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Fec Indoor Center Start-up Questions


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#1 mhb17

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Posted 27 May 2010 - 07:53 AM

I've been researching opening up a facility. I think it would go over great in our area since we don't have one. We have the rental businesses around but nothing indoor. My partners and I have visited a facility with out kids about 100 miles away. That's the closest one. We live in a city with about 80,000 people and have 3 smaller communities within 10 miles that are 40-50,000 range. I believe it's a prime market!! We have 1 Chucky Cheese and a Pizza Warehouse that is a pizza buffet with ticket video games. Other places of possible competition would be bowling allies which we have 2.

We want to model ours close to the Jump Zone type environment but add a light concession and possibly an arcade area (non tickets). We would like to concentrate mostly on Birthday Parties and are planning on 6 rooms versus the 4 we have seen at other facilities.

Our biggest concerns are location for business. We were planning on a very popular area where there are lots of building that have been sitting vacant for years. Asking lease prices are around the $8-9000 range, but all say "make and offer". Our issue with buildings are finding one with ample hight restraints that are heated and cooled. We are looking in the 12-15000 sq ft range. The facility we visited was a little over 10,000 but we want to add the concession and arcade areas thus the additional footage. What are the thoughts on size? We don't want to go too small that it limits us inside a 3 year lease not to be able to compete with another franchise that could come into town, but we don't want to "lease" ourselves out of business if it starts out slow and we have a $9000 a month lease agreement.

Our next issue is insurance. I've read some on here, but seems most are involved in the rental side of the business. We will do that next summer, but we want to try to get started about the time school starts to capatalize on that market as well as the cooler winter months for the indoor parties. I've seen a few "estimates" on what people say insurance runs for their rentals, but what about a FEC? We need better numbers than $500-1200 each per year. That's an $8500 a year difference and not accurate numbers for a business presentation to finacial agents.

What kind of revenue estimates can someone give me? I need fairly accurate numbers to put on our business proposal. Total # of kids? Prices per kids? Annual revenue? I know some don't want to publically discuss these numbers, so PM me or feel free to ask for my number so we can talk.

Any help/suggestions are GREATLY appreciated!! Thanks, and have a great day.

#2 cf1203

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Posted 27 May 2010 - 09:03 AM

We are probally one of the last members to open an indoor facility on the forums. We are the only thing like this in our city and we don't have a Chuck E Cheese or anything close to that. this is my opinion on some of the questions:

-6 party rooms seems a little overkill for a FEC. We average around 10-15 parties on the weekend(both private and open) and we do it all in one party area without over-lapping any parties. 2 areas would be nice, but parents seem to like the bigger party areas opposed to being crammed into a small room

-$9,000 a month is WAY TOO MUCH!!! we have 20,000 sq ft and pay less than half of that and we are in a mall that is on the corner of the 2 busiest streets in our city. If you pay anywhere near that, you are setting yourself up for failure. Along with bigger buildings come bigger power bills, bigger heat bills, more equipment to fill the space, etc. We are actually looking into another building in the mall thats only 7,000 sq ft but the ceilings range from 25' to around 15' in the bounce area in the same mall.

-Insurance is gonna vary depending on size of facility, equipment you use in the facility, etc. Figure a nice car payment a month and you will be ok.

-Revenue, amount of kids, etc is gonna vary depending on marketing, advertising, how much you put into the facilitly to "draw" people in. If you do it cheaply and cut corners, people will notice and it will affect your business.


An indoor facility isn't a cake walk like alot of people think, just like inflatables in general aren't. There is money to be made, but you are not gonna be a millionaire in a year. There is alot of overheard in the business like payroll, power, heating/cooling, equipment(which wears out alot faster than normal rentals), printing of safety waivers(and you will go through alot of them hopefully), and many more things that would make this list VERY LONG!!!

Also, just like many told me, when it warms up the business will slack off. They will come back when it gets HOT outside, but it will happen.

We are doing great and I don't regret doing it at all, but make you do your homework and read the forums because it will answer alot of your questions.

#3 mhb17

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Posted 28 May 2010 - 04:56 AM

We are probally one of the last members to open an indoor facility on the forums. We are the only thing like this in our city and we don't have a Chuck E Cheese or anything close to that. this is my opinion on some of the questions:

-6 party rooms seems a little overkill for a FEC. We average around 10-15 parties on the weekend(both private and open) and we do it all in one party area without over-lapping any parties. 2 areas would be nice, but parents seem to like the bigger party areas opposed to being crammed into a small room

-$9,000 a month is WAY TOO MUCH!!! we have 20,000 sq ft and pay less than half of that and we are in a mall that is on the corner of the 2 busiest streets in our city. If you pay anywhere near that, you are setting yourself up for failure. Along with bigger buildings come bigger power bills, bigger heat bills, more equipment to fill the space, etc. We are actually looking into another building in the mall thats only 7,000 sq ft but the ceilings range from 25' to around 15' in the bounce area in the same mall.

