provider business plan
TRANSCRIPT
Family Entertainment/ Recreation Industry:
Business Plan
Benjamin Wright
Executive Summary
1.1 Mission1.2 Keys to Success
Target Vertical2.1 Industry Summary2.2 Competition/ Barriers to Entry
Value Proposition 3.1 Products & Services3.2 Competitive Comparison3.3 Fulfillment/ Technology
Situational Analysis4.1 SWOT Analysis4.2 Prospect Culture4.3 Decision Making Process
Marketing Process 5.1 Main Competitors 5.2 Market Segmentation 5.3 Strategy and Implementation Summary
Financial Plan 6.1 Important Assumptions/ Indicators 6.2 Projected Revenue
Key Sources
1. Executive Summary
For families with multiple children, parents are always in need of opportunities to get the kids out of the house to divert some of their never-ending energy. Therefore, there is a lot of opportunity for entrepreneurs to open facilities that offer entertainment options to people of all ages and from all walks of life.
1.1 Mission
The mission of companies in the family entertainment industry is to provide affordable entertainment options that are not limited in the scope of age. Customers are able to visit these facilities with the whole family, at their own convenience, and without significant planning or spending.
The goal is to please the local community by giving them opportunities for diversion that suit the whole family, and do not require significant travel or time requirements. Customers should be provided with affordable games, activities, food, refreshments, and fun in a safe and clean environment, while receiving great customer service.
1.2 Keys to Success
In order for a business in the family entertainment vertical to be successful, the company must explicitly differentiate itself from competitors. Family entertainment is a very broad category, and includes businesses such as: movie theaters, bowling alleys, arcades, mini-golf courses, indoor and outdoor recreation facilities or adventure parks, ski facilities and more.
In addition, many towns offer multiple of these facilities, especially in urban areas. Therefore, it might be difficult for a new business in this field to attract customers. Companies offering family entertainment options need to specify why their service is the best candidate for customers to bring their whole family to for a stress-free night on the town.
2. Target Vertical
2.1 Industry summary
This industry vertical is comprised of: 1) establishments that operate
facilities or provide services that enable patrons to participate in
recreational activities, or pursue amusement, hobbies, or leisure-time
activities, 2) establishments meant for producing, promoting, or
participating in live performances, events, or exhibits, intended for
public viewing, and 3) establishments that preserve and display objects
and sites of historical, cultural, or educational interest.
Number of employees (nationwide):
Amusement and recreation attendees- 274,230 (2014)
Gaming Supervisors- 24,100
Average Wages:
Amusement and recreation- $9.70/hour
Gaming Supervisors- $22.12/hour
Work related fatalities, injuries, and illnesses (nationwide):
o Fatalities- 78 (2013)
o Injury/ Illness- 4.8/ 100 full-time workers (2013)
Range of establishments to pursue includes movie theaters, bowling
alleys, arcades, historical sites, small museums, state and national parks,
golf courses, paintball courses, skating rinks, rope courses, amusement
parks, ski facilities, adventure parks, training/ fitness facilties, and much
more.
2.2 Barriers to Entry/ Areas of Concern
Heavy capital expenditure needed for start-up for some
establishments (ski facility or any highly automated facility)
Difficulty obtaining funding to start-up
Failure rate of start-ups
Changing consumer preferences; companies need to stay ahead of
the ball on changing technologies and popular trends in recreation
(especially in children’s changing tastes as they are a key part of the
market)
Insurance issues: some establishments may require customers to
sign waivers prior to accessing facilities and licensing may be
required by state/ federal government depending on the nature of
the establishment
This industry’s insurance needs are currently provided by a few
insurance agencies. Provider needs a detailed plan of how to attract
clients in this industry before entering the market.
3. Value Proposition
3.1 Products and Services
Most establishments in this market provide services rather than
products. People pay to use the facilities in order to entertain
themselves. These types of establishments require various insurance
policies that Provider Group specializes in offering, including, but not
limited to, employee benefits, workers’ compensation, and various
property and casualty policies. Many of the establishments in this
vertical require heavy equipment with high degrees of automation.
These establishments require specialized insurance programs that
Provider Group could expand its offering to include, such as automobile
liability, commercial general liability, prize indemnity insurance, sports
incapacity insurance, and much more. Whenever heavy machinery is
needed for operation, there is inherent danger involved for both
workers and customers. Therefore, companies in this industry require
multiple insurance policies to mitigate the risk of an accident occurring
on the premises. Provider Group can help these companies by managing
their risk bearing activities and providing insurance to bear the
financial burden of these risks.
