The Asylum Escape - Business Plan

The Asylum Escape
theasylumescape
@TheAsylumEscape
CONFIDENTIAL INFORMATION
Business Plan
May 2016
CONTACT INFORMATION:
- Phone: +39 347 288 2768
- Mail: lorenzo.casale@hotmail.it
ADDRESS:
Via Monte Grappa 40Via Monte Grappa 40
20182 - Limbiate (MB)
WEBSITE & SOCIAL MEDIA:
www.theasylumescape.it

Business Plan - May 2016
Milan, ITALY
For more information please contact us at lorenzo.casale@hotmail.it
- Page 2 -
1 EXECUTIVE SUMMARY
1.1 MISSION & COMPANY DESCRIPTION
1.2 INDUSTRY ANALYSIS
1.3 MARKET ANALYSIS
1.4 MARKETING PLAN
1.5 MANAGEMENT TEAM & SERVICE PLAN
1.6 FINANCIAL PROJECTIONS
4
4
4
4
5
5
5
2 MISSION STATEMENT 5
3 COMPANY DESCRIPTION
3.1 HISTORY
3.2 PRODUCTS AND SERVICES
3.3 CURRENT STATUS
3.4 LEGAL STATUS AND OWNERSHIP
6
6
6
6
7
4 INDUSTRY ANALYSIS
4.1 INDUSTRY SIZE
4.2 INDUSTRY GROWTH RATES
4.3 INDUSTRY STRUCTURE
4.3.1 RIVALRY AMONG COMPETITORS
4.3.2 THREAT OF POTENTIAL INCOMING
4.3.3 THREAT OF SUBSTITUTE GOODS
4.3.4 CONTRACTUAL POWER OF SUPPLIERS
4.3.5 CONTRACTUAL POWER OF CUSTOMERS
4.4 NATURE OF PARTECIPANTS
4.5 KEY SUCCESS FACTORS
4.6 TRENDS
4.7 LONG-TERM PROSPECTS
7
7
8
9
9
10
10
11
11
12
12
13
14
5 MARKET ANALYSIS
5.1 MARKET SEGMENTATION AND SIZE
5.2 TARGET MARKET TRENDS
5.3 BUYER BEHAVIOR
5.4 COMPETITOR ANALYSIS
5.5 ESTIMATE ANNUAL SALES
14
14
15
15
16
16
6 MARKETING PLAN
6.1 CUSTOMERS
6.2 THE ESCAPE ROOMS
6.3 THE LOCATION
6.4 THE PRICES
17
17
17
18
18

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6.5 TEAM BUILDING
6.6 DATES & ADVERTISE
19
19
7 MANAGEMENT & ORGANIZATIONAL STRUCTURE 20
8 SERVICE PLAN
8.1 GENERAL APPROACH TO OPERATIONS
8.2 BACKSTAGE (BEHIND-THE-SCENE OPERATIONS
ACTIVITIES)
8.3 FRONT STAGE (WHAT THE CUSTOMERS SEE AND
EXPERIENCE)
8.4 HOW TO REACH US
8.5 INVENTORY
8.6 SEASONALITY AND PEAK TIMES
8.7 OUTSOURCING
21
21
22
23
23
24
24
24
9 CRITICAL RISKS 24
10 ANALYSIS OF FINANCIAL PROJECTIONS
10.1 REVENUE MIX & SALES PROJECTIONS
10.2 COSTS
10.3 PUBLIC GRANTS, DEBT AND EQUITY
10.4 BALANCE SHEET, INCOME STATEMENT AND BREAK-EVEN-
POINT
10.5 SIMULATION MODELS
25
25
27
28
30
33

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“The one and only
escape room so
fascinating, you won’t
want to escape!”.
Since 2006 escape room
number is growing at a
rate of 53.12% each
year.
Escape room business is
not a mature market.
Our company’s target is
the population aged
between 15 and 55
years old who live in a
50Km area around
Limbiate: about 3M
people.
1. EXECUTIVE SUMMARY
1.1 MISSION & COMPANY DESCRIPTION
“The one and only escape room so fascinating, you
won’t want to escape!”. The Asylum Escape is a new
start up. We will open in October 2017 10 escape
rooms in Mombello’s former mental asylum. We are
obtaining funds in order to start the renovation of the
building. There are 5 co-funders that will invest 20%
each in the company’s equity. We will adopt an s.r.l.1
form of business.
1.2 INDUSTRY ANALYSIS
Since 2006 escape room number is growing at a rate of
53.12% each year thanks to the 45% of world
population aged between 15 and 44 years old. The
industry is mostly composed of independent rooms that
operate locally. The highest barrier a potential entrant
has to face is what a company can offer to its clients.
Financial needs are low, there are no critical resources
needed and no legislative issues. As a substitute good
we can consider every product or service that gives the
customer a comparable adrenalin rush. Suppliers have
low contractual power and the risk that one of them
becomes a competitor is really low. Clients have not
high negotiation power. They don’t care too much
about price because it’s set from the market. Escape
room business is not a mature market, so entering it
now can bring competitive advantages for the future.
1.3 MARKET ANALYSIS
Our company’s target is the population aged between
15 and 55 years old (with focus on the range 20-35)
who live in a 50Km area around Limbiate. The total
amount of potential customers in our target area is
about 3M people. We will take advantage of the
increasing interest in horror trend and the massive use
of social networks in order to make people curious
about our escape rooms and persuade them to try. In
the 50Km area near Limbiate there are 16/17
competitors, but they will probably increase in few
years. Our location (Mombello’s former mental asylum)
will help us continue having a competitive advantage.
1
S.r.l., states for Società a Responsabilità Limitata

Milan, ITALY
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10 rooms with 2 difficulty
levels.
The management team
will be composed by the
5 co-founders. To
complete the staff 5
employees (Game
Masters) will be hired.
There will also be a
museum centered on the
asylum’s history.
Will be requested
fundings for 1,5M to
several European’s fund.
1.4 MARKETING PLAN
The asylum escape will have 10 rooms with 2 difficulty
levels. Rooms will change in order to maintain
customer’s loyalty. The historical building gives a horror
connotation to our escape rooms and we will take
advantage of this in order to create a frightful
atmosphere. The price is based on the group’s
dimension and for team building projects it will be
defined based on the kind of work requested from the
customer. We have already planned some marketing
events, like the advertising for a promotional event and
some other collaboration.
1.5 MANAGEMENT TEAM & SERVICE PLAN
The management team will be composed by the 5 co-
founders: Alessandro Braglia (CTO), Lorenzo Casale
(CEO), Benedetta Gasparini (CFO), Pietro Madonia
(COO) and Flavia Villa (CMO). To complete the staff 5
employees (Game Masters) will be hired. The main
activity of the operation department is to create riddles
for the rooms and equip the design of them. After the
change of the rooms, the enigmas will be stored and
re-used for other rooms, if necessary. Escape rooms
will be opened from 4:00PM to 00:30AM during
weekdays (Monday to Tursday) and from 4:00PM to
2:00AM during weekends (Friday to Sunday). There will
also be a museum centered on the asylum’s history.
Interior designer and hygiene personnel will be
outsourced.
1.6 FINANCIAL PROJECTIONS
To start the business, renovate the location, pay the
utilities and the security service, will be requested
fundings for 1,5M to several European’s fund. We
project to have the following revenues.
2017 2018 2019 2020 2021
2 people (10%) 43,352€ 61,618€ 85,993€ 112,942€ 147,739€
3-6 people (70%) 303,466€ 431,326€ 601,948€ 790,593€ 1,034,171€
7-14 people (20%) 86,704€ 123,236€ 171,985€ 225,884€ 295,477€
Revenues without VAT 433.522€ 616,180€ 859,926 1,129,418€ 1,477,387€
Revenues with VAT 528,897.20€ 751,739.22€ 1,049,109.90€ 1,377,890.28€ 1,802,411.71€
“The one and only
2. MISSION STATEMENT
“The one and only escape room so fascinating, you

