Starting a small business
jhunter46
Registered User regular
Registered User regular
I'm a little more than half way to picking up a degree in Accounting and I've come to the conclusion that I don't want to be a CPA, I don't hate it or anything, but I certainly don't enjoy it. For a while now a good friend and I have been talking about opening our own business.
We both played Magic (the card game) competitively for a long time and we were always bothered by how far we had to travel to find game stores, and then they were never quite what we'd like.
Our dream store would not only carry collectible card games, but miniatures and board games. It would be the kind of place where people would not only come out to purchase stuff, but hang out and play as well. I'm also in love with the idea of having 8 or so computers networked together loaded with stuff like Diablo 2, WoW, and CS so people could rent time and play against people or online.
I've sat down and ran some numbers, come up with an idea of how much capital we would need and what cash flow might look like. My friend is a business major and I've got enough accounting under my belt to manage a small business. The thing that scares me though is quitting my well paying job and taking such a huge risk.
Has anyone else tried to start your own business or been around anyone who has? What pushed you to take that first step, and how did it work out?
We both played Magic (the card game) competitively for a long time and we were always bothered by how far we had to travel to find game stores, and then they were never quite what we'd like.
Our dream store would not only carry collectible card games, but miniatures and board games. It would be the kind of place where people would not only come out to purchase stuff, but hang out and play as well. I'm also in love with the idea of having 8 or so computers networked together loaded with stuff like Diablo 2, WoW, and CS so people could rent time and play against people or online.
I've sat down and ran some numbers, come up with an idea of how much capital we would need and what cash flow might look like. My friend is a business major and I've got enough accounting under my belt to manage a small business. The thing that scares me though is quitting my well paying job and taking such a huge risk.
Has anyone else tried to start your own business or been around anyone who has? What pushed you to take that first step, and how did it work out?
jhunter46 on
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If there is demand, start small. Select a few key products and a focus, and go with that. Don't be a card + board + computer game store, as people will simply come in, play games, and leave without paying your bills for the month. You expand a small store once its making money.
That also allows you to focus on a specific thing. If there are a lot of people who play Magic in the area, see about organizing tournaments. Sealed Deck tournaments can be popular and are proven money makers, for instance.
but the key is to make a business that's actually a business that serves a need in the area. It's very easy to confuse your own desires with what a market actually would support.
As previously stated, many people go to gaming stores to play, not to spend
Gaming stores require contracts to sell Wizards of the Coast and Games Workshop goods.
These contracts are not cheap, are binding, and often control your purchases.
To legally charge people to play WoW, Diablo, CS, or any other game, you must acquire a license from the owners (Blizzard, Steam, NCSoft, whoever)
I know a few guys who recently opened up a gaming store. They'll probably close around June. They didn't consider the reality of their space (its way too big and thus expensive and not visible from the street), the nature of the demand (opened when the WoW CCG got started and failed to meet demand), and the importance of contracts with major suppliers. Can it work? Of course! But don't be blinded by dreams of the perfect gaming store. Focus on making money.
The ones that failed were the ones that weren't in it for the money. Some people just do this to be around games and gamers, and those are the ones who fail, because they get blinded by their ideals and the businesses flop. Don't do dumb stuff like tolerate guys buying and selling cards in your store instead of buying them from you. Don't cut discounts you can't afford just because customers whine about the cost of gaming.
Another thing to watch are the employees. Hard-core gamers tend to be people with issues, so you have to be especially careful who you hire. Don't get sympathetic and hire some totally crazy freak just because he's around a lot, don't hire closet queens who play D&D to escape into a fantasy world where their lives don't suck, don't hire people with drug/alcohol problems, etc.
Last, and most important, remember how much money you can make from food. Good game store subsidize themselves by selling drinks and snacks that don't get regulated under restaurant laws. Put a soda machine in so that guys can get a quick drink even when there's a line at the register, and never, ever run out of chips and candy. You can buy that shit in bulk at Costco, and even at only a 100% markup, you'll move so much so fast that you'll wonder why you bother selling games.
The way the suburbs here are laid out, shopping centers are nestled around housing developments, and inside each development are usually one to two elementary schools.
From my personal observations at the local comic book store who don't provide gaming but do sell cards there is a market to be tested here.
Also, yes I realize that each game needs a license, as such those were included in my startup projections.
How much do you make at your job? Between you and your friend, do you think you could hire an employee or two to run the store during the day, so that you guys could continue at your current jobs? That would substantially mitigate your risk, but be a lot of work.
Yes, capitalization is at the forefront of my mind right now.
I'm not sure if an employee that early in the business cycle is needed. It's just more cost.
Only in this case the baby is the new store.
If you're in a good market, and you play it smart, you could be an awesome store. But you gotta run it like a business. Don't put tables in the back of the store, as that just encourages people to hang out for long periods of time. Put the tables up front, and line the backs with merchandise. Do food and snacks, as unless you're right next to a grocery store you'll be able to make a very nice markup on snacks.
People who sit in stores to play games don't really buy a lot of primary product. But they love teh snacks. Keep a mental tab of how much things cost in your head for the occasional "give-away," such as opening a big bag of chips for everyone to enjoy, "on the house," if you're doing a tournament or other event that's otherwise bringing in a fair chunk of change.
One thing that's important with any sort of "collectible" market is to keep in mind actual demand, and don't stick to a set markup. For instance, back when I played magic there were plenty of stores that simply used a pricing guide to sell used singles. They'd sell through the new stuff but the older cards would languish, due to low demand. This is true for ANY collectible market, mind, so if you add some used video games to occupy some shelf space, or whatever, keep it in mind. You can make up for the funny pricing on older product by attempting to move it on volume. If you reduce markup on older cards, *someone* will think it's a steal and snatch it up.
I made about $400 for myself at a convention when I worked for a friend's store, and about $700 for him, by reducing prices on old cards that, while still desirable, were usually too expensive for whatever reason. I went through a TON of cards in one evening and everything turned at least some profit. Why? Because most anyone looking at singles uses those stupid pricing guides as a metric, and if they see something below those prices they assume it's a good deal. Nevermind that you're still making 20, 30% profit.
Most game stores fall into a similar trap, and end up with a lot of used or old stock that doesn't go anywhere. There's two reasons that Big Box retailers succeed. One is volume pricing (aka getting stuff cheap), which you can't get. the other is incredibly quick turnaround, allowing them to keep prices low by making up profits via volume. As to how this could be applied to, say, used video games, say you decide to deal in old SNES games. Someone comes in with ChronoTrigger. They can get $50 on eBay but don't want to deal with it, and you offer $30. You sell it for $45. Other stores in the area are looking on eBay and seeing it go for $60 w/ shipping, and price it at $60. But they only pay $20, because they try to get a huge markup on used games.
Gamers are going to come and see the game and snatch it up, thinking that it's a deal. And the friend is going to tell his friends that you offer more money than your competitors for used things. While they're there, they see that even though you offer more money for used games, you sell them for cheaper, and spend the money right away on, essentially, an equivalent game.
So you just "traded" one game for another, over a short time span, and made $15. Whereas your competitor spent $20 and you stole his business, leaving him down $20 but with essentially the same amount of stock.
The short of it is not to run your store like a collector's haven. If you price your product in an attempt to maximize volume, you will attract collectors naturally and make more money. Collectors and players together is a great mix for a store that focuses on collectible games, and they're all drawn to perceived good prices, and spend more money because of it.