3.2 Competitive Comparison
Number of insurance brokers in MA: almost 400
Some insurance brokers specializing in employee benefits- Towers
Watson, Mercer, Buck Consultants inc., Sentinel Benefits and Financial
Group Inc., Northwestern Benefits Association, and TBR Associates
Property & Casualty- at least 46 companies
Worker’s Comp.- More than 350 insurance companies licensed to sell
Industry performance (nationwide):
Arcades/ Amusement centers- 50 largest companies generate 85% of
revenue
Bowling Centers- top 50 companies generate 30% of sales
Fitness Centers- top 50 generate 30% of sales
Golf Courses- top 50 generate 15% of sales
Museums/ zoos/ parks- top 50 generate 35% of sales
Ski facilities- top 50 generate 80% of sales
3.3 Fulfillment/ Technology
Insurance companies ultimately offer similar services to organizations:
a financial safety net that protects against worst-case scenarios for your
business. For Provider Group to differentiate itself against competitors,
we need to communicate how we utilize the resources available to us to
tailor an insurance program that is specified for each individual
business.
Technology/ resources:
Internal loss control reports (OSHA compliance inspection & on-site
safety inspections), training (customized based on report & OSHA
training), OSHA 10 certifications, health care reform consulting, HR360,
analysis & review of claims experience, EXP mod calculation,
development of plan descriptions, wellness assessment, tax advantage
plan and design, and a lot more (see Provider’s website providerig.com)
Wedge:
Although many insurance agencies offer some similar services, it is
important to communicate how our proactive rather than reactive
approach separates us. It is a large reason why we have a 96% retention
rate with our clients. We need to differentiate ourselves by describing
how we utilize the resources available to us to design and implement a
specified program for every client, drive down their EXP mods, and
minimize their exposure to risk and claims. We also need to explain the
resources we make available to clients to help them manage their own
risk.
4. Situational Analysis
4.1 SWOT
Strengths
Environment: people feel like they’re having fun. Encourages them to
stay for a long time and keep coming back.
Encourages customer brand loyalty (both from the establishment to
the insurer and the patrons to the establishment)
The sheer number of establishments in this industry and their high
dependence on insurance coverage provides a large client base
Weaknesses
Competition: there are far too many organizations in this industry for
all of them to be profitable. In addition, the nature of the industry
attracts an endless influx of entrepreneurs.
Leads to a high failure rate for start-ups.
Customer service: employees are often kids who do not value the
work; customer service can lack and suffer from negligence.
Profitability: the profit margin can be low, even though revenues are
often high. This is due to the high capital expenditures associated
with operating facilities in this industry.
Many establishments buy their insurance from people they know or
K&K Insurance, the leaders in insuring recreation facilities
Opportunities
Conglomerate: lack of “one-stop” spots that meets all of one’s
recreation needs. Huge market and profit potential.
Segmentation: organizations in this industry can segment the market
by age, demographic, gender, etc. to corner a market vertical.
New establishments: new recreation facilities are always emerging
and require multiple insurance policies that we can provide
Threats
Differentiation: lack there of. Many establishments are
interchangeable from the patron’s point of view.
Location: difficulty marketing, attracting customers, and beating out
competition, depending on the dispersal of the population and
market leaders.
Some of these establishments have massive potential for losses and
claims; insurance companies need to be wary of this
4.2 Prospect Culture
Because there is such a wide variety of organizations within this
vertical, there are always prospects considering whether or not to enter
the market. In addition, the fun and exciting nature of the vertical
inspires many entrepreneurs to try their hand at starting a business in
the entertainment industry. That being said, many new businesses in
this vertical fail. An entrepreneur must have a detailed marketing
strategy before entering the market, and they must differentiate their
establishment from competitors to attract a strong customer base. In
addition, Provider Group must be certain of a company’s longevity in
the industry prior to signing the client.
Number of prospects:
Movie theaters- 141
Bowling alleys- 60 (incomplete list)
350-500 prospects in this vertical in MA
4.3 Decision Making/ Sales Process
1. Identify problem/ prospect- look for companies in the assigned risk
pool. Find establishments with high potential for lawsuits, losses,
damages, etc.
2. Seek information- cold call, visit the establishment and speak with
gatekeeper. Find areas of pain by speaking with employees. Decide
whether to pursue signing the client.
