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The Asylum Escape
theasylumescape
@TheAsylumEscape
CONFIDENTIAL INFORMATION
Business Plan
May 2016
CONTACT INFORMATION:
- ...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
CONFIDENTIAL INFORMATION
Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@ho...
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The Asylum Escape - Business Plan

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Business Plan realizzato per un'impresa creata partendo da zero - Business Plan realized for a brand new company to start

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The Asylum Escape - Business Plan

  1. 1. The Asylum Escape theasylumescape @TheAsylumEscape CONFIDENTIAL INFORMATION Business Plan May 2016 CONTACT INFORMATION: - Phone: +39 347 288 2768 - Mail: lorenzo.casale@hotmail.it ADDRESS: Via Monte Grappa 40Via Monte Grappa 40 20182 - Limbiate (MB) WEBSITE & SOCIAL MEDIA: www.theasylumescape.it
  2. 2. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 2 - 1 EXECUTIVE SUMMARY 1.1 MISSION & COMPANY DESCRIPTION 1.2 INDUSTRY ANALYSIS 1.3 MARKET ANALYSIS 1.4 MARKETING PLAN 1.5 MANAGEMENT TEAM & SERVICE PLAN 1.6 FINANCIAL PROJECTIONS 4 4 4 4 5 5 5 2 MISSION STATEMENT 5 3 COMPANY DESCRIPTION 3.1 HISTORY 3.2 PRODUCTS AND SERVICES 3.3 CURRENT STATUS 3.4 LEGAL STATUS AND OWNERSHIP 6 6 6 6 7 4 INDUSTRY ANALYSIS 4.1 INDUSTRY SIZE 4.2 INDUSTRY GROWTH RATES 4.3 INDUSTRY STRUCTURE 4.3.1 RIVALRY AMONG COMPETITORS 4.3.2 THREAT OF POTENTIAL INCOMING 4.3.3 THREAT OF SUBSTITUTE GOODS 4.3.4 CONTRACTUAL POWER OF SUPPLIERS 4.3.5 CONTRACTUAL POWER OF CUSTOMERS 4.4 NATURE OF PARTECIPANTS 4.5 KEY SUCCESS FACTORS 4.6 TRENDS 4.7 LONG-TERM PROSPECTS 7 7 8 9 9 10 10 11 11 12 12 13 14 5 MARKET ANALYSIS 5.1 MARKET SEGMENTATION AND SIZE 5.2 TARGET MARKET TRENDS 5.3 BUYER BEHAVIOR 5.4 COMPETITOR ANALYSIS 5.5 ESTIMATE ANNUAL SALES 14 14 15 15 16 16 6 MARKETING PLAN 6.1 CUSTOMERS 6.2 THE ESCAPE ROOMS 6.3 THE LOCATION 6.4 THE PRICES 17 17 17 18 18
  3. 3. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 3 - 6.5 TEAM BUILDING 6.6 DATES & ADVERTISE 19 19 7 MANAGEMENT & ORGANIZATIONAL STRUCTURE 20 8 SERVICE PLAN 8.1 GENERAL APPROACH TO OPERATIONS 8.2 BACKSTAGE (BEHIND-THE-SCENE OPERATIONS ACTIVITIES) 8.3 FRONT STAGE (WHAT THE CUSTOMERS SEE AND EXPERIENCE) 8.4 HOW TO REACH US 8.5 INVENTORY 8.6 SEASONALITY AND PEAK TIMES 8.7 OUTSOURCING 21 21 22 23 23 24 24 24 9 CRITICAL RISKS 24 10 ANALYSIS OF FINANCIAL PROJECTIONS 10.1 REVENUE MIX & SALES PROJECTIONS 10.2 COSTS 10.3 PUBLIC GRANTS, DEBT AND EQUITY 10.4 BALANCE SHEET, INCOME STATEMENT AND BREAK-EVEN- POINT 10.5 SIMULATION MODELS 25 25 27 28 30 33
  4. 4. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 4 - “The one and only escape room so fascinating, you won’t want to escape!”. Since 2006 escape room number is growing at a rate of 53.12% each year. Escape room business is not a mature market. Our company’s target is the population aged between 15 and 55 years old who live in a 50Km area around Limbiate: about 3M people. 1. EXECUTIVE SUMMARY 1.1 MISSION & COMPANY DESCRIPTION “The one and only escape room so fascinating, you won’t want to escape!”. The Asylum Escape is a new start up. We will open in October 2017 10 escape rooms in Mombello’s former mental asylum. We are obtaining funds in order to start the renovation of the building. There are 5 co-funders that will invest 20% each in the company’s equity. We will adopt an s.r.l.1 form of business. 1.2 INDUSTRY ANALYSIS Since 2006 escape room number is growing at a rate of 53.12% each year thanks to the 45% of world population aged between 15 and 44 years old. The industry is mostly composed of independent rooms that operate locally. The highest barrier a potential entrant has to face is what a company can offer to its clients. Financial needs are low, there are no critical resources needed and no legislative issues. As a substitute good we can consider every product or service that gives the customer a comparable adrenalin rush. Suppliers have low contractual power and the risk that one of them becomes a competitor is really low. Clients have not high negotiation power. They don’t care too much about price because it’s set from the market. Escape room business is not a mature market, so entering it now can bring competitive advantages for the future. 1.3 MARKET ANALYSIS Our company’s target is the population aged between 15 and 55 years old (with focus on the range 20-35) who live in a 50Km area around Limbiate. The total amount of potential customers in our target area is about 3M people. We will take advantage of the increasing interest in horror trend and the massive use of social networks in order to make people curious about our escape rooms and persuade them to try. In the 50Km area near Limbiate there are 16/17 competitors, but they will probably increase in few years. Our location (Mombello’s former mental asylum) will help us continue having a competitive advantage. 1 S.r.l., states for Società a Responsabilità Limitata
  5. 5. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 5 - 10 rooms with 2 difficulty levels. The management team will be composed by the 5 co-founders. To complete the staff 5 employees (Game Masters) will be hired. There will also be a museum centered on the asylum’s history. Will be requested fundings for 1,5M to several European’s fund. 1.4 MARKETING PLAN The asylum escape will have 10 rooms with 2 difficulty levels. Rooms will change in order to maintain customer’s loyalty. The historical building gives a horror connotation to our escape rooms and we will take advantage of this in order to create a frightful atmosphere. The price is based on the group’s dimension and for team building projects it will be defined based on the kind of work requested from the customer. We have already planned some marketing events, like the advertising for a promotional event and some other collaboration. 1.5 MANAGEMENT TEAM & SERVICE PLAN The management team will be composed by the 5 co- founders: Alessandro Braglia (CTO), Lorenzo Casale (CEO), Benedetta Gasparini (CFO), Pietro Madonia (COO) and Flavia Villa (CMO). To complete the staff 5 employees (Game Masters) will be hired. The main activity of the operation department is to create riddles for the rooms and equip the design of them. After the change of the rooms, the enigmas will be stored and re-used for other rooms, if necessary. Escape rooms will be opened from 4:00PM to 00:30AM during weekdays (Monday to Tursday) and from 4:00PM to 2:00AM during weekends (Friday to Sunday). There will also be a museum centered on the asylum’s history. Interior designer and hygiene personnel will be outsourced. 1.6 FINANCIAL PROJECTIONS To start the business, renovate the location, pay the utilities and the security service, will be requested fundings for 1,5M to several European’s fund. We project to have the following revenues. 2017 2018 2019 2020 2021 2 people (10%) 43,352€ 61,618€ 85,993€ 112,942€ 147,739€ 3-6 people (70%) 303,466€ 431,326€ 601,948€ 790,593€ 1,034,171€ 7-14 people (20%) 86,704€ 123,236€ 171,985€ 225,884€ 295,477€ Revenues without VAT 433.522€ 616,180€ 859,926 1,129,418€ 1,477,387€ Revenues with VAT 528,897.20€ 751,739.22€ 1,049,109.90€ 1,377,890.28€ 1,802,411.71€ “The one and only 2. MISSION STATEMENT “The one and only escape room so fascinating, you
