At any rate, I think the discussion about the exact price point of Ziac's soda is a lot of sound and fury. I think the advice that edibles are going to be a source of profit is good, but I think too many people in this thread are following the Games Workshop line of logic of "squeeze every last penny from the customer to the greater detriment of the overall business" or assuming that they know more about Ziac's store's socio-economic area than he does; if it's in anyway like my area, then, no, the soda prices being posted in this thread will simply not fly.
Actually, Shakespeare, I was illustrating a demand curve. They're very useful for determining pricing.
As far for Deebaser's suggestion that people who balk at heavily inflated soda/snack costs being bad customers: that just seems like a lot of rubbishy bad advice. Yes, crunching numbers and making a profit is the name of the game, but Ziac is talking about running a game store, not a "captive audience once you leave the grounds you can't come back in" concert venue - he may very well be competing with the 7-11 or local equivalent a short walk away. Johnny Gamer may drop plenty of cash at the store purchasing Magic packs, but will refuse to pay double what other places charge for something 'unnecessary' like snacks.
He isn't competing with the local corner shop. He is monetizing the space he is providing. People are "out" and successful businesses charge a premium for that. As an example, bars typically don't allow outside food and drink for trivia nights, and neither should he if he's going to put the effort into maintaining the space. For the packs, he is competing with amazon and if Johnny Gamer is that cheap, he's probably already buying from them as opposed to the "rip off" brick and mortar store.
Out of curiousity though, how do these events generate revenue? Is there an entry fee, or do you just hope that people will buy your stuff.
These events generate a huge amount of revenue. They are the main reason any money comes into the store so to fees for entry and pack purchases for drafts. Also bars make the majority of their money from drinks a gsmestore makes it from events. That is a big difference that makes the drink pricing a little less inportabt.
Knowing that you're from a miniatures background, I can tell you this as someone who does/did mini gaming on the super-cheap...minis don't seem profitable. For me there was little impulse buy, since it's not like you can pop open a box of minis and play with them right away anyways. You can get 20-30% off from etailers. Your minis (mostly) last you forever, so you don't need to keep buying a ton. People also have an axe to grind with a certain big-name mini company anyways. As much as I hate to say it, mini gaming seems extremely toxic for a game store at first glance.
It's helped out by the fact that expanding your army and/or buying a new army falls on the 'addictive things' scale somewhere between heroin and blowjobs.
He isn't competing with the local corner shop. He is monetizing the space he is providing. People are "out" and successful businesses charge a premium for that. As an example, bars typically don't allow outside food and drink for trivia nights, and neither should he if he's going to put the effort into maintaining the space. For the packs, he is competing with amazon and if Johnny Gamer is that cheap, he's probably already buying from them as opposed to the "rip off" brick and mortar store.
Actually, his snacks *are* directly competing with any sort convenience store/gas station within walking distance and to ignore a nearby business like that would be folly. Now, I agree with you concerning the 'no outside food/drink' - that's pretty standard for places, however, I think you missed my point that there's absolutely nothing preventing someone at his store to look at the clock during Friday Night Magic and say, "Well, I've got 20 minutes left until the next round. I can walk across the street to the 7-11 and grab a quick drink." If they're not finished the drink in time they can just stash it in their car or pockets (hoodies are 'a thing', afterall). Now, I'm not saying that Ziac's store should try a price war with the 7-11 (Ziac would be competing with the 7-11, but they wouldn't be competing with him back), but a having something like that nearby should absolutely factor into any decisions made.
Also, I think it's a bit of a leap to suggest that just because someone doesn't want to pay ridiculously marked up prices for soda ($2.00 for a can of soda is, in my mind, rather exorbitant) that they're unwilling to pay retail on gaming material. There's a pretty long league's worth of difference between buying models for one's army versus little bags of potato chips and soda cans. The one I need to have for my hobby/game, and the other just makes me fat. I understand there being some sort of mark up as a "table tax", but after a certain point, I can simply wait to grab something to eat or drink.
And, FWIW, the Magic players are, in my anecdotal experience, more likely to buy singles from sites like StarCityGames.com and TCGPlayer.com than bulk packs from Amazon. These are sites that Ziac should probably become aware of should he decide to to jump into all of this.
Edited due to: "curse these fat fingers" and "inner-grammarian".
In my personal opinion on this front I think if you go with whatever normal vending machine prices are in your area, or just install some, you'll be fine. 7-11 sells soda for what a buck something? And the average vending machine in my area is a buck fifty (for a 20 oz) Airports area another place you can take a cue from and they are around 2 bucks or so. It's not exactly the same but I think the airport comparison isn't too far off in terms of offering something you could get elsewhere or wait to have but people are willing to pay the price premium for the convenience of.
