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Creating a Haunt Business Plan
By Steve Smith

 

Deciding to get into the "Boo Business" can be as simple as going to a local Haunt, waiting in line with several thousand other people, and after touring the attraction, you realize that you could do better. So you attend the National Halloween, Costume and Party Show in Chicago and start filling out purchase orders. But before you get too far down this path, think very hard about the time and money you are about to invest. Are you sure that you can do it better than the other Haunts in town? Better yet, do you even know how well they do? Are they profitable? How many patrons actually pass their gates each season? Can you afford to make a bigger, better attraction than theirs? What will make customers come to your Haunt instead? These are but a few of the questions you need to answer before you buy your first prop!

"By the Book" is a new section of Haunted Attraction Magazine. In this series we will introduce the aspect of real business sensibilities into the artistically-driven Haunted Attraction industry. All of us take our Haunts seriously; however we tend to get tied up in the design/creative side of the product and leave the business side to fend for itself. In this first installment we will look closely at one of the most proven methods used by successful companies to plot a course to profits: the business plan. A business plan is a fifteen-page (give or take a few) documentation of your American dream, not just a formality for getting someone to loan you money. It is a road map for your company's progress; it shows you where you are, where you are trying to get, and how to get there.

So step out of your creative clothes for a moment and put on a business suit. Invest the time and energy into creating a profitable business plan and use it as a model for the formation and growth of your new company.


Cover Page
A business plan is comprised of several specific sections, supported by projections and estimates, bound behind a cover page. The cover page includes the company and/or Haunt name and logo. Add the words "Business Plan" and the month and year. The date can be changed each time you present the plan to a potential investor (see illustration A).

Behind the decorative cover lies the real meat of your plan:

1) Executive Summary This is a two- or three-page recap of the total plan. Sadly, for all of the work you do on the rest of the plan, this section is generally all that investors or lenders look at to evaluate feasibility. However, the rest of the plan is what generates this information and must be created last.


The following is a fairly complete example of an Executive Summary.

1.1 Business Overview
[Example] The Old Dark House Corporation (henceforth referred to as ODH) is by design a scaled-down version of a theme park attraction, specializing in the seasonal draw of Halloween, geared toward teens and young adults. In addition, ODH will manage all licensing and merchandising businesses associated with the attraction. While the primary customers are local residents, ODH's long-term goal is to become known throughout the Midwest as the best events to attend. The focus of the Company is to provide exciting, fright-filled experiences for its visitors.

1.2 Business Objectives
This is a single paragraph giving the company's "Mission Statement." What are the goals of the company? How will the public perceive it? Follow this with a bullet-pointed list of objectives (a list of goals needed to create a successful company). Provide completion dates for when these goal are to be completed.

1.3 Ownership and/or Management Team
In this section of the plan, present the biographies of each owner and key employee that make up the company's management team, and then outline that person's role in this venture. These biographies can be as short as a paragraph or as long as a page.

1.4 Financial Requirements
Break down the financial needs (required expenses) of the company. If one goal of the business plan is to borrow start-up or expansion capital, then make this clear in the introductory sentence.

[Example] The Old Dark House Corporation is seeking a one-time bank loan of $200,000 to be utilized as follows:

Provide an itemized spreadsheet showing exactly how the borrowed money will be spent. If the required amount is $200,000, then the bullet-pointed items must add up to $200,000. If the owners are investing personal cash, property or time on the project, these items will be shown on this sheet stating, "Owner (A) to invest (Insert Amount)."

Follow this section with a brief paragraph stating the company's financial objectives. If the financial objective is to recoup all investment money in the second season and the "Gross Revenues" chart (diagram 3) supports that goal, mention that here.

1.5 Company-Wide Critical Success Factors
Outline your company's annual goals for the next five years, outlining specific bullet-points to be accomplished. This is an excellent exercise in getting the management team to plan for the long haul.

[Example] YEAR 1 o ODH will concentrate on initial start up and begin production of the first season Haunt to be completed within nine months of initial funding for public opening. o ODH will launch www.olddarkhouse.com, an interactive and informative free website designed to promote the attraction.

YEAR 2 o ODH will reinvest proceeds from year 1 into an additional attraction to increase the value of the event and the ticket price. o ODH will broaden its licensed products and add the to the web site to generate year-round sales.

