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How To Start An Ice Skating Rink

How To Start An Ice Skating Rink

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How To Start An Ice Skating Rink

How To Start An Ice Skating Rink

If you grew up ice skating, chances are you had a favorite skating rink you headed to as a child or teen. Maybe your figure skating or hockey lessons took place at that same rink. Ice skating rinks offer entertainment and a safe training location to their local communities, fostering athleticism and a love of ice sports in kids, teens, and adults.

If you’ve ever dreamed of entering the arena yourself, not as a skater but as a rink owner, you’re probably wondering where to begin. This guide will provide you with some key information and steps to help move your dream from your imagination to reality.

Business Overview

An ice skating rink business provides the space, equipment, instruction, and amenities for people to participate in skating activities like hockey, figure skating, recreational open skates, competitions, parties, and more. As the owner, you’ll invest in the facility, rink equipment like ice resurfacers and proper ventilation, inventory like skate rentals, and staff to operate different functions. Major revenue streams come from admissions, skate rentals, selling food and beverages, pro shop sales, hosting events, and offering skating lessons.

Industry Summary

With the exception of COVID restrictions, the ice skating industry has seen steady growth over the years, with a surge in popularity during winter months. The success of an ice-skating rink isn’t solely dependent on the weather as indoor rinks provide year-round access to ice skating, making it a viable business in any climate.

The ice skating rink industry is expected to generate $586 million across about 450 rinks operating nationwide.1 The popularity of high school, college, professional hockey and figure skating contributes to steady participation of about 10 million Americans ice skating each year.2

Skating rinks typically attract a range of audiences, from individual skate enthusiasts to hockey teams and ice dancing troupes. Combine this with the timeless appeal of skating, and it’s no surprise there’s a steady demand within this industry.

Steps To Start An Ice Skating Rink

Step 1: Write a Business Plan

In the excitement of launching an ice skating rink, it’s tempting to jump right into the operational aspects – from selecting a location to buying skates. However, taking a step back to write a detailed business plan is an important and often overlooked step.

A business plan for an ice skating rink is vital for several reasons. First, a business plan offers clarity and direction, two elements to be focused on when starting any new venture. It lays out your business goals and detailed steps to achieve them. Think of it as a playbook for your ice skating rink – it keeps you focused on what’s important and helps prevent distractions that can derail your efforts. It also outlines a timeline for achieving these goals, allowing for better tracking of progress and adjustments as needed.

Another important part of your business plan is understanding the market. You’ll need to do some homework to find out about the demand for ice skating in your area and who your competitors are. Discovering who your customers are and what they want is also key. This information will shape your marketing and operations, helping you to stand out and satisfy your customers.

Last, an ice skating rink requires significant upfront investment and ongoing operational expenses. These include energy costs for ice maintenance, staff salaries, insurance, and more. Hence, one of the most critical aspects of your business plan is its financial section.

A financial plan is used to estimate startup costs, project revenue, and plan for expenses. It provides a clear picture of the financial feasibility of your business, which is particularly important when seeking funding from investors or lenders.

Related: How to write a business plan

Step 2: Secure Funding

Starting an ice skating rink is costly, but entrepreneurs have several options to get the financing they need. Here are some of the most common ways to fund an ice skating rink.

Personal savings: Many entrepreneurs will start by investing a portion of their personal savings. This option demonstrates a high level of commitment when approaching other potential investors or lenders. While few individuals have the full amount needed, putting your own “skin in the game” builds credibility.

Bank loans: Traditional bank loans are a very common source of funding for entrepreneurs. To secure a business loan, you’ll need to present a business plan, have good personal credit, and possibly pledge business assets or personal property as collateral. In addition, lenders typically require the borrower to invest at least 15% of the project’s total expenses. If the bank still feels the risk level is too high, they may request a Small Business Administration (SBA) loan guarantee.

Investors: Seeking investment from friends, family members, or angel investors is another way to obtain the necessary capital. But this route often requires giving up partial ownership and control of your business. Structuring the right investor agreements is crucial before taking on equity partners.

Community fundraising For facilities intending to fill a void as a new community asset, raising funds within the local area can help generate initial capital while also building your customer base. Consider offering pre-sale memberships or multi-visit passes at discounted rates to finance a portion of construction. Crowdfunding campaigns are also popular, rewarding donations with free visits, concessions, or logo placement when the rink opens.

