Escape Room Business Plan Template Xola CH2 1

The Escape Room Startup Guide
How to Open an Escape Room Business
Chapter 2
How to Create an
Escape Room Business Plan
Including never before seen research on average escape room

booking revenues during the first 12 months of operations!
How to Create an Escape Room Business Plan
Introduction
If you plan to open an escape room business, creating a business plan is important for a few
reasons. It can help convince investors or lenders to finance your business. It can persuade
partners or key advisors to join your team. Most importantly, it helps create a roadmap that will
guide the launch and growth of your escape room business.
Launching an escape room is complex. It can be time intensive, and requires strong planning
and coordination. Construction alone can take months depending on the permits, licenses, and
other requirements owners have to meet. Writing a business plan is your opportunity to carefully
think through every step of launching the business effectively so that you’re set up for success.
This is your chance to discover any weaknesses in your escape room business aspirations,
identify business ideas you may not have considered, and make plans to help deal with
challenges that might arise.
When you create your business plan, most of your time will be spent researching and thinking
instead of writing. To help you structure your research and thought process, we’ve included
useful research, resources, and templates for you to use.
You will also find never before seen escape room industry data, including the average monthly
revenue of North American escape rooms during their first 12 months of business.
Finally, keep in mind that while your business plan should be thoughtful and well-researched,
it’s never going to be perfect. Your business plan will likely change over time as you gain new
information, run into unexpected challenges, or discover new ideas. And that’s ok. The purpose
of a business plan is primarily to ensure that your business is feasible, and that you start
building it with a thoughtful, well-researched plan.
Here is your step-by-step guide to creating your escape room business plan. We hope that you
will find it useful and wish you all the best on your new venture!
Xola is a powerful booking and marketing platform built for escape room businesses.
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For additional information visit www.xola.com or email join@xola.com.
Your Escape Room Business Plan

The Twelve Elements of an Escape Room Business Plan
1 Executive Summary
A one or two page summary of your business plan.
2 Company Description
A brief description of your company, including your mission statement, philosophy, and vision.
3 Industry Analysis
A high-level analysis of the escape room industry, including size, growth, and emerging trends.
4 Market Analysis
Analysis of your local market, including your ideal customer profile(s), their demographics, and interests.
5 Competitor Analysis
Analysis of your direct and indirect competitors, and how you can differentiate yourself from them.
6 Barriers to Entry
Analysis of challenges that could prevent business success, and how you intend to overcome them.
7 Games and Services

In-depth descriptions of your games and other revenue-producing products and services you will provide.
8 Location
Desired elements and legal requiremenets for your ideal location.
9 Marketing Strategy
How you plan to acquire new customers using online and traditional marketing.
10 Startup Costs
Estimated costs to acquire a location, build your rooms, and launch the business.
11 Funding
How much funding you will need and how you plan to acquire it.
12 Financial Projections
Estimated monthly costs and revenue for the first 12 months of operation, based on the average revenue
North American escape rooms actually see.
Xola is a powerful booking and marketing platform built for tour and activity companies. 2
The Executive Summary

The Executive Summary is one of the most important parts of your business plan. Most investors, lenders, or
prospective business partners will read this section before deciding whether or not to read the rest of the plan.
It should demonstrate your enthusiasm for escape rooms and get the reader excited about your idea.
Because this section is meant to summarize your plan, it should only be written after you complete the rest of
the business plan. This insures that you have thought through all of the elements of your escape room startup
and that you are prepared to summarize the results.
Your executive summary should briefly explain the following (in one or two pages total):
1 The Overview
An overview of your escape room business idea (in one or two sentences).
2 Your Products and Services

A brief description of your games, and any other products and/or services you will provide. Include other
offers and paid services like corporate team building programs, merchandise, or vending machines.
Jump to Games and Services
3 Your Business Goals

Where do you expect your escape room business to be in a year? Three years? Five years? Many
companies set revenue or profit goals. If you are uncomfortable with setting revenue or profit goals you
can target specific milestones instead, like opening a third room or expanding to a second location.
4 Your Target Market

Who are your ideal customers? What are their demographics? Their interests? Their unique behavior?
Jump to Market Analysis
5 Your Competition and Unique Value Proposition (UVP)