  6. 6. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 6 - escape room so fascinating, you won’t want to escape!” Currently we are in the startup stage and we are making continuous progresses to reach our goal: opening on October 31st , 2017. 10 escape rooms themed as follows: 4 horror, 3 with just enigmas and riddles to be solved and the last 3 supernatural. An exclusive contract will guarantee the use of the mental asylum by us only for at least 10 years. We are requesting and obtaining the necessary funds. won’t want to escape!” This is our motto, the mantra that will guide us in the creation of a unique setting for our customers. Using a former mental asylum with a risky and challenging way to start an escape room business but it’s exactly what we wanted: its history will be an unrepeatable key success factor. 3. COMPANY DESCRIPTION 3.1 HISTORY During a Business Plan course at Bocconi University we were forced to create a team and came up with an idea for a new company: here our company started to be shaped. Currently we are in the startup stage and we are making continuous progresses to reach our goal: opening on October 31st , 2017. Our idea will meet the need of a more immersive and realistic experience of the customers of the current escape room’s market. 3.2 PRODUCTS AND SERVICES Our business, thanks to the vastness of the former mental asylum we’ll be using as location, will be made up of 10 escape rooms themed as follows: 4 horror related, 3 with just enigmas and riddles to be solved and the last 3 supernatural related. We chose this 3 kind of settings because they are the most trending in the market right now. We will protect the services offered with a non disclosure agreement signed by the staff (co-founders and employees), companies doing team building activities and other companies with which we will relate as for cleanings. Moreover an exclusive contract will guarantee the use of the mental asylum by us only for at least 10 years. 3.3 CURRENT STATUS Right now we are requesting and obtaining the necessary funds so we could start all the renovation works in a few months, maybe already in the middle of June 2016. Actually the management team is composed by the 5 co-founders displayed in the 7th chapter. The early customer reactions to a promotional video were huge, more then the 90% asked more about our business, a little 5% were curious and ready to try it and only a small 5% weren’t sure about it, but we will engage them too. In the future we will hire 5 employees
  7. 7. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 7 - Right now we have funded the project with our own money. Each founder has a 20% of the company’s equity Worldwide ecosystem of more than 3,673 companies and 7,934 rooms. as Game Masters, to create and control the games in the rooms. It’s important to say that right now we have funded the project with our own money, we don’t have any debt or surrendered any equity. 3.4 LEGAL STATUS AND OWNERSHIP The 5 co-founders own the business and there won’t be any changes in the future. Each founder has a 20% of the company’s equity, as settled in the founders agreement. Since we want the company to grow fast we won’t have any compensation for the first years. To start our business we chose to adopt an s.r.l. form of business. 4. INDUSTRY ANALYSIS 4.1 INDUSTRY SIZE Since the very beginning in 2006, the escape room business had an exponential growth that took the very first escape room in the world, opened in the Silicon Valley, to be part of a worldwide ecosystem of more than 3,673 companies and 7,934 rooms2 . The graph shows the potential actual size of the worldwide market based on solid assumptions. Starting from the bookings of Italian companies and considering the average rooms number, was calculated the annual revenue per room and using this data was found the revenue growth of the entire market. Articles and reports confirmed the guess about the room number for the entire world too. It’s not wrong to expect the market 2 Data from the ESCAPE REVIEWER website: http://www.escapereviewer.com/#!map/c1fzv and ESCAPE ROOM DIRECTORY website: http://escaperoomdirectory.com 0 100.000.000 200.000.000 300.000.000 400.000.000 500.000.000 600.000.000 700.000.000 800.000.000 900.000.000 1.000.000.000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 MARKETREVENUE(in€) YEAR
  8. 8. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 8 - In Italy there are 62 companies located in 29 different cities. reaching the 1B goal within the 2016. In Italy there are 62 companies located in 29 different cities based in 13 out of 20 regions. As usual the percentage of companies per region is not equally distributed and, as the graph below show, the top five positions are taken by: Lombardia, Emilia-Romagna, Piemonte, Campania and Veneto. Instead considering the number of cities in which escape rooms are present, the first two regions are the same while the next three change in the order showing the following ranking: Lombardia, Emilia-Romagna, Veneto, Piemonte and Campania. 4.2 INDUSTRY GROWTH RATES 27,42% 12,90% 12,90% 8,06% 8,06% 6,45% 4,84% 4,84% 4,84% 3,23% 3,23% 1,61% 1,61% Lombardia Emilia-Romagna Piemonte Campania Veneto 17,24% 13,79% 13,79% 10,34% 6,90% 6,90% 6,90% 6,90% 3,45% 3,45% 3,45% 3,45% 3,45% Lombardia Emilia-Romagna Veneto Piemonte Campania #1 ESCAPE ROOM - Silicon Valley 7,934 0 1.000 2.000 3.000 4.000 5.000 6.000 7.000 8.000 9.000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ESCAPEROOMS YEAR
  9. 9. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 9 - Since 2006 escape room number growth at a rate of 53.12% each year. There’s no leader in the industry. Independent rooms have the control of the market. As shown in the graph above, the exponential growth in revenues is also visible in the number of new escape rooms opened. Since 2006, on average, escape room number growth at a rate of 53.12% each year. The European area is the one with the most escape rooms in the world. The fuel for such an impressive growth in mainly composed by all the people aged between 15-44 years, which currently represents the 45% of world population3 . 4.3 INDUSTRY STRUCTURE • 4.3.1 RIVALRY AMONG COMPETITORS − Concentration: As the various reports show there’s no leader in the industry, neither global nor local in each country. There are a lot of different realities that mostly operate locally. So the competition is high, condition that levels the price between 20-30€ worldwide4 . − Degree of product differentiation: There were no possibility to gain a significant amount of data about the franchising weight in this industry, but through all the articles and reports read it can be said that independent rooms have the control of the market (for sure the Italian one). This lead to the highest possible level of differentiation because, despite the attempts of copying other rooms or similarities deriving from employing famous interior designer that have already worked for other companies, each founder (or team of founders) has his own ideas that wants to represent. 3 Data from the GEOHIVE website: http://www.geohive.com 4 Data from the ESCAPE ROOMS website: https://www.escape-rooms.com, MARKET WATCH website: http://www.marketwatch.com and CNBC website: http://www.cnbc.com 16,13% 83,87% Franchising Own Business
  10. 10. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 10 - The industry is growing at an exponential rate. − Impact of fixed costs: The perfect place represents the most important cost for a new business, but as the majority of escape rooms aren’t too big, finding the right spot will not represent an obstacle. − Industry growth: The industry is growing at an exponential rate and since its beginning in 2006 it evolved at an average of 53.12% each year. − Exit barriers: There are no exit barriers so it’s really easy also change the business location if the company needs more space because its growing. The majority of companies rent the space they need to start their business. • 4.3.2 THREAT OF POTENTIAL INCOMING − Entrance barriers: The highest barrier a potential incoming has to face is what a company can offer to its clients inside the escape rooms. − Capital needs: Financially speaking they are quite low, regarding the rent of a proper space. They can increase considerably in case of promotion strategies involving the media (new and traditional ones). − Access to critical resources: It’s easy, the only problem could be finding exactly what you want if you need something special or custom made. − Brand: It’s probably as important as the puzzles inside each room. It helps a company get known recalling a specific feeling just reading the name or remembering an emotion when a customer tried to escape during a game. − Legislative barriers: It depends by one country to another, in some places it’s illegal to close somebody inside a room. Considering how this business easily spread through out the world it seems that legal issues are mostly irrelevant. In any case in Italy there aren’t problems in this way. • 4.3.3 THREAT OF SUBSTITUTE GOODS − Value for money of substitute goods: It
