Lan Center Startup Spreadsheet Question

[MaddCow]

I have a question for those that have used the spreadsheet and about how accurate are the numbers on the spreadsheet compared to your actual business intake?  I understand that a lot of it depends on demographics, location, etc...  However, with the numbers that I plug in, due to the amount of capital I might have at startup, I see huge profit numbers on the operations tab once I put in all my numbers. 

Perhaps I'm just used to the notion of lan centers that are less than ideal when it comes to business, promotion, and customer service and see the negative effects of such, but I can't fathom entertainment centers that are capable of making med-high 6 digit profit margins.  Am I just being skeptical from a lot of previous bad experience from other entertainment  centers, or is there really that kind of money to be had assuming the business owner is capable and smart?

I don't mind making money, it's just that I had the idea that I was going to be a bit closer to the break even than the spreadsheet suggests.  Then again, I always plan for the worst case scenario just in case.  I'd like to hear the thoughts of those that have used this and just a simple comparison on how close the spreadsheet is/came.  Thanks in advance!

P.S.  I'm not trying to fish for peoples numbers, just a side by side comparison.  For example:  Our first year was about 2-3% difference (We made more than it suggested) but the expenses were about 5% higher than it projected. 

[Alomax]

Skepticism is very good.  What kind of numbers did you put into the sheet?  Can you list out the first page numbers that have the number of seats, hours, rates, etc?

[MaddCow]

Sure thing.

4,000 Sq ft
$30.00 rent per year
30 PCs
70 Consoles
168 Hours
$3.00 Hourly rate
$10.00 employee wage
168 Hours they work
25% Utilization
30.00% Sales
.11 Electric

[Alomax]

Ah there's the answer, you've decided to do things at a scale that makes sense.   Running 100 stations, yes you can pull in some fantastic numbers, the ability is there.  However I'll emphasize again that that spreadsheet is only a guideline. In particular, once you get into the 100+ range, there are costs that you may run into that I couldn't anticipate because smaller centers would never have to worry about it.

I'm excited for you! A 24/7 100station center at $3 hour is perfect in my humble opinion. I hope you have an equally fantastic location picked out!

[MaddCow]

Yeah, I've picked out a couple locations that look really good.  I'm going to do site inspections within the next week or so to finalize.  I definitely understand that the spreadsheet is a guideline, I was just curious how others have fared with it.  Ironically enough, I was originally going to start with JUST 20 PCs.  Then I found your article on having more than 30 stations and did more research from there.  It was a big eye opener and I'm very grateful for it   I'm not sure if our final numbers will be around 100 stations or not, I was just playing with numbers because it looks like we'll be able to put 5 houses down as collateral for the bank, and I'm just finding a good ratio of start up funds vs. loan repayment options.  I think 100 stations is a good number to aim for, who knows, maybe we'll get more.

It's pretty amazing how quickly revenue scales up with such a (Relatively) minor start up cost.  Anyways, I thank you again for your advice and I'll let you guys know more about it once things start falling more into place.  You guys are amazing!

[RsteeleAUG]

25 to 30% would be a fair percentage to use after you're done building a customer base. We didn't do ANY advertising in the first 6-8 months and it took a while to get an average percentage that was in that range but we're pretty close to that now.

[Ganthor]

One thing I noticed is that you only have one employee working at a time.  Another post I read on this forum mentioned that one person can keep up with about 25-30 stations, so you might need to double our triple the hours worked for your employees.

[Alomax]

One person can keep up with about 60 stations, if the facility is designed for it (and it should be).  One person can even take care of 100 stations depending, the only time you need more employees is when the actual customer traffic builds up.  But there is no reason to keep 2 or 3 people on the clock at all times just because you have 50+ stations.

At 30 stations, I would occasionally get slammed because a few groups of friends would all show up at the same time.  Having another POS+employee would have helped, but it only takes about 5-10 minutes to get through that rush, and after everyone is taken care of, nobody comes up the front counter more than every 10-15 minutes, and usually one or two at a time.

[MaddCow]

Hmmmm...  That is certainly something that I have thought about.  In fact, I'm thinking about rigging the front counter to actually have all the consoles right there, perhaps on the back wall (As that would look kind of cool) and it would help limit the traffic that an employee has to do and it would help keep discs and consoles much cleaner and less damaged because the customers aren't handling them.  I think the cost for extra cables is worth the benefits.  Again, this is all just a minor theory of mine at the moment

I do love the planning stage.  Everything is so fluid  

I also included the employee hours as one paid employee at a given time.  I have included myself in that equation, but I'd probably be working a good 15-20 hours of unpaid time in addition to the normal hours I would pay myself for working.  At least until we are up and running at a constant speed.

[RsteeleAUG]

Customers do come in waves.  I've seen up to 10-15 at a time even more for parties. Like Alomax said once you get them rolling they usually don't require much attention.

On our busiest nights it would be nice to have an extra pair of hands but it definitely doesn't require more than one person.

We have 35 console/PC stations and another 5 table games (Air Hockey, Pool, Foosball, Foosball hockey, basketball hoops). Space for at least another 10 PC's and 4-6 more of each console. Wide open floor plan allows you to see from the front to the back, a management system that allows you to see PC screens, security cameras, and everyone that comes or goes has to pass the front counter.

Sometimes I feel like the one man band you know the guy with the drum strapped to his back playing the guitar with a harmonica attached to him, horns in the shoes...but for now that's how it is.



It does look cool!!!