Practical Advice to …Setting Up An Indoor Playcentre

Play Providers Association (PPA) Seminar 13th March 2012

Welcome and Introductions

Tracey Bancroft PPA Exec Member + Ezeeeplay

Aims: • Provide an insight into the realities of operating an indoor play centre

• Learn from existing operators and leading industry suppliers

• Cover standards, guidelines, statistics and best practice

• Discuss future industry trends and innovations

• Opportunity to ask questions to the panel and speakers

• Information to allow your to make an informed decision on your start up

Seminar Outline:

1. Introductions (Tracey Bancroft) - 11am2. Researching the Market: (Neil Scott and Kate Costin)3. Location and Planning (Neil Scott) 4. Raising finance in the current climate (Mark Johnson) – 12:15

Networking Lunch at 12-30

1. Case Study – Indoor High Ropes (Sarah Ansell) at 1pm2. Play Standard’s & choosing a manufacturer (Graham Robinson)3. Creating your brand and marketing your site (Kate Costin) 4. Ongoing considerations of operating a Play Centre (Tracey Bancroft) 5. PANEL - Question and Answer Session -1:45 pm

Researching the MarketIs there an opportunity??

Neil Scott and Kate Costin

What does the market look like?

• Highly fragmented supply structure (700~ Private Operators)

• A new breed of operator creating higher customers expectations

• However MANY business failures

• Current sites having to diversify to survive

• Tough economic conditions for both existing operators & potential start ups raising finance

• Increased competition and costs for operators

Why might you want to open a play centre?• The centre near me is always heaving “they must be making loads of money”??

• I want to start my own business to spend more time with my young family??

• A local play centre closed- there is a gap in the market??

• There are no play facilities here and so no competition??

• Running a play centre looks easy and I can do better than what’s already there!?

BUT the realities are…

Many sites closing or changing hands …

UK’s largest multi-siteoperator into liquidation

September 2011 “CASH FLOW IS KING”

The economy hitting spend per head

Others are seeing potential!Party / leisure spend competition in all forms …

Any cause for optimism ??

“We are seeing a lot of entrepreneurs recognizing that they need to start working on their projects now, even though we are still in the tail end of the recession, so they can have the projects open when economic conditions improve.”

“The Great Recession resulted in many previously marginally performing projects going into the red. Owners are now calling us in to audit and analyze the projects, determine the root cause of their poor performance and develop strategies to improve performance with everything from management and marketing to renovations and rebranding. “

Still some great new sites opening

Industry Trends

Are play centres profitable ?

• Only 54% reporting a profit in 2009• 192 play centres “for sale” on Dalton’s

• Opportunity for failing sites to be purchased

Industry Benchmarks ?

• 33% Benchmark

• Admissions and F+B up

• Parties down

• 2011/12 Spend per Headreduced

Don’t be just another play centre … “DIFFERENT IS GOOD”• Product, be unique

• Create a visitor experience with extended dwell times

• Business Model – what’s yours?

• Branding

• Food and Beverage, Party, Secondary Spend

• Customer Service

Location, Location, Location and Planning

Neil Scott Play Concepts

Where are play centres located?

0

5

10

15

20

Frequency

Retail/Leisure

Industrial TownCentre

Other

Type of Location

What size of site’s are currently trading?

0

5

10

15

20

25

30

35

Percentage

0-7,500 7,500-10,00 10,000-12,500

12,500-15,000

15,000-20,000

20,000+

Size

Churches!!

Industrial Estate Retail/ Leisure

Shopping CentreTown Centre

The Bubbles Factory: Case Study

The Bubbles Factory opened on the 3rd November 2010 in Carluke, ScotlandA 500sqm - community based indoor soft play and cafeThe £1.1million delivered a very high quality, sensitively designed, environmentally considerate building including a Scottish government grant of £550,370.00Local regeneration to drive footfall to other businesses in the town centre

What makes a good location? • High Footfall = Large Catchment Area• Lack of Competition• Height of unit • Car Park

Don’t settle for anything less than perfect!!