1.6 Business Plan Maintenance
Part of the beauty of a business plan is its ability to help the company stay on its initially set path. One member of the management team will be appointed, and identified here, as the person responsible for keeping the company on track based on the guidelines, goals and finances set forth within the plan.

2) Vision and Mission
This is an outline of your dreams and goals for the company. Outline your reasons for wanting to start the event, using brief descriptions in the following order:

2.1 Vision
Show how your company will fit you, your staff, the industry and your audience. Have you and your key staff each write their own vision of where they see your Haunt going. Then as a team, consolidate the best ideas from everyone. Does the event conform to or defy what is being produced industry-wide? Will your community support or challenge your Haunt's existence?

2.2 Mission Statement
Every company needs a mission statement. Your mission drives the company to fulfill its vision.

[Example] In order to achieve our Vision, ODH commits to the following:

ODH's Mission is to provide innovative, practical and top-quality entertainment for the paying public. We believe that our first responsibility is to 100% customer satisfaction. Our strong financial position will enable us to market effectively and build our attendance. In carrying out our day-to- day business we strive to:

o Treat our employees and customers with dignity and respect.
o Follow the philosophy that our customers are our reason for existing.
o Be considered a positive asset to our community.

Through a long-term commitment to this mission, we will be known as a company that succeeds because we deserve to. Our customers, vendors, and employees will see ODH as a company with integrity.

2.3 Goals Be thorough and list all major goals necessary to complete the requirements called out by your Vision and Mission Statements. Put them in the order of need to acomplish.

If you are trying to obtain funding with this business plan, you may want to focus on the top two or three financial or business development goals that need to be achieved through the additional funding. Delete any goals that presently do not add to the bottom line. (If your fifth-year goal is to manufacture special products based on your Haunt, leave that goal out.) Focus on the goals that affect the immediate success of the venture, such as "acquiring $50,000 in corporate sponsorships by year 2." This goal will interest an investor; just be prepared to show that it is possible and how you plan to accomplish it.

Primary goals can cover but are not limited to the following areas: Profits, Products, Quality, Growth

Fields of Interest, Community, Marketing, Expansion

3) Company Overview
Outline of your management team (this is more or less a boasting section for all key players in your group, so if you have a former Disneyland marketing strategist on your team, put their resume first!)

3.1 Legal Business Description
Include your company name, legal form of business (partnership, C-Corporation, Limited Partnership, etc.)

3.2 Management Team
List each key player and include any ownership interest. If you are a corporation and are issuing stocks in the venture, list what each key team member is allocated.

3.3 Responsibilities
List each task that is required to complete each goal on your vision statement and detail who will be responsible to see that these tasks are completed. This is basically a job description for each key member.

3.4 Management Team Backgrounds
Repeat the resumes used in the Executive Summary section.

3.5 Board of Directors
Do you have family or friends as investors? If so, appoint them as members of your advisory board. You may also invite industry professionals to sit on your board, which is the kind of experience that banks and investment firms are looking for. If a back or investment firm is involved with your event, they will place at least one representative onto your board.

3.6 Staffing
One person cannot do everything, so who is going to help you design, build, operate and strike (if needed) the event? Will these people be partners, employees, or volunteers? In this section, list the jobs needing to be filled, along with a description of responsibilities and estimated salaries.

3.7 Strategic Alliances
If you start your business knowing (for sure) that WBOO-TV or WAAH-FM are each going to give you $50,000 in television or radio spot placements as event title sponsor, list them here and any other "arrangements" or trade outs.

4) Brand Strategy
Describe exactly what a haunted event is, what is it that you are selling, and why people will buy it. What makes your product better and more profitable than the rest?

4.1 The Product
Offer a description of your Haunt as if it were sitting on a store shelf. What is its outer appearance (the candy shell), as well as the inside (the tasty, chewy middle)? If the event will be a multi-element, explain that here. If one attraction will incorporate the only 50-ft. Tesla Coil in the world, list that here. Do not be afraid to boast special features.

4.2 Merchandise
Describe any and all peripheral items that you will be selling at your event. T-shirts, Baseball Caps, Carnival Games, Tarot Reading, or anything else that will bring in additional revenue.

