How to start an escape room business: your master key

Starting an escape room business is a rewarding venture that blends creativity, storytelling, and puzzle design with business savvy. The market is accessible for new entrepreneurs, but that doesn't guarantee a packed house. Success depends on creating memorable experiences for corporate teams, families, and friends.

This guide will take you through the practical steps of validating your concept, securing funding, selecting a location, and obtaining permits to help you launch a successful escape room business in the U.S.

Step 1: Validate your business concept

Your first move is to analyze the local market. Use U.S. Census Bureau data to understand area demographics. Then, study competitor reviews on sites like TripAdvisor and Yelp to find underserved themes or difficulty levels that customers want.

Some new owners build a theme they love without market validation. This can be a misstep if local data shows stronger demand for family-friendly adventures over complex horror scenarios, for example.

Estimate your startup costs

A clear financial picture is necessary for your business plan. Initial investment varies, but you can expect costs to fall within these general ranges for a single-room operation.

• Game design or franchise fee: $5,000 - $30,000
• Lease deposit and first month's rent: $5,000 - $15,000
• Room construction and props: $10,000 - $50,000
• Technology and software: $5,000 - $15,000
• Licenses and insurance: $1,000 - $3,000

This brings your initial startup estimate to between $26,000 and $113,000. A detailed budget helps you secure the right amount of funding without surprises down the road.

Here are 3 immediate steps to take:

• Map all competitors within a 30-mile radius to find location gaps.
• Draft a one-page concept document for your primary theme.
• Create a spreadsheet to budget your initial startup costs.

Step 2: Establish your legal and licensing framework

First, decide on a business structure. Many escape room owners choose a Limited Liability Company (LLC). It offers personal liability protection without the complex tax filing of a corporation. You might want to consult a CPA to see if this is the right fit for you.

Once you have a structure, register your business. You will need an Employer Identification Number (EIN) from the IRS, which is free. Then, register your business name with your state's Secretary of State, a process that typically costs between $50 and $200.

Secure permits and licenses

Your physical location requires local permits. Contact your city or county clerk for a general business license application. You will also need a Certificate of Occupancy, which can take 4-8 weeks and cost a few hundred dollars, confirming the building is safe for public use.

A mistake some owners make is underestimating permit delays. Any construction will require building permits and inspections from your local fire marshal. These bodies, along with OSHA for employee safety, set the rules you must follow, so build their timelines into your plan.

Here are 3 immediate steps to take:

• Consult a CPA or lawyer to finalize your business structure.
• Apply for a free Employer Identification Number (EIN) on the IRS website.
• Contact your local planning department about occupancy and building permits.

Step 3: Secure your insurance and manage risk

You will need several types of insurance. General Liability is the baseline, covering player injuries. Aim for at least $1 million per occurrence and $2 million aggregate coverage. Annual premiums for this typically range from $1,500 to $4,000.

Key insurance policies

In addition to liability, you need Property Insurance to cover your build-out, props, and tech. If you have staff, Workers' Compensation is legally required. Only add Commercial Auto if you own a company vehicle. Some owners mistakenly underinsure their custom props, so get a detailed appraisal.

Work with an agent who understands entertainment venues. You might want to get quotes from providers like Philadelphia Insurance Companies, CBIZ, or Haas & Wilkerson. A general agent may not grasp the specific risks, leaving you with costly coverage gaps.

Manage your unique risks

Insurance is one part of your safety plan. You must also have every player sign a liability waiver before they enter a room. This document, drafted by a lawyer, should address risks like tripping in low light or anxiety from intense themes.

Here are 3 immediate steps to take:

• Request quotes from at least three insurers specializing in entertainment.
• Consult a lawyer to draft a state-compliant liability waiver.
• Create a daily safety inspection checklist for each room.

Step 4: Select your location and equipment

Look for commercial spaces between 1,500 and 3,000 square feet. This size can house two or three rooms plus a lobby and restrooms. You will need a space with a commercial or retail zoning classification, which you can confirm with your local planning department.