Invest in Good Design

The design of the physical facility has a profound impact on not only the cost of the facility, but just as, if not more important, the quality of the guest experience which directly impacts on revenues and the cost efficiency of operating the business. Design directly affects:

•Development cost•How much your guests enjoy the experience of visiting•How much they spend•Whether and how often they return•What it costs to operate the business

Most design decisions are permanent, or at the least, very costly to correct if they can be corrected. In most cases, the cost of developing a center with a flawed design is the same as developing one with a good design. So getting the design right in the beginning is very important to long-term success.

Invest in Good Design

Planning • Policy … Town Centres• Employment• Highways… Access• Car Parking• Public Transport • Sequential Approach

Do you need professional help? Change of Use? How long does it take? How much will it cost?

Planning Recommendations… • Have a robust approach• Take early pre-planning advice• Discuss your proposal with highways• Establish the availability of Public Transport links• Demonstrate a need for your proposal • Understand previous planning approval / refusals

Financing Business Growth Presenter

Mark Johnson

Bamboo Tree

Fastest growing woody plant in the world grows very little until year 4

In the 5th year, the tree can grow 80 feet

BUT they don’t grow up every year – but continue growing under ground.

Build your foundations!!

Key points for today

•Bank funds, equipment leasing & EFG loans (replaced the old DTI) and other local grants or just use your own cash

•Information required from all lenders

•Recession has severely impacted on niche sectors like Soft play but with good housekeeping, funding is out there

•Market conditions – UK recovery stuttering, rates are set to be on hold for the foreseeable future.

•But this creates opportunities

• Most small businesses that fail within the first 3 years do so because of lack of cash-flow, not because of a bad product.

• Up to 50% of businesses fail in the first 12 months & 70% within 5 years• Know your numbers ‘Dragons Den’ type questions, T/O, P&L, GP, net profit,

margins• Key is; planning, planning & planning!

Cash Flow ?

• Business plan; directors background & CV, SWOT analysis, location details, (serviceability security ability)

• Financial projections; be realistic with accurate assumptions, ask your accountant for help

• Personal net worth statements for all directors - none home owners will not get finance without a suitable guarantor

• Common sense underwriting

Information Required?

• Personal bank statements for all directors - not including any unpaid items or missed mortgage repayments

• Investment, clarity ref bank and personal, (often lenders look for match funding)

• Clean credit search• Other commitments e.g. cards, HP, should be limited• NO CCJ’s or x bankrupt

Information Required?

Bank V’s Leasing• Bank normally take security on your property• Bank normally used for working cap and refurbishment work• Leasing is secured on the asset only with a personal guarantee• Leasing for equipment only• Repayment periods; Bank loans 5-7 yrs, equipment leasing over 3 yrs

normal for a new business up to 5 for established • Lenders like to see match funding i.e 100k loan with either 100k cash

contribution / 100k equity in the back ground

Types of equipment one can lease

QURIKY KIT FINANCE!

• The Play Structure• Catering Equipment• Furniture• EPOS• CCTV• Air con

A good advisor

• Able to provide a mix of bank and equipment finance• Package your file professionally to both bank and leasing houses• Have access to a number of funding institutes• A good business may have a healthy mix of bank funds, equipment

leasing & personal cash, with head room on each.

Summary

• Common-sense underwriting• Do not over borrow• Be committed from the start & once open that's just the start!• Clearly the market is still challenged but this also creates opportunities• Recent case studies; The play factory / Yellow Sub, Play arena, The Zone,

Treasure chest• Look up enterprise funding magazine • Find a trusted advisor

Presenter

Mark Johnson

Johnson Reed

www.johnsonreed.co.uk/softplay

Networking Lunch12-30 until 1pm

PPA Supplier Member’s

Case Study- Indoor High Ropes

A journey to "Kaos"

a case study

Aims• Highlight some areas and unexpected

issues that we experienced as a new start up business.

• Encourage information sharing among new starters. It can work......

• Provoke a lively discussion........particularly when I get to health and safety !

From the beginning........

