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1.0 Executive Summary
The purpose of this business plan is to showcase the development and growth of an arcade business based in Bethel, Connecticut. Arcade, LLC (“the Company”) was founded and is owned by John Wallace. At this time, the Founder is seeking $185,000 of debt capital to establish the operations of the business. The location will feature numerous new and classic arcade games as well as food and beverage service.
1.1 The Services
The primary revenue center for the business will come from the ongoing usage of the broad range of arcade games that will be featured on site. The business will have classic games, modern games, as well as virtual reality installations. Each play will generate $0.50 to $2.00.
The Company will develop a membership based program that will allow for discounted fees when games are played for a flat monthly fee. This membership program will produce highly recurring streams of revenue that will greatly contribute to the economic stability of the business.
Beyond these revenue centers, the Company will offer a wide range of food and beverages. The business will serve beer and wine in addition to standard soft drinks.
The third section of the business plan will further describe the services offered by the Arcade.
1.2 Financing
At this time, Mr. Wallace is seeking $185,000 of capital via an SBA loan. The terms of this loan are to be determined during negotiation. This document assumes that the Company will receive a 10 year loan carrying an 8% interest rate. Primarily, Mr. Wallace will use the funding for the following:
• Arcade game installations
• Location development in Bethel
• Working capital
• Initial payroll
In the future, Management may acquire a working capital line of credit in order to more easily acquire state-of-the-art video games and entertainment installations. Given the highly predictable streams of revenue generated from facility usage and food/beverage service, the Company is a strong candidate for this type of financing.
1.3 Mission Statement
Arcade, LLC’s mission is to provide the Bethel area general public with an affordable and exciting gaming facility that provides outstanding entertainment.
1.4 Management Team
John Wallace has five years of experience managing the operations of arcades and gaming facilities. He will be able to properly establish and expand the operations of Arade, LLC over the next three years.
1.5 Sales Forecasts
1.6 Expansion Plan
The Company may seek to develop secondary Arcade locations within the Fairfield County market once the business reaches maximum revenue generation for its initial facilities. The Company will also implement a membership based program that will allow the business to increase its profits while creating forecasted monthly revenue.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Arcade, LLC. The business is registered as a limited liability company in the State of Connecticut.
2.2 Required Funds
Mr. Wallace requires a $185,000 SBA loan in order to commence operations. He will contribute $65,000 towards the development of the arcade. The funds are to be used as follows:
2.3 Investor Equity
An equity partner is not required at this time. In the event that Management wishes to acquire the real estate that houses the arcade, an equity investor may be sourced for this purpose.
2.4 Management Equity
John Wallace is the 100% owner of Arcade, LLC and its sole member.
2.5 Exit Strategy
As the Arcade will produce highly predictable revenue from facility usage coupled with recurring income from its membership program, the Company could receive a price to earnings multiple of two to three times the previous year’s earnings. In the event of a business sale, Mr. Wallace will coordinate these efforts with an entertainment focused business brokerage.
3.0 Operations
Arcade, LLC will generate income among numerous revenue centers. Below is an overview of the primary service operations of the business:
3.1 Arcade Game Usage and Membership
As stated in the executive summary, Arcade, LLC will have approximately 100 arcade games within its facilities. This will encompass classic/vintage arcade games, modern games, virtual reality, motion simulators, augmented reality games, skee ball, and numerous related entertainment installations.
Of immense importance to the Company’s operations will be the membership program. The Company will charge $29.95 per month, and members will be able play all games for $0.50 rather than $1.00 to $2.00. Only simulators and motion based games would be exempted from this program.
3.2 Food and Beverage Service
In order to provide a fully comprehensive experience for customers, the business will offer a full food and beverage service. The fare offered will include American classics such as wings, burgers, chicken tenders, chicken nuggets, and related food. Beverages will include soft drinks, bottled drinks, beer, and wine. All patrons that order an alcoholic beverage will be required to show a valid identification.
3.3 Event Hosting
The Company will also offer event hosting operations for people of all ages. Management expects that most party events will be for children, but the Arcade will be able to host corporate and personal events as well. These operations will produce substantial revenues while concurrently increasing awareness of the location among Bethel and Fairfield County area customers. Each event is expected to produce $500 to $1,000 of revenue. Children’s parties will produce $250 to $400 depending on the number of attendees.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
This part of the business plan will focus on the arcade industry, the average customer of the business, and the ongoing competition that the Company will face as it establishes its operations in Fairfield County.