-Insurance is gonna vary depending on size of facility, equipment you use in the facility, etc. Figure a nice car payment a month and you will be ok.

-Revenue, amount of kids, etc is gonna vary depending on marketing, advertising, how much you put into the facilitly to "draw" people in. If you do it cheaply and cut corners, people will notice and it will affect your business.


An indoor facility isn't a cake walk like alot of people think, just like inflatables in general aren't. There is money to be made, but you are not gonna be a millionaire in a year. There is alot of overheard in the business like payroll, power, heating/cooling, equipment(which wears out alot faster than normal rentals), printing of safety waivers(and you will go through alot of them hopefully), and many more things that would make this list VERY LONG!!!

Also, just like many told me, when it warms up the business will slack off. They will come back when it gets HOT outside, but it will happen.

We are doing great and I don't regret doing it at all, but make you do your homework and read the forums because it will answer alot of your questions.



So what are some of the better/popular insurance companies for this business? I don't want a fly by night scam company so I thought I'd ask.

#4 kenmartin

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Posted 28 May 2010 - 05:23 AM

It would help to know where you are located. How honest can one be with a person who does not reveal who or where they are.

#5 americanbounce

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Posted 28 May 2010 - 06:03 AM

I thought Dreamland was an actual place, you mean I need to move to a new location. My wife keeps telling me this but I thought she was just kidding me.
Thanks alot Ken now I need to find a place for all my plans. LOL

Seriously you need to let us know where your from, rent insurance permits are all based on where you are located.

Edited by americanbounce, 28 May 2010 - 06:04 AM.


#6 mhb17

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Posted 28 May 2010 - 08:07 PM

It would help to know where you are located. How honest can one be with a person who does not reveal who or where they are.




I'm from Arkansas. The only reason I'm a little hesitant about revealing too much is that I don't want anyone to beat me to our market. I believe it is ready for this and a few local business men can't believe we don't have one yet and have already said their kids love the ones in other towns that they have visited so....



But an update on our progress. We've found a 10,000 sq ft building for sale instead of rent. It's 50 x 200 with the entrance on the short side and already has the front part sectioned off from what will be the inflatable area. I believe it will be perfect. We will also be buying instead of leasing. I really like this idea since it will cut our lease costs and we will own the building not giving away money for one.

Now we need to estimate and get quotes for insurance and choose inflatables. Of course we are trying to figure out how to ask the bank for the building price plus $100,000 for equipment and operating capital but don't have any colateral. Just some cash.

#7 JumpinJoe

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Posted 16 June 2010 - 12:58 PM

I am curious to hear any progress you are having, I too am in the early stages of opening an indoor FEC. Not in Arkansas :(

#8 BounceHouseGuide

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Posted 17 June 2010 - 09:33 AM

There is nothing compared to doing your due diligence when starting any location based business - google the term "Location Intelligence" as it relates to demographics . . . pay to have a basic study done or buy the software to run some numbers yourself . . . also, you can use the software later to run specials, analyze competitors, etc. . . . its actually kind of fun and can be the single most important decision when setting up your biz . . .

Also helpful, run these terms by a commercial realtor and make sure they know them . . . a good one will do these studies or offer to do them with you . . .

#9 CFOsales

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Posted 17 June 2010 - 10:53 AM

During Minneappa 2 - we focused on opening an indoor inflatable FEC with safety, financing, design and website marketing.

We have some of the powerpoints to the presentations we can share - thus I recommend you call up Brandon and schedule a time with him - about 1 hour.

Brandon is our resident FEC expert at CEC and he can discuss all the options and offer some advice. CEC has been in the indoor market since it was first defined/created by Brenda and Terri and has product in many of the major franchises.

Thanks

#10 InflatableStartup.com

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Posted 07 July 2010 - 05:52 PM

I agree with one of the replies up there, $9000 is way to much, at least currently. You also mentioned there are lots of buildings empty. Use this to your advantage, negotiate the prices, make a low offer, if you think you'd take $8000 offer $7000 see what happens. Also negotiate a rent free period - about a month or so? So you can get things going - as well as move in and setup time. Make sure you're READY TO GO, once you sign the lease. Time is ticking, you'll need to get people in the door. You need to pick your battles, but you can also get the land lord to possibly put in any extra walls, or knock down any walls according to your layout requirements, before you sign the lease. They'll be able to get things like that done for far less $ than you would.

Insurance, again agree, it varies. Get a security camera system and write a safety manual. Mention those to your agent. There are a few other tips: http://www.inflatabl...atable-centers/

Revenues vary with your setup. Will you have 2 jump rooms, or just one? Private parties? or combined with open jump and just a private 'cake room', etc.

hope this helps!