• The idea

• The drawing

• The research and development

• The Business Plan and Finance

• The Building

• The Planning Department

• The Lease and Legal

• Fit out, general building, toilets, cafe, seating area, office

• staff recruitment, policies

• Construction Health and Safety

The marketing

• Marketing strategy

• FREE !!!!!!Press and radio coverage

• SOCIAL MEDIA

• Community interest

• Staff ropes course training, general induction

• E. R. C. A inaugural inspection, accreditation

• Local government Health and Safety

One week following signing of lease

Eight weeks later . . . Anything is possible !!

What is kaos?• An indoor ropes course

based in Lytham, Lancashire

• Innovative whole family activity and experience from the age of six

• Cafe and seating area

• Birthday parties, Leavers proms

• Corporate Events

Some of our clients to date ?

• General Public, families,

• Youth football and rugby teams

• Schools

• Youth groups, Guides, Scouts, 6-24

• Companies

• Charitable youth organisations, government funded.

• Adult groups

• Primary Care Trust.

What is the best advice I could give?

Research Plan

Revisit Be different

Speak to people

How do I feel ?Knackered!

Would I do it again?Absolutely

Indoor Play Setting the Standard

Graham Robinson

BS 8409: 2009 - Code of Practice• Fully enclosed play areas that offer children attractive opportunities are generally those presenting different levels of challenge and difficulty.

• Children can explore solutions to these challenges and practise their newly acquired abilities in competently designed and managed settings, where the levels of risk have been assessed and, through supervision or design, are managed.

• Precautions need to be taken by play providers to reduce the severityof injuries if children make the wrong judgement but the possibility of harm cannot be completely removed.

• This British Standard aims to help play providers develop facilities that children find enjoyable and reduce the risk of serious or disabling injury.

Why do Play Areas need inspections?• Risk Assessment is clear legal requirement… Health & Safety at Work Act 1994 & Management of H&S at Work Regs 1999

• Systematic safety inspections are recommended as Best Practice in the accepted standard

• BS EN 1176 and HASAW Act (playground equipment)• Note: BS EN 1177 (is the test method for safer surfacing)• Insurers prefer Safety Inspection & Risk Assessment• Parents, carers & play providers want safe playgrounds • Play providers also want to avoid litigation.

Why do Play Providers need inspections?• For peace of mind

• To ensure compliance with HSE requirements for best practice

• To avoid risk of injury to children & young people

• To operate legally regarding H&S & DDA (Disability Discrimination Act)

• To have valid insurance against risk

• To avoid litigation

BECAUSE they want:A. To determine priorities for routine inspections and confirm compliance with changing standards

B. Help with preventative maintenance

C. Identify worn parts needing replacement or refurbishment to maintain required levels of safety

D. Provide a written record and/or evidence of continuous safety checks and maintenance.

E. Provide defence and/or evidence in legal cases/insurance claims

There are Benefits• Achieve good value from capital costs of equipment

• Keep down costs of preventative maintenance

• Maintenance to extend working life

• Improve safety

Why do they need RPII Inspectors?

BECAUSE: -

The H&S Act & Regulations specify ‘Competent’

The BS EN Standards specify ‘Competent’

RPII Annual Inspectors are: -

• Examined/Certificated Competent• Re-examined every three years• Independent Third Parties• Experienced Professional Inspectors

BECAUSE: -

• RPII Examinations: • Are rigorous & to BS EN Standards

•RPII Inspectors: • Are kept up-to-date & exchange info.• Are bound by RPII Code of Conduct• Hold all relevant insurances• Write comprehensive reports

• Using RPII inspectors aids consistent interpretation

• Insurers / Risk Managers prefer & may specify ‘Competent Certificated Inspectors’ and CRB Checked

Types of Inspections:Routine Visual Inspection

• Looking at the equipment’s basic condition, especially faults due to recent vandalism, breakages and also cleanliness of the playframe.

• These inspections can be carried out by the manager or his/her staff and should be recorded on a simple sheet or book.

• The equipment supplier should provide a checklist.

• Dependant on usage, these inspections should be carried out either daily or weekly as a minimum.

Operational Inspection

• Looking in more detail at the condition of the equipment, providing a quality control check on the more regular inspections and identifying wear and tear on the equipment.

• Such inspections should be carried out by an appropriately trained member of staff, or alternatively by a suitably qualified specialist and should be recorded.