Milan, ITALY
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escape room so
fascinating, you won’t
want to escape!”
Currently we are in the
startup stage and we are
making continuous
progresses to reach our
goal: opening on
October 31st
, 2017.
10 escape rooms
themed as follows: 4
horror, 3 with just
enigmas and riddles to
be solved and the last 3
supernatural.
An exclusive contract will
guarantee the use of the
mental asylum by us
only for at least 10 years.
We are requesting and
obtaining the necessary
funds.
won’t want to escape!” This is our motto, the mantra
that will guide us in the creation of a unique setting for
our customers. Using a former mental asylum with a
risky and challenging way to start an escape room
business but it’s exactly what we wanted: its history will
be an unrepeatable key success factor.
3. COMPANY DESCRIPTION
3.1 HISTORY
During a Business Plan course at Bocconi University
we were forced to create a team and came up with an
idea for a new company: here our company started to
be shaped. Currently we are in the startup stage and
we are making continuous progresses to reach our
goal: opening on October 31st
, 2017. Our idea will meet
the need of a more immersive and realistic experience
of the customers of the current escape room’s market.
3.2 PRODUCTS AND SERVICES
Our business, thanks to the vastness of the former
mental asylum we’ll be using as location, will be made
up of 10 escape rooms themed as follows: 4 horror
related, 3 with just enigmas and riddles to be solved
and the last 3 supernatural related. We chose this 3
kind of settings because they are the most trending in
the market right now. We will protect the services
offered with a non disclosure agreement signed by the
staff (co-founders and employees), companies doing
team building activities and other companies with which
we will relate as for cleanings. Moreover an exclusive
contract will guarantee the use of the mental asylum by
us only for at least 10 years.
3.3 CURRENT STATUS
Right now we are requesting and obtaining the
necessary funds so we could start all the renovation
works in a few months, maybe already in the middle of
June 2016. Actually the management team is
composed by the 5 co-founders displayed in the 7th
chapter. The early customer reactions to a promotional
video were huge, more then the 90% asked more about
our business, a little 5% were curious and ready to try it
and only a small 5% weren’t sure about it, but we will
engage them too. In the future we will hire 5 employees

Milan, ITALY
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Right now we have
funded the project with
our own money.
Each founder has a 20%
of the company’s equity
Worldwide ecosystem of
more than 3,673
companies and 7,934
rooms.
as Game Masters, to create and control the games in
the rooms. It’s important to say that right now we have
funded the project with our own money, we don’t have
any debt or surrendered any equity.
3.4 LEGAL STATUS AND OWNERSHIP
The 5 co-founders own the business and there won’t be
any changes in the future. Each founder has a 20% of
the company’s equity, as settled in the founders
agreement. Since we want the company to grow fast
we won’t have any compensation for the first years. To
start our business we chose to adopt an s.r.l. form of
business.
4. INDUSTRY ANALYSIS
4.1 INDUSTRY SIZE
Since the very beginning in 2006, the escape room
business had an exponential growth that took the very
first escape room in the world, opened in the Silicon
Valley, to be part of a worldwide ecosystem of more
than 3,673 companies and 7,934 rooms2
.
The graph shows the potential actual size of the
worldwide market based on solid assumptions. Starting
from the bookings of Italian companies and considering
the average rooms number, was calculated the annual
revenue per room and using this data was found the
revenue growth of the entire market. Articles and
reports confirmed the guess about the room number for
the entire world too. It’s not wrong to expect the market
2
Data from the ESCAPE REVIEWER website: http://www.escapereviewer.com/#!map/c1fzv and ESCAPE ROOM DIRECTORY
website: http://escaperoomdirectory.com
0
100.000.000
200.000.000
300.000.000
400.000.000
500.000.000
600.000.000
700.000.000
800.000.000
900.000.000
1.000.000.000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
MARKETREVENUE(in€)
YEAR

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In Italy there are 62
companies located in 29
different cities.
reaching the 1B goal within the 2016.
In Italy there are 62 companies located in 29 different
cities based in 13 out of 20 regions. As usual the
percentage of companies per region is not equally
distributed and, as the graph below show, the top five
positions are taken by: Lombardia, Emilia-Romagna,
Piemonte, Campania and Veneto.
Instead considering the number of cities in which
escape rooms are present, the first two regions are the
same while the next three change in the order showing
the following ranking: Lombardia, Emilia-Romagna,
Veneto, Piemonte and Campania.
4.2 INDUSTRY GROWTH RATES
27,42%
12,90%
12,90%
8,06%
8,06%
6,45%
4,84%
4,84%
4,84%
3,23%
3,23%
1,61% 1,61%
Lombardia
Emilia-Romagna
Piemonte
Campania
Veneto
17,24%
13,79%
13,79%
10,34%
6,90%
6,90%
6,90%
6,90%
3,45%
3,45%
3,45% 3,45% 3,45%
Lombardia
Emilia-Romagna
Veneto
Piemonte
Campania
#1 ESCAPE
ROOM -
Silicon Valley
7,934
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
9.000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
ESCAPEROOMS
YEAR

Milan, ITALY
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Since 2006 escape room
number growth at a rate
of 53.12% each year.
There’s no leader in the
industry.
Independent rooms have
the control of the market.
As shown in the graph above, the exponential growth in
revenues is also visible in the number of new escape
rooms opened. Since 2006, on average, escape room
number growth at a rate of 53.12% each year. The
European area is the one with the most escape rooms
in the world.
The fuel for such an impressive growth in mainly
composed by all the people aged between 15-44 years,
which currently represents the 45% of world
population3
.
4.3 INDUSTRY STRUCTURE
• 4.3.1 RIVALRY AMONG COMPETITORS
− Concentration: As the various reports
show there’s no leader in the industry,
neither global nor local in each country.
There are a lot of different realities that
mostly operate locally. So the competition
is high, condition that levels the price
between 20-30€ worldwide4
.
− Degree of product differentiation: There
were no possibility to gain a significant
amount of data about the franchising
weight in this industry, but through all the
articles and reports read it can be said
that independent rooms have the control
of the market (for sure the Italian one).
This lead to the highest possible level of
differentiation because, despite the
attempts of copying other rooms or
similarities deriving from employing
famous interior designer that have
already worked for other companies, each
founder (or team of founders) has his own
ideas that wants to represent.