Related: Finding the money to start a business

Step 3: Register the Business

When starting an ice skating rink business, you’ll need to follow certain steps to make it legal. The requirements may vary depending on the state where your business will be located, but here is an overview of what you need to know:

Choose a business structure: There are four common business structures, each with its own benefits.

  • Sole proprietorship: The simplest structure, but offers no separation between personal and business liabilities. The main advantage is its ease of setup and low cost.
  • General partnership: Similar to a sole proprietorship, but involves two or more people. The partners share responsibilities, profits, and also share personal and business liabilities.
  • Corporation: Provides limited liability protection and is a separate legal entity. However, it can be more complex and costly to set up and maintain.
  • Limited Liability Company (LLC): Offers limited liability protection like a corporation but with fewer administrative requirements and a favorable tax structure.

Related: Comparison of business structures

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.

Some popular LLC formation services include:

IncFile - $0 plus state fees & free registered agent for 1 year!

ZenBusiness - Best for beginners. $0 plus state fees & free registered agent for 1 year!

Northwest - Best privacy protection. $39 plus state fees & free registered agent for 1 year!

Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.

Related: Tips and ideas for naming an ice skating rink

During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.

Related: Finding a domain name for your business

Obtain business licenses and permits: You’ll need a general business license, a health and safety permit, and specific permits for food and beverage services if offered at your rink. Be sure to check with your state and local government offices to learn the exact requirements for your area.

Related: State guides for general business licensing

Ensure proper zoning: Verify that the location you’ve selected for your ice skating rink is zoned for commercial use and specifically for a sports/recreational facility. This will help you avoid legal issues down the road.

Acquire music licensing: Obtain public performance licenses from organizations like ASCAP and BMI to legally play music at your ice skating rink.

Step 4: Acquire a Facility & Set Up Operations

Setting up an ice skating rink can be quite a process and requires extensive planning and preparation. From finding the right location to installing the necessary equipment and ensuring proper air quality, there are several factors to consider before opening your doors to the public.

One of the first aspects of setting up an ice skating rink is finding a suitable location. The ideal location needs to be centrally located and easily accessible to the public, preferably situated near high-traffic areas, tourist destinations, and other recreational activities.

After securing the right location, you’ll need to plan your facility layout. A majority of ice rinks include a skate area complemented by observation spaces for those who want to watch. It’s common to have a rental desk with skate storage as well as lockers or cubbies for personal belongings. If you intend to cater to larger groups or events, make sure to leave space for parties. Many rinks also enhance their customer experience by providing a concession bar with seating, vending machines, and arcade games. For those wanting to go the extra mile, a pro shop where customers can buy or repair skates and other equipment can be a major plus.

Maintaining good indoor air quality is essential in an ice skating rink. Due to the equipment used in ice maintenance, harmful compounds such as carbon monoxide, ammonia, and nitrogen dioxide can build up in the air. Monitoring the levels of these harmful compounds is important, and proper ventilation systems are necessary for controlling the air quality. Check the necessary utility infrastructure for the facility, ensuring that there is an adequate heating and ventilation system that will maintain good indoor air quality.

Step 5: Hire Staff

When setting up an ice skating rink business, it’s likely you’ll need staff to keep things running smoothly. Hiring employees means you’re taking on new responsibilities as an employer, so you’ll need to fulfill a few key legal requirements.

First, you will need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This unique nine-digit number is required for reporting taxes and other documents to the IRS. Next is confirming employment eligibility. The law requires you to ensure that your new employees are eligible to work in the US. To do this, you must complete an I-9 form for each new hire and check appropriate identification documents.

State hiring requirements should also be taken into account. Please note that every state has different laws and regulations regarding hiring staff. Be sure to check and follow the specific rules of your state. In addition, most states demand businesses to have worker’s compensation insurance in place. This is to provide wage replacement and medical benefits for employees who get injured at work.

Finally, be aware of the labor laws that govern employee rights and work conditions. These laws cover various aspects like minimum wage, overtime pay, work hours, child labor restrictions, and much more.

Related: State guides for hiring your first employee

Step 6: Prepare to Open!