5) Market Analysis
How are competitors doing locally, nationally, and internationally? This is where it starts getting tricky. Search the web for business data, such as the Haunted Attraction Magazine industry survey findings available at www.hauntedattraction.com/survey.html, and the annual theme park statistics available to members of the International Association of Amusement Parks and Attractions (IAAPA) in the "members" section of their web site at www.IAAPA.org (though a brief summary is available to the general public at www.IAAPA.org/media/f-stats.htm).

5.1 Industry Analysis
How is attendance? Are the admission prices going up or down? Are profits going up or down? Incorporate the survey data into an explanation of how the Haunt industry as a whole is doing.

5.2 Market Segment
What is the target market for your event? Will it be exclusively a teen attraction or will it be for children (not recommended)? Define the strengths and weaknesses of your event and how these will affect your ability to reach your audience. If you are opening a teen Haunt in a retirement community in Arizona, this would be considered a weakness. If you are opening a hayride in a town with more kids under the age of fifteen than any other community within 100 miles, that is a strength.

5.3 Customer Profile
Who do you see as your main audience? Children? Families? Teens? Explain why, and then explain how you will customize your Haunt to have the most appeal to that market segment. This is also known as your demographic profiling. If you know the majority of families in your vicinity are young urban professionals with two incomes and an average of 2.5 children between 10 and 18, cater to them.

5.4 Competition
Certainly visit the other Haunts in your area many times. Use the "Competition Analysis" chart (see Diagram 1) to help you understand how they are doing. It might be relevant to this business plan to address the benefits of local competition, including a brief statement on how you might work together via cross-promotion to boost your businesses. Consolidate all data into this section as observations and conclusions.

5.5 Risk
We would all like to enter a business venture that is risk-free; however there is no such thing. It is best to understand that there are risks, and to take the necessary steps to avoid them. That new sprinkler system you need to install is helping to avoid the risk of injury due to fire, but at $20,000, is that a risk to your bottom line? Review these important sub-topics and fill out an "Elements of Risk" table for your benefit. This is a "Pros Vs. Cons" type data sheet you can create on your own.

o Cost Structure - Do you have enough money to do everything necessary to open successfully?
o Competition - Can you compete financially? Put aside your design ego for a few minutes and consider your competition. If they have been very successful for ten years, they may be doing something right, whether it is marketing or design. If they decide you are a threat and pump $100,000 into additional advertising and promotion to keep their customers away from your Haunt, can you afford to take the hit or to "hit" back?
o Industry Growth - How are Haunts doing across the nation? If the country is experiencing a 30% decrease in attendance, do not fool yourself into thinking you are the one Haunt that will pack them in. Can you afford to open if your receipts are 30% under your financial projections?
o Liability - Are you well insured? You better be. No matter how safe your Haunt, in today's litigation-happy environment, insurance is a must. You may need to have proof of liability insurance when you submit your business plan to a lender.
o Environmental Risks - How will bad weather affect attendance (many haunters can tell their own horror stories about the 2001 season). If your customers have to walk or park on non-paved surfaces, or wait outside in the elements, this is a real issue to consider.

6) Marketing Plan
How will you promote your attraction to drive your target market customers to your door? This one item is the most important part of your Business Plan and the most detailed. A strong marketing plan is one thing that potential Investors and lending agencies will be looking for.

6.1 Sales Strategy
How are you going to sell tickets to your haunt, and to whom? Incorporate the data from the demographic surveys in sections 4.2 and 4.3 to help you define a strategy. Are you going to use television? Radio? Are you going to create a mascot, or host character to help in your sales pitches? Are your admission prices competitive, too high, or too low? Be smart when placing your ads. Unless you have several million dollars to spend in advertising, do not propose a 60-second spot during the Superbowl. Local radio and local and cable television are much more economically feasible, and focus on people that are close enough to drive to your event. There may be sponsor opportunities there as well.

6.2 Retail
Will you be setting up a gift shop? Keep in mind; merchandising is key to the livelihood of every theme park in the world. Your event should be set up as a mini-version of a theme park; why not use a mini version of their money-making tactics? How much should you (can you) invest in this? What products will you carry? Outline the products that you want to offer in a list along with unit costs and sale prices.

6.3 Discounts
Are you going to offer discount coupons? How will these be distributed? How much of a discount should you offer? Do your total sales projections reflect a percentage of discount tickets sold?