3
Data from the GEOHIVE website: http://www.geohive.com
4
Data from the ESCAPE ROOMS website: https://www.escape-rooms.com, MARKET WATCH website:
http://www.marketwatch.com and CNBC website: http://www.cnbc.com
16,13%
83,87%
Franchising
Own Business

Milan, ITALY
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The industry is growing
at an exponential rate.
− Impact of fixed costs: The perfect place
represents the most important cost for a
new business, but as the majority of
escape rooms aren’t too big, finding the
right spot will not represent an obstacle.
− Industry growth: The industry is growing
at an exponential rate and since its
beginning in 2006 it evolved at an
average of 53.12% each year.
− Exit barriers: There are no exit barriers so
it’s really easy also change the business
location if the company needs more
space because its growing. The majority
of companies rent the space they need to
start their business.
• 4.3.2 THREAT OF POTENTIAL INCOMING
− Entrance barriers: The highest barrier a
potential incoming has to face is what a
company can offer to its clients inside the
escape rooms.
− Capital needs: Financially speaking they
are quite low, regarding the rent of a
proper space. They can increase
considerably in case of promotion
strategies involving the media (new and
traditional ones).
− Access to critical resources: It’s easy, the
only problem could be finding exactly
what you want if you need something
special or custom made.
− Brand: It’s probably as important as the
puzzles inside each room. It helps a
company get known recalling a specific
feeling just reading the name or
remembering an emotion when a
customer tried to escape during a game.
− Legislative barriers: It depends by one
country to another, in some places it’s
illegal to close somebody inside a room.
Considering how this business easily
spread through out the world it seems
that legal issues are mostly irrelevant. In
any case in Italy there aren’t problems in
this way.
• 4.3.3 THREAT OF SUBSTITUTE GOODS
− Value for money of substitute goods: It

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Can be considered as a
substitute good every
product or service that
gives the customer a
comparable adrenalin
rush.
Each product has to
work properly so to let
the final customers
experience the best
escape game possible.
varies from a person to another what to
consider as a substitute good. It could be
watching a horror movie, that costs
around 7€, or try a parachute jump, which
costs around 150€. To set a more specific
definition, can be considered as a
substitute good every product or service
that gives the customer a comparable
adrenalin rush.
− Propensity of clients to change: There are
two alternatives: they succeed escaping
or they don’t. If they don’t succeed it’s
more likely that customers will come back
again to defeat the room. Instead if they
win they can choose among three
different options: 1) Play the game again
trying to score a better result; 2) Play
another different room; 3) Don’t come
back.
• 4.3.4 CONTRACTUAL POWER OF SUPPLIERS
− Concentration: As the set of needs of an
escape room business is really wide,
suppliers don’t represent a problem in
terms of contractual power.
− Existence of substitute products: There
are a lot of different options among which
a company can select what it needs.
− Strategic value of the asset sold to the
customer: Each product has to work
properly so to let the final customers
experience the best escape game
possible, but none of the products bought
is essential or has just one seller.
− Ability to integrate downstream: It’s not a
problem because what a supplier does is
substantially different from an escape
room business, so the change a supplier
becoming a competitor are really low.
• 4.3.5 CONTRACTUAL POWER OF
CUSTOMERS
− Negotiating power: Medium
§ Concentration: Customer doesn’t
team up in association or
something like that, so they can’t
use this factor as a leverage point.
§ Purchase volumes: Customers

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Pricing information can
be easily found on the
company’s website.
Each company tries to
renovate itself a fixed
amount of times during a
year.
The two main
discretional points are if
a company offers B2B
services or if is a
franchise.
usually use a try-and-decide
process to understand if they like
the service offered and if come
back again or gift family and
friends with vouchers.
§ Available information: Pricing
information can be easily found on
the company’s website, instead the
inside of each rooms is secret and
only a brief description is available
online, just to catch the attention.
− Price sensitivity: Mostly because of the
“fixed price” set by the market, customers
don’t care too much about it, but it can be
used for signaling if you offer something
more and want to be noticed out of the
competitors.
− Degree of product differentiation: Despite
a room designed as part of a franchise,
each company tries to renovate itself a
fixed amount of times during a year to
continuously catch new customers and
keep the old one coming to se what’s
new.
4.4 NATURE OF PARTECIPANTS
There is no such big differentiation between companies
in terms of business structure. The two main
discretional points are if a company offers B2B services
(like team building experience) or if is a franchise. The
matrix that follows shows graphically and more clearly,
with some examples, the 4 types of companies a
customer could find.
B2B
YES Secret Rooms Enigma Room
NO Intrappola.to Trap Milano
YES NO
FRANCHISE
4.5 KEY SUCCESS FACTORS
The company in the industry try to excel in all the six
following key success factors:
1. Location: Having an escape room in a building
on a crowded street of a big city is already a
good point of start and marketing itself.
2. Structure/Building: If the place found has all the
necessary things to create a business inside

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A company should
consider also
implementing a payment
process via its website.
The horror theme is
growing popularity in the
last years.
without spending to much money is not bad.
3. Decorations: The style of each room must reflect
attention to the smallest detail, so the customers
can be more involved in the game
4. Puzzles: The difficulty and the creation of the
puzzles is the key for a successful escape room.
5. Price: The customers must perceive that they
are paying exactly for what they get or even
less.
6. Paying options: The possibility to pay cash or via
other means must be considered not only when
the customers arrive but a company should
consider also implementing a payment process
via its website, so the client can book and pay
easily and faster.
7. Other services: Offering a team building service
is a well valued plus, so a company can open up
to more customers.
4.6 TRENDS
The escape rooms industry is characterized by the
following trends:
• Environmental:
− Economic: Thanks to the economic crisis
the real estate market suffered a lot and
today it hasn’t completely recovered, so
it’s still easy renting a good place at a
convenient price.
− Social: The horror theme is growing
popularity in the last years, in greater part
thanks to the various horror movies. A
very interesting data regarding the horror
movie industry, that affects positively the
escape room business, is its revenue
growth since 1995 of 62,22%5
.
− Technological advances: Technology is
an essential part in every escape room,
just for security reasons too. Surveillance
cameras are now smaller than ever, but
technology is helping companies also
building new tricks in escape rooms.
Thanks to the continuous improvement
the costs related to technology is slower
than ever.
− Political and regulatory changes: Since
5
Data from THE NUMBERS website: http://www.the-numbers.com

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In the last three years
the escape room game
literally exploded.
The escape rooms
business isn’t still a
mature market.
2012 is possible to start a new compny in
Italy as an s.r.l.s. (Società a
Responsabilità Limitata Semplice. In this
way it’s possible to have several cost-
related advantages.
• Business: In the last three years the escape
room game literally exploded, so now getting
known is easier as people are more informed
about this new alternative experience.
4.7 LONG-TERM PROSPECTS
The escape rooms business isn’t still a mature market,
so it’s good to enter it now with innovative ideas that
can set a competitive advantage for the years to come.
Probably, if the growth keeps on going like the past
years, the mature state will be reached by 2019-2021.
5. MARKET ANALYSIS
5.1 MARKET SEGMENTATION AND SIZE
The Italian market has a 15 Million value and currently
is divided in several regions as said in the industry
analysis. The highest number of companies and cities
with escape rooms is located in Lombardia, which itself
produces one third of the entire market value. However
our company stays grounded and will start its business
targeting a smaller slice of the Lombardia’s market,
precisely the Milan area which is the most profitable of
the region with its 3 Million value (20% of the overall
Italian market).

