenging and enjoyable for your customers. The more fun and exciting your escape room is, the more likely people are to return and recommend it to their friends.
How much does it cost to open an escape room?
Opening an escape room can be expensive, but there are many ways to reduce the cost. The startup costs to open an escape room range between $10,000 and $50,000 depending on how large and how sophisticated your escape room is. The costs to maintain an escape room will vary depending on how often you need to purchase new puzzles or props.
What are the ongoing expenses for an escape room?
The ongoing expenses for an escape room will vary depending on the type of escape room you offer. In general, you will need to budget for new puzzles and props every few months, as well as for marketing and advertising expenses. You may also need to hire additional staff to help manage your escape room.
How does an escape room make money?
An escape room typically makes money by charging customers an admission fee. This fee usually includes a set amount of time to attempt to escape the room, as well as any props or puzzles needed for the game. In addition, some businesses may charge extra for each additional person who plays the game.
Other methods of making money include renting out the escape room for private parties or special events, or selling merchandise related to the escape room business. Escape rooms can also generate income by offering consulting services or training courses to other business owners interested in starting their own escape rooms.
Is owning an escape room profitable?
Yes, owning an escape room can be very profitable.
Is owning an escape room profitable?
The profitability of an escape room will vary depending on a variety of factors. The profitability of an escape room will also depend on how much you invest in your business, how large and how sophisticated your escape room is, and what services you offer.
Some of the key things you can do to make your escape room more profitable include:
- Offering a variety of escape room experiences, including both standard and themed rooms
- Offering add-on services such as catering or party planning
- Investing in marketing and advertising initiatives to attract new customers
- Creating a strong social media presence to build brand awareness
- Hosting special events and private parties
- Offering add-on services that complement your main offering
- Optimizing your website for SEO to increase online visibility
- Testing out different strategies with a limited budget, so you can see which methods work best before investing heavily in these areas of your business.
- Providing outstanding client service
Why do escape rooms fail?
Running an escape room can be a very profitable business venture, but there are a few things you need to keep in mind if you want to increase your chances of success.
One of the main reasons that escape rooms fail is a lack of planning. This can include not having a detailed business plan, not doing research on the industry, and not targeting the right customers.
Another reason is a lack of marketing and sales skills. This can include not creating a sales process and not have a clear and strong value proposition.
The last main reason is a lack of financial management skills. This can include not having a realistic budget, not tracking expenses, and not investing in the business.
Who are key players in the escape room market?
The escape room market is made up of a variety of different players, including small businesses, large enterprises, and even individuals.
Some of the key players in the market include:
- Palace Games
- Escape Room LA
- Trapped Puzzle Rooms
However, there are many other players in your specific target market, and it is important to research the market to identify the key players that may have the most direct influence on the success of your business.
How much should I charge for my escape room services?
Escape room fees can vary depending on the type of escape room services being offered.
However, some common escape room fees include:
- Room Rentals: Rents can range from $50-$200 per hour.
- Admission Fees: Range from $15 – $35 per session.
- Equipment Rental Fees: This can vary depending on how much equipment and technology the escape room needs.
- Staffing Fees: This can range from $10 - $20 per hour.
Additionally, some escape room businesses may also offer additional services such as catering, decorating and other special amenities for an added fee.
The best way to determine the right fee for your escape room services is to research the rates of similar businesses in your industry, and to also consider the value that you will be providing to the client.