6.4 Customer Service
Create a plan of how your crew will treat customer service issues. Much like a mission statement, your version of "the customer is always right...as long as all posted rules were followed," will help you in disputes and ultimately result in a very peaceful resolution to most issues.

6.5 List Management
Will you be having your customers fill out mailing list forms for future direct mailings? If so, you will need space to store this valuable data for use in subsequent seasons. Budget for appropriate large database software. Most home PC software is made for storing your Christmas card lists of a few hundred names. You will need professional database software for the thousands of entries you will have, as well as someone to maintain this information.

6.6 Graphic Mockups
Provide data sheets, brochures, diagrams, logos, sketches, photographs, related press releases or other documentation about your event. This can be included as separate attached exhibits to your business plan package.

7) Financial Plan
What is your target budget? Can you make this project happen with the money you have plus the money that you are requesting? Do not work out a budget thinking that you will have all the reliable volunteers and donated materials you need to build the attractions. Be tough, be critical; fudging the numbers here can be catastrophic. This exercise can be an eye-opener, and may require you to re-evaluate other elements of the business plan. Be honest with yourself. If the event cannot turn a healthy profit buy year 3, then why would you even open in the first place?

7.1 Financial Statements
Keep in mind that projected financial statements do not stand on their own. Anyone reviewing your financial statements will also expect to read a discussion that supports these projections (research on your market, competition, etc.).

7.2 Budget
A budget is primarily for internal purposes. You may not want to include your budget in your business plan package; instead, include a Monthly Income Statement that summarizes your expenses into categories. During your presentation, have the budget available in case your potential lender or investor asks to see it, and be prepared to discuss it.

7.3 Gross Revenues
The Gross Revenue Analysis is a support document designed to track earnings (see Diagram 3). The diagram shows a five-year projection, which you will want to do if you are seeking funding. A modified version of this form can be used nightly, weekly, and monthly in your Haunt to keep track of income. It is a simple form to create and modify, and is essential for your long-term success, as it is the simplest method of comparing your projected income against your actual income.

7.4 Cost of Sales
This section is as important to your funding venture as the Gross Revenues chart. This "break-even analysis" (see Diagram 4) is ultimately the deciding factor in proceeding with your plan. This chart takes your earnings and subtracts the cost of sales and operating expenses to provide you with a "bottom line," known as your Operating Income.

7.5 Capital Requirements
State the total capital requirements for the event, where these funds will come from and how they will be used. You will also want to discuss the level of security for any loan or investment. The level of safety is not for you; it is for the lender or investors' comfort, and is a discussion of the business plan's findings. If looking at the plan makes you confident that this can and will work, then say so. This is also the place to be explain your and any other partner's investment. While "sweat equity" is an investment, lenders and investors will expect that. The question is: What exactly do you bring to the table financially? Be specific here. Do you have collateral that you are willing to put up in case you are not able to pay back the loan? Are you willing to gamble your retirement money, your savings, your stocks, or your house to build the event? Try to avoid this if you can.

If you are preparing this business plan to secure financing or a bank loan, then end your business plan with the following information:

7.6 Payback Strategy
Define how long you will need the loan. Describe how repayment will accomplished, or the strategy for how investors' equity will be converted to cash (i.e., a public stock offering, sale of the business, etc.). Your financial projections should indicate that the loan or investment funds will help generate the profits and cash required for payback and investor "exit." Discuss any significant increases in profits and/or cash flows that are expected as a direct result of financing, and how these increases will help to pay back the funds.

This entire process may seem like a big waste of time, but whether you are new to haunting, or this is your twentieth year, it is an excellent way to determine - in advance of spending much money - whether or not you can succeed if you move forward. If you find that the math does not make financial sense, then that should be a warning not to proceed. If the numbers do show a reasonable profit, then you will have a business plan to follow throughout the start-up process.

There are several books available to help you create your business plan. Many are available through public libraries, but the small investment of $25 or less is well worth the valuable reference guide you get. There is also an excellent software program called BizPlan Builder available for $100 or less. This provides Microsoft Word/Excel-based templates and an invaluable guide to help you create your plan.

 

Steve Smith is an entertainment developer at Atomic Vision Entertainment, a conceptual studio in which he is a partner with filmmaker/FX artist Steve Wang, and artist Dave Dorman. Atomic Vision Entertainment is a subsidiary of The Dodd Group, Inc. You can contact him at steve@thedoddgroup.com.

 

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