3. Engage decision maker- set up appointment/ get familiar with
decision maker
4. Choose an alternative/ Drive wedge- drive the wedge: give new
quote, explain the services we offer and our proactive approach, and
demonstrate the resources we can utilize to tailor our program specific
to each client
5. Implement plan- get commitment to change insurance broker
6. Evaluate plan- follow up by visiting establishment regularly,
monitoring activities through consulting and risk management
techniques, and maintaining a favorable relationship with decision
makers.
5. Marketing Process
5.1 Market leaders
Movie Theater: AMC Dine-in Theater
Bowling Alley: Pinz
Entertainment Centers: Dave & Buster’s
Other: Sky Zone, Frozen Ropes, Fantasyland Golf, Merrimack Family
Pavilion
Leading insurance agencies in this industry: Aon, K&K (leading provider
of sports, leisure, and entertainment insurance products), and
Northeast Insurance Agency
Carriers: Philadelphia, Hanover, & Travelers’
5.2 Market Segmentation
These facilities thrive because they offer multiple, unique entertainment
experiences for the whole family. They consistently attract the largest
crowds and have the highest profit margins. They are ideal candidate
for a mid-market agency such as Provider Group.
The AMC Dine-in Theater in Framingham differentiates itself by
filling its show-rooms with luxurious leather recliners, that require
seat reservations prior to the show time. This makes a unique
viewing experience for the audience. In addition, they have
specialized show-rooms where adults can sit and be waited on,
enjoying a full meal and alcoholic beverages if they so choose. This
differentiates the theater and allows it to appeal to a specific market
segment: people older than 21 who are looking for a classier viewing
experience.
Pinz Bowling Alley in Milford implements a similar strategy. Not only
do they have multiple lanes, they put massive tv-screens at the end of
each lane to give the alley a sports-bar feel. In addition, they have a
sports bar that serves full meals and alcoholic beverages. They also
have an extensive arcade and laser tag, making Pinz a place where
parents can take the kids and let them run free, while they enjoy a
more age-appropriate scene at the bar.
Since many generic entertainment centers already exist and have
existed for years, the key to thriving in this industry is
differentiation. Sky Zone succeeds by attracting kids to schedule
their birthday parties at their indoor trampoline theme park. Frozen
Ropes is a more constructive recreation facility where kids can work
with friends and trainers to hone their baseball skills. Fantasyland
Golf and Merrimack Family Pavillion are massive mini-golf courses
that also offer arcades and snack bars to provide a one-stop spot for
any entertainment needs.
In order to succeed in this industry vertical, an organization must go
after a specific market segment. Family entertainment centers need
to offer activities the whole family can enjoy. However, there is too
much competition for a start-up to come in and thrive without
offering some unique services, such as the ones offered by the
market leaders listed above.
5.3 Strategy and Implementation
We need to identify those establishments who have thrived in offering
recreation activities and are highly regarded by the local community.
However, we should limit our scope to establishments that have
experienced repeated losses and claims, or have high exposure to risk
which would allow us to drive the wedge between them and their
current agent. .
6. Financial Plan
6.1 Important Indicators
US personal income (influences how much people spend on recreation) rose by 4.2% in November 2014 compared to November 2013.
Total US consumer spending (indicator of sales in recreation industry) rose 1.2% in November 2014 in comparison to November 2013.
US revenue for arcades and amusement parks rose 9.4% in the third quarter of 2014 compared to the previous year.
Average US retail price for gasoline fell 21.1% in January 2015 compared to January 2014 (decreased cost to operate facilities and for consumers to travel).
Spot price for crude oil (affects energy costs for operating recreation facilities) fell 47.2% in January 2015 in comparison to January 2014.
6.2 Projected Revenue
Bowling center - $700,000-800,000 per year
Arcades/ amusement parks - $90,000 per year per employee
Golf Courses - $60,000 per year per employee (highly seasonal)
Ski Facilities - $70,000 per year per employee (highly seasonal &
labor-intensive)
Parks (state, museums, zoo, aquarium, etc.) - $100,000 per year per
employee (labor-intensive)
Provider’s revenue potential:
o For companies with $1,000,000 (average), expect premiums
of $5,000 for workers’ comp., general liability, umbrella etc.
o Companies with revenue between $5-10 million, expect
premiums of $30,000
Key Sources
Liberty Mutual: First Research industry profiles
Department of labor
Manta
Bureau of labor statistics
Provider’s website
Hoover’s
WCRIBMA
http://www.masshome.com/insure.html