City Opens Haunt Loses Money...Read On

[drfrightner]

Read this story...

http://www.dailynewstranscript.com/news/x715650115

[xxxdirk]

Ok, a few observations as I am always curious how others fail so I can learn from their mistakes. I did a bit of research and found this artical that ran BEFORE they opened. http://www.wickedlocal.com/norwood/n...le/x1633048794

#1 The haunt opened on the last week of Halloween and ran those 7 days, traditionally a slower part of the season. I am not sure if it was a typo in the story, but they made it sound like they set everything up in ONE day, the day before they opened. To top things off, they were only open from 6-9PM each night!!!!!!!!!

#2 They had 1600 people go through and charged $10 a pop, meaning thier ticket sales was $16,000. They claim to have lost $12,000 so that must have meant they had a budget of about $28,000. Now that is a pretty fair budget, but I would love to know where all those pennies went. I mean you are not going to open Neatherworld for $28,000, but I think they could have spent their money wiser?

[Barry]

I read this article earlier today and the thing that jumped out at me was the expectation of making money the first year. They were reopening after 24 years which means that they probably had nothing to start with. How many times has it been mentioned here that it takes 2-3 years to turn a profit?

[xxxdirk]

Barry, I seriously doubt they visit this forum. Seriously, I think they saw a line at a haunted house or heard about how much money people make at a haunt and thought "CACHING"!!!! lol

[Greg Chrise]

I'll bet they got a $12,000 bill for dragging things across a finished basket ball floor.

[Mike Bizub]

I found it curious that they mentioned competing against the World Series. In Denver numbers were down at most haunts. I would have thought it would be two different demographics but numbers were decent on days the Rockies werent playing. Mike

[TheNightMare]

If the opened for the whole month like most haunts they would not have lost any money.

[Jim Warfield]

"Build it and they will come, buy it from someone else and the bill comes due."
I think charity haunts (or community haunts?) are actually pretty smart closing around 9 to 9:30 because after 9:30 are when all the problems find a haunted house, the drunks, the very difficult people..... I would if I could.
Paid helpers wouldn't be too keen about driving many miles to get here then working only 2 hours.....
Maybe their $12,000 loss was simply a bookkeeping error?
Move a few decimal points and all is well.
Blame it on the flea that happened to die right on that one spot between those certain numerals.

[Nightmaretony]

Professional lighting installed first year? Outside company contracting? Money ----


The rules change over 24 years.

Impossible to amortize first year loss unless you got smart in other budgeting tactics.

Leonard Pickel said it best: NEVER put a second mortgage on your house to build a haunt.

Gotta treat it like a business unless you are haunting your front yard with friends. Then it is all fun.

Even the greatest home haunter Jim Warfield had to pull a bank loan to get things going.

[Greg Chrise]

Charity Haunt

Somewhere someone wanted money that is due and it says in the articles that he will be talking (trying to weasel) to get the $12,000 from vendors.

The first year:
-My charity haunt was paid for when we went in.
-The space was free a 3,000 SF new building.
-The actors were from generations of volunteer actors and medical technicians and fire fighters plus a local resort that had all acted since the mid 80's and needed a place to get their fix. They all volunteered and meals and drinks came from the ticket money. Some meals were provided free even during set up by local restaurants.
-A total budget of 1500 buys the new expendable portions of the scene decorations and make up.
-Costumes props and masks were all paid for and in hand.
-Lighting sound and electrical harnesses were a compilation of everones event donated.
-Fire extinquishers, unused were on loan from a fire extinquisher company
-The building already had event insurance.
It took probably 4 weeks to set up and flesh out and the first year the advertising was botched by volunteers who really did nothing. It saw 421 people and made at $10 a ticket $4,210 plus some random donations.

However if I had to put a price on all of this It would certainly have cost 4 times as much money as it would have made.

$8,000 space
$1,000 electric bill
$10,000 payroll Cheap could be $12,000 with meals and taxes
$12,000 advertising (should have been)
$2500 insurance
$1500 expendable materials
Total $25,000

Actual cost of haunt and props with paid labor $15,000 (took 5 years to build)
Grand total $35,000 first year potential

A good event increases numbers of attendance/ticket sales 30% per year but of course in the charity side of the industy, the charity expects immediatly that 80% of the money earned or more goes to charity concerns and not the haunt or it's operational effects or damages to a facility.