  11. 11. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 11 - Can be considered as a substitute good every product or service that gives the customer a comparable adrenalin rush. Each product has to work properly so to let the final customers experience the best escape game possible. varies from a person to another what to consider as a substitute good. It could be watching a horror movie, that costs around 7€, or try a parachute jump, which costs around 150€. To set a more specific definition, can be considered as a substitute good every product or service that gives the customer a comparable adrenalin rush. − Propensity of clients to change: There are two alternatives: they succeed escaping or they don’t. If they don’t succeed it’s more likely that customers will come back again to defeat the room. Instead if they win they can choose among three different options: 1) Play the game again trying to score a better result; 2) Play another different room; 3) Don’t come back. • 4.3.4 CONTRACTUAL POWER OF SUPPLIERS − Concentration: As the set of needs of an escape room business is really wide, suppliers don’t represent a problem in terms of contractual power. − Existence of substitute products: There are a lot of different options among which a company can select what it needs. − Strategic value of the asset sold to the customer: Each product has to work properly so to let the final customers experience the best escape game possible, but none of the products bought is essential or has just one seller. − Ability to integrate downstream: It’s not a problem because what a supplier does is substantially different from an escape room business, so the change a supplier becoming a competitor are really low. • 4.3.5 CONTRACTUAL POWER OF CUSTOMERS − Negotiating power: Medium § Concentration: Customer doesn’t team up in association or something like that, so they can’t use this factor as a leverage point. § Purchase volumes: Customers
  12. 12. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 12 - Pricing information can be easily found on the company’s website. Each company tries to renovate itself a fixed amount of times during a year. The two main discretional points are if a company offers B2B services or if is a franchise. usually use a try-and-decide process to understand if they like the service offered and if come back again or gift family and friends with vouchers. § Available information: Pricing information can be easily found on the company’s website, instead the inside of each rooms is secret and only a brief description is available online, just to catch the attention. − Price sensitivity: Mostly because of the “fixed price” set by the market, customers don’t care too much about it, but it can be used for signaling if you offer something more and want to be noticed out of the competitors. − Degree of product differentiation: Despite a room designed as part of a franchise, each company tries to renovate itself a fixed amount of times during a year to continuously catch new customers and keep the old one coming to se what’s new. 4.4 NATURE OF PARTECIPANTS There is no such big differentiation between companies in terms of business structure. The two main discretional points are if a company offers B2B services (like team building experience) or if is a franchise. The matrix that follows shows graphically and more clearly, with some examples, the 4 types of companies a customer could find. B2B YES Secret Rooms Enigma Room NO Intrappola.to Trap Milano YES NO FRANCHISE 4.5 KEY SUCCESS FACTORS The company in the industry try to excel in all the six following key success factors: 1. Location: Having an escape room in a building on a crowded street of a big city is already a good point of start and marketing itself. 2. Structure/Building: If the place found has all the necessary things to create a business inside
  13. 13. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 13 - A company should consider also implementing a payment process via its website. The horror theme is growing popularity in the last years. without spending to much money is not bad. 3. Decorations: The style of each room must reflect attention to the smallest detail, so the customers can be more involved in the game 4. Puzzles: The difficulty and the creation of the puzzles is the key for a successful escape room. 5. Price: The customers must perceive that they are paying exactly for what they get or even less. 6. Paying options: The possibility to pay cash or via other means must be considered not only when the customers arrive but a company should consider also implementing a payment process via its website, so the client can book and pay easily and faster. 7. Other services: Offering a team building service is a well valued plus, so a company can open up to more customers. 4.6 TRENDS The escape rooms industry is characterized by the following trends: • Environmental: − Economic: Thanks to the economic crisis the real estate market suffered a lot and today it hasn’t completely recovered, so it’s still easy renting a good place at a convenient price. − Social: The horror theme is growing popularity in the last years, in greater part thanks to the various horror movies. A very interesting data regarding the horror movie industry, that affects positively the escape room business, is its revenue growth since 1995 of 62,22%5 . − Technological advances: Technology is an essential part in every escape room, just for security reasons too. Surveillance cameras are now smaller than ever, but technology is helping companies also building new tricks in escape rooms. Thanks to the continuous improvement the costs related to technology is slower than ever. − Political and regulatory changes: Since 5 Data from THE NUMBERS website: http://www.the-numbers.com
  14. 14. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 14 - In the last three years the escape room game literally exploded. The escape rooms business isn’t still a mature market. 2012 is possible to start a new compny in Italy as an s.r.l.s. (Società a Responsabilità Limitata Semplice. In this way it’s possible to have several cost- related advantages. • Business: In the last three years the escape room game literally exploded, so now getting known is easier as people are more informed about this new alternative experience. 4.7 LONG-TERM PROSPECTS The escape rooms business isn’t still a mature market, so it’s good to enter it now with innovative ideas that can set a competitive advantage for the years to come. Probably, if the growth keeps on going like the past years, the mature state will be reached by 2019-2021. 5. MARKET ANALYSIS 5.1 MARKET SEGMENTATION AND SIZE The Italian market has a 15 Million value and currently is divided in several regions as said in the industry analysis. The highest number of companies and cities with escape rooms is located in Lombardia, which itself produces one third of the entire market value. However our company stays grounded and will start its business targeting a smaller slice of the Lombardia’s market, precisely the Milan area which is the most profitable of the region with its 3 Million value (20% of the overall Italian market).