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Potential customers in
our target area: 3M.
In our building we will
create all the most
profitable escape rooms’
narratives.
The population we’ll target is in the 15-55 years old
range, with a higher focus on the smaller group of
people aged between 20 and 35 years. The older part
of our customer base will be composed mainly by
people involved in team building experience with
companies, this opportunity will be used in two ways:
1. Team Building Experience: We will offer a
custom product to create the best engagement
possible and let the companies come back,
building a strong relation.
2. Marketing: The largest part of people has a
family with sons in the proper age to enjoy the
game. As they have friends too, this would be a
good occasion to create some word of mouth.
The total amount of potential customers in out target
area is composed of 3M people.
5.2 TARGET MARKET TRENDS
In our building we will create all the most profitable
escape rooms’ narratives, as we have all the space
needed and the right atmosphere too. The most
trending themes are:
1. Escape from the unpleasant
2. No narrative, just escape the room
3. Engage with the supernatural
As mentioned in the industry chapter, the horror trend
is getting more and more popular each year, thank to
all the movies and related stuff. This, merged with the
outstanding power of communication and engagement
represented by the social networks, will be our first
mean of reaching our customers. Italian people use
social media most than anybody else with an average
of 6 hours and half per day, according to a Nielsen
research6
.
5.3 BUYER BEHAVIOR
We perfectly know that despite people may like scary
things like the ones seen in horror movies, some of
them need to be “prepared” for what they’ll see. We will
prepare different marketing campaigns and different
ways to target everyone and everywhere with the
minimum costs. Either if customers are horror-
passionate or simply want to feel an adrenaline rush,
they will be approached in the right way.
As our product sorts a medium-high involvement, we
6
Data from the NIELSEN website: http://www.nielsen.com

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We will be based in the
former building of
Mombello’s mental
asylum, a unique setting
that constitutes an
absolute advantage
compared with the other
classic escape rooms.
will manage all the processes around our customers’
behavior to make them curious about the game and try
it.
5.4 COMPETITOR ANALYSIS
We will be based in the former building of Mombello’s
mental asylum, a unique setting that constitutes an
absolute advantage compared with the other classic
escape rooms. From there we’ll target an approximate
area with a 40-50Km range that will include the
prosperous Milan area, as sad in paragraph 5.1. In our
business area we’ll compete with almost all the other
companies in Lombardia (16/17 are in a 50Km range
from Limbiate, where the mental asylum is located). So
we can say that they will be our direct competitors, all
the 17 companies, none excluded.
The following competitive analysis grid is based on a
ranking made by TripAdvisor on Lombardia’s escape
rooms ponderated using their scores and total number
of votes.
NAME
CHARACTERISTIC
The Asylum
Escape
Company
A
Company
B
Company
C
Location: Geographic Even Advantage Advantage Advantage
Location: Building Advantage Disadvantage Disadvantage Disadvantage
Number of rooms Advantage Disadvantage Disadvantage Disadvantage
Decorations Advantage Even Even Even
Puzzles quality Even Even Even Even
Social presence Advantage Even Disadvantage Even
Price Disadvantage Even Even Even
Paying options Advantage Disadvantage Disadvantage Even
Team building Advantage Disadvantage Disadvantage Advantage
Regarding indirect and future competitors there’s no
much to say, we can make just one consideration: our
industry is continuously growing year by year, so it
wouldn’t be smart think that the current situation won’t
vary. Surely more companies will open in the years to
come and we’ll have to fight against them but with the
advantage of the exclusive use of the mental asylum
area, thanks to an exclusive agreement with the
ownership of the building.
5.5 ESTIMATE ANNUAL SALES
With a complete analysis of industry trends,
competitors, target market and potential growth we

Milan, ITALY
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assume to have the following revenues in the next 5
years.
2017 2018 2019 2020 2021
2 people (10%) 43,352€ 61,618€ 85,993€ 112,942€ 147,739€
3-6 people (70%) 303,466€ 431,326€ 601,948€ 790,593€ 1,034,171€
7-14 people (20%) 86,704€ 123,236€ 171,985€ 225,884€ 295,477€
The Asylum Escape will
be the biggest escape
room location in Italy
thanks to its 10 different
escape rooms.
2 different difficulty
levels.
Starting from October
2018, every two months
we will change riddles in
6. MARKETING PLAN
6.1 CUSTOMERS
The Asylum Escape will be the biggest escape room
location in Italy thanks to its 10 different escape rooms.
The target of our game is people who live in the North
of Milan. The potential market is composed by about
3,000,000 people. Their age is between 15 and 59, with
a focus on the range between 20 and 35.
The graph shows the composition of the population by
age in a 50Km area around Limbiate.
6.2 THE ESCAPE ROOMS
In order to satisfy different needs, in The Asylum
Escape the rooms will have 2 different difficulty levels.
People can decide the level of the room in which they
will play at the moment of the reservation. The 2
different levels (normal and hard) will differ in the
difficulty of the riddles and in the quality and quantity of
horror effects. Almost for one year the riddles in the
rooms won’t vary, then starting from October 2018,
every two months we will change riddles in two rooms
at time. This way people can change room every time
15,89%
25,93%
25,73%
22,27%
10,18%
15-24
25-34
35-44
45-54
55-59

Milan, ITALY
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two rooms at time. The
purpose of these
changes is to build
customer loyalty and
keep engagement at a
high level.
The former mental
asylum of Mombello, is
an added value for our
company.
In 1865 it became a
mental asylum. Inside it
were conducted human
experiments so it took on
a sinister reputation.
Our logo represents the
sadly gate of the asylum.
The price is based on the
number of players.
facing different challenges, but also engage with new
ones if they completed every room successfully. The
purpose of these changes is to build customer loyalty
and keep engagement at a high level. The unused
riddles will be filed: doing this, with small changes, they
can be re-used in future rooms preparation. In the
building there will be a storage room for rooms pieces
of furniture not used in any room in that moment.
6.3 THE LOCATION
The location, the former mental asylum of Mombello, is
an added value for our company. Built in ‘500, it was
the holiday house of a Milanese noble family. During
the Italian’s Campaign, also Napoleon lived there. In
1865 it became a mental asylum where 3,000 people
lived. Inside it were conducted human experiments
and, also thanks to this, the asylum quickly took on a
sinister reputation where the walls became a break
between the civilized world and a place full of suffering
and sadness. Also Benito Mussolini’s son was
hospitalized, and died there. The Mombello’s asylum
was closed in 1978 and since then the buildings have
been abandoned.
The history of the building already gives a horror
connotation to The Asylum Escape. We will take
advantages of this unlikely celebrity in order to attract
curious customers from all around the region. Where
it’s possible, we will leave original pieces of furniture
and walls of the 1865 asylum, in order to make the
customer feel as if he is really in the old mental
hospital. Where it’s not possible, we will recreate the
rooms thanks to pictures taken when the asylum was
used.
The state of abandonment which the location finds itself
in will give us, through the repair works which will be
faced to start the business, the possibility to request
funds from the Government as an incentive for the
requalification of the facility.
Our logo represents the sadly gate of the asylum: in
this way our potential customers can easily recognize
us because we will use the same gate to create the
entrance to our business’ parking.
6.4 THE PRICES
The price will change based on the number of players
that will want to play.