What other escape rooms are in your area? What unique value proposition will help you stand out in a
competitive industry?
Jump to Competitor Analysis
The Executive Summary
6 Your Team
A brief description of your startup team and their prior experience. What skills and experiences does your
team have that will give your escape room business a competitive edge?
7 Startup Costs
If you’re using the business plan for financing purposes, explain exactly how much startup capital you
need, how you will use it, and how that will make your business more profitable.
Jump to Startup Costs
8 Financial Projections
Financial projections are your way to ensure your escape room startup is feasible, and necessary if you
are requesting funding from a bank or investor. Financial projections are based on calculating costs,
revenue and growth over time. While costs differ widely by location and based on business needs,
revenue can be estimated using industry benchmarks. In the Financial Projections section of this guide
you will find new industry research we have developed which shows the monthly booking revenue North
American escape rooms actually see in the first 12 months of operation.
Jump to Financial Projections
A well-written executive summary should help readers understand what an escape room is and why
your escape room business will be successful. Above all, it should excite the reader enough that they
will want to read the rest of your business plan.
After you’ve completed the rest of your business plan, return to this section and write your executive
summary on the next page.
Executive Summary Worksheet
Write your executive summary after you’ve completed the rest of your business plan. Limit your
summary to one or two pages.
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The Company Description

This section explains the basic elements of your escape room business and should include the following:
1 Your Mission Statement

A mission statement is a short explanation describing the reason your escape room business exists. It
describes what you do and who you do it for. Good mission statements are often short (one or two
sentences long), and focus on the things that make the business unique.
Example Mission Statement

EscapeXYZ is a live escape room game that uses captivating historical storylines to
teach visitors about the city’s local history, and challenge their problem solving skills.
2 What Is an Escape Room?

If you’re lucky, investors and potential business partners will already be familiar with escape rooms. But
many will not. In addition to your mission statement, it’s important to briefly explain what an escape room
is, and how the games work.
3 Your Philosophy
What values does your business live by? Honesty, integrity, fun, innovation and community are values
that might be important to your business philosophy.
4 Your Vision
Vision refers to the long-term outlook for your business. What do you ultimately want it to become? For
instance, your vision for your escape room might be to become the highest quality room in your area, or
build your business into a franchise.
The company description should give the reader a basic understanding of what an escape room is and what
makes yours unique. It should also help them understand how you intend to run the business (your
philosophy) and what you hope to accomplish in the long term (your vision).
Company Description Worksheet
Business
Name
Mission
Statement
What Is an
Escape Room?
Philosophy
Vision
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The Opportunity
An important reason for creating a business plan is to understand the
opportunities and risks associated with starting an escape room business.
Detailing the industry and market opportunities (revenue, competitive

advantages, etc.) will help convince investors and partners to support the
venture, and will help you take advantage of your unique market conditions
and competitive advantages.
At the same time, being realistic about the risks involved will help you plan
for inevitable roadblocks, and ensure that you are prepared for the difficulties
of starting an escape room business.
There are four things you need to analyze to fully understand the
opportunity: the industry, the market, your competitors, and possible barriers
to entry. In this section we will pick them apart one by one.
Xola is a powerful booking and marketing platform built for tour and activity companies.
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Industry Analysis
Industry analysis helps escape room startups understand their position among other escape rooms. Unlike
market analysis, which focuses primarily on the end customers, industry analysis focuses on other escape
room businesses to understand how your startup can be successful in a competitive industry.
Industry analysis requires looking at a few key factors:
Industry Size
New or niche industries (like escape rooms) give pause to many investors and potential partners. People
prefer to invest in familiar industries with a history of success, and most people don’t know how large the
escape room industry is, or how successful.
Did You Know? Estimated Number of Escape Rooms in the US