  15. 15. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 15 - Potential customers in our target area: 3M. In our building we will create all the most profitable escape rooms’ narratives. The population we’ll target is in the 15-55 years old range, with a higher focus on the smaller group of people aged between 20 and 35 years. The older part of our customer base will be composed mainly by people involved in team building experience with companies, this opportunity will be used in two ways: 1. Team Building Experience: We will offer a custom product to create the best engagement possible and let the companies come back, building a strong relation. 2. Marketing: The largest part of people has a family with sons in the proper age to enjoy the game. As they have friends too, this would be a good occasion to create some word of mouth. The total amount of potential customers in out target area is composed of 3M people. 5.2 TARGET MARKET TRENDS In our building we will create all the most profitable escape rooms’ narratives, as we have all the space needed and the right atmosphere too. The most trending themes are: 1. Escape from the unpleasant 2. No narrative, just escape the room 3. Engage with the supernatural As mentioned in the industry chapter, the horror trend is getting more and more popular each year, thank to all the movies and related stuff. This, merged with the outstanding power of communication and engagement represented by the social networks, will be our first mean of reaching our customers. Italian people use social media most than anybody else with an average of 6 hours and half per day, according to a Nielsen research6 . 5.3 BUYER BEHAVIOR We perfectly know that despite people may like scary things like the ones seen in horror movies, some of them need to be “prepared” for what they’ll see. We will prepare different marketing campaigns and different ways to target everyone and everywhere with the minimum costs. Either if customers are horror- passionate or simply want to feel an adrenaline rush, they will be approached in the right way. As our product sorts a medium-high involvement, we 6 Data from the NIELSEN website: http://www.nielsen.com
  16. 16. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 16 - We will be based in the former building of Mombello’s mental asylum, a unique setting that constitutes an absolute advantage compared with the other classic escape rooms. will manage all the processes around our customers’ behavior to make them curious about the game and try it. 5.4 COMPETITOR ANALYSIS We will be based in the former building of Mombello’s mental asylum, a unique setting that constitutes an absolute advantage compared with the other classic escape rooms. From there we’ll target an approximate area with a 40-50Km range that will include the prosperous Milan area, as sad in paragraph 5.1. In our business area we’ll compete with almost all the other companies in Lombardia (16/17 are in a 50Km range from Limbiate, where the mental asylum is located). So we can say that they will be our direct competitors, all the 17 companies, none excluded. The following competitive analysis grid is based on a ranking made by TripAdvisor on Lombardia’s escape rooms ponderated using their scores and total number of votes. NAME CHARACTERISTIC The Asylum Escape Company A Company B Company C Location: Geographic Even Advantage Advantage Advantage Location: Building Advantage Disadvantage Disadvantage Disadvantage Number of rooms Advantage Disadvantage Disadvantage Disadvantage Decorations Advantage Even Even Even Puzzles quality Even Even Even Even Social presence Advantage Even Disadvantage Even Price Disadvantage Even Even Even Paying options Advantage Disadvantage Disadvantage Even Team building Advantage Disadvantage Disadvantage Advantage Regarding indirect and future competitors there’s no much to say, we can make just one consideration: our industry is continuously growing year by year, so it wouldn’t be smart think that the current situation won’t vary. Surely more companies will open in the years to come and we’ll have to fight against them but with the advantage of the exclusive use of the mental asylum area, thanks to an exclusive agreement with the ownership of the building. 5.5 ESTIMATE ANNUAL SALES With a complete analysis of industry trends, competitors, target market and potential growth we
  17. 17. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 17 - assume to have the following revenues in the next 5 years. 2017 2018 2019 2020 2021 2 people (10%) 43,352€ 61,618€ 85,993€ 112,942€ 147,739€ 3-6 people (70%) 303,466€ 431,326€ 601,948€ 790,593€ 1,034,171€ 7-14 people (20%) 86,704€ 123,236€ 171,985€ 225,884€ 295,477€ Revenues without VAT 433.522€ 616,180€ 859,926 1,129,418€ 1,477,387€ Revenues with VAT 528,897.20€ 751,739.22€ 1,049,109.90€ 1,377,890.28€ 1,802,411.71€ The Asylum Escape will be the biggest escape room location in Italy thanks to its 10 different escape rooms. 2 different difficulty levels. Starting from October 2018, every two months we will change riddles in 6. MARKETING PLAN 6.1 CUSTOMERS The Asylum Escape will be the biggest escape room location in Italy thanks to its 10 different escape rooms. The target of our game is people who live in the North of Milan. The potential market is composed by about 3,000,000 people. Their age is between 15 and 59, with a focus on the range between 20 and 35. The graph shows the composition of the population by age in a 50Km area around Limbiate. 6.2 THE ESCAPE ROOMS In order to satisfy different needs, in The Asylum Escape the rooms will have 2 different difficulty levels. People can decide the level of the room in which they will play at the moment of the reservation. The 2 different levels (normal and hard) will differ in the difficulty of the riddles and in the quality and quantity of horror effects. Almost for one year the riddles in the rooms won’t vary, then starting from October 2018, every two months we will change riddles in two rooms at time. This way people can change room every time 15,89% 25,93% 25,73% 22,27% 10,18% 15-24 25-34 35-44 45-54 55-59
  18. 18. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 18 - two rooms at time. The purpose of these changes is to build customer loyalty and keep engagement at a high level. The former mental asylum of Mombello, is an added value for our company. In 1865 it became a mental asylum. Inside it were conducted human experiments so it took on a sinister reputation. Our logo represents the sadly gate of the asylum. The price is based on the number of players. facing different challenges, but also engage with new ones if they completed every room successfully. The purpose of these changes is to build customer loyalty and keep engagement at a high level. The unused riddles will be filed: doing this, with small changes, they can be re-used in future rooms preparation. In the building there will be a storage room for rooms pieces of furniture not used in any room in that moment. 6.3 THE LOCATION The location, the former mental asylum of Mombello, is an added value for our company. Built in ‘500, it was the holiday house of a Milanese noble family. During the Italian’s Campaign, also Napoleon lived there. In 1865 it became a mental asylum where 3,000 people lived. Inside it were conducted human experiments and, also thanks to this, the asylum quickly took on a sinister reputation where the walls became a break between the civilized world and a place full of suffering and sadness. Also Benito Mussolini’s son was hospitalized, and died there. The Mombello’s asylum was closed in 1978 and since then the buildings have been abandoned. The history of the building already gives a horror connotation to The Asylum Escape. We will take advantages of this unlikely celebrity in order to attract curious customers from all around the region. Where it’s possible, we will leave original pieces of furniture and walls of the 1865 asylum, in order to make the customer feel as if he is really in the old mental hospital. Where it’s not possible, we will recreate the rooms thanks to pictures taken when the asylum was used. The state of abandonment which the location finds itself in will give us, through the repair works which will be faced to start the business, the possibility to request funds from the Government as an incentive for the requalification of the facility. Our logo represents the sadly gate of the asylum: in this way our potential customers can easily recognize us because we will use the same gate to create the entrance to our business’ parking. 6.4 THE PRICES The price will change based on the number of players that will want to play.