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For team building
projects, the price will be
planned with the client.
open its rooms October
31st
, 2017. Before and
after the opening we will
create several
advertising campaigns.
NUMBER OF PEOPLE A B C
PRICE (per person) 30€ 25€ 20€
There will be prizes as gadgets and discount coupons
to the ones who will manage to escape from the rooms
in less then one hour (which is the maximum time to
solve all the riddles). We chose to set a price per
person instead a group one to better manage this
variable and let the customer understand that we add a
price premium for the quality of all our services.
6.5 TEAM BUILDING
For team building projects, the price will be planned
with the client, depending on the number of people will
participate, the purpose the team has to achieve and
the number of times that they want to play. For every
team building project, an expert will create personalized
riddles teaming up with the HR division of the company
or who will be devoted to this task. If a company needs
it we will also offer a 360° service, with hotel
accommodation, shuttle rides and lectures with
selected speakers related to the skill a company wants
to enhance in its employees.
6.6 DATES & ADVERTISE
The Asylum Escape will open its rooms October 31st
,
2017. We will take advantage of Halloween in order to
launch our new way to have fun. Before and after the
opening we will create several advertising campaigns
that will be developed mainly in Milan (but not only)
near places where we can easily get in contact with our
target customers (universities, high schools, pubs, etc).
The campaigns will have the main goal of creating buzz
around our company.
• VAN THEFT: some people, dressed as asylum’s
doctors, will kidnap an actor while he’s walking
on a street and will bring him into a van, bringing
him to the asylum. This will be repeated in
different places and different days to let the
campaign became viral. The last part of the theft
will be leaving a big poster with information
about who we are and the opening party.
• PROMOTIONAL EVENT: this event will be
almost one week before Halloween. It will
consist in a horror dinner inside the asylum for
our investors and other important people in
terms of popularity and power. The event will be

Milan, ITALY
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Advertising campaigns
on the main social
networks (Facebook,
Instagram, Twitter).
The 5 co-founders will
manage the business.
characterized by a free entry, so everyone will
be allowed to enter the party area where he will
find: several djs heating up the atmosphere,
expert bartenders to serve cocktails, a free
parking area inside the park area and all the
possible information about who we are and what
we do.
• COLLABORATION: in order to get the most out
of the social media environment we will
collaborate with the YouTube channel
DMPranks 7
to create several videos scaring
people (they will be actors) who tries to enter the
asylum.
In order to let people know about The Asylum Escape
we will also create advertising campaigns on the main
social networks (Facebook, Instagram, Twitter) using
the material produced during the described activities.
The Asylum Escape will offer the possibility for
customers, who are interested, to periodically receive
information regarding new offerings and changes in the
rooms.
7. MANAGEMENT AND ORGANIZATIONAL
STRUCTURE
Considering the presence of many initial activities and
less continuous ones, the initial team will be composed
of only eleven people. Basing on a simple structure,
there will be 5 co-founders, which will manage the
business through the Board of Directors.
• Braglia Alessandro: Thanks to his previous
experiences and his advanced knowledge in the
technology field, he will be able to manage all
the digital elements of The Asylum Escape, thus
holding the position of Chief Technology Officer.
• Casale Lorenzo: Thanks to his previous
experiences and the developed know-how in the
management of various businesses, he will hold
the position of Chief Administrative Officer, thus
taking care of the performance of the business
and keeping the harmonious proceeding of The
Asylum Escape.
• Gasparini Benedetta: Thanks to her previous
7
DmPranksProductions, official YouTube channel: www.youtube.com/user/DmPranksProductions

Milan, ITALY
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hire 5 Game Masters,
which will create
enigmas and control two
rooms each.
working experiences in the Finance department
of several firms, she will hold the position of
Chief Financial Officer, thus being responsible
for all aspects of The Asylum Escape’s finances.
• Madonia Pietro: Thanks to his previous
experiences as coordinator of events and
activities in various fields, he will hold the
position of Chief Operating Officer, regulating
the daily operations.
• Villa Flavia: Thanks to her previous experiences
in the development of marketing plans in various
fields, she will hold the position of Chief
Marketing Officer, managing the all-round
activities concerning marketing.
The Asylum Escape will, moreover, hire 5 Game
Masters which will be paid on a monthly basis and for
the creation of enigmas and the control of two rooms
each. In order to assure a perfectly functioning online
payment system, the business will also use, when
needed, an expert in online security and payments.
CTO
Alessandro Braglia
CFO
Benedetta Gasparini
CEO
Lorenzo Casale
CMO
Flavia Villa
COO
Pietro Madonia
Employees
(Game Masters)
Escape rooms represent
a strongly growing
business, which is
expanding throughout
different parts of the
world.
The central purpose is to
let customers live strong
emotions and feel
challenged enough to
agree upon a return try.
8. SERVICE PLAN
8.1 GENERAL APPROACH TO OPERATIONS
Escape rooms represent a strongly growing business,
which is expanding throughout different parts of the
world. In Milan, several similar activities have recently
opened; nevertheless The Asylum Escape works
towards a more immersive experience, which revolves
around engaging and appalling games. One of the
main focuses is to transmit the sensation of rush and
anxiety, which is supposedly natural and intrinsic in the
concept of a horror-themed escape room: for this very
reason it’s important to create befitting settings. It is
thus reasonable to assert that the central purpose is to
let customers live strong emotions and feel challenged
enough to agree upon a return try. Therefore, the
operations will be geared to:

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Enigmas and riddles will
be thoroughly thought in
order to make them fit
with the environment and
the settings.
A core activity will
revolve around the
creation of motivation to
participate in the games
with certain regularity.
1) Offer an environment adequate for the chosen
location (Mombello’s forms asylum)
2) Provide 2 different levels of difficulty and fright
3) Create a community within which clients can be
thrilled by competition
All of our goals will be achieved through perfectly
coordinated backstage and front-stage activities.
8.2 BACKSTAGE (BEHIND-THE-SCENE
OPERATIONS ACTIVITIES)
• Riddles and enigmas creation, selection and
installation: Enigmas and riddles will be
thoroughly thought in order to make them fit with
the environment and the settings. Moreover they
will be balanced and classified in terms of
difficulty, so that it will be possible let people
choose the preferred difficulty level.
• Riddles and enigmas control and quality checks:
It will be fundamental to keep constant track of
the status of the riddle, on different levels:
material conditions and frequency of resolutions.
• Clues and hints: It will be likewise important to
measure the impact of timed clues, in order to
simplify the solution yet not disrupting the
immersion.
• Customers’ motivation to come back: A core
activity will revolve around the creation of
motivation to participate in the games with
certain regularity. In order to achieve this goal, it
will be important to accurately weight fright,
difficulty, dare and fun; this balance will be thus
kept in a competitive environment, as The
Asylum Escape will work towards a stimulating
environment with points and rankings.
• Security & Surveillance: Due to the open space
around the facility - and the underground tunnels
- The Asylum Escape will be provided with an
effective surveillance and security system,
reassuring both for the business and the
customers.
• Emergency Plans: Emergency plans will be
written in advance and the front office staff will
be trained in the procedures. As much as the
structure will be wholly regulated and
supervised, there will be no space for
uncertainty or doubt.

Milan, ITALY
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For the first period we
will be open from
4:00PM to 00:30AM on
weekdays (Monday to
Thursday) and from
4:00PM to 2:00AM for
the weekends (Friday to
Sunday). Total number
of 10 runs per room on
weekdays and 9 per
room on weekends.
The location is easily
reachable by car. If
booked in advance there
will also be a shuttle. The
location can be easily
reached by train too. Our
location is extremely
easy to be reached by
people using bus.
8.3 FRONT STAGE (WHAT THE CUSTOMERS SEE
AND EXPERIENCE)
On October 31st
, 2017, we will open our company to
the customers. For the first period we will be open from
4:00PM to 00:30AM on weekdays (Monday to
Thursday) and from 4:00PM to 2:00AM for the
weekends (Friday to Sunday). Then, based on the
increasing of the occupancy rate we will extend the
opening time reaching a full day equivalent. Given the
maximum duration of 60 minutes given to solve the
enigmas and 30 minutes (15 at the beginning and 15 at
the end) between every game, this should allow a total
number of 10 runs per room on weekdays (Monday to
Thursday) and 9 per room on weekends (Friday to
Sunday).
The entrance will be placed next to the parking lot, with
a hall where customers will be able to register their
presence and wait for their turn. It will be furnished with
three vending machines (Drinks - Coffee - Snacks) and
sofas for the wait.
Furthermore there will be two spacious rooms where
men and women will be able to change, considering the
possibility for interactive elements during the
experience which could dirty the customers.
Given the relevance of the environment and the facility,
The Asylum Escape will also give its customer the
possibility to learn more about the history behind the
structure and, more in general, what the former asylum
of Mombello was, thanks to a museum which will be
created in the ground floor.
8.4 HOW TO REACH US
The location is easily reachable by car: there will be a
wide car park inside the park, where the asylum is
located, reserved only for clients. If booked in advance
there will also be a shuttle that will take our clients
where they prefer in the surrounding area and bring
them to the asylum and back, paying just for the
kilometres driven, nothing more. As the location can be
easily reached by train too, thanks to a nearby station
(only 2Km away from our gates), we will offer a free
ride to The Asylum Escape to our guests who request
it. Least but not last our location is extremely easy to be
reached by people using bus, as there is a stop in front
of our gates thanks to the nearby high school.

