How to Start an Ice Skating Rink
If you grew up ice skating, then chances are you had a favorite skating rink that 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. While starting a skating rink of your own is a big venture, rinks can also be highly profitable and enhance their communities.
Ice skating rinks provide both professionals and casual skating enthusiasts with a safe place to enjoy figure skating, hockey, and other ice sports. Indoor rinks are accessible year-round, while outdoor rinks are usable only in the winter months when temperatures drop below freezing. Rinks may vary in size, but they’re usually large enough to accommodate hockey games and figure skating competitions, two valuable sources of income.
Skating rinks offer a variety of activities. Free skating sessions allow the public to enjoy themselves, but rinks have busy schedules that may include competitions, skating and hockey practices, lessons, and even birthday parties. Most rinks offer skate rental, skate sharpening, and a concession stand.
Before drawing up a business plan, connect with other rink owners and ask to meet with them for coffee. Ask them about what running a rink is like, what decisions have contributed to their success, and what they would change about their rinks and operations if they could. These interviews can give you valuable insight into the industry and help to prepare you to successfully open a rink of your own.
According to IBIS World, the ice rink industry grew by an annualized 2.6% from 2014 through 2019. While ice activities are usually more expensive than other sports, an increase in per capita disposable income meant there was plenty of participation in ice sports. That five-year period also saw an increased interest in ice hockey, which led to increased demand for ice time and larger rinks. As more people grew aware of the link between health and physical activity, more people were seeking out sports and physical activity opportunities.
By 2019, the ice rink industry was an 883,000-million-dollar market. A total of 1,714 businesses employed 40,748 staff. IBIS World predicts that the industry will continue to grow from 2019 to 2024, though that growth will be slightly slower. Per capita disposable income should continue to increase, allowing more people to participate in ice sports. The continued awareness of the health benefits of athletics will also probably encourage more people to take part in sports like ice hockey and ice skating.
Many trends are shaping the ice rink industry. According to Recreation Management, most rinks need to attract a broad base of recreational users. This customer base may include families looking to book birthday parties, recreational skaters interested in free-skate sessions, skaters who are signed up for figure skating or hockey lessons, and more. By focusing on recreational skaters instead of relying on elite skaters to make up the bulk of the customers, a rink can better schedule its time and maximize its profits. In recent years, there’s been increased demand for leisure ice and free skating time.
Ice rinks are also embracing green practices in both construction and maintenance. Rinks are using more recycled products, and floors made out of recycled rubber have become popular options. Facilities are being built to use natural lighting to reduce energy usage and costs. Many rinks are transitioning from Freon R-22 refrigerant to ammonia instead, which is more economical and efficient. Some facilities are even using fuel-cell energy to replace most of their electrical power usage. Lighting can lead to tremendous energy usage, so LED lighting systems have increased in popularity.
Even rink layouts and designs are changing. Many rinks are being built to have higher roofs so that they can double for other activities like concerts and lacrosse competitions. The use of flex changing rooms, accommodating up to 10 users, plus traditional changing rooms, gives facilities more versatility. Those flex rooms can be a larger referee room, but they’re also ideal for figure skaters.
Skating rinks often have multiple target markets. A single rink may market to elite skaters and sports leagues, and recreational skaters, including kids, families, and local athletics groups. Figure skating competitions and hockey leagues are also frequently a large part of a skating rink’s target market.
Skills, experience, and education useful in running a skating rink
Starting a skating rink doesn’t require a business degree, but certain skills and advantages can be beneficial in this field.
Skating experience. A rink owner who has experience in figure skating, hockey, or another ice sport will be prepared with a more detailed understanding of these sports and what they require of a skating rink.
Experience working at a rink. Experience working in this industry will give a business owner knowledge of everything that goes into running a rink.
Management experience. Rinks require multiple staff, so experience hiring, training, and managing employees is a valuable asset.
Customer service skills. Repeat customers make up a large portion of a rink’s customer base. An owner who has great customer service skills can build rapport with customers, encouraging them to return again and again.
Finance and business knowledge. Because rinks are expensive to build, most will require investors and/or outside funding. Knowledge of finances and even some previous business courses can help a rink owner prepare a sound business plan and make a strong presentation to potential investors.
Problem-solving skills. From solving scheduling problems to sorting out issues and conflicts that crop up each day, a business owner will benefit from strong problem-solving skills and the ability to think on their feet.
Checklist for Starting an Ice Skating Rink
Starting an ice skating rink can be an incredibly rewarding experience, but it’s important to make sure you’re prepared for the challenges ahead. Use this checklist to help get your business off on the right foot.