  19. 19. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 19 - For team building projects, the price will be planned with the client. The Asylum Escape will open its rooms October 31st , 2017. Before and after the opening we will create several advertising campaigns. NUMBER OF PEOPLE A B C PRICE (per person) 30€ 25€ 20€ There will be prizes as gadgets and discount coupons to the ones who will manage to escape from the rooms in less then one hour (which is the maximum time to solve all the riddles). We chose to set a price per person instead a group one to better manage this variable and let the customer understand that we add a price premium for the quality of all our services. 6.5 TEAM BUILDING For team building projects, the price will be planned with the client, depending on the number of people will participate, the purpose the team has to achieve and the number of times that they want to play. For every team building project, an expert will create personalized riddles teaming up with the HR division of the company or who will be devoted to this task. If a company needs it we will also offer a 360° service, with hotel accommodation, shuttle rides and lectures with selected speakers related to the skill a company wants to enhance in its employees. 6.6 DATES & ADVERTISE The Asylum Escape will open its rooms October 31st , 2017. We will take advantage of Halloween in order to launch our new way to have fun. Before and after the opening we will create several advertising campaigns that will be developed mainly in Milan (but not only) near places where we can easily get in contact with our target customers (universities, high schools, pubs, etc). The campaigns will have the main goal of creating buzz around our company. • VAN THEFT: some people, dressed as asylum’s doctors, will kidnap an actor while he’s walking on a street and will bring him into a van, bringing him to the asylum. This will be repeated in different places and different days to let the campaign became viral. The last part of the theft will be leaving a big poster with information about who we are and the opening party. • PROMOTIONAL EVENT: this event will be almost one week before Halloween. It will consist in a horror dinner inside the asylum for our investors and other important people in terms of popularity and power. The event will be
  20. 20. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 20 - Advertising campaigns on the main social networks (Facebook, Instagram, Twitter). The 5 co-founders will manage the business. characterized by a free entry, so everyone will be allowed to enter the party area where he will find: several djs heating up the atmosphere, expert bartenders to serve cocktails, a free parking area inside the park area and all the possible information about who we are and what we do. • COLLABORATION: in order to get the most out of the social media environment we will collaborate with the YouTube channel DMPranks 7 to create several videos scaring people (they will be actors) who tries to enter the asylum. In order to let people know about The Asylum Escape we will also create advertising campaigns on the main social networks (Facebook, Instagram, Twitter) using the material produced during the described activities. The Asylum Escape will offer the possibility for customers, who are interested, to periodically receive information regarding new offerings and changes in the rooms. 7. MANAGEMENT AND ORGANIZATIONAL STRUCTURE Considering the presence of many initial activities and less continuous ones, the initial team will be composed of only eleven people. Basing on a simple structure, there will be 5 co-founders, which will manage the business through the Board of Directors. • Braglia Alessandro: Thanks to his previous experiences and his advanced knowledge in the technology field, he will be able to manage all the digital elements of The Asylum Escape, thus holding the position of Chief Technology Officer. • Casale Lorenzo: Thanks to his previous experiences and the developed know-how in the management of various businesses, he will hold the position of Chief Administrative Officer, thus taking care of the performance of the business and keeping the harmonious proceeding of The Asylum Escape. • Gasparini Benedetta: Thanks to her previous 7 DmPranksProductions, official YouTube channel: www.youtube.com/user/DmPranksProductions
  21. 21. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 21 - The Asylum Escape will hire 5 Game Masters, which will create enigmas and control two rooms each. working experiences in the Finance department of several firms, she will hold the position of Chief Financial Officer, thus being responsible for all aspects of The Asylum Escape’s finances. • Madonia Pietro: Thanks to his previous experiences as coordinator of events and activities in various fields, he will hold the position of Chief Operating Officer, regulating the daily operations. • Villa Flavia: Thanks to her previous experiences in the development of marketing plans in various fields, she will hold the position of Chief Marketing Officer, managing the all-round activities concerning marketing. The Asylum Escape will, moreover, hire 5 Game Masters which will be paid on a monthly basis and for the creation of enigmas and the control of two rooms each. In order to assure a perfectly functioning online payment system, the business will also use, when needed, an expert in online security and payments. CTO Alessandro Braglia CFO Benedetta Gasparini CEO Lorenzo Casale CMO Flavia Villa COO Pietro Madonia Employees (Game Masters) Escape rooms represent a strongly growing business, which is expanding throughout different parts of the world. The central purpose is to let customers live strong emotions and feel challenged enough to agree upon a return try. 8. SERVICE PLAN 8.1 GENERAL APPROACH TO OPERATIONS Escape rooms represent a strongly growing business, which is expanding throughout different parts of the world. In Milan, several similar activities have recently opened; nevertheless The Asylum Escape works towards a more immersive experience, which revolves around engaging and appalling games. One of the main focuses is to transmit the sensation of rush and anxiety, which is supposedly natural and intrinsic in the concept of a horror-themed escape room: for this very reason it’s important to create befitting settings. It is thus reasonable to assert that the central purpose is to let customers live strong emotions and feel challenged enough to agree upon a return try. Therefore, the operations will be geared to:
  22. 22. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 22 - Enigmas and riddles will be thoroughly thought in order to make them fit with the environment and the settings. A core activity will revolve around the creation of motivation to participate in the games with certain regularity. 1) Offer an environment adequate for the chosen location (Mombello’s forms asylum) 2) Provide 2 different levels of difficulty and fright 3) Create a community within which clients can be thrilled by competition All of our goals will be achieved through perfectly coordinated backstage and front-stage activities. 8.2 BACKSTAGE (BEHIND-THE-SCENE OPERATIONS ACTIVITIES) • Riddles and enigmas creation, selection and installation: Enigmas and riddles will be thoroughly thought in order to make them fit with the environment and the settings. Moreover they will be balanced and classified in terms of difficulty, so that it will be possible let people choose the preferred difficulty level. • Riddles and enigmas control and quality checks: It will be fundamental to keep constant track of the status of the riddle, on different levels: material conditions and frequency of resolutions. • Clues and hints: It will be likewise important to measure the impact of timed clues, in order to simplify the solution yet not disrupting the immersion. • Customers’ motivation to come back: A core activity will revolve around the creation of motivation to participate in the games with certain regularity. In order to achieve this goal, it will be important to accurately weight fright, difficulty, dare and fun; this balance will be thus kept in a competitive environment, as The Asylum Escape will work towards a stimulating environment with points and rankings. • Security & Surveillance: Due to the open space around the facility - and the underground tunnels - The Asylum Escape will be provided with an effective surveillance and security system, reassuring both for the business and the customers. • Emergency Plans: Emergency plans will be written in advance and the front office staff will be trained in the procedures. As much as the structure will be wholly regulated and supervised, there will be no space for uncertainty or doubt.
  23. 23. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 23 - For the first period we will be open from 4:00PM to 00:30AM on weekdays (Monday to Thursday) and from 4:00PM to 2:00AM for the weekends (Friday to Sunday). Total number of 10 runs per room on weekdays and 9 per room on weekends. The location is easily reachable by car. If booked in advance there will also be a shuttle. The location can be easily reached by train too. Our location is extremely easy to be reached by people using bus. 8.3 FRONT STAGE (WHAT THE CUSTOMERS SEE AND EXPERIENCE) On October 31st , 2017, we will open our company to the customers. For the first period we will be open from 4:00PM to 00:30AM on weekdays (Monday to Thursday) and from 4:00PM to 2:00AM for the weekends (Friday to Sunday). Then, based on the increasing of the occupancy rate we will extend the opening time reaching a full day equivalent. Given the maximum duration of 60 minutes given to solve the enigmas and 30 minutes (15 at the beginning and 15 at the end) between every game, this should allow a total number of 10 runs per room on weekdays (Monday to Thursday) and 9 per room on weekends (Friday to Sunday). The entrance will be placed next to the parking lot, with a hall where customers will be able to register their presence and wait for their turn. It will be furnished with three vending machines (Drinks - Coffee - Snacks) and sofas for the wait. Furthermore there will be two spacious rooms where men and women will be able to change, considering the possibility for interactive elements during the experience which could dirty the customers. Given the relevance of the environment and the facility, The Asylum Escape will also give its customer the possibility to learn more about the history behind the structure and, more in general, what the former asylum of Mombello was, thanks to a museum which will be created in the ground floor. 8.4 HOW TO REACH US The location is easily reachable by car: there will be a wide car park inside the park, where the asylum is located, reserved only for clients. If booked in advance there will also be a shuttle that will take our clients where they prefer in the surrounding area and bring them to the asylum and back, paying just for the kilometres driven, nothing more. As the location can be easily reached by train too, thanks to a nearby station (only 2Km away from our gates), we will offer a free ride to The Asylum Escape to our guests who request it. Least but not last our location is extremely easy to be reached by people using bus, as there is a stop in front of our gates thanks to the nearby high school.
