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Wife wants to start a new business. Any tips?
Sipex
Registered User regular
Registered User regular
My wife believes she has found her calling in life, she wants to start her own business. Specifically, she wants to start a hobby shop (ie: D&D, warhammer, boardgames, etc).
Now, she's not being stupid, she hasn't pinned all her hopes on this and she doesn't believe she'll be starting up immediately.
She's currently looking into business courses at the local community college to learn...whatever there is to learn (economics and whatnot).
I'm not a business man, I work in IT and I don't plan on being a business man so the most I can offer is some labour hours and my knowhow on the hobbies. I know she shouldn't expect to be profitable before 2 years.
We also need to build up our credit beforehand so this isn't a 'must implement nownownownow' but more of 'Let's research and get the facts straight, see what's possible, where we can go from here'
Will the business course be beneficial? We're thinking, along with what they teach her the diploma will also raise her chances for a business loan.
Any other tips?
Now, she's not being stupid, she hasn't pinned all her hopes on this and she doesn't believe she'll be starting up immediately.
She's currently looking into business courses at the local community college to learn...whatever there is to learn (economics and whatnot).
I'm not a business man, I work in IT and I don't plan on being a business man so the most I can offer is some labour hours and my knowhow on the hobbies. I know she shouldn't expect to be profitable before 2 years.
We also need to build up our credit beforehand so this isn't a 'must implement nownownownow' but more of 'Let's research and get the facts straight, see what's possible, where we can go from here'
Will the business course be beneficial? We're thinking, along with what they teach her the diploma will also raise her chances for a business loan.
Any other tips?
Sipex on
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Focusing on the accounting aspect of it, keeping track of your money is probably the best way to keep and run a successful business. Advertising is pretty important too.
Shogun Streams Vidya
You'd be surprised. The hobby shop around where I live usually does more business in cards like pokemon and the WoW TCG than anything else.
How would one research supply/demand in an area? I can't think of anything besides straight out asking people.
Definitely spend a good amount of time checking out the existing gaming stores in the region to see what works and what doesn't.
As someone who is finishing up an MBA, there are 3 universal things for starting a business -- understanding your costs, understanding your revenue, and understanding your taxes. All are based on estimates for the future -- while it's important to have a solid history, and it can be informative, it doesn't help you get started and it doesn't really pay your future bills.
The costs are numerous for any business, but for a retail store your basic costs are: Rent/leasing space, inventory, and typical business costs like accepting credit cards, owning a POS, shelves, display cases, cleaning costs, and so on. Are you going to offer seating? Are you going to allow bathroom use for non-employees? These are all very important things to figure out before you get started, and are critical for doing well.
For inventory, you need to source warehouses and resellers (or order direct, if possible) and have a way to display it. You, perhaps obviously, need to spend money on things that you're never going to use so that someone else can pay you more for it. This is true for everything you buy for the store's inventory. Something that costs you $5 (all costs[/b]) that you sell for $5 is a waste.
And for taxes, you need to understand the taxes because the IRS is one agency you do not mess with. Are you going to be a sole proprietorship? An LLC?
A good hobby shop can do well, but the thing to keep in mind is not that it takes "two to three years to get in the black." It's that 67% of new businesses fail in two years. If you fail, what do you do? Can you liquidate without going bankrupt?
A good business will be on the road to paying back its loans almost immediately. A bad one will simply rack up debt without paying attention to its revenue sources and without changing its marketing and sales approaches, and close relatively soon.
You'll definately want to see if there is demand for this before you do it. Pick a location and canvass facebook and whatnot to see if people are interested. If there aren't enough gamers, it doesn't matter how good the store is!
www.sba.gov
Plenty of resources and information. They even give you certificates to print out when you complete their online courses!
Glad (in my own sort of morbid way) to hear TO is lacking hobby shops, we were suspecting it might be.
The internet is definitely going to be a huge resource for us, especially as an advertising tool.
What I mean by that, is that you will often be unable to sell at the same reduced prices as many online merchants do (particularly for gaming models). The War Store sells Games Workshop at what, 20% off? Warmachine is sometimes 30% to 40% off. You will be unable to match that kind of cost.
You probably will just be able to match the price of hobby supplies against Hobbytown USA, etc.
So you need to provide incentive for your customers to spend more money per, say model, at your store than they would online. The most successful independent stores I've seen do this by providing playing space (either as a rental, for a membership to the store's gaming club or whatever, or just for free). They also provide a bathroom, terrain for gaming, and regularly run tournaments.
Keep this in mind when envisioning your store. The best / most successul game stores I've ever been in had a balance between providing space and selling goods. They also kept a tight reign on individual groups making the store their hangout / afterschool club / free babysitting.
Some details:
- She plans on providing gaming space, she's thinking pre-gridded dry-erase tables, we'll need to provide both hex and square grid though. She's thinking to charge for space, no cost ideas yet, still researching.
- Bathroom(s) available to those renting the rooms.
- Snacks/Drinks available for purchase. Debating between break even (ie: Same price we pay) and profit. Either way they act as an incentive to game there.
- Microwave available to renters.
- Store owned board games/books/whatever is popular at the time which can be rented in store. It's still in initial stages but the idea is someone can try something out before paying full price to purchase it. She's still devising limitations for this.
Also, I wasn't aware that places like this used for hangout would be bad. Unless traffic is really high allowing teens to hang out and check out the material might help to build loyal customers later.
the store I go to is in a mall and it has payed big dividends for the owner. He puts probably 80% of his effort/overtime hours into ccg's (magic/wow/pokemon/whatever) but he gets a large chunk of business selling sports memorabilia, baseballs cards etc to mall patrons.
There was already another shop in town that did lots of D&D, miniatures and board games and there was also a comic book store that dabbles in everything too. He doesn't sell any of that stuff.
I can only assume he did his research and found out what other stores were selling and what they were not ahead of time. I don't think he initially intended for CCGs to be a big part of his business, I'm not even sure what % it is, but between wednesday night and friday night tournaments his revenue from magic alone is at least $1500+ per month and triple that whenever a new set drops. That being said, if a new store opened in town selling magic cards they won't make nearly that much because they would be competing with the existing store that already runs ccg tournaments and pretty much everything the community wants.
This is why many game shops have tables in the back, so people can come in & shop without being accosted by a table of rowdy gamers. Even if you have polite gamers, having them in the front will make other customers feel like it's a "club" rather than a store.
Another thing to keep in mind are your hours. Doing the 9-5 doesn't make any sense if your potential clientele works a normal workday -- you'll just attract the unemployed, the underemployed, and kids. Having more esoteric hours has the potential of attracting adults and people who are coming in to spend money.
For example: there's a game store in my town that I never go to. Their prices are high, and their hours are terrible. I'd rather save $10 and order it online, where I can buy something on Monday and have it before the weekend -- unlike having to wait for the weekend so I can drive down there. And see if they have it in stock (which they probably wouldn't, it's a small store).
But! Gaming clubs are successful because people come in after dinner or after work and play with friends, making it a hang-out spot. They probably bring their own games but are used to the idea of paying a "cover" or with paying for some snacks on the spot. And stores that have late hours or are set up to accomodate such groups (as in, they are oriented around "events") seem to stick around longer with a friendlier atmosphere.
There's been, I don't know, at least a dozen threads about opening game stores of various stripes in this forum over the past couple years. I don't think any of them have come to fruition because ultimately you don't have a successful business because you love the [inventory], but because you love running a business.
If you think small space, insane rent and shit hours are good. Who's going to lug a box full of Warhammer through the mall? And there's not a lot of crossover with mall shoppers and D&D, Warhammer, etc.
Then again, we live in a student town so that probably explains where they get daytime business from.
Yeah...she's not too keen on the mall idea for this sort of shop. It provides extra security, sure but severely limits the store and could embaress the clients. (ie: Lugging Warhammer minis through the mall.)
Also since you do work in IT, try getting a website with e-commerce setup and a newsletter (gotta inform people when the next MTG tourney is) for her. Easiest way to do this is to use [url=
"http://www.magentocommerce.com/"] magento. [/url] Just make sure that your customers have an easy way to access the newsletter and see when the next tourney is.
True. But I've found that the people who buy that could give two shits what others think.
I am saying this because of my previous comment. The bulk of most hobby shop sales are usually cards.
Know that you're getting into a declining (but not dying) industry. It's a hard business, no one gets rich, but many get poor. Competition from online is fierce. You can't compete on price. To stay in business, you have to find a way to add value beyond what people can save by buying online (typically 20% to 40% for most figures, books, cards, etc).
To that end:
Be everyone's friend: You'll note that I refer to the owners as my "good friends." I'd wager half the people who shop their call them their "good friends." They create value by building relationships with individuals. They know what people like and dislike, know who is playing what, when, where, know who is dating who, etc. They're like a matchmaking service for gamers. You can't buy that online.
Have game space: But keep it isolated from both the register and your inventory (there are a number of reasons for this, one is to keep the shopping experience pleasant, a second is that it can become a shoplifting nightmare). Again, you can't buy real life people to play with online, keep them coming into the store. My friends have about 1/3rd of their space set aside for game tables.
Sell food and drinks: The same gamer that will go home and order dice online to save $.55 on a set, will buy 3 cans of Mountain Dew at a price that's double what he'd pay at the grocery store up the block.
Have a game night: Have 1 or 2 nights a month where you invite your best friends (i.e. customers) to come play board games at the store after hours. You can run it as a pot luck or you can ask everyone to pitch in for pizza and beer/soda. This is one endeavor where you shouldn't necesarily worry about making money. This is a marketing event. You want gamers to think of your store as their 2nd home.
Someone out there already knows what a good inventory/sq.ft. number is and it's NOT YOUR SUPPLIER. (They LIE on the high side) and it's NOT YOUR BANK. (They LIE on the low side). Ask successful stores in your area (or another area with similar real estate prices) to figure out what this is. If you tell them what information you're looking for, most store owners won't mind telling you what their sq.ft is and what their current inventory level is. You can figure a good ratio from this.
Few things I have learned:
1) It's all about the rent. This is the deciding factor in how long a game store lasts before it goes under. Mall stores have about the highest rent around.
2) Most Tournaments are not a money maker. A CCG booster draft will break even or maybe even earn you a few bucks but only if you don't count the time you spent running it. If you can get a volunteer to run the thing then it might work out. Just make sure they can handle all the DCI paperwork (if it is a Wizards of the Coast thing). The exception to this rule are very large tournaments (eg: pro tour qualifiers and the like). Which, unless you have connections, you won't be running. And if you had the space to run them your business is doomed because you'll be paying rent on it 24/7 even though such large tournaments are an every-couple-months tops kind of event.
3) The margin on non-ccg stuff like Warhammer and RPG books is horrible. You have massive price competetion from online stores with lower fixed costs (eg: rent) and even if you manage to unload the stuff at the suggested retail price you won't be making much off it. Your money makers are in CCGs (if you can get a decent clientelle) and in board games. And I don't mean good specialist board games like Le Havre or Agricola. I mean shit like Cranium, Apples to Apples and Monopoly.
4) Be very careful when trying to build a "community" around a store. The easiest kind of community to build is the kind that never spends any money and is cliquish and generally uninviting to the kind of people who actually have money.
Ok, so what this comes down to is that for a hobbyist kind of store to make money selling the kind of games you actually like is a losing proposition. You need to have something else going on as your main revenue stream. EG: Maybe the store is a break-even kind of deal backing an online retailer.
This is a pretty good idea. This place right http://www.thewarstore.com/ is a hobby store that's a pretty major online retailer and gets tons of business because they have this sweet pyramid discount deal. You earn points for every dollar spent and can use it towards future purchases.
How would we sell store shelf products though? If we're selling online we'll HAVE to sell at normal online price or nothing will move. The store will have to sell at store price still so what's going to stop customers from stating "It's X price on your website, why can't I get it for the same price in person?" I guess we could disassociate the two.
No idea
I was mostly wanting to get accross that you need to be thinking about alternate revenue streams because the kind of product you mention in the OP just is not going to support a brick and mortar store in the US (I am assuming you are in the US...).
The store I refered to above that is still going strong is a break-even kind of deal. The main business is that of designing, manufacturing (or rather, dealing with having their games manufactured overseas) and selling their own boardgames to other stores. These guys.
Another long-term store in the area (Seattle) is Gary's Games of Greenwood. That place actually loses money but the owner owns a number of businesses and just likes having it around.
A) The store that is in immaculate condition and discourages gaming / hanging out.
You'll be able to quickly judge what clients are going to be respectful of your area, clean up after themselves, show courtesy and respect to other clients, and more importantly - HAVE A SENSE OF RESPONSIBILITY to the store. An example is at my college we had a Miniature Gaming Club. All of us were college students, respectful, and we helped the owners by running tournaments for free and generally trying to keep the area clean and an eye on the store so shoplifting didn't occur.
Nothing turns me off more to a store then walking in, seeing a bunch of people just loitering around, being loud / obnoxious and not respectful.
Shit, maybe I'm getting old - but somehow I got through that description without using the phrase 'mouth breather' or 'neckbeard'.
That's not fair, not all clientle and/or neckbeards are that way.
Still, yeah, some sort of angle which will make people want to buy from us...er, her.
I really gotta make sure I don't try to take over this project as well :P
What requires an enourmous amount of patience and tact are the mentally-challanged adults. The couple what runs the comic shop over on the ave are practicially saints. You can't just banish a dude who doesn't know any better. But if you don't set some boundries you will be hearing long ramblings monolouges on the subject of Batman for hours at end.
Except that unfortunately those individuals are primary revenue sources. These are the people who spend % of their disposable income, as opposed to others who primarily spend a fixed amount that fluctuates inversely to their total disposable income.
For the OP, a big, big suggestion. Do Not Talk Shit. A local store is in the process of closing because the store owner got in the habit of talking trash about customers behind their backs, often as soon as they left the store. No one trusts the guy, and the player base that remains is the sort that can't take the 10 minute drive to other stores (re: unemployed and kids).
If you're going to speak ill of a customer, don't. Ban them, but the instant the trash talking starts, you have to realize you are dealing with a group that by and large has been ostracized and reacts with a group mentality.
Otherwise, g'luck.
And regarding food/drinks, I might be wary of selling food, unless it's just things like chips and stuff. But even so, if you have "rental books" or anything of the sort, they will quickly fall into disrepair. Drinks however, are a great idea. Heck, you can buy a 12-pack of pop for $4, and sell each of them for a $1.00, so why not.
If you have space for gaming, I'd suggest having one or two tables on the "floor" and a room or two that you rent out. That way you can rent the room to people who want to game in a central location, and you can entice new buyers who are "just watching" their first game of Warhammer... That's how I got roped into the hobby, "Hey, ever played? Wanna try?" and I was hooked.
This would really be better served with a new thread.
Both dealt with Magic the Gathering and other collectibles, most notably, Warhammer Fantasy.
The owner of Game Time was in his 50's and not really interested in the hobby of warhammer or magic. This made things awkward. You couldn't talk to him about the stuff and carry on a conversation. He wasn't very friendly and even occasionally enforced a minimum purchase amount to use the space in his store (We would play a lot of magic there, but frequently not buy anything, so I can understand this somewhat. We were 13 and 14 though...)
The other place had an owner that was genuinely interested in the material, nice, talkative, kinda geeky, but he truly fit right in with everyone else. There was never any forced purchases, and I clearly recall him charging straight up more for boosters and singular cards than Game Time did. Nevertheless, he saw way more business. I like to think it was the atmosphere and the guys' personality that made the difference.
He also held FREQUENT tournaments that were both extremely successful and had a lot of participants. For a shop as small as it was, it wasn't uncommon to sometimes see up to 30 or 40 people in there. You almost could not move it was so full. I am sure that there was a great deal of money made there...
Now it's 2010, and I do believe that Mishras is still there (I haven't been in the area for several years, but as of 2005, It was there).
Game Time closed in 1998 or 1999.
The point is this: An interest in what you sell, and the ability to not only put up with, but engage in discussion with your customers about your products will make all the difference. Friendliness is the absolute key to success. If the atmosphere is inviting and inclusive, and your business plan and location is sound for the demographic, I think you will enjoy success given enough time and effort.
Good luck!