#11 mhb17

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Posted 17 July 2010 - 07:28 AM

I agree with one of the replies up there, $9000 is way to much, at least currently. You also mentioned there are lots of buildings empty. Use this to your advantage, negotiate the prices, make a low offer, if you think you'd take $8000 offer $7000 see what happens. Also negotiate a rent free period - about a month or so? So you can get things going - as well as move in and setup time. Make sure you're READY TO GO, once you sign the lease. Time is ticking, you'll need to get people in the door. You need to pick your battles, but you can also get the land lord to possibly put in any extra walls, or knock down any walls according to your layout requirements, before you sign the lease. They'll be able to get things like that done for far less $ than you would.

Insurance, again agree, it varies. Get a security camera system and write a safety manual. Mention those to your agent. There are a few other tips: http://www.inflatabl...atable-centers/

Revenues vary with your setup. Will you have 2 jump rooms, or just one? Private parties? or combined with open jump and just a private 'cake room', etc.

hope this helps!



Very helpful, THANKS!! We have negotiated down to about $5250 a month for a little over 14,000 sq feet. It will be a "white box" deal. It is a "new" area in the building that has never been used so they are going to have to put in A/C and finish the walls. Also putting up lights and running all electrical and putting in bathrooms as well. It will all be new so that's nice.

We plan to have 2 bounce rooms. We are looking at 3-4 party rooms. An area that we have it only about 10 ft high ceiling so we will make this our party room areas. Should work out well. We intend to have open play, as well as private parties on the weekends. We plan to have private parties at certain times during the week as well. We hope to have a small concession, but not enough to have to deal with the health department. All sealed items. We've already been working a deal with our neighbors (chic-fil-a) on chicken nugget kids meals as an option to only pizza for parties. We also have word that a new neighbor will be a party supply store next door so that could work in our advantage for getting party supplies cheap. We also have a connection with the owner. ;)

We initially wanted to open up only the indoor until next spring time when we would begin to do rentals, but we've already been approached by so many friends and acquantences about doing their parties, that we are getting very close to buying some equipment now so we can start the revenue moving.

We are still unsure exactly what register and software we will buy/use.
We are still unsure exactly what insurance company we will use (or what's available).
We are still unsure exactly how we are going to lay it all out because we want to be able to open both rooms up as 1 huge room so we can accomidate parties in the open area, after we roll up the inflatables.

I'm open for any ideas, good and bad. I take criticism well and hope to get some. I like to prove people wrong that say I cant do something. lol.

Thanks for the comments, and please keep them coming!!!

#12 mhb17

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Posted 17 July 2010 - 07:29 AM

Also forgot to mention that our contract will give us 30 days from the day we open for business before our lease actually begins. Gives us a month to start revenue before having to pay.

What else have I forgotten????

#13 jumpingjay

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Posted 18 July 2010 - 04:18 PM

What else have I forgotten????



It's not what you have forgotten, it's what you haven't considered. This message is going to be blunt.


Having done both an indoor facility first then rentals, I always look back and wonder why anyone would do it the other way around. What I am saying is that if you are doing rentals, why would do an indoor facility? People look at the indoor business and they see all of the people going in and out and all of the money flowing around, but they don't realize how much of that money is going out and how much all of your time and effort are invested in the place on a daily basis.

For example, if you have a large facility (10,000+ sf/ft) and it is a NICE place, then you probably dropped between 150k - 250k on it (which includes the cost of equipment). If you sit here and write that you did it for less, then you probably don't have a nice place (sorry) or you just took you crappy, beatup outdoor rental equipment and put it indoors (again... not a nice place).

In addition to that, you have the 3+ year lease at $5,000+ a month, which comes out to another $180,000 over the 3 years.

So, with all of that being said, what kind a rental business could you have if you had taken the initial amount of $200k and put into equipment and advertising. Heck, I only used a fraction of that amount towards my rental business and in the FIRST YEAR my NET was more than it was for my indoor place.

So what is your plan? You are going to open an indoor facility and become RICH? I think not. It won't happen. People don't get rich in the FEC business. I hate to bust your bubble, but the best that you will probably end up doing is making 40k-50k a year, after it is all said and done. But wait, you have a business partner, so make it 20k-25k a year. And you will have a HUGE amount of financial exposure to make that tiny amount of money, if you even make it at all. And let's not forget the 40 - 60 hours a week you will be putting into this thing (it would be more, but at least you have a partner).

Heck, you would probably be better off taking that money and going and opening a bar, or some other type of business.

