New Business Concept

[rcslimited]

hi people,
 
i have a business idea, its basically an indoor entertainment complex comprising of laser tag, crazy golf, indoor go-carting maybe and an arcade and restauraunt.
 
im 22, have a degree in marketing and no money whats my chances of pulling this off with a business loan? our area is severely lacking in entertainment facilities, and im positive this place would sell itself, i am confident i could write a decent business plan but going back to my age issue, how best would i go about it? and would something of this size be better set up as a ltd company, as protection on my own assets?
 
also would it be better to set up as a company prior to applying for loans?
 
cheers,
rcs

[Business Brian]

It sounds very similar to the MegaBowl model - laser tag, bowling, arcade, diner, bar, kids parties, office parties, etc.
 
 It also sounds remarkably expensive.
 
 I should hate to sound the downer, but my own experience is that business loans and grants are effectively the cream for adding to an already present body of funds - as per the old business maxim of "you need money to make money". If you are seriously looking at building a leisure complex my own perception would be that you;re looking at a budget reaching into millions, and persuading anyone to give you millions might be rather awkward if you have no assets to back the project up with.
 
 Ultimately, you could always try interesting local companies to invest - but I suspect it would take you years to get anywhere - if at all - and you would be constantly havint ot persuade extremely shrewd and extremely sceptical people as to why they should risk funds what is essentially a high-risk investment.
 
 Also - if your local area is lacking in entertainment facilities it is worth asking if there is actually a provable market to sell to there. Everything about your idea hinges on that - and you would not be able to provide a real answer to anyone unless you polled a good few hundred users at least as a market research project.
 
 My 2c, anyway. Hope it doesn't sound too much of a downer.

[rcslimited]

no, the price isnt running into millions. perhaps 200,000 tops. the lease of the arena would cost several thousand a year and the laser tag license + fittings would cost about £50,000. 38 for equipment and 12-20 for internal fixtures and fittings.
 
Ok, so maybe the overral model is slightly misplaced. And perhaps consideration into defining my product as a single of these objectives rather than a complex offering them all. say, perhaps, laser quest alone, and run it as an official tournament arena. purpose built to host nationwide championships etc. a marketing plan similar to a yearly league system, with prize money, player of the tournament etc....
 
also I live in sunderland, and the location ive got planned is half a mile from the city centre and is the top floor of a current bowling alley - which already has a steady stream of customers. additionally, it is based but 10 minutes from a university campus which should ensure a steady and chanigng customer base on a yearly cycle...
 
there are no laser tag complexes in the region, so not only could i target my own city but the surrounding ones.
 
and finally, i also want to promote it along the lines of a place to go for corporate events and team building exercises, similar to the paint balling system of today...
 
so, say if i had...10,000 of my own capital and a limited company, do you think my chances of pulling this off would increase?
 
500 customers a month spending on average of £10 at the complex gives me a potential £50,000 per year, not including corporate events or children;s parties or the sign up fees for laser tag teams and tournaments (3 leagues perhaps - different age groups, £100 entry, £10 a game per team, 15-20 teams per leage - 1 game per week? kind of set up) I reckon an overall turnover of 70/80,000 less expenses etc. and a final profit of about 30/40k per year....that should be enough to recompense a £200,000 loan....dont you think? or am i being more than ambitious?
 
perhaps the idea is a little up in the air at the moment but as a general business concept?

[Business Brian]

Don;t forget to add 50% for "unaccountables".
 
 That means all the expensives that you can't budget for. For example, last I heard, the lasers in the laser tag guns were a few hundred each to replace. Having once worked in a laser tag environment, many years ago, I can assure you that the guns are repeatedly broken - just a few knocks and then the laser crystal is racked useless.
 
 Overall - you're main concern isn't good dieas - it's finance. And if you want finance you are absolutely going to have a full list of costings to show pontential investors.
 
 I know I'm benig something of an absolute downer, but my own experience is that you're facing up a very big hill. If you don't have a good third of the funding yourself already then your whole project sounds very high risk, and not many people are going to back such a horse, if at all. I'll tell you now, business people are not simply very shrewd, but unless it makes them money quickly, they are usually very very tight with their wallets.

[rcslimited]

no, youre not being a downer at all.  its good to get some concise and critical input, for without it we'd never get better or refine our ideas.
 
and during your first year licensing, replacement lasers are free ;-)
 
and from what i have gathered, investors are interested on return, not necessarily speedy return BUT I believe in this instance you may be right.  I will still run up this hill though.  I reckon I could perhaps gain 10-15,000 from grants and personal loans...but I see what youre saying, perhaps the fact that I do not have anything to set against my loan, I would be very high risk...but is it a misplaced belief that investors arent really interested in a genuinely good, exciting business plan? and are only interested in return?

[Business Brian]

Hey, good luck for you all the same.
 
 Even if this particular project doesn't necessarily turn out the way you would prefer - it will provide invaluable experience in setting up any other business ventures.
 
 Overall, though, you absolutely need to sound convincing - you must sound like you know exactly what you're talking about, to being able to justify every single figure you mention, with real research and accounts information to back up your assertions. So when you say 500 sales per month - you must know the general maintenance costs for that period, as well - of course - as a breakdown of how you actually acheived those 500 sales in the first place - full business, marketing, and advertising plan.

[EquusBusinessFinance]

Brian has given you some sound advice there.
 
This would be a very difficult project to finance, because there are many unknowns, particularly the size of your market place.
 
You figures of 500 sales a month might be feasible in the long term, but how will you get over the initial build-up period while your venue is relatively unknown to your customers, and your advertising costs are high to attract those customers.
 
Another factor which disdvantages you, is that you are talking about leasehold premises, so there is not even a property, or any other major asset, which a lender could recover in the event of the business failing.
 