After addressing the core steps of starting an ice skating rink, there are several additional steps that will need to be taken care of. Some of the most common ones include:

Business insurance: Obtaining business insurance protects against risks like customer injuries, employee accidents, or property damage.

Setting up bookkeeping: Set up accounting software or hire a bookkeeper to record daily sales, track invoices, process payroll, and produce financial statements. Wave Accounting (FREE) or Quickbooks are commonly used accounting software programs.

Contracts: Prepare and review various contracts, such as liability waivers, to help protect your rink from legal claims in case of accidents. RocketLawyer and Law Depot have free and inexpensive templates that may be helpful.

Opening a business bank account: Opening a dedicated business account is important for managing business expenses, cash flow, and simplifying tax reporting.

Creating a marketing strategy: Develop a comprehensive marketing strategy to promote your ice skating rink. This should include creating a visually appealing logo and a user-friendly website. Consider using social media marketing, local advertising, and email marketing campaigns to reach potential customers. Hosting special events or offering promotional deals can also attract visitors to your rink.

Preparing for the grand opening: Plan a grand opening event to generate excitement and attract initial customers. Consider special promotions, guest appearances, or community events to draw attention to your new rink.

Common Questions When Starting An Ice Skating Rink

How much does it cost to start an ice skating rink?

Starting an ice skating rink is a huge financial undertaking, and the total cost to start this business can range from $2 million to $4 million. Costs can vary based on factors like location, size, and equipment selections, but these are typical expenses involved:

Location and construction: The most significant expense in starting an ice skating rink is securing a location and subsequent construction. The cost here can vary widely depending on whether you are building from scratch or renovating an existing structure. For a new build, costs can range from $1.5 million to $3 million, including land acquisition, construction, and initial deposits. Renovating an existing space might be more cost-effective but can still be substantial, especially if major structural changes are needed.

Equipment: The necessary equipment, including ice resurfacing machines, refrigeration systems, sound and lighting systems, and seating, can cost around $200,000 to $500,000. This range accounts for new, high-quality equipment essential for rink maintenance and customer experience.

Business registration: Registering your business involves various fees, depending on your state and chosen business structure. These costs are relatively minimal compared to others, typically ranging from $100 to $800.

Insurance: Initial insurance costs are expensive in this industry and can range from $10,000 to $25,000.

Marketing: Initial marketing efforts, including website development, promotional materials, and launch advertising, can cost between $5,000 and $15,000.

Other costs: Other miscellaneous costs, such as permits, legal fees, and initial staff training, can vary but may add an additional $10,000 to $30,000 to your startup expenses.

How profitable is an ice skating rink?

The profitability of an ice skating rink can vary based on several factors such as location, size, and the range of services offered. However, using industry averages and assumptions, we can estimate potential profitability.

– Admissions & skate rentals: $300,000 (Average 300 daily visitors on weekends/holidays at $10 admission + $5 skate rental per person. 150 visitors on weekdays at $7 admission + $5 rental.)
– Food & beverage sales: $150,000 (Average spend of $5 per guest across daily visitors.)
– Pro shop sales & services: $120,000 (20% of visitors purchase socks, jerseys, and equipment at an average spend of $30, and 10% use blade sharpening and skate repair annually.)
– Party room & event rentals: $180,000 (2 hour parties for 30 guests at $150 each, hosting 150 large events per year at $1,200 facility rental.)
Sponsorships & advertising: $90,000 ($750 per month for rink wall/ice/Zamboni ads and sports league sponsor patches.)
Miscellaneous income: $60,000 (Arcade games, ATM fees, vending machines, storage locker rentals.)

Total estimated revenues: $900,000

The typical ice rink sees total operating expenses of 75% to 85% of revenues to cover costs for staffing, facility maintenance, equipment, energy bills, insurance, consumable supplies from cleaning to CO2 pellets, and other overhead expenses.

Using the higher percentage of 85%, this example rink would have $765,000 in expenses, leaving $135,000 in profit.

Please note that these are rough estimates based on industry averages and the actual profit can vary based on several factors.

What is the NAICS code for an ice skating rink?

The NAICS code for an ice skating rink is 713940, which is classified under Fitness and Recreational Sports Centers.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code and how to find yours


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How To Start An Ice Skating Rink

How To Start An Ice Skating Rink

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