In 2015 there were only 22
escape room locations in the
US. In 2018, the industry
had grown to more than
2,300 locations.
Between 2017 and 2018 the

number of escape room
locations in US grew by
approximately 28%.
Growth Rates
Industries with high growth rates (like the escape room industry) are often more attractive opportunities for
investors, lenders, and business owners. High growth rates indicate that the number of people booking escape
rooms, and the frequency that they book, is increasing rapidly over time.
Industry Trends
It helps to keep a pulse on the industry and how it’s evolving. Are escape rooms becoming more popular
among corporate groups? Are consumers demanding higher quality games? Do changes in technology affect
the competitive landscape? Take this opportunity to make an honest assessment of where the industry is
going (or not) and determine how you will adapt as it changes.
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Market Analysis
You’ll never hear an escape room owner complain that they “did too much research” before opening their first
room.
Starting an escape room business is a complex endeavor. But if you do your research and plan carefully, the
startup process will be much easier and the likelihood of success much higher.
Conducting market research helps you better understand your potential customers and is an important first
step to figuring out how to start an escape room business.
General information like population size and tourism forecasts will inform your escape room business plan and
give you a better understanding of the market opportunity in your area. It’s an important first step in
determining the feasibility of the business, before committing substantial resources to the venture.
Consumer interest data can be used to guide your theme choices and room designs. And detailed profiles of
potential customers in your area, including customer characteristics, spending habits, and location are crucial
to your escape room marketing strategy.
Collecting Data
There are two kinds of market research: primary and secondary.
Primary research uses data that you collect yourself. This could include going online and measuring the
booking volume of competitors by looking at their online availability, or driving around town to play their games
and observe their operations. It could mean interviewing people who fit the profile of your ideal customers, or
manually counting the amount of foot traffic at a location you’re considering.
Secondary research uses data collected from published sources like census data, demographic profiles, and
industry reports. You can find this information online, through your local chamber of commerce, and from
vendors who sell to your industry and government agencies.
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Market Research Resources

Good market research can provide a lot of guidance as you plan your escape room venture. But it can be hard
to know where to go to find the information you need.
Here are six resources that will help inform your escape room market research.
Industry Research
Escape room industry research is limited. However, a number of vendors, enthusiast groups, and academics
have put their resources to good use and developed some valuable findings.
Three Years of Room Escapes: The Growth of the US Market

This article, produced by Room Escape Artists using their REA Directory data, shows the continued rapid
growth of the escape room industry in the US. Amazingly, in July 2017, they were adding new escape room
businesses to their directory at a pace of approximately 75 rooms per month!
The growth trends provide valuable insight into the rapid pace of growth (and increasing competition) in the
escape room industry. The REA Directory is also a useful resource to identify other escape rooms in your area.
Peeking Behind the Locked Door: A Survey of Escape Room Facilities (2015)
In 2015, Scott Nicholson, Professor of Game Design and Development at Wilfrid Laurier University produced
the first academic white paper outlining major trends in everything from game design to pricing structure in the
global escape room industry.
The findings in Nicholson’s paper should be taken with a grain of salt, however. Given the age of the paper
and limited sample size (about 175 respondents globally) it’s hard to draw any definitive conclusions. But
despite its limitations, it still has a lot to offer to anyone getting started in the escape room industry. Nicholson
provides enlightening historical context, draws important parallels to other gaming categories, and develops
useful ways to think about puzzle organization.
The State of Escape: Escape Room Design and Facilities (2016)

In 2016, Scott Nicholson published a second white paper covering the same survey results from 2015 but with
a more explicit focus on findings around design and facility choices.
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Market Research Resources
Enthusiast Research
In 2017, Lee Fay-Low (an Associate Professor at the University of Sydney) partnered with Errol Elumir (founder
of The Codex and a host on the Escape Room Divas Podcast) to collect, analyze, and present the survey
results of 250 escape room enthusiasts. The final result was the 2017 Escape Room Enthusiast Survey.
Government Resources
Aspiring escape room owners can often access useful population and demographic data by accessing public
government records and resources. Escape room owners in the US, for example, can use sites like
Census.gov to get a snapshot of their local population, demographics, housing, economic, and transportation
data, among other things. This information can help project the size of the business opportunity, better develop
customer personas, and assess realistic pricing.
Community Organizations
Community organizations, like your local Chamber of Commerce or Business Development agency, can often
provide you with their local market research data, or help you identify and access the research you need.
Becoming a member of your local chamber of commerce can have other benefits too, like offering discounted
prices with other chamber members. Down the line, your local chamber of commerce can also help you
promote your escape room corporate or team building program.
Owner and Enthusiast Groups

Whenever you have a pressing question, or cannot find the resources you want or need, try engaging with the
rest of the escape room community. Most owners and enthusiasts will be happy to lend their expertise or
point you in the direction of someone who can.
Your Potential Customers