The economic climate is currently strong. Although interest rates increased substantially, they are returning to normalized rates. Inflation is also abating given the effective monetary policies that have been put in place.
However, an economic recession would not impact the Company’s ability to operate at a profit. Arcades are considered to be low-cost forms of entertainment. The recurring income from the Arcade, LLC’s membership based program will contribute to the economic stability of the business.
4.2 Industry Analysis
There are currently 4,000 companies that provide arcade entertainment to the general public. These businesses generate $4 billion per annum while creating 60,000 jobs.
One of the major trends within this industry is to provide expansive food and beverage services to patrons (including the sale of alcohol). Among Generation Z and the Millennial Generation, arcades and video games are immensely popular forms of entertainment. The Company will embrace this trend by focusing on events and competitions specific for this demographic during evening hours.
4.3 Customer Profile
Among people that will frequent the location in Bethel, the following demographic profile will be used in conjunction with the Company’s marketing campaigns:
• Between the ages of 18 to 50 (including parents of children that will use the facilities)
• Annual household income exceeding $60,000
• Will spend $25 to $50 per visit (depending on whether or not food is consumed)
In this section of the business plan, you will need to determine the type of customers that are you seeking to attract to your arcade. This portion of the business plan should include an examination of the target market with a focus on population size, population density, median household size, median household income, and the number of people that enjoy video gaming in your market. You can conduct local surveys in order to determine demand for arcade venues.
4.4 Competition
In any market area, there are usually a number of entertainment venues including arcades. For this arcade, Management intends to feature installations that include classic games, modern games, and state-of-the-art simulation devices. Here, you can further indicate the ways that you will set your arcade apart from other competitors in the market. You can also discuss the benefits of any membership program that you intend to implement.
5.0 Marketing Plan
Arcade, LLC will engage in a multifaceted marketing campaign in order to draw interest in the location from the onset of operations. Most importantly, the Company will establish a substantial marketing campaign that will be launched during the development period. This will ensure substantial visibility as soon as the Arcade begins its grand opening period.
5.1 Marketing Objectives
• Implement marketing campaigns that will create brand name awareness during the development period.
• Use social media to promote the arcade as well as events that will be hosted on a regular basis.
• Leverage search engine optimization techniques that will create awareness for the birthday and personal event hosting capabilities of the location.
5.2 Marketing Strategies
Management intends on using a number of marketing strategies that will create substantial visibility for the Arcade location. As stated above, the Company will market the location during the development period so that potential customers are aware of the address and opening date. During the grand opening period, which will last three weeks, the business will have all games available for free plays. This will drive an immense number of people to the location, and it will familiarize the Bethel and Fairfield County community with the operations.
Arcade, LLC will maintain an expansive online presence that encompasses both a proprietary website as well as a presence among all major social media platforms. As it relates to the website, the Company will have a professional firm create a search engine optimized and mobile device friendly platform. The platform will undergo SEO specific for Bethel, Fairfield County, and surrounding market areas. The website will also feature reservation functionality so that individuals can reserve tables for food and beverage service when large parties will be in attendance.
As it relates to social media marketing, Arcade, LLC will harness the marketing capabilities of Facebook, Instagram, Tik Tok, and YouTube. The Company will have a number of videos that showcase all games available at the location. These videos will be shown on YouTube and featured among all other pages. The Company will frequently offer discounts on food service while concurrently providing new membership opportunities.
For event hosting, it is expected that as a greater number of patrons attend Arcade events – there will be a natural increased awareness of the location. The Company will frequently promote event hosting on its website and social media pages.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Payroll
7.0 Financial Plan
7.1 Underlying Assumptions
• Arcade, LLC will acquire a $185,000 SBA loan (carrying a 10 year term and an 8% interest rate).
• Management will contribute $65,000 towards the venture.
7.2 Sensitivity Analysis
The business will be able to remain profitable in any economic given the highly predictable streams of revenue generated from all facets of operation. The recurring income from membership activities will further ensure that all underlying operating costs and financial obligations can be fulfilled on a monthly basis. As going to an arcade is a low cost form of entertainment, the business will remain economically viable.
7.3 Source of Funds
7.4 Profit and Loss Statement
7.5 Cash Flow Analysis
7.6 Balance Sheet
7.7 Breakeven Analysis
7.8 Business Ratios
