Soft Play Centres: Controlling your Costs

Video of Richard Tyler, Enterprise Editor of the Daily Telegraph titled "Reducing Costs during a Recession"

In the second part of my series looking at some basic principles to help Soft Play Centre’s prosper in these tough times, let’s consider the costs associated with the business and some simple guidelines to help keep control of them http://tinyurl.com/qtdu68.

If your costs are not under control, you will spend your days treading water as an Indoor Play Centre operator. The more revenue you generate, the greater your costs, keeping your profit margins at the same level and hence becoming very busy but seeing little rewards for that extra effort.

Principle No 2: Control your Costs

1. Keep large costs in-line with your turnover – When considering the major costs associated with your Soft Play Area; rent, staff costs, loan repayments etc, it is imperative to apportion each of these as a percentage of the turnover you generate. An Indoor Play Centre in Blackburn have a strict policy of never allowing staff costs to escalate above 20% of turnover. This means some tough decisions have to be made during slow periods, but ensures the right profit margins are achieved every month and the business can prosper. Flexible employment contracts are advisable to give you the opportunity to tailor staff rotas to your needs http://tinyurl.com/rxx3e4.

2. Consider every cost, no matter how small – Don’t assume that small costs aren’t that important when running a Soft Play Centre. This is the attitude I adopted when opening my Indoor Play Centre, particularly in respect of my party food. We initially worked with the local McDonalds restaurant to supply our party food. After operating for about a year, it became apparent that, not only were the kids leaving most of the food, I was wasting 75p on every meal served. Within a month we changed our offering to food that we could prepare on site for half the price, resulting in each party generating at least an additional £10 on to my bottom line. Analyse every single cost associated with your business, no matter how small, as every saving you can make will positively impact your profit. A simple rule of thumb; for every £1 you spend, you have to earn £10 in revenue so think carefully before spending.

3. Don’t be afraid to re-negotiate – You will no doubt be tied in to long term agreements in regard to rent and loan repayments. Every Soft Play Centre has such agreements, and any saving you can make on these items, will have a significant effect on your business. In the current climate, landlords and banks may be more accommodating if you approach them to change the payment plans on such agreements (and the earlier the better). An Indoor Play Centre in Longford, Ireland, has recently re-negotiated their rent with their landlord, and in the process literally saved thousands on their annual costs.

My next blog in this series will look at marketing and how Soft Play Centre’s can target the right audience and utilize free applications on offer.