It’s easy to get distracted by the mountains of data available to you online, and forget about the most
informative and direct way of getting to know your prospective customers… Talk to them!
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The Competitive Landscape

For aspiring escape room owners, it’s important to ask: is there too much competition in my area? Is the
market saturated? Or is there still space for new entrants?
The short answer? it depends.
After all, competition happens at the local level. An increase in the number of escape rooms in New York is not
going impact the market conditions in Los Angeles. In fact, large cities like NYC and LA may not even
experience competition outside of their own neighborhood.
To truly understand the “market saturation” or level of competition in your area, we recommend comparing the
number of local escape room locations to the size of the population in your local area.
Measuring Escape Room Density

You can measure the “density” of escape rooms in your local area using an equation like this one:
# of Escape Room Locations

Escape Room 100,000
= X
Density Residents
Population of Area
To define your local area, try focusing on a geographic radius, or region, that represents the limited travel
distance of your ideal customers.
At a basic level, you can determine the market size of that area by looking at population or census data. But to
get more exact, we recommend narrowing your research to a specific subset of the population that represents
your target demographic.
To provide an example, we have compiled a list of all the escape room locations in the US and calculated the
escape room “density” of each state.
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The Competitive Landscape
Escape Room Density by State
But what do these numbers mean?
Alaska, for example, has a density rate of 0.95 escape room locations per 100,000 residents. Does that mean
the market is too competitive? Or is the market large enough to support a new escape room business?
The easiest way to answer these questions is to measure the density rate against a state with comparable
numbers. For example, if a new escape room location opened in Alaska, the density rate would increase from
0.95 to 1.08 locations per 100,000 residents. The new density rate is similar to the current rate in Utah.
Using this knowledge, you can assess the competitive landscape in Utah to help you assess the pros and cons
of joining a market with similar conditions. For example, you can reach out to local escape room owners in
Utah and ask about their experience competing in that environment.
Being that competition happens on a local level, we recommend you conduct this type of analysis within
your own city, district, or neighborhood.
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Competitor Analysis
The number of escape room locations in your area shouldn’t be the only factor you consider when determining
the market conditions or identifying your competitive advantage.
To understand the nuances of the competitive landscape, it’s important to look in detail at your key competitors
to understand what kind of threat they pose (if any) and how you can differentiate your business.
Direct vs Indirect Competitors

A common mistake many new businesses make when drafting their business plan is to claim you have “no
competition.” Every escape room has competitors, even if there are no other escape rooms in the area.
Begin by listing key escape room competitors in your area (including names and locations). Do they compete
for similar demographics? For certain types of games (thrillers vs puzzlers) or certain themes?
Also include indirect competitors. For instance, other popular activities like movie theaters, bowling alleys, and
well-known attractions may be competing for your ideal customers’ attention and discretionary spending.
Data Collection
When analyzing your competitors, it’s important that you don’t rely on guesswork. Putting together a data
collection plan will help you determine the best ways to collect accurate information.
To assess the company’s reputation, for example, you might consider reviewing their reviews on Google,
Facebook, Yelp or TripAdvisor. To estimate their weekly guest volume, you might try comparing their
availability (or lack of availability) on a given weekend by monitoring the numbers on their online checkout.
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Data Collection Worksheet

Use the data collection worksheet to detail how you will collect data about important attributes of your direct
and indirect competitors’ business.
Direct Competitors Indirect Competitors
Price
How much does a ticket
cost? What pricing
structure do they use? Etc.
Games
How many games do they
offer? What themes do
they use? What is the
quality level? Etc.
Customer Service
What is the quality of their
customer service? Etc.
Guest Volume
How many guests do they
serve each week? Etc.
Marketing
How do they attract new
customers? What is the
quality of their site? Etc.
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Competitor Analysis Worksheet

