The author, John Marek, is executive director of the Anson Economic Development Partnership.
Last week, I met with an entrepreneur who is considering opening a “fun center” in Wadesboro. As part of that conversation I promised to post that information on Facebook so that she could gauge the level of interest. To date, that post has received 139 “likes” and 91 comments. It has been shared 79 times. This is, by far, the most Facebook engagement we have had for a single post in the three-plus years our page has been active. Perhaps more surprising, virtually all of the comments have been positive. So, the “fun center” is a slam dunk, right?
Remember last week’s column, “That’s not how any of this works”? Well, here we are. There is no question that young families in Anson County need a child-specific entertainment venue and would support one to the best of their capabilities, but the real problem is determining whether it makes sense as a business.
First of all, the potential entrepreneur is definitely qualified in terms of education and experience, and she does not have unrealistic expectations of the venture. She has explored possible locations and has learned the truth that those in my business deal with daily; the “perfect” place is probably too expensive. Several of the Facebook comments said that it would need to be in a “nice” and “safe” location. I agree that is the paramount consideration. No parent is going to drive their child to a sketchy part of town and let them enter a makeshift establishment.
Further, bouncy houses are space hogs. To make it a worthwhile venture, the business would need a minimum of 6,000 square feet. The “perfect” Wadesboro location meeting all these criteria costs $4,000 per month in rent.
Supervision is another important consideration that was mentioned on Facebook. Many similar establishments require parents to be present, along with their children. That makes sense up to a certain age, but even so, a reasonably well-trained staff is going to need to be in place. Assuming the fun center would be open at least eight hours on at least six days per week, monthly labor costs would likely run between $1,000 and $1,500, and that’s assuming a reasonably lean staff.
Of course, even with the best staff, incidents are going to happen, and in today’s overly litigious society, any establishment dealing with children is going to have to be insured to the gills, lest Little Johnny scrape his knee and get a multimillion-dollar settlement.
Add in utilities, maintenance and advertising, and the monthly operating costs for a fun center would likely be somewhere around $8,500. That’s just a back-of-napkin sketch, but it should be in the ballpark.
So, where are those dollars going to come from? Given the scenario above, the establishment would be open about 190 hours per week. To break even on operations, the fun center would need to produce an average of $45 each hour it was open. That may not sound like a lot of money, but to deliver that day in and day out over an extended time would probably be a challenge.
If we do a very rough extrapolation of census figures, we can conclude that there are about 1,200 families in the county with at least one child between the ages of 3 and 12. Let’s say, rather conservatively, 30 percent of those families are not in a financial position to afford any additional expenditure on entertainment under any circumstances. That leaves a potential customer base of 840 family units. Of those, perhaps 50 percent could only afford to visit once per year for a special occasion, and would likely be quite limited in their spending during that visit.
The real active market is 420 families. To break even, the fun center would need each of those families to spend $20 per month, every month. The question becomes, does that seem reasonable?