  24. 24. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 24 - 8.5 INVENTORY As for the inventory, due to the nature of the business, The Asylum Escape is not expected to carry a significant amount of inventory, if not for old enigmas to be reused in the future and small accessories to be consumed in the rooms. Every item which is in a “stand-by” phase will be carefully stored in a specific room in the ground floor. 8.6 SEASONALITY AND PEAK TIMES The Asylum Escape expects a higher customers’ flow during the weekends. During the year, the same prevision could be made for the autumn season, especially in proximity of Halloween. 8.7 OUTSOURCING The Asylum Escape will look for strong partnerships with, mainly, two professional figures: Interior Designers and Hygiene companies. • Interior Designers: they will be contacted in order to organize the structure and the furniture inside the building, after that, it will be an occasional contact. • Hygiene companies: they will represent the most constant contact. The frequency will allow the professionals to adjust themselves to the particular necessities of escape rooms (in terms of positioning of riddles). 9. CRITICAL RISKS As every new business risks are a part of the game, but we are aware of them and ready to solve everything, like the ones who follows: • Lower customers then expected: thanks to our strong social media knowledge and marketing tactics, we will face a lower amount of clients with guerilla marketing tactics. • Higher renovation costs: in case we’ll need more money to cover the upcoming costs, we can access to more European funds or request an higher amount to the ones explain in chapter 10. • Not enough Game Masters in Italy: if this happens we will expand our research also to foreign country.
  25. 25. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 25 - Our primary source of revenues is the tickets sold. 10. ANALYSIS OF FINANCIAL PROJECTIONS 10.1 REVENUE MIX & SALES PROJECTIONS Our primary source of revenues is the tickets sold, based on the usage of the escape rooms. However we do consider having other additional sources of revenues, such as private and optional donations for the museum and the revenues from the vending machines. The pricing mix is based on the articulation of the marketing plan: Number of people Min people per group Max people per group Average people per group Price per person VAT Price per person without VAT Percentage A 2 2 2 € 30,00 22% € 23,40 10% B 3 6 4,5 € 25,00 22% € 19,50 70% c 7 14 10,5 € 20,00 22% € 15,60 20% The initial number of customers that we think we are going to reach for the first year is based on a saturation rate of 25%. In order to calculate our revenues, we additionally found a weighted price, based on the percentages that we think we are going to get from each type of group: 19,11€ (weighted price). As owning or outsourcing a catering service for our business could result too expensive, we are providing vending machines in the building. We are making the assumption of a 10% usage from our clients, spending on average 2€ each. We are going to get 5% on (royalties)8 x (number of annual clients) x (average spending) x (% of usage): 2017 2018 2019 2020 2021 % of costumers using vending machines 10% 10% 10% 10% 10% Royalties on selling 5% 5% 5% 5% 5% Average spending per costumer 2€ 2€ 2€ 2€ 2€ Revenues from vending machines 227€ 322€ 450€ 591€ 773€ The initial number of customers that we think we are going to reach for the first year is based on a saturation rate of 25%: this is an hypothesis based on the number of customers that we are going to acquire with the launch of the venture, estimated on the cost of acquisition from the promotion side and the consequent growth due to the word of mouth. Especially the promotional event will be able to reach an occupancy of 8 Franchisedirect - “Cost of Operating Vending Machine”
  26. 26. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 26 - al least 2,500 people. Due to the optimistic analysis of our potential market and the comparison between the competitors surrounding Limbiate in terms of growth rate, we are assuming that our occupancy and, by the extent, our revenues, will grow with a percentage of 30% every year. We are also assuming a defection rate of 7% every year for those customers that are likely not going to return because they don’t like escape rooms. 2017 2018 2019 2020 2021 Slot Monday 6 7 8 9 10 Slot Tuesday 6 7 8 9 10 Slot Wednesday 6 7 8 9 10 Slot Thursday 6 7 8 9 10 Slot Friday 7 8 9 9 9 Slot Saturday 7 8 9 9 9 Slot Sunday 7 8 9 9 9 Total Week Slots 45 52 59 63 67 Number of rooms 10 10 10 10 10 Maximum capacity in terms of people 90,743 104,858 118,974 127,040 135.106 Percentage of saturation 25% 31% 38% 47% 57% Weekly Occupancy 113 160 223 293 383 Weekly people 613 871 1,216 1,597 2,089 Yearly Working week 37 37 37 37 37 People per year 22,686 32,244 44,999 59,101 77,310 Revenues without VAT 433.522€ 616,180€ 859,926 1,129,418€ 1,477,387€ Revenues with VAT 528,897.20€ 751,739.22€ 1,049,109.90€ 1,377,890.28€ 1,802,411.71€ 3 different group compositions: 10% of 2 people, 70% of 3-6 people groups and 20% of 7-14 people groups. The revenues without VAT could also be broken down and divided into three different group compositions that we are assuming to have, based on the offer of our business: 10% of 2 people (i.e. the couples), 70% of 3- 6 people groups (most common groups based on the competitors analysis) and 20% of 7-14 people groups (other competitors doesn’t have as much space as us). 2017 2018 2019 2020 2021 2 people (10%) 43,352€ 61,618€ 85,993€ 112,942€ 147,739€ 3-6 people (70%) 303,466€ 431,326€ 601,948€ 790,593€ 1,034,171€ 7-14 people (20%) 86,704€ 123,236€ 171,985€ 225,884€ 295,477€
  27. 27. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 27 - 10.2 COSTS • VARIABLE COSTS: Our variable costs will be divided into credit card commissions for the payment on online transactions (as one of our main channel for selling tickets will be our website), consumable goods (such as candles, fake blood, disposable goods, etc. and all those materials used in the rooms which are subjective to change after the usage), cleaning, that we consider to be variable as we will be outsourcing that service when needed (after the “consumption” of the room) and transportation costs of the fuel for the shuttle. The incidence was calculated verifying the fixed prices/revenues. 2017 2018 2019 2020 2021 Credit Cards Commissions 2% 2% 2% 2% 2% Consumable Goods 1% 1% 1% 1% 1% Cleaning and Transportation 7% 7% 7% 7% 7% Total Incidence of Variable Costs 10% 10% 10% 10% 10% Total Variable costs 43,352€ 61,618€ 85,993€ 112,942€ 147,739€ • FIXED COSTS: Our fixed costs exclude the rent of the asylum: we are going to obtain the building as a contract free loan. General & Administrative costs include consulting and legal expenses for the fundings. Marketing takes into account 10,000€ for the promotional event, 7,000€ for web campaigns (development of the website and social media) and 15,000 € for the impact marketing initiatives. Water, electricity and public services will be key utilities for our business. The outsourcing costs are referred to the indirect labor (interior designers, team building speakers and IT consultants). The security will be a high investment too, as we will have to provide appropriate technology (cameras and audio systems), guards and controlling systems, as the area is pretty isolated.