Once you have thoroughly researched your competitors, you can begin to assess their strengths and
weaknesses. For each competitor, rank the perceived quality of each factor on a scale of 1 to 5 (1 = weak;
5 = strong). By comparing these different factors to the business you hope to build, you can start to identify the
places where you can or cannot stand out among your competitors.
Me Competitor 1 Competitor 2 Competitor 3 Competitor 4
Factor
Games
Price
Quality
Selection
Customer
Service
Reputation
Location
Brand Image
Marketing
Strategy
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Barriers to Entry
Escape rooms can face a number of barriers to entry (i.e. things you need to overcome to launch and sustain
your business) that must be accounted for in your business plan. Here are a few items to consider:
Startup Costs
One of the largest barriers to entry for many escape room entrepreneurs are the startup costs. The cost of
paying a lease, building games, designing a website, and investing in digital marketing add up quickly. When
you add in legal, accounting, and architecture fees, construction, permit and licensing fees, and other odd
expenses, finances can get tight. When you develop your financial projections, it helps to leave some
breathing room in your budget for unexpected costs.
Permits and Building Requirements

Certain states, cities, and districts make it notoriously difficult to get the appropriate permits needed to legally
build and run an escape room business. Some owners report spending months going through slow permit
processes with the city. That can be costly. If you’re unprepared, you could find yourself paying a lease for
months before you’re even able to move in equipment and start building your rooms!
The advice almost every owner gives is: talk to the city before you close a lease and start building your rooms.
It could save you months of trouble, thousands of dollars, and lot of headache.
Awareness
Although the escape room industry has gained a lot of traction in the US and Canada, there are still many
places where the general population is unfamiliar with the concept. Even in well-established cities, there are
pockets of the population that will require education and clever marketing before they’re open to the idea of
booking a room.
If you anticipate the need to generate awareness and educate your local population, it’s important to address it
here. Your business plan should acknowledge any major barriers to entry and outline how your plan to
overcome them.
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Execution
The first half of your business plan is all about understanding the
opportunities and risks of starting a new escape room business. The second
half of your plan explains what and how you plan to build and run your
escape room business.
It’s important that you invest the time and energy in doing industry, market,
and competitive research before making any definitive plans for how you will
run the business. The findings you uncover in your research will determine
some of the most important aspects of the business, including the games
you design, the property you lease, and your marketing strategy.
For investors and potential business partners, this section of your business
plan demonstrates that you have assessed the business opportunity
honestly and have taken the time to plan the next steps.
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Your Games and Services

This section expands on the basic information about your games and services included in the executive
summary and company description. Here are some items to consider:
Your Games (and Other Services)

Introduce the rooms/games you plan to offer, including the themes and/or storylines and why you think they
will be appealing to your target audience. Include any additional products and/or services you may plan to sell,
including corporate and team building programs, retail sales, and other revenue sources (vending machines in
the lobby, reselling puzzle designs or props, etc.).
Your Unique Value Proposition (UVP)

In short, a unique value proposition explains why consumers should book your games over a competitor. True
to its name, the standout qualities of your business should be:
1. Unique - it should be something that you do differently, or noticable better than your competitors.
2. Valuable - it should be something that your customers care about.
In general, a strong UVP goes beyond the unique theme or gameplay style you offer. Those elements are
important to a successful room, but because your future customers won’t be able to see or play the rooms
before they book, the promise of a unique theme or novel puzzle ideas won’t be enough to convince those
first-time players to book with you.
Awareness
Your pricing strategy should include the price (how much you charge) and the pricing structure (private, public,
or both?). There are a number of strategies you can use and factors you should consider to determine how
you charge, and how much. You can read more about developing a pricing strategy here.
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Games and Services Worksheet

Use the games and services worksheet to outline the games you will develop along with any other revenue-
generating services or products you will offer.
Games
Other Products
and Servies
Unique Value
Propostion
Pricing
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Your Location
The location of your escape room, including geographic area and the building itself, is one of the most
important factors that will determine your costs and revenue potential. The location you choose can affect your
budget, how many rooms you can build, what games you can or cannot design, how much you spend on
marketing, and much more.
A larger space in a popular part of town with high foot traffic, for example, will cost a premium. It may stretch
your budget in the short term, but the appeal to customers and free exposure to foot traffic can have enormous
benefits in the long run.
Because the location you choose is so important to the business, and because there are so many factors to
consider, we dedicated an entire chapter of the guide to answer the question: how do I pick the perfect
escape room location?
Here are just a few of things you should consider when choosing a location:
• Foot Traffic
• Nearby Amenities
• Nearby Competition
• Pre-Constructed vs “Shell” Properties
• Zoning (Commercial, Industrial, etc.)
• Room Design
• Space Requirements (Lobby, Bathrooms, Storage Space, etc.)
• City Requirements (Sprinkler Systems, ADA Accessibility, Fire Exits)
• Construction Demands
• Property Management
• Price
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Your Marketing Strategy