In short, I am saying that I know A LOT of people in the indoor business. And I do not know any of them that have gotten RICH in the business. This is because when they sat down and made up their little income projections the didn't realize that they are basing a 12 month income statement on an 8 month year. Oh, please don't tell me that you too are basing your income projections on 12 months... you don't think that you have 12 months to make all of this money in do you? WHAT???? That's right, don't base your party projection on 12 months. Your Summer will drop off on parties by 50%, so there goes 3 months. Christmas and Thanksgiving breaks, I don't think so, nobody partying there. Spring break - nope. All major and minor holiday weekends? They are gone too. Heck, most people won't even book on MLK weekend, cause they are afraid the guest turnout will be low. And if you are counting on your open jump to make up for the difference, well... don't. It will make up for some parties lost, but not all of them.

Now, if you are smart, you will do a TEEN NIGHT and that will definately help out alot, if it is done right.

But all in all, my advice to everyone that is considering opening an indoor place is that think twice, then thrice about it. Make sure all of your ducks are in a row, get plenty of advice from lots of sources and make sure that it is really where you want to put your 1/4 of a million dollars (especially after all of that rent).


Maybe this message has been too grim, but I always feel that it is my duty to try to talk people out of this type of business. If I can't talk them out of it, then maybe, just maybe, they are ready for what they are getting themselves into. I do this not because I regret my choice to get into the business, but only because I know what and how much is involved. I have seen plenty of people fail at it, and it hurts them and their family.

I want you every one considering doing it to know the risks involved and to know that it is not all fun and games. Yes, it is a wonderful business, if you make it.

IF YOU MAKE IT.

#14 cf1203

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Posted 18 July 2010 - 06:43 PM

We also srarted by opening an indoor center first and will be starting rentals next year. the indoor centers have ALOT of overhead that you do not expect when people look at how "easy" it is to open one.

It is by far not a cake walk to do this type of business if you do it right. Sure, you can cut corners and just throw a place together, but you will never make it by doing that.

Just like Jumpinjay said, holidays kill an indoor facility, just like warm weather. Our parties have dropped off some for the summer, but we have picked up several daycare groups that help offset that money.

#15 mhb17

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Posted 18 July 2010 - 08:53 PM

Thanks. lol. I guess. I've been researching/reading quite a bit. I know I don't know it all (who does) but I've learned quite a bit. I'm still learning. We have a bulding that we will be the first people to rent this space so it will be very clean and new. Should be nice. We are looking to buy all new equipment so they equipment will be nice. I've been trying to decide which company to use for this purchase.

I own my own convenient store (in the process of selling it). Talk about a headache!!! I ran over $1.5 million last year and didn't make hardly any money off of it. I know it will take lots of hours. I'm prepared for that. I don't do anything but work. Guess I got that from my dad, he's a workaholic as well. I have a full time job that I only work 7 out of 14 days so I won't be counting on this new business for income for quite a while. My wife also has a full time job and works 4 days a week. So between the 2 of us we will have quite a bit of time to invest into the business. Our partners wife just resigned from her position as a preschool director so she's very good with kids. She also has an industrial engineering degree, as does her husband, so they are very educated and goal driven. They also have 2 business's they run, or that run by themselves really. So the business experience is somewhat there. The drive for success I don't think can be easily matched.

The idea of the indoor first is to start getting our name out through the winter months which we assumed would be very slow with rentals. I've got all the names and numbers for all of the PTA presidents for all the schools in our local school system. My dad just retired from pretty high up in the school system so we have many contacts through him. We want to do rentals as well and are actually starting to get the idea of going ahead and start doing some rentals ASAP. We have already had a few people talk to us about their company parties and kids Bdays that they want us to do as well so we will probably go ahead and get a couple to start with.

The profit will be there if we run it right. At least I believe it will be. No I don't plan to quit my job right away. My wife works as a route driver and has a bad knee. I want to have a place that we can pay her to run that is less stressful on her knee.

I know there are slow months. Read a lot about them. That's why we want to have both indoor as well as rentals. seems they should compliment each other fairly well. We also have a partner on the local soccer league board. We are going to push lots of sports teams to have their end parties at our place. We both have kids playing tball. I've lived here all my life, except the 6 years in the Navy, so I know a lot of people. Most of the coaches on all the tball teams went to school with me. They all have loved the idea. The parents have all loved it. My brotherpin-law is a minister and has already approached us about having youth meetings at our place on occasion. Said he would talk to other ministers if all goes well with the youth.

We've got lots of ideas and we know we will have to advertise wisely if we are going to make it. Spend less for lots of exposure.

I know it won't be easy, but besides the lottery, you don't get things without working for them.

Anyway, off the soapbox. What other things should I be looking out for? Thanks for all the advise. I love it. :))

#16 rufusjack

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Posted 01 August 2010 - 06:20 PM

What is the ceiling height?




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