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8.5 INVENTORY
As for the inventory, due to the nature of the business,
The Asylum Escape is not expected to carry a
significant amount of inventory, if not for old enigmas to
be reused in the future and small accessories to be
consumed in the rooms. Every item which is in a
“stand-by” phase will be carefully stored in a specific
room in the ground floor.
8.6 SEASONALITY AND PEAK TIMES
The Asylum Escape expects a higher customers’ flow
during the weekends. During the year, the same
prevision could be made for the autumn season,
especially in proximity of Halloween.
8.7 OUTSOURCING
The Asylum Escape will look for strong partnerships
with, mainly, two professional figures: Interior
Designers and Hygiene companies.
• Interior Designers: they will be contacted in
order to organize the structure and the furniture
inside the building, after that, it will be an
occasional contact.
• Hygiene companies: they will represent the most
constant contact. The frequency will allow the
professionals to adjust themselves to the
particular necessities of escape rooms (in terms
of positioning of riddles).
9. CRITICAL RISKS
As every new business risks are a part of the game, but
we are aware of them and ready to solve everything,
like the ones who follows:
• Lower customers then expected: thanks to our
strong social media knowledge and marketing
tactics, we will face a lower amount of clients
with guerilla marketing tactics.
• Higher renovation costs: in case we’ll need more
money to cover the upcoming costs, we can
access to more European funds or request an
higher amount to the ones explain in chapter 10.
• Not enough Game Masters in Italy: if this
happens we will expand our research also to
foreign country.

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Our primary source of
revenues is the tickets
sold.
10. ANALYSIS OF FINANCIAL PROJECTIONS
10.1 REVENUE MIX & SALES PROJECTIONS
Our primary source of revenues is the tickets sold,
based on the usage of the escape rooms. However we
do consider having other additional sources of
revenues, such as private and optional donations for
the museum and the revenues from the vending
machines. The pricing mix is based on the articulation
of the marketing plan:
Number
of people
Min people
per group
Max people
per group
Average people
per group
Price per
person
VAT
Price per person
without VAT
Percentage
A 2 2 2 € 30,00 22% € 23,40 10%
B 3 6 4,5 € 25,00 22% € 19,50 70%
c 7 14 10,5 € 20,00 22% € 15,60 20%
The initial number of
customers that we think
we are going to reach for
the first year is based on
a saturation rate of 25%.
In order to calculate our revenues, we additionally
found a weighted price, based on the percentages that
we think we are going to get from each type of group:
19,11€ (weighted price).
As owning or outsourcing a catering service for our
business could result too expensive, we are providing
vending machines in the building. We are making the
assumption of a 10% usage from our clients, spending
on average 2€ each. We are going to get 5% on
(royalties)8
x (number of annual clients) x (average
spending) x (% of usage):
2017 2018 2019 2020 2021
% of costumers using
vending machines
10% 10% 10% 10% 10%
Royalties on selling 5% 5% 5% 5% 5%
Average spending
per costumer
2€ 2€ 2€ 2€ 2€
Revenues from
vending machines
227€ 322€ 450€ 591€ 773€
The initial number of customers that we think we are
going to reach for the first year is based on a saturation
rate of 25%: this is an hypothesis based on the number
of customers that we are going to acquire with the
launch of the venture, estimated on the cost of
acquisition from the promotion side and the consequent
growth due to the word of mouth. Especially the
promotional event will be able to reach an occupancy of
8
Franchisedirect - “Cost of Operating Vending Machine”

Milan, ITALY
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al least 2,500 people.
Due to the optimistic analysis of our potential market
and the comparison between the competitors
surrounding Limbiate in terms of growth rate, we are
assuming that our occupancy and, by the extent, our
revenues, will grow with a percentage of 30% every
year. We are also assuming a defection rate of 7%
every year for those customers that are likely not going
to return because they don’t like escape rooms.
2017 2018 2019 2020 2021
Slot Monday 6 7 8 9 10
Slot Tuesday 6 7 8 9 10
Slot Wednesday 6 7 8 9 10
Slot Thursday 6 7 8 9 10
Slot Friday 7 8 9 9 9
Slot Saturday 7 8 9 9 9
Slot Sunday 7 8 9 9 9
Total Week Slots 45 52 59 63 67
Number of rooms 10 10 10 10 10
Maximum capacity
in terms of people
90,743 104,858 118,974 127,040 135.106
Percentage of saturation 25% 31% 38% 47% 57%
Weekly Occupancy 113 160 223 293 383
Weekly people 613 871 1,216 1,597 2,089
Yearly Working week 37 37 37 37 37
People per year 22,686 32,244 44,999 59,101 77,310
3 different group
compositions: 10% of 2
people, 70% of 3-6
people groups and 20%
of 7-14 people groups.
The revenues without VAT could also be broken down
and divided into three different group compositions that
we are assuming to have, based on the offer of our
business: 10% of 2 people (i.e. the couples), 70% of 3-
6 people groups (most common groups based on the
competitors analysis) and 20% of 7-14 people groups
(other competitors doesn’t have as much space as us).
2017 2018 2019 2020 2021
2 people (10%) 43,352€ 61,618€ 85,993€ 112,942€ 147,739€
3-6 people (70%) 303,466€ 431,326€ 601,948€ 790,593€ 1,034,171€
7-14 people (20%) 86,704€ 123,236€ 171,985€ 225,884€ 295,477€

Milan, ITALY
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10.2 COSTS
• VARIABLE COSTS: Our variable costs will be
divided into credit card commissions for the
payment on online transactions (as one of our
main channel for selling tickets will be our
website), consumable goods (such as candles,
fake blood, disposable goods, etc. and all those
materials used in the rooms which are subjective
to change after the usage), cleaning, that we
consider to be variable as we will be outsourcing
that service when needed (after the
“consumption” of the room) and transportation
costs of the fuel for the shuttle. The incidence
was calculated verifying the fixed
prices/revenues.
2017 2018 2019 2020 2021
Credit Cards Commissions 2% 2% 2% 2% 2%
Consumable Goods 1% 1% 1% 1% 1%
Cleaning and Transportation 7% 7% 7% 7% 7%
Total Incidence of Variable Costs 10% 10% 10% 10% 10%
Total Variable costs 43,352€ 61,618€ 85,993€ 112,942€ 147,739€
• FIXED COSTS: Our fixed costs exclude the rent
of the asylum: we are going to obtain the
building as a contract free loan. General &
Administrative costs include consulting and legal
expenses for the fundings. Marketing takes into
account 10,000€ for the promotional event,
7,000€ for web campaigns (development of the
website and social media) and 15,000 € for the
impact marketing initiatives. Water, electricity
and public services will be key utilities for our
business. The outsourcing costs are referred to
the indirect labor (interior designers, team
building speakers and IT consultants). The
security will be a high investment too, as we will
have to provide appropriate technology
(cameras and audio systems), guards and
controlling systems, as the area is pretty
isolated.