The reality is all of these hard costs might not be recovered for 10 to 15 years of everyone volunteering at 20% of the ticket price doing a charity event. Sure after 20 years it will be an over night success and be seeing 12,000 to 35,000 people with continuous reinvestment to make each years event better and different.

So, this whole thing is a miscommunication. Everyone expecting the city would be doing for free and providing for everyone. I'll bet the city provided a few helpers that were on payroll, a real expense (as we do for a portion of set up and tear down) plus the facilities had to be maintained after the event. Simply the "vendors" needed to know ahead of time it was going to cost them money to have their name mentioned in a positive light.

It is kind of odd seeing leonard quoted here as he spent 25 years forming partnerships that cost people money. In comparison the secret of the Raven's Grin Inn is that Jim worked very hard and under durress for 3 years to pay off his creditors and the building was paid for outside of yearly taxes. Then the low over head allowed it to become an over night success 17 years later with the advent of the internet and continous decades of word of mouth. His event became large enough spending every day building what he could and giving tours every night if people arrived. Going back, it took Leonard 25 years to begin telling people not to mortgage their house as advice.

From day one I got the feeling there were lots of people posturing to find those that had money to burn or to lose when in reality, any business is a gamble. Just the other day, at lunch, my helper and a waitress got into a conversation about how they enjoy taking a couple hundred dollars and going to the boats in Lousinana to spend hours losing it in hopes of walking out with big cash. I realized and told everone I don't need these thrills as I own my own business. I gamble on wether I am going to make money every day, every week, every year.

At some time at some point this $25,000 to $35,000 for a small event or $150,000 for a medium event has to come from the labors of someone somewhere. It can be done for $3,000 a year over 20 years too! The only way to expedite this is to in the case of a charity get 25 or 35 people to give $1,000 free and clear and of their own free will.

A year or so ago, Rich Hanf made a post that the haunt Business was great! he could spend $65,000 and make it all back in one year! Of course he is located in a very highly populated entertainment oriented region and had already been in some fasset of haunting for probably 20 year when that announcement was made.

Historically even those events we worship (or are supposed to worship) today were take overs of other successful events that had run for years and years. Even the Jaycees now see 4,000 to 8,000 people and it is deemned to be a great turn out for what they are offering but it is on the backs of people having given hard earned cash and labor every year for the last 30 years.

I'll go a little further here and say ther is absolutely wrong with Nightmare Tony having spent the last decade acculmulationg and planning and has not opened an event as yet. When he does it will be right, it is all paid for and as a result, in a way will turn a profit day one. It might not compensate him for a decade of research and development but it will be some positive cash flow even if it profits one dollar.

Perhaps 30 years ago $150 worth of black plastic would raise $800 and that was really keen. As the present demands for real investment exist to be a real event, not everyone can just write a check for $150,000 and if they can they should really consider a mini retirement instead of all of this very hard work.

I have actually been in Leonard's face when he thought he could operate something like the Raven's Grin Inn. He has no idea how hard and how long and what Jim has had to do as far as non stop physical labor and first hand advertising to keep it going and make it successful. For the Raven's Grin Inn to remain stable, all time and effort is put into that one event. You can't also be operating a magazine and a convention. You can't have partners who bought you the props and property, you can't have other partners doing the advertising for you. You have to do it yourself and have everything earned and paid for.

But the other curse of the information age is that everyone has a business plan, free financing or a way to make a quick buck and it usually involves you giving them your money instead of earning it and keeping it. Keeping it so yo have the resources to go make more.

Even these events that have sort of broken even in three years and can not believe their success so far, it is not over, the repeating reinvestment and so many things that effect each years market are a gamble.

Any body can spend money. Very few can make money.

On the other end of the spectrum, these markets that have high patronage and multiple locations have not pocketed a million per year, they have reinvested all but about $50,000 a year and many years less than that.

So first year for this event, a charity it is known that anything over that $16,000 per year potential expense will have to be provided by someone else for the event to continue. They are simply at the why are we doing this again phase.

You do it so that a decade or two later, you can tell your boss to shove it. It's more fun than having ceramic trinkets or candy machines at all the gas stations. It's more fun than having 200 websites that each pay $50 a month.

A business implies that someday you will be semi gainfully employing people and the community benefits from them paying taxes.

