Start an escape room business by following these 10 steps:
- Plan your Escape Room Business
- Form your Escape Room Business into a Legal Entity
- Register your Escape Room Business for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Escape Room Business
- Get the Necessary Permits & Licenses for your Escape Room Business
- Get Escape Room Business Insurance
- Define your Escape Room Business Brand
- Create your Escape Room Business Website
- Set up your Business Phone System
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 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 much can you charge customers?
- 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 important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Escape Room Business Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your escape room business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
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?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
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.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
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.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
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.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
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
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
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.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
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.
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.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2022 to find the best phone service for your small business.
Recommended Business Phone Service: Nextiva
Nextiva is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.
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.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
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.
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.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
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.