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2017 2018 2019 2020 2021
Annual Rent € - € - € - € - € -
General & Administrative Costs 30,000€ 30,000€ 30,000€ 30,000€ 30,000€
Marketing 32,000€ 32,000€ 32,000€ 32,000€ 32,000€
Utilities 40,000€ 40,000€ 40,000€ 40,000€ 40,000€
Outsourcing 60,000€ 60,000€ 60,000€ 60,000€ 60,000€
Security 40,000€ 40,000€ 40,000€ 40,000€ 40,000€
Total Fixed Costs 202,000€ 202,000€ 202,000€ 202,000€ 202,000€
The labor cost of the 5 employees (the Game Master)
will be considered as a fixed cost, as the riddles
produced will be granted as “intangible assets” to be
stored for the future customers.
2017 2018 2019 2020 2021
Number of Employees 5 5 5 5 5
Avarage yearly
cost per employee
24,000€ 24,000€ 24,000€ 24,000€ 24,000€
Labour Costs 120,000€ 120,000€ 120,000€ 120,000€ 120,000€
SSP incidence
on labour cost
1/18 1/18 1/18 1/18 1/18
SSP on Labour Costs 6,667€ 6,667€ 6,667€ 6,667€ 6,667€
SSP Fund 6,667€ 13,333€ 20,000€ 26,667€ 33,333€
10.3 PUBLIC GRANTS, DEBT AND EQUITY
Our initial investment in terms of renovation of the
building will be huge: we got a quotation from a
construction company of 1,000,000€. In addition, we
calculated a 360,000€ amount for restoration and
indoor/outdoor furniture purchases, in order to equip
the 10 rooms, the toilets, the receptions, the lockers
and changing rooms, the gardens and the showcases
for the museum. The purchase of the shuttles is also
included here. All of these costs are considered as
“launching costs”, so we will be able to depreciate them
for 10 years, following the actual Italian regulations.
2017 2018 2019 2020 2021
Investments 1,380,000€ € - € - € - € -
Cumulated
Investments
1,380,000€ 1,380,000€ 1,380,000€ 1,380,000€ 1,380,000€
Depreciation charge 10% 10% 10% 10% 10%
Investments
Depreciation
138,000€ 138,000€ 138,000€ 138,000€ 138,000€
Depreciation Fund 138,000€ 276,000€ 414,000€ 552,000€ 690,000€

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We will finance our
launching costs by
having access to Public
Grants.
We will constitute a s.r.l.
company, with the equity
divided into 20% of
quotes between the 5
co-founders.
The venture is new and doesn’t already have an
history, so it’s really difficult to access to a long-term
debt. Generally, most of the fundings in this sense
come from self-funding. Other than this aspect, we
were told by Marco Trombetti (founder of translater.net)
that we won’t be helped by business angels or venture
capitalists, as our business is not scalable. We can’t
access to the equity crowdfunding either because we
aren’t an innovative business and we don’t detect any
patent. The best option for us in order to finance our
launching costs, is having access to Public Grants for
the first year, in order to access to non-repayable
money. We’ve talked with two different consultants and
we could gather a total amount of 1,500,000€ divided
as it follows:
• Bando ISI INAIL: it accousnts for 40% of our
expenses for the purpose of adapting structures
to the safety national regulations (maximum of
276,269,986€).
• Contributo a fondo perduto: for 50% of the
expenses with the aim of valorize the tourism
and the local heritage/asset/holding (maximum
of 6,427,500€). In order to get this fund, we will
build the Mombello’s museum in order to
promote culture and history of a local region.
• The warranty program for young enterprenuers:
a slight part of the grants will be financed with
this. It’s a grant dedicated to self-employers and
self-enterprenuers between youngsters from 18
to 35 years old (maximum of 2,300€ per person).
The rest of the costs (outsourcing, utilities and security)
will be covered with the remaining 120,000€ for the first
year of usage of the building. All the other costs
(general & administrative and marketing) will be initially
covered by self and family equity. We will constitute a
s.r.l. company, with the equity divided into 20% of
quotes between the 5 co-founders. The business
partners will sign for 20,000€ each, so the overall
equity will be 100,000€. We do not suppose an
increase of capital for the next years.
The situation described could be summarized as it
follows:

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2017 2018 2019 2020 2021
Common Stock 100,000€ - € - € - € - €
Cumulated Stock 100,000€ 100,000€ 100,000€ 100,000€ 100,000€
Foundings 1,500,000€ - € - € - € - €
Cumulated
Fundings
1,500,000€ 1,500,000€ 1,500,000€ 1,500,000€ 1,500,000€
As we have already stated, we will not be able to obtain
a long-term debt. Furthermore we supposed an interest
rate on short-term debt on deposit with the bank of
3.5% (bank overdraft). We are also making different
hypothesis on our DSO and DPO: the clients pay with
their cash at the moment of the purchase of the tickets,
so our DSO is basically 0. On the contrary, we ask for
30 days to be able to reward monetarily our suppliers
(of utilities, outsourcing, security and cleanings).
2017 2018 2019 2020 2021
DSO = Days Sales Outstanding 0 0 0 0 0
DPO = Days Payable Outstanding 30 30 30 30 30
Long Term Debt € - € - € - € - € -
Interest Rate on Short Term Debt 3.5% 3.5% 3.5% 3.5% 3.5%
10.4 BALANCE SHEET, INCOME STATEMENT AND
BREAK-EVEN-POINT
Following the previous analysis, the income statement
projections for the first 5 years are:

Milan, ITALY
- Page 31 -
2017 2018 2019 2020 2021
Revenues 433,522€ 616,180€ 859,926€ 1,129,418€ 1,477,387€
Total Variable
Costs
43,352€ 61,618€ 85,993€ 112,942€ 147,739€
Contribution
Margin
390,170€ 554,562€ 773,934€ 1,016,476€ 1,329,648€
Labour Costs 120,000€ 120,000€ 120,000€ 120,000€ 120,000€
SSP on Labour
Costs
6,667€ 6,667€ 6,667€ 6,667€ 6,667€
Total Fixed Costs 202,000€ 202,000€ 202,000€ 202,000€ 202,000€
Depreciation 138,000€ 138,000€ 138,000€ 138,000€ 138,000€
Royalties 227€ 322€ 450€ 591€ 773€
Other Revenues 150,000€ 150,000€ 150,000€ 150,000€ 150,000€
EBIT 73,730€ 238,217€ 457,717€ 700,401€ 1,013,754€
Interest on
short-term debt
€ - € - € - € - € -
Pre-Tax Income 73,730€ 238,217€ 457,717€ 700,401€ 1,013,754€
Income Taxes 36,865€ 119,109€ 228,858€ 350,200€ 506,877€
Net Income 36,865€ 119,109€ 228,858€ 350,200€ 506,877€
Cumulated
net income
36,865€ 155,974€ 384,832€ 735,033€ 1,241,910€
We expect a steady increase of both net income and
revenues. The fundings will be depreciated for 10 years
and considered as a form of “other revenues”, just like
the Italian regulations deal with this extraordinary item
in this particular case. Due to our high fixed costs we
will be able to break-even in 2018, after 24,420
customers in terms of overall capacity and 518,519€ in
terms of revenues. The explication of the calculations is
stated below:
2017 2018 2019 2020 2021
Fixed costs 466,667€ 466,667€ 466,667€ 466,667€ 466,667€
Contribution margin % 90% 90% 90% 90% 90%
Contribution margin per unit 19.11 19.11 19.11 19.11 19.11
Break even point (in terms of
n° of customers)
24,420 24,420 24,420 24,420 24,420
Saturation Capacity in BEP 27% 23% 21% 19% 18%
Break even point (in terms of
revenues)
518,519€ 518,519€ 518,519€ 518,519€ 518,519€
Safety edge - 84,996€ 97,661€ 341,408€ 610,900€ 958,868€
Safety edge % - 20% 16% 40% 54% 65%
The balance sheet for the first 5 years is made up of:

Milan, ITALY
- Page 32 -
ASSETS 2017 2018 2019 2020 2021
Accounts receivable € - € - € - € - € -
VAT receivable 263,156€ 186,948€ 63,015€ € - € -
= Operating current
assets
- 263,156€ - 186,948€ - 63,015€ € - € -
Fixed assets 1,380,000€ 1,380,000€ 1,380,000€ 1,380,000€ 1,380,000€
Depreciation fund 138,000€ 276,000€ 414,000€ 552,000€ 690,000€
= Net fixed assets 1,242,000€ 1,104,000€ 966,000€ 828,000€ 690,000€
= Total Assets 978,844€ 917,052€ 902,985€ 828,000€ 690,000€
LIABILITIES AND
EQUITY
2017 2018 2019 2020 2021
Fundings 1,500,000€ 1,500,000€ 1,500,000€ 1,500,000€ 1,500,000€
Ammortation Funding 150,000€ 300,000€ 450,000€ 600,000€ 750,000€
Accounts payable 19,784€ 19,784€ 19,784€ 19,784€ 19,784€
SSP fund 6,667€ 13,333€ 20,000€ 26,667€ 33,333€
VAT payable € - € - € - - 9,474€ - 20,403€
Income taxes payable 36,865€ 82,244€ 109,750€ 121,342€ 156,677€
= Operating current
liabilities
1,413,316€ 1,315,361€ 1,199,533€ 1,057,761€ 939,120€
Long term debt € - € - € - € - € -
Short term debt (bank
overdraft)
€ - - 771,082€ - 1,006,038€ - 1,414,995€ - 2,097,907€
= Financial debt - 607,248€ - 771,082€ - 1,006,038€ - 1,414,995€ - 2,097,907€
Common stock 100,000€ 100,000€ 100,000€ 100,000€ 100,000€
Retained earnings 36,865€ 155,974€ 384,832€ 735,033€ 1,241.910€
Net income 36,865€ 119,109€ 228,858€ 350,200€ 506,877€
= Equity 173,730€ 375,083€ 713,691€ 1,185,233€ 1,848,787€
= Liabilites and equity 979,797€ 919,361€ 907,186€ 828,000€ 690,000€
As we can see from the table, the working capital
remains really low because of:
• the absence of the inventory (as we are offering
a service and the low inventory that we keep for
some disposables isn’t part of our core
business)
• the absence of accounts receivable as we get
cash directly from the transactions
• the presence of accounts payable kept for 30
days
• SSP funds which are really low compared to the
previous items
• the VAT which will be receivable for the first 3
years due to our high costs

Milan, ITALY
- Page 33 -
• the income tax payable which are going to
increase along with our net income
10.5 SIMULATION MODELS
While we were shaping our financial forecasts, we
made different assumptions based on the key
variables, on which we are not sure about because
they have yet to be tested. As a result, we built different
simulation models trying to see how our net income will
vary with a change in the:
• Annual growth rate of the occupancy: each year
we suppose the growth will be around 30%. We
are making projections for the best scenarios
(35% - 40% yearly growth) and the worst
scenarios (20% - 25% yearly growth).
• Annual defection rate of the customers: we want
to maintain this pretty low, as having 10 rooms
allow our customers to return to our place more
frequently, so we supposed a 7% of decrease.
The best scenarios are 3% and 5% (which
however are really low) and the worst scenarios
are considering a defection rate of 10% and
15%.
• ∆% of 3-6 people groups (the groups which
constitute our main target)
• ∆% of 2 people groups (customers who are not
our main target and from which we don’t expect
a lot of traffic). The remaining percentage of 7-
14 people groups will be automatically fixed.
To summarize, in our financial forecasts we used the
data that will appear in the center of the simulation
models below.
• 1st
MODEL: how the net income varies with a
change in the saturation capacity starting from
the second year, as the growth will be based on
the word of mouth, advertising and consequent
increase of occupancy. The variables are the
first two stated above.
− Second year:
119,109 20% 25% 30% 35% 40%
3% 105,575 116,853 128,131 139,409 150,688
5% 101,064 112,342 123,620 134,898 146,176
7% 96,552 107,831 119,109 130,387 141,665
10% 89,786 101,064 112,342 123,620 134,898
15% 78,507 89,786 101,064 112,342 123,620

Milan, ITALY
- Page 34 -
− Third year:
224,559 20% 25% 30% 35% 40%
3% 188,115 218,358 249,867 282,642 316,682
5% 176,371 206,109 237,112 269,380 302,914
7% 164,831 194,062 224,559 256,321 289,349
10% 147,899 176,371 206,109 237,112 269,380
15% 120,693 147,899 176,371 206,109 237,112
− Fourth year:
350,200 20% 25% 30% 35% 40%
3% 279,352 337,898 401,444 470,197 544,360
5% 257,288 313,891 375,412 442,058 514,033
7% 235,978 290,671 350,200 414,772 484,590
10% 205,399 257,288 313,891 375,412 442,058
15% 158,020 205,399 257,288 313,891 375,412
− Fifth year:
506,877 20% 25% 30% 35% 40%
3% 386,272 485,507 597,722 724,003 865,480
5% 349,978 444,315 551,210 671,732 806,992
7% 315,529 405,131 506,877 621,817 751,046
10% 267,176 349,978 444,315 551,210 671,732
15% 194,928 267,176 349,978 444,315 551,210
Even considering our worst scenarios every year (the
ones highlighted in red), the net income is still
satisfying.
• 2nd
MODEL: how the net income will vary with an
alteration of the composition of the different
groups. In this model we are considering only
the first year. In fact, learning from that and
testing the market, we will be able to know which
will be the composition of our groups and we will
base the following projections for the future on
these data. The net income’s forecasts
considering the second two variables stated
above are:

Milan, ITALY
- Page 35 -
Groups of 3-6 people
Groups of 2
people
36,865 50% 60% 70% 75% 80%
5% 79,561 64,117 47,795 39,306 30,597
7% 75,863 60,119 43,498 34,859 26,000
10% 70,129 53,935 36,865 28,001 18,918
12% 66,182 49,689 32,319 23,306 14,073
15% 60,075 43,133 25,314 16,076 6,619
The interesting fact is that our most profitable
combination in terms of net income would be
composed by a 50% of 3-6 people groups, a 5% of 2
people groups and a 45% of 7-14 people groups. On
the other hand, our worst scenario would be keeping
really high (80%) the 3-6 people groups and really low
the % of 7-14 people groups (5%), with a 15% of 2
people groups. Given the fact that the 3-6 people
groups are the main target of our competitors, we
should try to implement a strategy that underlines how
our rooms are big and different. This could attract the
7-14 people groups that our competitors can’t afford to
draw and it could surely boost our profitability.

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