• These inspections should be carried out at least on a monthly or quarterly basis.

Annual Main Inspection• To be carried out by an RPII (Register of Play Inspectors) Indoor Annual Inspector not connected with the playground operator or manager.

• Essentially looking at vandalism, wear and tear, long-term structural problems, standards compliance and design, along with risk assessment etc.

• This report essentially covers the overall safety of the playground.

• Inspection should also include an annual oversight of the internal procedures and documentation to ensure that the correct procedures are in place.

Choosing a Manufacturer

Key Considerations• At what stage do you need to speak to a manufacturer ??• What is your budget??• Equipment : Building Ratio … maximise your profit per square foot • New Trends

Issues with funding play centres• Current economic climate means banks are not keen to lend• Presenting the business case• Proving demand

Establish that the Play Provider can… • Provide product information and assistance• Demonstrate a quality control system for design, manufacture, installation, maintenance and repair• Offer an independent post installation inspection service, to be carried out before the facility is first open for public use• Provide documented confirmation that the play equipment has been installed in accordance both with relevant standards and manufacturers instructions • Provide an after-sales inspection, repair and maintenance service, including an emergency response and a warranty covering defects in design, manufacture and installation• Demonstrate that they are covered by appropriate and adequate professional and product indemnity insurance• Take new clients to existing facilities and/ or provide a list of reference sites

Why use an API Member? API membership signifies professional competence and performance

• Strict admission criteria : Ensures that all members have the necessary experience, financial status and quality of workmanship. • Professional code of conduct : Members are committed to high standards of customer service and business practice. • Standards: Delivering to clearly defined EN, BS standards, guidelines and DDA requirements to maximise play value and accessibility and minimize risk to users. Buyers can also rely on API members being at the forefront of new thinking on play value, accessibility, risk and challenge. • Technical mediation service: Impartial assistance in the resolution of complaints and disputes, if necessary, between Members and their customers.

How much will it cost? • Industry average is 10k per 1,000sqft of play centre for soft play… So normally soft play will cost you 90K for 9,000 Sq Ft

• 3 months landlord rent as a deposit upfront? + service charge plus solicitors fees. EG= £6 per Sq ft x 9000=54k year. Stamp Duty on lease

• Building reg’s / engineer, planning permission (EG- Plan 10k inc complications), design drawings for the whole centre to pass planning & building reg’s. Fire Risk assessment as required by law. DDA, labour.

• Doing the actual building works (??£$), Building materials, electrical (equipment, plus installing plus testing), plumber, gas engineer, fire alarm , security systems (alarm, cctv), disabled toilet. Fire marshall , Food Hygiene training

How much will it cost? Continued

• Extractor (~3K), cooker / oven, griddles, microwaves.... Fridge& freezer (~ 1K)• Toilets, hand wash, hand dry, DDA toilet equipment• Carpet & flooring commercial non slip• Tables, chairs and sofas.... EG -9,000 Sq Ft centre ~10k also high chairs, nappy changing ? lockers? • 1st aid equipment, 1st aid training. CRB checks. PRS license, PPL License, TV License, Entrainment License?• Advertise for staff, T-shirts, clothing, Chef clothes. General kitchen tools.vending machines / rides / Arcade machines.• Hoovers, Cleaning Equipment• Menu's, Print and Design •EPOS Systems, Online Party Booking software?

• Party room set up, Disco lights, music system. Large PA system.Coffee machine EG ~2k • Hot water machine, hot choc machine, reserve coffee machine for when the main on breaks Heating ?? Again thousands of pounds, my recent air conditioning additional cost EG ~£28 K • Decoration (labour & materials), Cherry picker lift hire, PC systems, BT install / connection, • Insurance? Staff opening cost? Business rates? Your wages while building? Sage accounts system? Accountant ? • Interest payments & repayments on loans ? •Opening day stock & materials…

All needs paying before opening & money come rolling in

API, PPA, RPII – A New Partnership …

• Play Providers Association (PPA)• Association of Play Industries (API)• Register of Play Inspectors International (RPII)

Marketing and Creating your Brand

Kate Costin

Creating your Brand • The face of your business• Brand Values – what do you stand for?• What is your target market? • What do you want customers to think about your business?• Be consistent throughout • Invest in professionalism

• TOOLS … Ie- SWOT analysis, Marketing Plan, Briefing external companies

Key Challenges of Brand Management

Brand MapYou and your competitors

Not just play centres!

