the amusement archive for startups
The amusement business holds a lot of excitement and promise for the new entrepreneur looking to start something of their own. What's not to like about working in a fun environment all day
But as with any new startup, there has to be a business opportunity to make the leap from working-for-the-man, to working-for-thyself.
The process to really determine the business opportunity falls to the feasibility study and that process starts with a look at the demographics. To clearly determine your local market opportunity and the potential of your fun center idea and it's profitability, you must get an understanding locally of the community demographics
The study and understanding of your local market area and the demographic make-up of your market can be a complex one. However, prior to really digging into the specific data, and spending volumes of time there, you can do some quick, general rule-of-thumb projections to at least get a start and some degree of initial confidence, that this fun center project idea of your's is an idea that has some market potential.
The first step in analyzing the market opportunity is a determination of the overall market area, (how far are customers willing to drive to get to your business) followed by a total count of the families living in that market area. As a starting point, it is widely accepted that the average distance people will travel within a primary market area in order to take their family to a fun center is 15-20 minutes for most urban areas. There are of course exceptions to this rule, for example, as you get out in to less densely populated rural areas where people are already accustom to 45 - 60 minute drives to get to the county retail corridor.
This 'drive-time' guide also brings up another interesting point, which is the real market area. In many cases new amusement attraction developers will sit down with a 3-5-10 mile radius map and determine that everyone within this area is a target customer. And again, as a starting point in first determining the total "potential" demogrpahics this may be acceptable, however is most likely not 100% accurate.
What we find in the feasibility studies we perform, is that the map of the real market area is seldom perfect concentric circles of 5 and 10 mile radius. Typically what happens based on many different factors including physical barriers, traffic congestion, roadways and pyscological barriers, the map of the market area ends up looking like a beat up star shape or dented circle with a pointy thing in one direction. For example, people in the north may be able to travel an existing retail corridor for work, shopping, etc., only taking 15 minutes to get from 10 miles out into town. However, those 10 miles to the east and southeast seldom travel that way because traffic is always a mess, there are bridges or other percieved and/or natural barriers and it can take them upwards of 30 minutes to travel the same distance. So, rather than a nice 3-5-10 mile radius map, your market area needs to consider these local drive times.
Once you best determine your market map, the next data you are looking for is how many households and families are there in the targeted age group(s) that are within that 15-20 minute drive time. For example, if the project is a Children's Entertainment Center (CEC's), targeting parents with children from infant to 12 years old, how many families with children in that age range are there?
There are several sources to finding most of this data online and locally. To start with, reach out to your local Chamber of Commerce or Community Business Office as it is the mandate of these organizations to help new business start and grow in your community. Data and market research may also be found on line at your City/State's web site, or at the Federal Government's Statistical web page www.fedstats.gov and others.
You may also seek more focused data from the targeted schools within your 15-20 minute drive times by calling and asking for enrollment statistics from these schools. Explain to them that you are looking to create a "family-friendly" community fun center and request this data to help build your business plan. Once you have this base set of data collected, your next task is to pull some basic financial projections off these numbers.
If you know how many target customers there are within a 15-20 minute drive time, how can we find out what that equates to in gross revenue potential?
Amusement business data collected by IAAPA indicates that on average, North American families will visit a full-featured family amusement center 3.2 - 4.6 times per year. The same data also indicates that the average dollar spent in a family fun center is between $12 - $22 per visit, depending on your activity mix. At the lower end of that scale are smaller indoor party center type businesses, while full attraction family entertainment centers tend to have higher per cap spending.
If your project plan is to build a Children's Entertainment Center (CEC) you should get in the habit of presenting your idea as family friendly. In many instances, the general population connects Family Entertainment Centers, or Fun Centers with arcades, and thus the possible negative image of unwanted teenagers hanging around their communities. In the process of securing the right location, we have run into this problem on more than one occasion. Great locations have been found and community hearings have taken place to get the appropriate use permission with the local neighbors and businesses. Many people come to these hearings to express their concerns about you bringing an arcade business into their neighborhood. Very tough battles have been fought to change the negative impressions in the communities mind regarding a family fun center, and in many cases communities have been able to get city council to deny the use permits.
Whether seeking permit permission to build a CEC or FEC, you should position your project as having a large degree of community value. You can do this by including some amount of educational and developmental content or programming, (classes, local community use plans, etc) and by clearly identifying who your target market is and how you expect them to use your facility.
From running this initial formula; Number of children within your target age group x number of visits per year x average dollar per visit, you should get an initial sense of whether this idea is feasible and at what potential. If after running through this exercise you determine there is revenue potential that could be worthy of your time and financial investment, it is time to move on to a full Feasibility Study.
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"I just wanted to say thanks for taking the time to chat with me. This was a very valuable conversation as it gave me a whole lot more to think about. Although I have done some research, our conversation opened my eyes to things I was unaware of. From lease negotiation and startup costs to a much better understanding of what and how our local community and area demographics play into our fun center planning. Time well spent and I would recommend others who are researching their startup, give your office a call. You were extremely selfless with information and provided an encouraging view based in Reality. Thank you."
"Thanks for taking the time to chat with us, we really appreciate your time and insight. We had some idea of project scope, but had no idea about all the minutia and details to consider for startup location and our funding. After speaking with you, we came to the realization that ultimately the project we were considering is more of our time than we can commit to, and would not have discovered this reality until much further along. Thanks for helping us determine our path forward."
"This was by far the best thing I have done for my fun center startup. You provided such great and unbiased information, some of which I did not want to hear, but so glad that I did. I now have the focus of mind to proceed with a lot more confidence and direction. I just want to say again, thank you for sharing these insights and your experience."
"I wanted to say thanks again for all of your time in answering my many questions, and helping to make me better understand the steps needed to see our dream of a family entertainment center business in reality. For the first time in this journey I understand how and why to prepare our plan for funders, and how to match my own abilities and financial resources to accomplish my goal. And yes, I would recommend others do take advantage of this service, I can’t imagine to find this much experience and honest at any price, none the less for free. Thank you."
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