Step 1: Write your Business Plan
After coming up with the idea, the next step in starting your business should be to write an ice skating rink business plan. Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.
Related: How to write a business plan
Step 2: Name the Business
Finding the perfect business name can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.
Step 3: Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for an ice skating rink, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
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!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 4: Select your Location
Due to the size, finding a suitable location can be a challenge, especially one that is convenient to customers. Locating close to other amusement-related activities, high-traffic areas, or tourist areas, can also help with getting customers to your facility.
Rent or mortgage costs will depend on the rink’s size, location, and amenities. If a rink is purchased or built, putting down a large down payment can help to reduce the size of monthly payments.
Related: Choosing a business location
Step 5: Register for Business Licenses and Permits
A skating rink owner will need to obtain certain business licenses and permits. These permits and licenses can vary based on the state and town where the rink is located. If a rink incorporates food service or a bar, additional food and liquor permits and licenses may be necessary. Rinks that play music during skating events and competitions will need to obtain entertainment and music licensing for the songs played.
Some of the general local, state and federal business registrations may include a sales tax permit, Employer Identification Number, Occupancy Permit, among others.
Step 6: Find Financing
A skating rink is a tremendous investment, so it’s important to do thorough market research before starting this type of business. Start by researching competing facilities to make sure that there’s sufficient local demand for the rink. Consider networking with local leagues and skating instructors to identify the business that a rink could bring in once in business.
In order to get a loan, the borrower(s) will need to have good credit and be able to personally invest 15-25% towards the total start-up costs.
Step 7: Open a Business Bank Account
Keeping your business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
Skating rinks can market in many different ways. Common marketing techniques include social media marketing, radio advertising, online advertising, print advertising, and more.
For larger skating rinks, hiring a part-time or even full-time marketing manager may be justified.
Step 9: Get Business Insurance
To fully protect a skating rink, several types of insurance should be considered. A few of these include:
– General liability insurance protects the rink if a customer is ever hurt while on the property. This type of insurance usually covers expenses like medical bills and legal fees.
– Commercial property insurance helps to protect a business against financial loss if it’s building, equipment, and inventory are ever damaged or destroyed during an event like a fire.
– Worker’s comp insurance helps to cover expenses like medical bills and legal fees if an employee is ever hurt while working.
Insurance costs will vary depending on factors like the rink’s valuation, the value of its equipment, and the number of employees on staff. To get the most accurate idea of insurance costs, request quotes from multiple providers. When evaluating the quotes, consider how coverage limits, exclusions, premiums, and deductibles compare.
Step 10: Hire Employees
Skating rinks are large operations, and they require multiple full-time and part-time employees to keep them running. PayScale reports the following average salaries for these common ice skating rink staff positions:
– General manager: $42,000
– Restaurant manager: $44,000
– Group sales manager: $34,000
– Finance and administration manager: $57,000
– Administrative assistant: $30,000
– Training coordinator: $30,000
In addition to budgeting for staff salaries, a rink’s budget needs to include employee-related expenses like worker’s comp, paid time off, and vacation time.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost to start an ice skating rink?
Building a skating rink requires a significant initial investment. Arena Watch estimates the construction of a 40,000-square-foot ice skating rink to cost $4,381,021, or approximately $114.53 per square foot. Because this initial cost is so great, most rinks are owned and operated by multiple funders or corporations. Buying and renovating an existing skating rink can be a more affordable option.
Common startup costs for a skating rink include:
– Construction or renovation costs
– Machinery purchases, like ice resurfacers
– Supplies like goals and skates
– Inventory for a snack bar
– Office equipment like cash registers, computers, and printers
How profitable is an ice skating rink?
Skating rink profits will depend on the facility’s size, target market, years in business, and location. Whether a rink is an indoor or an outdoor rink will also affect its profits. An indoor rink can operate year-round, while an outdoor rink may only operate during the winter, permitting weather conditions.
The skating admission fee is a major part of income, which is usually priced by the hour, but don’t overlook other profit centers like the rental fee for ice skates, arcades, concessions, and skate lessons. Some rinks will also offer annual memberships and instruction, similar to a gym in order to have reliable income throughout the year.
Ice rinks can require significant utilities during a single year. According to Ice Skating Resources, rinks use approximately 50,000 gallons of water to form the ice. Heating, lighting, and cooling costs can also lead to high electrical bills, though implementing energy-saving lights and technology can help to minimize this. Exact utility costs will depend on a facility’s size, construction, and usage.
Regardless of the type of rink, strong marketing, a well-thought-out schedule, and a focus on the most profitable activities can help to maximize profits.
Are there grants to start an ice skating rink?
It’s extremely rare to find a grant to start an ice skating rink. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.
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.