Your marketing strategy explains how you will convince your ideal customers to book your rooms. Your
marketing strategy can include a wide range of different tactics, but most owners recommend focusing on
digital marketing since the majority of your bookings will come from your website.
A complete marketing strategy includes a few important elements:
Goal
Your primary marketing goal should be result-oriented. For most startups, the primary escape room
marketing goal will be to generate a specific amount of revenue and/or profit.
Target Audience
In order to achieve your goal, you will need to decide what type of people you target with your marketing
campaigns. The market research that you conducted early in the business planning process will help you
determine who those people are, including their geographic location, key demographics, interests, etc.
Strategy
Your escape room marketing strategy determines how you will achieve your goal. For example, will you target
first time visitors using digital marketing tactics? Will you develop a strategy that encourages word of mouth?
Or will you attempt to get your current customers to book your other rooms? The strategy (i.e. how you
achieve your goal) should not be confused with the tactics you use (e.g. Facebook Ads or abandoned booking
recovery emails).
Tactics
The tactics describe the specific channels and tools you will use to execute your strategy. For example, if you
are targeting first time visitors using digital marketing tactics, you might choose to focus on Facebook Ads,
Search Engine Marketing (SEM), or even Search Engine Optimization (SEO).
There are a lot of questions to answer when developing a marketing strategy. Because of this, we wrote a
chapter in the guide to help you build your own marketing strategy, step by step.
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Financial Plan
You cannot start an escape room business without money to fund your
venture. And you cannot continue to maintain or grow your business without
generating enough revenue.
Your Financial Plan helps you understand how much money you will need to
build and grow the business, and how you intend to secure funding.
Your Financial Plan should carefully detail your expected costs and funding
to ensure that you have enough capital to survive the intial phases of
building and growing the business.
Finally, your Financial Plan should include financial projections (expected

costs and revenue) for the first 12 months of operations. To help you get
started, Xola has done extensive research on the average monthly revenue
of new escape rooms over their first 12 months in business.
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Startup Costs
Startup costs refer to all of the upfront costs associated with launching your escape room business. This
includes upfront property costs (deposit, rent payments, etc.), construction and set decoration, website design
and development, legal and accounting expenses, and so on. Understanding your startup costs is incredibly
important if you want to avoid the risk of going into debt (or worse, running out of capital and failing to open
your escape room).
There is no “one size fits all” answer to how much your escape room startup will cost. Expenses can vary
widely between countries, states, and cities and depend on many different layers of decisions like what
location you choose, how many rooms you build, how strict building requirements are, and more.
Luckily, there are a lot of free resources available to help you get started. SCORE, a nonprofit organization
dedicated to helping small businesses get started, provides a useful Startup Expenses Worksheet.
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Funding
In order to pay the expenses necessary to start your escape room and maintain operations after you are open,
you will need to secure funding. There are a few different ways to fund you escape room’s startup costs.
Personal Savings
If you can, using your own personal savings might be one of the most appealing ways to fund your escape
room startup, because you won’t owe anyone else in the process and will have total control over the business.
However, if the business fails or if something goes wrong, you are solely liable.
Business Partner
Many owners choose to fund their escape room venture by pooling resources with one or more business
partners. If the partners have complementary skill sets (e.g. a creative co-founder and a business-savvy co-
founder) they can benefit from the shared knowledge. However, it is important that the partners have a strong
relationship since they will share ownership of the company, and work closely together on important issues.
Family and Friends

