Are you looking for a way to nail down your capital options and find the funds you need to start your indoor playground business? Let’s quickly go through how you can secure capital and pick the route that works best for your bottom line.
Before even thinking about lenders, you need to know what your total build-out is going to cost. Although labor is typically included in your quote from your indoor playground equipment supplier, every other budget category can spiral out of control if you’re unprepared. Pay close attention to your recurring fixed costs after installation.
Remember, also: Property leases can change annually based on market forces. Utilities and property insurance can also increase if you do not shop around and lock in rates.
There’s an old saying, “Focus on the toy and not the playroom.” This refers to novice entrepreneurs who get wrapped up in the colorful structures without considering how much it will cost to maintain those assets.
As you speak with bank representatives and investors, make sure you consider the expertise of your indoor playground equipment supplier. They should be able to provide some insight into projecting maintenance costs and monthly insurance premiums.
If you are a seasoned developer or business owner, your first stop may be the local “brick and mortar” commercial bank or credit union. These institutions are great because you know what you are getting, regarding interest rates and monthly payments. For qualified borrowers, they can also offer the lowest interest rates around.
Look for banks that understand your product. Although any structure from a trusted indoor playground manufacturer will hold its value better than something mass-produced “off-the-brand,” some banks have more experience funding these projects than others.
Showcase your knowledge of upkeep and maintenance when speaking to bank reps. If they think your toys are a depreciating asset, they will calculate your payments differently. Be sure to give yourself at least a three-year runway on financial projections, as some lenders want to see higher earnings before approving your loan.
The Small Business Administration has several different programs that can help aspiring indoor playground business owners. Our favorites are the SBA 7(a) and SBA 504 loans because they require less money down and have longer repayment terms than traditional commercial financing.
As with any loan, the SBA wants to see that you can pay the money back. However, since they guarantee a portion of the loan, banks are often more lenient to non-startup businesses. Having a detailed business plan that outlines your research will go a long way when you speak to someone.
Including that you will be purchasing your structures from an indoor playground manufacturer that has years of experience building these types of attractions can also help ease any lender’s fears.
There are banks out there that truly don’t understand how an indoor playground turns a profit. If that happens, it’s recommended to try speaking to equipment financing companies.
Typically working with your indoor playground builder, these firms can offer lease-to-own options or equipment-backed loans that can be decided upon faster than a bank.
Benefits of equipment financing:
Check with your indoor playground equipment supplier to see if they offer this service. Since these lending companies work with them directly, your paperwork will move more quickly.
Brand sponsorships and government grants are often overlooked ways to pay for your indoor playground. Companies like McDonald’s, Burger King, and others have zones within their playgrounds branded by local charities and franchises.
Visit your local Chamber of Commerce to see if there are any business grants available. Some states even have grants for “healthy living” for children and adults.
If you plan on using any high-end components from your indoor playground builder, please keep this in mind as you draft your business plan. Certain simulations and coordinating sensory elements could qualify your business for free money.
Like any business decision, it comes down to how much cash you have in your pocket. If you own the facility, your best bet is always going to be an SBA 504 loan. If you are renting space in a strip mall with tons of traffic, equipment financing can be a great way to open your doors and start collecting revenue.
No matter which route you decide to take, we recommend doing what is called a “Sensitivity Analysis” on your business plan. This includes troubleshooting:
If you answered “no” to more than one of these questions, you may want to table the loan process until you have more capital or a stronger business plan.
Now that you have your funding lined up, it’s time to start the fun part and work with a company that has your best interests in mind. At Next Level Parks, we take pride in being a customer-focused indoor playground manufacturer and one of the leading Attraction & Entertainment Solution companies in the industry.
Not only do we offer some of the safest indoor playground equipment available, but our team works with you to design a playground that will continue to generate revenue year after year.
Give us a call and request a consultation with one of our team members. We can help you maximize your investment with exciting designs and industry-leading components.
Want To Know More? Download our Brochure to receive a breakdown of our commercial indoor playground equipment solutions.