Some new owners accept a cheap lease in a poor location. Remember that visibility and foot traffic are powerful marketing assets. A slightly higher rent in a prime spot often pays for itself through customer acquisition. This brings us to your lease agreement.

When you negotiate, ask for a Tenant Improvement (TI) allowance. This is a contribution from the landlord to help fund your build-out. A longer lease term of 5-7 years can give you more leverage to secure a favorable TI package for your custom construction.

Source your props and tech

Your room build-out is a major expense. Custom-made puzzles can cost $500 to $5,000 each. You will also need cameras and microphones for monitoring, which run about $500 to $1,500 per room. Booking software is another recurring cost, typically between $50 and $200 per month.

Here are 4 immediate steps to take:

• Research commercial listings for 1,500-3,000 sq. ft. spaces.
• Contact your city's planning department to confirm zoning requirements.
• Ask potential landlords about their Tenant Improvement allowance policy.
• Draft a spreadsheet of your props and tech with estimated costs.

Step 5: Set up your payment processing

Most of your revenue will come from prepaid online bookings. This approach secures your schedule and reduces no-shows. Look for a payment solution that integrates with your booking software. Some owners get caught by high transaction fees, so compare rates carefully.

While online systems handle bookings, you also need a way to accept payments on-site. For escape room businesses that need to accept payments for walk-ins or merchandise, JIM offers a streamlined solution. With JIM, you can accept debit, credit, and digital wallets directly through your smartphone.

Just tap and you are done. At just 1.99% per transaction with no hidden costs or extra hardware needed, it is a great fit for selling a t-shirt or adding a last-minute player. Other providers often charge 2.5% to 3.5% plus monthly fees, making JIM a more cost-effective choice.

Getting started is straightforward:

• Get Started: Download JIM app for iOS
• Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone
• Access Funds: Your money is available right on your JIM card as soon as the sale is done - no waiting for bank transfers

Here are 3 immediate steps to take:

• Research booking software with integrated payment options.
• Compare transaction fees from at least two payment processors.
• Download the JIM app to prepare for on-site sales.

Step 6: Secure your funding and manage finances

Many escape room owners use SBA 7(a) loans. For amounts under $150,000, you might see interest rates of Prime + 3-4%. Lenders will require a detailed business plan and a personal credit score above 680 to consider your application.

You could also explore equipment financing just for your puzzles and tech. This is often easier to secure than a general loan. Personal loans are another option, but they put your own assets on the line, so weigh the risks carefully.

Plan for your first six months

Your funding needs go beyond the initial build-out. You need working capital to cover at least six months of operating costs. This includes rent, payroll, marketing, and utilities while you build a customer base and become profitable.

A frequent misstep is spending the entire loan on construction and props. Owners forget about the monthly cash burn. Without a cushion, you can run out of money for marketing or payroll by your third month of operation, right when you need it most.

Here are 3 immediate steps to take:

• Contact your local Small Business Development Center (SBDC) for free loan application help.
• Calculate your 6-month operating budget to determine your working capital needs.
• Request quotes from lenders for equipment financing to cover your props and tech.

Step 7: Hire your team and set up operations

Your first hires will likely be a Game Master and a Manager. Game Masters monitor games, give hints, and reset rooms. Plan for a pay rate of $15-$20 per hour. A Manager handles scheduling, customer service, and inventory, with a typical salary of $40,000-$55,000 annually.

Some owners rush the training process, which is a mistake. Your Game Masters must know every puzzle and story detail to provide immersive hints. You might also want to have your staff get First Aid and CPR certified to handle any minor incidents with confidence.

Streamline your daily workflow

To manage shifts, look into scheduling software. Platforms like Homebase or When I Work help you build schedules, track hours, and communicate with your team. This avoids the confusion of spreadsheets and group texts, especially as you grow and add more staff to the payroll.

With your team in mind, let's talk budget. Aim to keep total payroll costs between 25% and 35% of your monthly revenue. This ratio is a good benchmark for profitability in the entertainment industry and helps you decide when you can afford to hire more help.