  28. 28. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 28 - 2017 2018 2019 2020 2021 Annual Rent € - € - € - € - € - General & Administrative Costs 30,000€ 30,000€ 30,000€ 30,000€ 30,000€ Marketing 32,000€ 32,000€ 32,000€ 32,000€ 32,000€ Utilities 40,000€ 40,000€ 40,000€ 40,000€ 40,000€ Outsourcing 60,000€ 60,000€ 60,000€ 60,000€ 60,000€ Security 40,000€ 40,000€ 40,000€ 40,000€ 40,000€ Total Fixed Costs 202,000€ 202,000€ 202,000€ 202,000€ 202,000€ The labor cost of the 5 employees (the Game Master) will be considered as a fixed cost, as the riddles produced will be granted as “intangible assets” to be stored for the future customers. 2017 2018 2019 2020 2021 Number of Employees 5 5 5 5 5 Avarage yearly cost per employee 24,000€ 24,000€ 24,000€ 24,000€ 24,000€ Labour Costs 120,000€ 120,000€ 120,000€ 120,000€ 120,000€ SSP incidence on labour cost 1/18 1/18 1/18 1/18 1/18 SSP on Labour Costs 6,667€ 6,667€ 6,667€ 6,667€ 6,667€ SSP Fund 6,667€ 13,333€ 20,000€ 26,667€ 33,333€ 10.3 PUBLIC GRANTS, DEBT AND EQUITY Our initial investment in terms of renovation of the building will be huge: we got a quotation from a construction company of 1,000,000€. In addition, we calculated a 360,000€ amount for restoration and indoor/outdoor furniture purchases, in order to equip the 10 rooms, the toilets, the receptions, the lockers and changing rooms, the gardens and the showcases for the museum. The purchase of the shuttles is also included here. All of these costs are considered as “launching costs”, so we will be able to depreciate them for 10 years, following the actual Italian regulations. 2017 2018 2019 2020 2021 Investments 1,380,000€ € - € - € - € - Cumulated Investments 1,380,000€ 1,380,000€ 1,380,000€ 1,380,000€ 1,380,000€ Depreciation charge 10% 10% 10% 10% 10% Investments Depreciation 138,000€ 138,000€ 138,000€ 138,000€ 138,000€ Depreciation Fund 138,000€ 276,000€ 414,000€ 552,000€ 690,000€
  29. 29. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 29 - We will finance our launching costs by having access to Public Grants. We will constitute a s.r.l. company, with the equity divided into 20% of quotes between the 5 co-founders. The venture is new and doesn’t already have an history, so it’s really difficult to access to a long-term debt. Generally, most of the fundings in this sense come from self-funding. Other than this aspect, we were told by Marco Trombetti (founder of translater.net) that we won’t be helped by business angels or venture capitalists, as our business is not scalable. We can’t access to the equity crowdfunding either because we aren’t an innovative business and we don’t detect any patent. The best option for us in order to finance our launching costs, is having access to Public Grants for the first year, in order to access to non-repayable money. We’ve talked with two different consultants and we could gather a total amount of 1,500,000€ divided as it follows: • Bando ISI INAIL: it accousnts for 40% of our expenses for the purpose of adapting structures to the safety national regulations (maximum of 276,269,986€). • Contributo a fondo perduto: for 50% of the expenses with the aim of valorize the tourism and the local heritage/asset/holding (maximum of 6,427,500€). In order to get this fund, we will build the Mombello’s museum in order to promote culture and history of a local region. • The warranty program for young enterprenuers: a slight part of the grants will be financed with this. It’s a grant dedicated to self-employers and self-enterprenuers between youngsters from 18 to 35 years old (maximum of 2,300€ per person). The rest of the costs (outsourcing, utilities and security) will be covered with the remaining 120,000€ for the first year of usage of the building. All the other costs (general & administrative and marketing) will be initially covered by self and family equity. We will constitute a s.r.l. company, with the equity divided into 20% of quotes between the 5 co-founders. The business partners will sign for 20,000€ each, so the overall equity will be 100,000€. We do not suppose an increase of capital for the next years. The situation described could be summarized as it follows:
  30. 30. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 30 - 2017 2018 2019 2020 2021 Common Stock 100,000€ - € - € - € - € Cumulated Stock 100,000€ 100,000€ 100,000€ 100,000€ 100,000€ Foundings 1,500,000€ - € - € - € - € Cumulated Fundings 1,500,000€ 1,500,000€ 1,500,000€ 1,500,000€ 1,500,000€ As we have already stated, we will not be able to obtain a long-term debt. Furthermore we supposed an interest rate on short-term debt on deposit with the bank of 3.5% (bank overdraft). We are also making different hypothesis on our DSO and DPO: the clients pay with their cash at the moment of the purchase of the tickets, so our DSO is basically 0. On the contrary, we ask for 30 days to be able to reward monetarily our suppliers (of utilities, outsourcing, security and cleanings). 2017 2018 2019 2020 2021 DSO = Days Sales Outstanding 0 0 0 0 0 DPO = Days Payable Outstanding 30 30 30 30 30 Long Term Debt € - € - € - € - € - Interest Rate on Short Term Debt 3.5% 3.5% 3.5% 3.5% 3.5% 10.4 BALANCE SHEET, INCOME STATEMENT AND BREAK-EVEN-POINT Following the previous analysis, the income statement projections for the first 5 years are:
  31. 31. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 31 - 2017 2018 2019 2020 2021 Revenues 433,522€ 616,180€ 859,926€ 1,129,418€ 1,477,387€ Total Variable Costs 43,352€ 61,618€ 85,993€ 112,942€ 147,739€ Contribution Margin 390,170€ 554,562€ 773,934€ 1,016,476€ 1,329,648€ Labour Costs 120,000€ 120,000€ 120,000€ 120,000€ 120,000€ SSP on Labour Costs 6,667€ 6,667€ 6,667€ 6,667€ 6,667€ Total Fixed Costs 202,000€ 202,000€ 202,000€ 202,000€ 202,000€ Depreciation 138,000€ 138,000€ 138,000€ 138,000€ 138,000€ Royalties 227€ 322€ 450€ 591€ 773€ Other Revenues 150,000€ 150,000€ 150,000€ 150,000€ 150,000€ EBIT 73,730€ 238,217€ 457,717€ 700,401€ 1,013,754€ Interest on short-term debt € - € - € - € - € - Pre-Tax Income 73,730€ 238,217€ 457,717€ 700,401€ 1,013,754€ Income Taxes 36,865€ 119,109€ 228,858€ 350,200€ 506,877€ Net Income 36,865€ 119,109€ 228,858€ 350,200€ 506,877€ Cumulated net income 36,865€ 155,974€ 384,832€ 735,033€ 1,241,910€ We expect a steady increase of both net income and revenues. The fundings will be depreciated for 10 years and considered as a form of “other revenues”, just like the Italian regulations deal with this extraordinary item in this particular case. Due to our high fixed costs we will be able to break-even in 2018, after 24,420 customers in terms of overall capacity and 518,519€ in terms of revenues. The explication of the calculations is stated below: 2017 2018 2019 2020 2021 Fixed costs 466,667€ 466,667€ 466,667€ 466,667€ 466,667€ Contribution margin % 90% 90% 90% 90% 90% Contribution margin per unit 19.11 19.11 19.11 19.11 19.11 Break even point (in terms of n° of customers) 24,420 24,420 24,420 24,420 24,420 Saturation Capacity in BEP 27% 23% 21% 19% 18% Break even point (in terms of revenues) 518,519€ 518,519€ 518,519€ 518,519€ 518,519€ Safety edge - 84,996€ 97,661€ 341,408€ 610,900€ 958,868€ Safety edge % - 20% 16% 40% 54% 65% The balance sheet for the first 5 years is made up of:
