Start an escape room business by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your escape room business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening an escape room business?
Depending on the location, the cost of rent, and the complexity of the room design, opening an escape room business can cost anywhere between $7,000 and $30,000. A business license and insurance are among opening costs. Props and furnishings are another. Some escape game rooms provide elaborate costumes and set designs that include laser lights, while others keep their sets relatively simple.
What are the ongoing expenses for an escape room business?
The main costs are rent, utilities, and employee payroll. Other ongoing expenses include replacing equipment and props as needed, the cost of which is dependent upon the complexity of your escape room’s design. Website maintenance with educational information about escape room gaming and promotional advertising are also necessary expenses, especially since this type of business is so new and many people are still unaware of how escape room games work.
Who is the target market?
Preferred clients are individuals who prefer to purchase interactive experiences rather than consumer products. Business owners, managers, and coaches who want to provide their employees or players with positive team-building experiences also make great customers. Statistics show that corporate clients make up 20% of escape room game participants.
How does an escape room business make money?
An escape room business makes money by charging customers a participation fee to play an escape room game. Escape room games are live-action adventure experiences in which participants are locked in a room and try to escape within the allotted time by discovering clues and solving puzzles. Game rooms usually have a theme, whether historic, futuristic or completely original.
How much can you charge customers?
Most games cost $25 to $30 per person for a one-hour game, and even in larger venues typically allow no more than 12 players at a time. Smaller venues often limit games to no more than 6 players.
How much profit can an escape room business make?
The escape room business can be extremely lucrative. For example, Escape Expert opened in Dallas in February, 2015 and is now earning approximately $70,000 per month. Similarly, the owner of Puzzle Break, another successful escape room business, started in 2013 with only $7000, and had a projected yearly income of approximately $600,000 less than two years later.
How can you make your business more profitable?
The best way to make your escape room business more profitable is to open more than one room with more than one game. Since escape room games are not yet copyrighted, it’s still possible to use, and improve upon, the ideas of others who have already achieved success with their escape room businesses. The more interactive your escape room is, the more enjoyable it will be for the participants, and the more likely they will be to recommend it to their friends. Ideally, the level of difficulty should be such that not every team who participates will succeed in escaping. Printing up some t-shirts with your business logo to serve as memorable prizes for successful escapees can be good form of inexpensive yet effective advertising.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your escape room business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
In most states, it is necessary to obtain an escape room business license. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources
Release of Liability
Liability waivers are essential since consumers will be in high stress environments. Though escape room waivers should be custom-made, sports center waivers can serve as helpful examples.
Recommended: Rocket Lawyer makes it easy to create a professional release of liability form for your escape room business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.
In order to play music in a business setting, permission must be acquired from the composer or license holder. Typically, it is possible to obtain a “blanket” license allowing a businesses to play music owned by a large catalog of artists and recording studios. Such licenses can be obtained from Performance Rights Organizations, such as ASCAP or BMI.
Certificate of Occupancy
Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to an escape room business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for you business’ location to ensure your escape room business will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market an escape room business
Social media is a great way to advertise an escape room business. There is also an international website directory designed specifically for owners to list their businesses by country and city to make it easier for game enthusiasts to locate an escape room near them.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Unlike other types of competitive businesses, partnering with other escape room business owners to provide mutual referrals is beneficial for everyone involved, including customers seeking new gaming experiences. Providing your customers with post-game surveys is a good way to get valuable feedback about their experiences and how your game can be improved for future players. Each escape game is played only once by each player since the majority of clues are discovered during the game. To succeed in getting repeat business, it is necessary to create and present new games.
Recommended: Learn how to build a strong brand for your business and retain more customers by reading our article, Branding Your Escape Room Business in 8 Simple Steps, by contributing author Chris Hanson.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start An Escape Room Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Those who enjoy playing escape games themselves are prime candidates for starting this type of business. It’s also a good business for creative people with a flair for the dramatic who enjoy designing their own games and providing others with enjoyable gaming experiences.
What happens during a typical day at an escape room business?
- Maintaining the cleanliness and physical safety of game rooms
- Placing props and clues for guests to find
- Designing games
- Website maintenance
- Training staff
- Advertising and creating promotional events
What are some skills and experiences that will help you build a successful escape room business?
Attention to detail is one of the most important skills to have in this business. Success depends on providing enough relevant clues for teams to escape, but making them hard enough to find to provide an enjoyable challenge. Design skills are also helpful in setting up an escape room.
What is the growth potential for an escape room business?
The number of escape room businesses before 2010 was zero. Since then, that number is over 2,800. Most are registered with escape room directories to make it easier for gaming enthusiasts and new potential customers to locate them.
Recommended: To get a deeper insight into your escape room's growth potential, read our article The State of the Escape Room Industry, by contributing author Charles Bechtel.
TRUiC's YouTube Channel
For fun informative videos about starting a busines visit the TRUiC YouTube Channel or subscribe below to view later.
Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
How and when to build a team
It’s advisable to build a good team during the initial planning stages of starting your business. While some people have the skills and experience to design, create, build, and outfit their own escape rooms as well as maintain a website to help advertise it, most people outsource one or more of those tasks to other professionals. Once the room is operational, at least one additional staff member will be necessary to assist other customers while games are in progress.
Read our escape room business hiring guide to learn about the different roles an escape room business typically fills, how much to budget for employee salaries, and how to build your team exactly how you want it.