Unless you are very lucky and find investors that you could befriend, you will always find that investors are looking for one of only two things:-
 
1. A very safe investment that returns a good yield.
2. A risky investment that returns a spectacular yeild from a minimal investment.
 
Your project does not meet the criteria for number 1, and your yield projections do not meet the criteria for number 2.
 
Sorry to be so damning about your project, but you have to be realistic about these things.
 
Your only possibilities are friends/relatives who would raise funds on your behalf to get you started, or a lucky contact with a wealthy investor who might be interested in the concept from a personal interest.
 
The way to look at these sort if projects is to consider whether you would lend your own personal money to someone who approached you to fund them, in the full knowledge that you could probably lose the whole amount.
 
I especially wish I could help you, as I originally come from Hetton-le-Hole, about 8 miles from Sunderland.
 
Hope you have some luck in sourcing your funds, and, if you don't, keep looking for the next idea ...... you'll get there eventually.

[rcslimited]

thanks for the advice david, that was some very sound stuff. the idea is in a very early stage and i was just musing more than anything else, i wanted to 'get the feelers out' if you can see what i mean. Having now received some good criticism and sound advice, the answer to my initial question has been answered and unless i can come up with something in criteria 1 or 2, at 22 with no assets, I got bugger all luck at pulling it off ;-)
 
thanks guys,
i will return to demystify my doubters, all shall see....BECAUSE, my next project is carbohydrate free delicacies...picking up on the current fad in consumer eating habits and the increased pressure from official bodies to make schools provide 'healthier' options, im going to try and come up with a range of delicacies (that i can patent of course) that meet the requirements of some of today's popular diets....
 
whilst at the same time opening up 'An All You Can Takeaway' store. £5 for a carton, go in, fill it up as much as you like with whatever we've got then get the hell out of there and go home
 
plenty more to come....

[Business Brian]

Carbohydrate free? Sounds like Atkins territory.
 
 Big market, and darn competitive to SEO for.

[rcslimited]

yeah, it is, brian, atkins, zone, all these celebrity low carb diets which ( i knwo for a fact exist because my fiancee tells me every other week when she receives her magazines ) are very popular at the moment.  Its also quite a nice little niche with lots of growth potential im thinking - obesity britain etc etc. so if you can jump on the lucrative 'healthier living' bandwagon with a line of sweet delicacies (which are so far very rare) or some kind of snack food that people actually like and protect your investment with patents (?) [either the production process or the product itself] then you'll be in a nice little place to license out...
 
yeah, i know with regards to seo though that that particular field is very competitive and I wouldnt even bother trying to get in on the market that way.   would be face to face sales teams i think, to wholesalers and retailers, with a 'buy this amazing low carb sweet and we promise the current upturn in low carb dieting will shift it off your shelves' kind of sales pitch.
 
As this is a concept forum, what do you think?  
 
all i need to do

[Business Brian]

Heh, you've got lots of good ideas - all you seem to be missing is a manufactured product you can really work with.
 
 Ideas are good, but the manufacturing can be really messy business - I'm talking to some people who make child-safety loks, about taking over their marketing for them. They overproduced and their original marketing company simply left the whole project still-born. So the sales have been almost non-existent, and the factory staff had to be laid off. The joys of manufacturing.

[rcslimited]

really?  whats your prong of attack then? SEO?  I dont know if the market will be susceptible to child-loks online  You could always try ebay ;-) theyre usually good for shifting a bit of unwanted stock.
 
I WANT to get into manufacturing (as well as anything else that can make me money ) but I will only consider manufacturing something I can protect, otherwise, going back to earlier discussions - no one will be interested.  cant your company licence out their manufacturing process/plans etc for the child loks and just let somebody more suitable deal with the selling of it?  Is there a market for child locks?  What kind of child locks? just for normal doors or something?
 
it seems a little bit of a waste if all they have to do is sell the product...

[Business Brian]

Whoops - my bad - I'm awful for typos these days - trying to type too fast, methinks.
 
 locks, not loks.
 
 SEO is my favoured aspect of internet marketing - because it's more lasting visibility. AdWords and general PPC is great for instant visibility - but you lose it as quick as you get it. Ideally, both together would be complimentary for a start up - but SEO simply costs myself time, whereas AdWords costs time AND money.
 
 As for the child-safety locks - everything is up in the air at the moment. Basically, they own European rights to a product, but they have overproduced and undersold. I'm writing them a report next week comparing what it'll cost them to get the project marketed across the internet. Ideally, I'm looking at profit sharing because an over-produed product means little available in liquid assets. They have already intimated that they may not have the money available that they really need for a sustained campaign.

[EquusBusinessFinance]

rcslimited,
 
Your idea about carbo-free drinks.....
 
I was recently dealing with such a project, not that precise thing, but a health-related drink.
 
It cost £2million for initial development, testing, licencing, etc and now needs an investment of £10million+ just for marketing. This sort of stuff starts falling under all sorts of EU regulations, and it costs big-time to get the necessary approvals. It's also taking 5 years to reach this point.
 
Rewards are enormous, but chances of raising the money are slim.
 
 
Your own ideas about utilising a sales force ... have you considered how much a sales force would cost to run.
 
 
 
I make my living raising finance for businesses, and I can tell you categorically that without assets, its extremely difficult to raise finance. I know that sounds like a chicken and egg situation, but its a fact.
 
The best way to get started in business today, with very little investment, is without a doubt ....... The Internet.
 
Find or create a product you can sell online, and spend your time promoting it online.
 
You seem to have a fertile mind, you just need to harness it, and give it direction, persevere and you'll eventually come up with an idea that you can turn into a successful business opportunity.