  32. 32. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 32 - ASSETS 2017 2018 2019 2020 2021 Accounts receivable € - € - € - € - € - VAT receivable 263,156€ 186,948€ 63,015€ € - € - = Operating current assets - 263,156€ - 186,948€ - 63,015€ € - € - Fixed assets 1,380,000€ 1,380,000€ 1,380,000€ 1,380,000€ 1,380,000€ Depreciation fund 138,000€ 276,000€ 414,000€ 552,000€ 690,000€ = Net fixed assets 1,242,000€ 1,104,000€ 966,000€ 828,000€ 690,000€ = Total Assets 978,844€ 917,052€ 902,985€ 828,000€ 690,000€ LIABILITIES AND EQUITY 2017 2018 2019 2020 2021 Fundings 1,500,000€ 1,500,000€ 1,500,000€ 1,500,000€ 1,500,000€ Ammortation Funding 150,000€ 300,000€ 450,000€ 600,000€ 750,000€ Accounts payable 19,784€ 19,784€ 19,784€ 19,784€ 19,784€ SSP fund 6,667€ 13,333€ 20,000€ 26,667€ 33,333€ VAT payable € - € - € - - 9,474€ - 20,403€ Income taxes payable 36,865€ 82,244€ 109,750€ 121,342€ 156,677€ = Operating current liabilities 1,413,316€ 1,315,361€ 1,199,533€ 1,057,761€ 939,120€ Long term debt € - € - € - € - € - Short term debt (bank overdraft) € - - 771,082€ - 1,006,038€ - 1,414,995€ - 2,097,907€ = Financial debt - 607,248€ - 771,082€ - 1,006,038€ - 1,414,995€ - 2,097,907€ Common stock 100,000€ 100,000€ 100,000€ 100,000€ 100,000€ Retained earnings 36,865€ 155,974€ 384,832€ 735,033€ 1,241.910€ Net income 36,865€ 119,109€ 228,858€ 350,200€ 506,877€ = Equity 173,730€ 375,083€ 713,691€ 1,185,233€ 1,848,787€ = Liabilites and equity 979,797€ 919,361€ 907,186€ 828,000€ 690,000€ As we can see from the table, the working capital remains really low because of: • the absence of the inventory (as we are offering a service and the low inventory that we keep for some disposables isn’t part of our core business) • the absence of accounts receivable as we get cash directly from the transactions • the presence of accounts payable kept for 30 days • SSP funds which are really low compared to the previous items • the VAT which will be receivable for the first 3 years due to our high costs
  33. 33. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 33 - • the income tax payable which are going to increase along with our net income 10.5 SIMULATION MODELS While we were shaping our financial forecasts, we made different assumptions based on the key variables, on which we are not sure about because they have yet to be tested. As a result, we built different simulation models trying to see how our net income will vary with a change in the: • Annual growth rate of the occupancy: each year we suppose the growth will be around 30%. We are making projections for the best scenarios (35% - 40% yearly growth) and the worst scenarios (20% - 25% yearly growth). • Annual defection rate of the customers: we want to maintain this pretty low, as having 10 rooms allow our customers to return to our place more frequently, so we supposed a 7% of decrease. The best scenarios are 3% and 5% (which however are really low) and the worst scenarios are considering a defection rate of 10% and 15%. • ∆% of 3-6 people groups (the groups which constitute our main target) • ∆% of 2 people groups (customers who are not our main target and from which we don’t expect a lot of traffic). The remaining percentage of 7- 14 people groups will be automatically fixed. To summarize, in our financial forecasts we used the data that will appear in the center of the simulation models below. • 1st MODEL: how the net income varies with a change in the saturation capacity starting from the second year, as the growth will be based on the word of mouth, advertising and consequent increase of occupancy. The variables are the first two stated above. − Second year: 119,109 20% 25% 30% 35% 40% 3% 105,575 116,853 128,131 139,409 150,688 5% 101,064 112,342 123,620 134,898 146,176 7% 96,552 107,831 119,109 130,387 141,665 10% 89,786 101,064 112,342 123,620 134,898 15% 78,507 89,786 101,064 112,342 123,620
  34. 34. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 34 - − Third year: 224,559 20% 25% 30% 35% 40% 3% 188,115 218,358 249,867 282,642 316,682 5% 176,371 206,109 237,112 269,380 302,914 7% 164,831 194,062 224,559 256,321 289,349 10% 147,899 176,371 206,109 237,112 269,380 15% 120,693 147,899 176,371 206,109 237,112 − Fourth year: 350,200 20% 25% 30% 35% 40% 3% 279,352 337,898 401,444 470,197 544,360 5% 257,288 313,891 375,412 442,058 514,033 7% 235,978 290,671 350,200 414,772 484,590 10% 205,399 257,288 313,891 375,412 442,058 15% 158,020 205,399 257,288 313,891 375,412 − Fifth year: 506,877 20% 25% 30% 35% 40% 3% 386,272 485,507 597,722 724,003 865,480 5% 349,978 444,315 551,210 671,732 806,992 7% 315,529 405,131 506,877 621,817 751,046 10% 267,176 349,978 444,315 551,210 671,732 15% 194,928 267,176 349,978 444,315 551,210 Even considering our worst scenarios every year (the ones highlighted in red), the net income is still satisfying. • 2nd MODEL: how the net income will vary with an alteration of the composition of the different groups. In this model we are considering only the first year. In fact, learning from that and testing the market, we will be able to know which will be the composition of our groups and we will base the following projections for the future on these data. The net income’s forecasts considering the second two variables stated above are:
  35. 35. CONFIDENTIAL INFORMATION Business Plan - May 2016 Milan, ITALY For more information please contact us at lorenzo.casale@hotmail.it - Page 35 - Groups of 3-6 people Groups of 2 people 36,865 50% 60% 70% 75% 80% 5% 79,561 64,117 47,795 39,306 30,597 7% 75,863 60,119 43,498 34,859 26,000 10% 70,129 53,935 36,865 28,001 18,918 12% 66,182 49,689 32,319 23,306 14,073 15% 60,075 43,133 25,314 16,076 6,619 The interesting fact is that our most profitable combination in terms of net income would be composed by a 50% of 3-6 people groups, a 5% of 2 people groups and a 45% of 7-14 people groups. On the other hand, our worst scenario would be keeping really high (80%) the 3-6 people groups and really low the % of 7-14 people groups (5%), with a 15% of 2 people groups. Given the fact that the 3-6 people groups are the main target of our competitors, we should try to implement a strategy that underlines how our rooms are big and different. This could attract the 7-14 people groups that our competitors can’t afford to draw and it could surely boost our profitability.

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