Another way to fund your escape room venture is to ask family, friends, and close associates to help fund your
venture. This type of funding relies heavily on relationships rather than an assessment of the feasibility of the
business. It can provide a quick funding option and flexible payment methods, but may have tax implications.
And failing to pay those people back could put undue strain on important relationships.
Crowdfunding
It is possible to raise money on platforms like Kickstarter or GoFundMe, but the percent of escape room
crowdfunding campaigns that have successfully reached their target funding goal is low. Room Escape Artist
did a revealing analysis of companies attempting to crowdfund their escape rooms, which you can find here.
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Funding
Investors
Investors, including wealthy individuals and venture capital funds, can provide funding in exchange for equity
and other forms of profit sharing. They can often offer useful business expertise, but they may force you to
give up a lot more control over your escape room business than other alternatives.
Loans
Bank and government loans are a popular source of funding for many small businesses. Before taking a loan,
it’s important to understand the various options available, and the fees and interest rates that come with them.
The funding is often quick, assuming you qualify, but may require a lot of research and paperwork. Depending
on the loan, you may also be required to pay it back whether or not your escape room business succeeds.
Combining Sources
Depending on the estimated costs, you may choose to combine a number of different funding options. For
example, if you don’t have the savings necessary to fund your entire venture (or want to limit the risk) you
might consider using a portion of your own savings and applying for a small business loan.
Leave Space for Extra Costs
Escape room startups tend to end up costing more than expected, and you need to be prepared.
When you’re estimating your costs and funding needs, be sure to include extra capital for
unexpected expenses. For certain expenses, like construction and design costs, owners suggest
accounting for two or three times the amount you think it will cost.
According to Michael Hill, owner at Limitless Escape Games:
“Double or triple whatever time, money, and energy you think it’s going to cost you. If you’ve got a
budget of $100 it’s going to be $300. It really is.”
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Financial Projections
Your financial projections are perhaps the most important element of your business plan. If you are seeking
institutional investment, lenders and investors will review your projections in detail. It’s equally important for
you, the business owner, to understand how you should allocate your resources so that you become profitable
and are able to grow the business successfully.
12-Month Income Projections

Also known as a profit and loss statement or P&L, your 12-month income projection is the cornerstone of your
business plan. It demonstrates, month-over-month, how much money to expect to lose and gain after
launching your business. It is an important first step to determining your break-even point (i.e. the point in the
business venture when the total revenue is equal to the total costs).
Creating income projections consist of three elements: cost of sales, operating expenses, and projected sales.
Cost of Sales
The cost of sales, also known as Cost of Goods Sold (COGS) refers to the direct costs attributable to running
an escape room game. In many cases these costs are small. The cost of sale includes employee wages (for
on-call employees like game masters) and the cost of resupplying or rebuilding broken parts in your rooms.
Operating Expenses
Operating expenses, also known as Overhead, refers to the necessary expenses that are not directly related
to operating your rooms. These are often relatively fixed. They can include rent, fixed salaries (for managers
and other full-time employees), marketing costs, accounting and legal expenses, utilities, and so on.
Projected Sales
Finally, you will want to compare your estimated expenses to your projected sales over the 12-month period.
Many escape room owners have created sales estimates by creating a realistic weekly schedule and
estimating revenue based on the number of rooms they expect to fill. But these estimates are often unreliable,
and involve a lot of guesswork.
To help escape rooms make more accurate sales projections we have analyzed escape room revenue during
the first 12 months of operation. Read on to learn what the average escape room in the US or Canada can
expect to see in the first year, month by month.
28
12-Month Average Escape Room Startup Revenue
In our effort to help the escape room industry succeed, the team at Xola has done extensive research on how
much booking revenue an escape room startup can expect during their first year of business. To do this, we
analyzed aggregated anonymized booking data of more than 50 new escape rooms over a 12-month period.
Here is what we found:
Average Monthly Revenue After Starting an Escape Room
Like most new businesses, escape room startups should expect a small number of sales within the first few
months.
The average new escape room can expect to gross $26,091.68 total in the first three months of operations. By
the end of the first year (months 9-12), they can expect to make a similar amount in a single month. With some
patience you can expect revenue to grow consistently each month. By the end of the twelfth month, the
average escape room in the US or Canada can expect to have grossed a total of $206,669.28 in booking
revenue during the first year of operation.
29
Financial Projections
Adjusting Expectations
As you begin to make your financial projections, you will likely find that you cannot comfortably
afford everything you detailed in the business plan. And that’s ok. Learning where you fall short
provides an opportunity for you to revisit how you plan to launch the business and find places
where you can cut expenses (at least until you’re running the business profitably).
Most people who start their own business have an ambitious vision. It’s why they got into the
business in the first place. The ones that ultimately achieve their vision understand that you don’t
get there all at once. Initially, you have to settle for something a little smaller. But with a smart
growth strategy and little bit of patience, you’ll find that you can accomplish extraordinary things.
Resources
Business Plan Resources
• Business Plan Template for Startup Businesses (SCORE)
• Escape Room Business Plan Example (The Asylum Escape)
Marketing Resources
• Escape Room Marketing Resources
• The Ultimate Escape Room Marketing Guide
Financial Planning Resources

