After 3 years in business at Climbing Vines Cafe & Play, I finally understand the saying, “Hindsight is 20/20.” As I was preparing to open our indoor playground, my never-ending task list seemed overwhelming. As a result, I rushed through a few crucial phases of the opening process. While discussing this topic with other play cafe owners, I realized I was not alone. It’s certainly easy to make a few oversights and incorrect decisions when you face so many daily. That’s why I’ve compiled the three most common mistakes indoor playground business owners have made to prevent you from facing the same fate.
1) Failing to Closely Examine your Lease
While hiring (and trusting) a real-estate lawyer is an extremely crucial step in signing a lease, it’s crucial to remain an active part of the legal process. There are several different types of leases and if you don’t ask the right questions to your lawyer, hidden costs can creep into your operating expenses. To protect your bottom line, you should ask your lawyer questions like:
Should we need to close, what will the process be like? Which assets, either business or personal, can be seized? Will I be responsible for legal costs or listing/ brokerage costs in the event our landlord must find a new tenant?
What insurance am I required to carry based on this lease? If your space is in a plaza, close to a restaurant, in a school zone, or in an area often affected by floods or fires, your lease will likely require that you carry specific types of insurance. They will often also require a specific amount of coverage based on your business income and assets. Before you sign your lease, be sure to get an insurance quote based on the lease terms. These details can often be negotiated and doing so can potentially save you thousands of dollars each month, so don’t skip this step.
Which maintenance items or utilities am I responsible for? Snow removal, lawn maintenance, water, heat and electric, internet, and more may or may not be included in your lease. Knowing these details and updating your business plan (LINK) to include or remove these costs may impact your cash flow, so be sure to examine your new numbers closely.
What is included in the build-out? Many landlords will include a “vanilla box buildout” in your lease. This means they will go as far as to put up drywall, but the carpet, flooring, paint, counters, cabinetry, light fixtures, and more are all on your shoulders. Ask if this is the case and what the details of this are. For example, bathroom plumbing and fixtures are NOT guaranteed to be included. Bathroom build-out costs can climb into the tens of THOUSANDS of dollars, so this isn’t a detail to gloss over.
What are our options to renew? If you renew your lease, its common for landlords to work in a schedule of rent increases. Be sure this increase is something you can afford because it’s often less expensive to renew a lease than to move locations (unless there are other factors you’re considering such as expansion). Remember to also ask if the schedule already accounts for inflation.
2) Forgetting to Examine the Competition
Many play cafe business owners build the business of their dreams based on their own likes and interests. While this isn’t necessarily wrong to do, it’s easy to forget to check the competitive landscape while designing your space. If you go into other local indoor play spaces and examine what they lack (a classroom, multiple bathrooms, a climbing structure, cafe seating, etc.), you are more likely to fill a void and coexist with your competition, rather than compete directly. Avoiding copying your competitors’ best attributes will help you find your own “stand-out” attribute and settle into a unique space in the marketplace.
Before Climbing Vines Cafe & Play opened, I examined other indoor play spaces closely. Our closest competitor had an absolutely gigantic water table. That was their “stand-out” factor, and what customers knew them for. Instead of trying to build the same or a slightly better water table, I had custom-built imaginative playhouses made. Now, if a parent wants more of a sensory play experience, they go to our competitor. If they want to avoid wetness or are looking for a more low-key imaginative day, they visit us. We now coexist in close vicinity without worry.
3) Underestimating Opening Expenses or Operating Costs
Even after you’ve negotiated your lease and exposed any hidden pitfalls or money “traps,” there are still ways to accidentally underestimate your costs. For example, when we were getting ready to open our doors, we underestimated the amount we would need to train our staff. Labor costs add up quickly-- before any revenue even starts coming in. We also underestimated the amount and cost of paper products, inventory, cleaning supplies, and cleaning equipment we would need prior to making our first sale.
This miscalculation caused us to dip into our cash reserve, which was a financial cushion we were hoping to save. I recommend OVER-estimating whenever possible, as this can only have a positive outcome.
Operating costs are also easy to underestimate. For example, when signing our lease, I asked the electric company to estimate the cost to heat our 2,500 square foot space. I knew we would need to heat the cafe most of the year because of out cold climate, so I was careful to get an exact estimate.
What I failed to ask, however, was how our very high ceilings would impact our bill. As a result, our bill is several hundred dollars more per month than anticipated. While this mistake alone is fairly innocuous, if enough of these mistakes pile up they can eat into your profits and leave you facing thousands of dollars in unexpected bills per month.
The key takeaway is that preparation and careful consideration every step of the way is important to the success of your business. If you are looking for additional guidance in navigating the many “hidden icebergs” in the brick-and-mortar business waters, check out our Play Cafe Academy program, where we give you all the tools you need to open a business poised for success.