Great Brands in the Indoor Play Sector

Belper, Derbyshirewww.chucklebutties.co.uk

Putney, Wimbledon, Newburywww.eddie-catz.com

Edinburghwww.timetwisters.co.uk

Pre Launch • Website• Literature• Staff and Uniform• Signage• VIP Event- Golden Ticket •Where will people be looking to find you?

Have a budget and stick to it…

Best forms of Marketing • WORD OF MOUTH• Good PR (and bad!)• Mascots• Local Events• Group Marketing• Local Parenting Magazines / Websites – eg Primary Times,

• Less Effective : Radio, Buses, Flyers • Stick to budget • Have a Marketing Plan and MEASURE

Social Media

• 2,013 Facebook Fans• 1,757 Twitter Followers

Operating your Centre

Tracey Bancroft

Playcentre Usage Factors

• THE WEATHER!!!• Competition … All formsMarket Saturation• Repeat Business …Customer Service• Marketing your centre• The economy• Time of Year …Peak – Off Peak and Holidays

Setting up your play centre is the easy bit!! Continuing the journey…

Turnover vs Size of Site

•Capacity Maximising secondary spend •Effective use of space Off peak •Play Value VS turnover •3 'R's Review, Reinvent, Review

Ongoing Considerations• Tight management of all your overheads - utilities , suppliers , resources • Maximise opportunities to negotiate with suppliers to drive down costs • PEOPLE = 20 - 30% OVERALL COSTS - but also most beneficial resource!! • Rota structures /controls - match anticipated demand - • Policies/procedures - legislative and business • 3 'R's - Review, Review, Review • NETWORK - PPA - organisations, associations, local authority members, MP’s • Educate yourself, staff - understand the industry/understand your customers • Partnerships with other organisations, business • BE PROUD - SELL YOUR BUSINESS - SELL YOU !!

Legal Requirements vs Best Practice

•UNCRC - Rights Of The Child - includes right to PLAY, leisure & rest •Responsibility for PLAY - devolved to Local Government - constant review in each member country •Health & Safety at Work Act 1994 & Management of H&S at Work Regs 1999 •Anticipated change to legislative demands •PPA members best placed to absorb changes - e.g CRBs, annual safety checks, operational checks •Peace of mind - professional /conscientious PLAY PROVISION PROVIDER •Robust against litigation •Able to meet customers expectations and allay 'fears' •Best placed to meet future opportunities

Re-invest to survive and grow• Party package offering ie- Laser Guns, Build a Bear• Add new attractions ie- Playbus, Climbing Wall, GO OUTDOORS• Diversifying • Again having a USP and focusing on your key market’s ie- Toddlers• Keep customers returning by addingsomething new

When to Reinvest??How often to Reinvest??Doesn’t need to be expensive!!

About the Play Providers Association• Background

• Code of Practice and Standards

• Cost Saving Benefits

• Campaigns

• Networking Events

• How to join …

The PPA - Pushing the Industry forward!

The PPA- Associate Membership

Cost Saving Benefits

JOIN TODAY ONLY FOR £50 +VAT FOR THE REST OF 2012

Network Support

Industry News and Events

How to join … and upgrading

Session 7- Question and Answer Panel:

Neil ScottPlay Concepts

ConsultantEx PPA Chair

Kate CostinPPA Association

Manger

Tracey BancroftEzeeeplay

PPA Vice Chair

Sarah AnsellKaos

New Operator

Mark JohnsonJohnson Reed

Conclusions• Invest in market research - speak to existing play operators, industry experts and reputable suppliers

• Ensure you are able to invest at the right level without undue risk

• Be different, Be unique and Be professional

• Be knowledgeable on industry standards and know your responsibilities

• Bring your site to life with a consistent engaging branding and marketing activities. Opening a play centre is just the start…

• Join the PPA !!