9 Steps to Develop a Family Fun Center
By John Gerner
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The study should also project potential financial performance and provide
guidance on the total development costs needed to achieve a worthwhile return-on-investment
to investors. This amount needs to be high enough to provide the "critical
mass" of experiences needed to achieve its market potential, yet avoid overbuilding.
An FEC can often be expanded later if needed, but downsizing is generally very
difficult. With the feasibility study in hand, you're ready to continue moving
forward.
Sixth, you should prepare a detailed business plan
for your proposed family entertainment center. Its purpose differs from the
feasibility study. The feasibility study is prepared by an outside expert and
hopefully demonstrates the potential of your proposed FEC. If not, you will
need to make changes to the concept and/or location. Even a positive feasibility
study does not predict or guarantee success. Instead, it shows the potential
performance if the FEC is developed and managed effectively.
The business plan shows how you plan to effectively
develop and manage the FEC so that it will achieve the potential identified
in the feasibility study. Although the business plan may partially
or completely be prepared by outsiders, it is ultimately your document.
It will need to persuade skeptical readers that you can actually make
this happen. They will look hard at the top people involved in the
project that are described in the business plan, and will want comfort
that these individuals are qualified.
Seventh, you may need initial
design and concept development work as part of the complete package to
present to prospective investors and lenders. I'm not a designer, so I
won't speak for that profession concerning this particular step. There
are many fine design firms in our industry that will be happy to discuss
this with you and you should begin talking with them early in the planning
process. There may also be other consultants needed to effectively move
the planning process forward.
Eighth, you may need to bring in other equity investors.
Banks and other lending institutions will rarely provide all of the funds needed
to develop the FEC, so the remaining amount has to be provided by equity investors.
Since the lenders will likely have liens on the assets of the FEC, the equity
investors have higher risks, but also have the potential to reap the higher
rewards from a successful operation.
Ninth, you have funding in place and are ready
to begin construction. If you've made it this far, you've accomplished quite
a bit and should take a moment to celebrate. More challenges lie ahead, but
you're well on your way.
John Gerner is managing director of Leisure Business Advisors LLC, which
specializes in providing feasibility studies for new attractions. More information
can be found at www.leisure-business.com. He can be reached at johngerner@leisure-business.com
or 804-644-3544. |