SCORE, a nonprofit organization dedicated to helping small businesses get started, provides a
series of useful financial planning templates to help you get started.
• Startup Expenses Template

• Opening Day Balance Sheet Template
• 12-Month Profit and Loss Projections Template
• 3-Year Profit and Loss Projections Template
• 12-Month Cash Flow Statement Template
• 3-Year Cash Flow Statement Template
• Year 1 Balance Sheet Template
• Break Even Analysis Template
30
Escape Room Booking Software
A beautiful, optimized
checkout that decreases
abandonment rates and
increases revenue.
Real-time Availability Increased Conversions Professional Reservations

Customers know how many People abandon carts ~70% of Impress customers from the
spots are left, giving them the time. Xola helps you beat get-go with a delightful booking
the confidence to book a those odds with a lightning-fast experience that matches the
room and stop shopping and mobile-friendly checkout. caliber of your games.
around.
Secure Payments Free, Easy Setup

Xola’s PCI-compliant processing It only takes one line of code
and Norton Secured checkout and a few seconds to integrate
keeps your customers and your Xola with any site. The best
business in good hands. part? We’ll do it for you.
Automated Remarketing
Move the needle without moving a muscle.
Automatically recover carts, request reviews, re-
engage with remarketing ads and more.
Transform how you
Reporting & Business Intelligence do business today!
Break down your transactions, see cash flow and
realized earnings, and identify your most valuable Visit www.xola.com or
products and booking channels.
call +1 (415) 404-9652
World-Class Support
Free setup and unlimited staff training. We also
offer 24/7/365 support via phone, email, or chat.
31

Escape Room Business Plan Template Xola CH2 1

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What are the key steps to creating an escape room business plan?

What are the key steps to creating an escape room business plan?

What industry data is provided regarding average monthly revenue for escape room startups?

What industry data is provided regarding average monthly revenue for escape room startups?

The Escape Room Startup Guide

How to Open an Escape Room Business

Including never before seen research on average escape room

Your Escape Room Business Plan

7 Games and Services

The Executive Summary

2 Your Products and Services

Jump to Games and Services

3 Your Business Goals

4 Your Target Market

Jump to Market Analysis

5 Your Competition and Unique Value Proposition (UVP)

Jump to Competitor Analysis

The Executive Summary

Jump to Startup Costs

Jump to Financial Projections

Executive Summary Worksheet

The Company Description

1 Your Mission Statement

Example Mission Statement

2 What Is an Escape Room?

Company Description Worksheet

Detailing the industry and market opportunities (revenue, competitive

Industry analysis requires looking at a few key factors:

Did You Know? Estimated Number of Escape Rooms in the US

Between 2017 and 2018 the

Market Research Resources

Three Years of Room Escapes: The Growth of the US Market

The State of Escape: Escape Room Design and Facilities (2016)

Market Research Resources

Owner and Enthusiast Groups

Your Potential Customers

The Competitive Landscape

The short answer? it depends.

Measuring Escape Room Density

# of Escape Room Locations

The Competitive Landscape

Escape Room Density by State

But what do these numbers mean?

Direct vs Indirect Competitors

Data Collection Worksheet

Direct Competitors Indirect Competitors

Competitor Analysis Worksheet

Me Competitor 1 Competitor 2 Competitor 3 Competitor 4

Permits and Building Requirements

Your Games and Services

Your Games (and Other Services)

Your Unique Value Proposition (UVP)

2. Valuable - it should be something that your customers care about.

Games and Services Worksheet

• Pre-Constructed vs “Shell” Properties

• Zoning (Commercial, Industrial, etc.)

• Space Requirements (Lobby, Bathrooms, Storage Space, etc.)

• City Requirements (Sprinkler Systems, ADA Accessibility, Fire Exits)

Your Marketing Strategy

A complete marketing strategy includes a few important elements: