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Opening an Arcade – Feasibility Study

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Introduction

Opening an Arcade - Feasibility Study I am going to carry out a feasibility study into opening an arcade. The arcade will be named "Big Money" and will be located in Glengormley, which is a small village on the outskirts of Belfast. Glengormley is a constantly growing and developing village with an expanding youthful population. An arcade with a variety of machines and snooker tables would be good for the area because it will create a small amount of employment, attract more people to Glengormley and give people somewhere to go. My reasons for choosing this are because as a young person living in Glengormley I find that there is a lack of decent places especially arcades for people aged 16 to 50 to go. I am also very interested in fruit machines and enjoy playing them as well as playing snooker and pool so I think that by opening an arcade a lot of people could benefit from it. For my investigation I intend to analyse both the practical and financial aspects of starting a new business. I will break my report up into three parts: market analysis, financial feasibility, final evaluation and conclusion. Analysing the market is one of the most important aspects to consider when starting a new business. In my market analysis section, through effective market research I hope to establish that there is a demand for this type of business. I will use both primary and secondary research in doing this. In my primary research I will include questionnaires and market mapping. Under secondary research I will look at web sites suppliers as well as competitors. I will also visit the local competitors and try to organise interviews with the workers and customers. Effective market research will help to determine the potential of the idea. I will then analyse the financial feasibility of the business. Firstly I will examine the start-up costs necessary for the arcade and also the sources to finance these costs. ...read more.

Middle

Portland Arcade: This is a small gambling arcade for over 16's that has 20 fruit machines and two pool tables. It also has two televisions both with Sky Digital for its customers. It has the advantage of being on the market before me creating a regular group of loyal customers. However, it has a bad reputation and it is a small building, which is not on the main strip of Glengormley. It may create a little competition. Although there is a range of competition, I hope that Big Money will be more appealing than its competitors because it will be newer and more up to date with a wider variety of facilities and machines. SAMPLING METHODS To carry out a survey of every single potential customer would be impractical, time consuming and costly. Therefore only a sample of the population is needed to collect enough data to establish a clear idea of consumer views. The two main concerns of sampling are to choose the right people and the right number for the questionnaire. There are three main types of sampling. Random sample: This method, selected at random, gives everyone in the area an equal chance of being selected. Its main advantage is that bias cannot be introduced when choosing the sample. However, unfortunately this technique assumes that all members of the group are homogenous, which is not always the case. Also it is not a representative sample and can be quite costly and time consuming. Stratified random sample: Researchers prefer this process because it makes the random sample a more accurate portrayal of the whole group. The sample is divided into segments or strata and only those persons with certain characteristics are required. Quota sampling: This is my preferred method. I would like an equal number of men and women to participate in the questionnaire. Once the target from each sex is reached no more persons from that group can be chosen. ...read more.

Conclusion

12ft snooker tables: �3.50 �1113.00 x 6(tables) x 52(weeks) �21.00 �57876.00 per year x 53(hours) / 12 �1113.00 per week �4823.00 per month Coin operated pool tables: �0.50 �750.00 x 6(tables) x 52(weeks) �3.00 �39000.00 per year x 250(games) / 12 �750.00 per week �3250.00 per month AIR HOCKEY TABLES: The air hockey will cost 50p a game and I have worked out that there will be 15 games played per table a day, this is a total of 105 games played per table a week. Air hockey: �0.50 �105.00 x 2(tables) x 52(weeks) �1.00 �5460.00 per year x 105(games) / 12 �105.00 per week �455.00 per month The total income from the snooker and pool tables, and the air hockey is: �4823 + �3250 + �455 = �8528.00 per month Therefore my total monthly income is �55509.67 + �8528.00 = 64037.67. I have also estimated that I will make an extra �2000 in each of the summer months of July and August. START UP COSTS These are the estimated start up costs for the first month: Personal Finance �40000.00 Bank Loan �50000.00 Rent of premises: �850.00 Refurbishment: �20000.00 Advertising: �100.00 Pool Tables: �6570.00 12ft Snooker tables: �23490.00 Twin Racing games: �10585.00 Poker machines: �10000.00 Fruit machines: �5043.33 Skill Machines: �173.33 Arcade games: �520.00 Air hockey tables: �2590.00 Wages: �7218.00 Electricity: �1000.00 Phone bill: �30.00 Total costs: �88169.66 SOUCES OF FINANCE In order to start up this business I will need quite a lot of money. I have �40,000 of my own money and I will be getting a bank loan of �50,000 which has to be paid back at a fixed interest rate of 9.9% over 5 years. 9.9% of �50,000 = �4950 �50,000 + �4950 = �54950.00 total amount paid; �54950.00 / 5 = �10990.00 per year; �10990 / 12 = �915.85 per month. ?? ?? ?? ?? Candidate No. 5138 1 Centre No. 71149 ...read more.

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