Here are 4 immediate steps to take:

• Draft job descriptions for a Game Master and a Manager.
• Create a payroll budget that targets 25-35% of projected revenue.
• Compare features on scheduling software like Homebase and When I Work.
• Outline a training program that includes puzzle walkthroughs and story immersion.

Step 8: Market your business and acquire customers

First, claim your digital real estate. Set up a Google Business Profile with high-quality photos, your hours, and a link to your booking site. This is your most powerful free marketing asset. Encourage every customer to leave reviews on Google, Yelp, and TripAdvisor to build social proof.

Build an audience and drive bookings

Use social media to show, not just tell. Post video trailers of your rooms on Instagram and TikTok. Behind-the-scenes content also performs well. Some owners make the mistake of using poor-quality photos, which can devalue a great room. Invest in professional photography.

With your online presence established, you can explore paid ads. Allocate 10-15% of projected revenue for marketing. Run Google Ads targeting local searches like "team building activities [city]". Aim for a Customer Acquisition Cost (CAC) below $15 per booking to ensure profitability.

You can also pursue local partnerships. Team up with nearby restaurants for a dinner-and-a-game package or with corporate event planners. These collaborations provide a steady stream of customers with minimal ad spend.

Here are 4 immediate steps to take:

• Set up and verify your Google Business Profile.
• Invest in professional photos and a 30-second video trailer for your main room.
• Create a marketing budget equal to 10-15% of your projected revenue.
• List three local businesses to approach for a partnership.

Step 9: Set your pricing and financial strategy

Choose your pricing model

Most escape rooms use a per-person pricing model, typically charging $30 to $40 per player. This works well to fill slots with multiple small groups. Another option is a flat-rate private booking, such as $250 for a room of up to eight people.

Private bookings guarantee an exclusive experience for teams and families. You might also consider a hybrid model. You could offer per-person tickets during the week and require private bookings on busy weekends to maximize revenue.

Analyze your profitability

Your goal is a net profit margin between 20% and 40%. To get there, you need to price above your break-even point. Some owners set prices too low to attract customers, but this can signal a low-quality experience and hurt your brand.

Research what your local competitors charge for similar themes and group sizes. Instead of a race to the bottom on price, focus on the value you offer. You can also implement dynamic pricing, like a 15% discount for weekday afternoon slots to attract customers during slow periods.

Here are 3 immediate steps to take:

• Research pricing for at least three local competitors.
• Decide between a per-person, private room, or hybrid booking model.
• Calculate your break-even point based on your operating costs and proposed ticket price.

Step 10: Maintain quality and scale your business

Measure your performance

Your reputation depends on a flawless experience every time. Track your Google review average and aim for a 4.8-star rating or higher. You can also use post-game surveys to calculate your Net Promoter Score (NPS). A score above 50 shows strong customer loyalty.

Some owners overlook small details as business picks up. This can hurt the experience. Create a photo-based checklist for room resets to ensure every prop is in its place. A 99% reset accuracy rate should be your standard to avoid frustrating players with broken puzzles.

Plan your growth

With your quality locked in, you can look toward growth. When your booking rate consistently exceeds 80% for three consecutive months, it is time to plan an expansion. This could mean adding a new room or scouting a second location.

Your staff is another indicator. If your manager spends over half their time on daily operations instead of growth tasks, you may need to hire an assistant manager. For software, platforms like Xola or FareHarbor scale well and can manage multiple locations from one dashboard.

Here are 4 immediate steps to take:

• Create a post-game survey to track your Net Promoter Score (NPS).
• Build a detailed room reset checklist with photos for each puzzle.
• Set a target booking rate, like 80%, to trigger expansion planning.
• Review booking systems like Xola or FareHarbor for multi-location features.

An escape room is more than just puzzles; it's a story that players will remember. Your success depends on that immersive experience. You have the steps, now it's time to build your world.

And as you manage your business, a simple payment process helps. JIM lets you accept cards on your smartphone for a flat 1.99% fee, no extra hardware needed. It keeps things simple so you can focus on your guests. Download JIM to get started.