A charity implies the efforts of many will be converted to immmediate benefit for some need in the community.

Two more facts: The loan for the Raven's Grin Inn did not come from a bank. And second it is not a freaking home haunt. It is an ongoing proffesional attraction open all year long. You see plainly what happens to some home haunter if they leave their decorations up past November 2nd...This is a whole city block and 7 physical levels (much subterrainian) of attraction. It is not a home window display on crack. Pretty much even though I am 1100 miles away, I know that people that have made such generalizations have not spent $12 there.

Jim is the ultimate super hero of what someone can do if they are willing and able to work. There are an entirely different set of role models if you are seeking what you can do if you can write a check for some huge sum and the later never turn out as expected. They never seem to turn out with immediate gratification and even more riches.

A charity event on the other hand is not supposed to lose money whatso ever. It might not reach a goal but by definition it can't lose money. The other fun fact is that News reporters are not usually business owners or philathropists or community advisors and the throwing around of improper terms get s headlines when it shouldn't. Usually journalists are employees or self under employeed trying to figure out how it works.

[Jim Warfield]

Disclaimer: Jim Warfield and Gregg Chrise are two different people. (Just incase somebody thought differently)
Gregg is right .
No "Bank Loan" here! Moneys loaned from two eldely , retired men, one had been a banker (a very conservative banker at that!) the other a very far-sighted and diversified businessman. They each had their own reasons for "investing" in my dream and a return on their investment was not in their minds at all.
They both were repaid within a few short years.
It's a small, small town both of these men knew my work ethic and range of knowledge and talents pretty well before loaning me anything.
I probably talked to 120 people over almost a year to get the money and buy this house. Even after the one man said he would co-sign for the loan no bank would actually loan me(us) the needed money! He loaned it to me personally after three banks he had money in said "No". (Maybe they made him frustrated enough to do this? I think so.)
I didn't immeadiately quit my dead-end job and even then there were times when I had no money to walk into a restaurant and buy a mere hamburger.
When I did quit my previous job I made sure I had no telephone for the next several years since I sure didn't need such distrcations from the building I was engaged in here trying to accomplish something worthy of charging money for the general public to see.
It wasn't fun or easy racing out into the parking lot (dropping tools, quitting what I was in the middle of) when I would hear someone turning around (Dead End Street) trying to look non-aggressive, friendly and try to get a minute or two to explain what I was doing here so as to possibly create a new customer.
I didn't stop doing this for many years even after afew pretty good Octobers.
As I have said repeatedly many times on-line I do not" know it all" by any means , I know what has worked for me as far as how I treat my customers, as customers and patrons and some of the simple-minded little things I have created here that seem pretty popular with these people.

[HauntedWebby]

I read this article earlier today and the thing that jumped out at me was the expectation of making money the first year. They were reopening after 24 years which means that they probably had nothing to start with. How many times has it been mentioned here that it takes 2-3 years to turn a profit?

You can run a profit every year. We've done it, but we started small and on budget. Like it's been said many times, if you don't go nuts with the money ... you can turn a profit!

[Barry]

Webby,

I still would find it hard to believe that anybody can run a "profit" the first year of operation if they are starting from scratch. I know you came into your business with a lot of "stuff" that you already owned. Plus a lot of people here associate "profit" with money made after everrything is paid off which includes rent or mortgage payments.

In this case, the organization was starting with absolutely nothing.

[Jim Warfield]

When the day comes that my place and things will be auctioned, there will be some original paintings and drawings and a few other things peculair to me and my talents and ideas, but there won't be any high ticket-bought -from -somebody -else items...so there won't be much of an auction in those respects.

"What am I bid for this garbage bag?" (Scared 10,000 people)
"What am I bid for this spool of fishline?" (Scared 5,490 people)
"What am I bid for this slightly used cat-sand?"
"50 pound bag of Dust Motes?"
"Three wheelbarrows of old, odd cell phones?" (Thank You customers who didn't read my sign about bringing in your cell.)
"What am I bid for 2.500 video tapes filled with people laughing and screaming?"
Please understand that this is just from a few years, Jim already privatly sold the best ones."
Spending money spends "easy" money coming in the door comes in alot slower and often with much effort to get it there.

[xxxdirk]

Actually Barry, I started from scratch in 2004, built all my walls and bought my props, rented my bldg and ended up making more than I had invested, so it can be done.