The mark up you can put on a can of red bull and still sell it to me in the game store is ridiculous.
What is this I don't even.
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JohnnyCacheStarting DefensePlace at the tableRegistered Userregular
edited November 2013
OK, jumping in the pool here. I live over (roomates with the owner) and am a sort of psuedo- silent partner (provided stocking capital in exchange for lifetime discounts) in a local game store.
Here's how we stay in business (not the only strategy, but one that has worked here)
We focus on playspace, open gaming, open painting, and atmosphere. A large, clean, bright store with lots of playing space. We have a pretty thriving co-ed gaming community and that is in a town of about 75,000
The store is about 2500+ Square feet and after three years in business, the "payoff" day in the month is just getting to the middle (meaning 15 days to pay for the store and 15 days that pay cash to the owner). after re-stocking, we pay expenses and the owner is walking with about 1200 a month (after taxes)
The store carries minis, magic, and comics. We do not have an exclusive "no food or drink" policy. What we have is limited storage space and refrigeration, so if someone comes in with a bag of taco bell and a soda, they finish it and buy cold ones from the machines. We do not have a formal or strict "no secondhand sales" policy. What we do is offer consignment sales on used items other than magic. Magic we buy and sell with much better rates obviously for in store credit than cash.
if we pie-charted the store's sales, ALL MINIS would be roughly 55 percent of gross sales. Magic would be about 30.
If you break minis up, it's more like 30% 40k, 30% Magic, 25% other mini games, 15% everything else.
The owner doesn't drive so he uses turn key vending - they provide vending machines, stock them, everything, and just give him roughly 50% of the profit. I don't personally recommend this for max profit, but it suits this particular guy because of his situation vis a vis driving. But on a 75 cent can of pop he gets about 16 cents. Upside being, no money comes out of the register to stock it, the stockist does that.
On profits; volume vs maximums - we make a 15 cent profit on water at 25 cents a bottle, it's the only independently stocked item in the store. You are giving people a "good deal" at .50 cents and making a tidy profit per bottle.
Your best bet, soda wise, for ROI is a fountain, but fountains are actually only great deals if you have enough volume, and then you typically have to work with a drink vendor, and their terms can really alter the equations. For food, you want to sell dry snacks and maybe something things that can be microwaved - you don't want to be preparing any food, that gets into health inspections.
On discounts and competing with only: Think of and post some mini buying programs, give people a 5% discount on orders over 200 or so and another 5% if they pay in advance.
On buying existing inventory:
Obviously I would have to know exactly what it is to tell you more than grossly if it is a good deal, but what is the MSRP on the stuff you are getting for 12k?
Is the 12K for inventory your only takeover cost?
What is the square footage you're looking at?
What is the location like in terms of parking, nearness to other stores, etc?
This pertains to your hours. We're near several bars, theaters, and coffee shops so later hours work out for us. We're open 11-7 every day. We have a clerk that works for min wage and a professional painter that works Sundays for credit. Employing someone at minimum wage sucks balls, but on the other hand, he's a college kid on a scholarship and working much more than one day a week is not to his liking anyway.
We have extended hours (till approx 10-12) on: Monday is a movie night, usually an episode of MST3K or some other "bad" movie.
Wednesday is board game night (Board game night is popular to the point of turning into a scene; this is our most diverse night of customers and also turns into kind of a nice potluck)
Thursday is a late night (until 10) for open magic
Friday is FNM
Sat we try to run some demo mini games and those sometimes run into the evening
Sunday is a sedate day and we're only open 12-5
Magic nights are a BIG sales driver, actually, so if you are planning on being somewhat magic focused, yes late event hours are "worth it"
Re insurance: Obviously if I could predict what insurance will cost when you are off your parents plan, I'd be a genius political pundit. But I don't know of a single state in the union where exchange insurance for someone making 17,4 a year will cost you much more than 40-50 bucks. You should be able to get a bronze plan for 20 bucks or so.
My advice on comics: If you do comics, focus on building bin service. Have bin users file a card, and sign some paperwork saying if their bin gets out of date, you will bag, board, box and ship it say 3 times before cancelling it. Bins become steady income, and are a good service for single issue collectors. Every comic we sell comes with a bag and board for .25 by default. This is essentially cost; it's worth it to us as a value-add for bin customers and to prevent shop reading for singles.
The comics distributor will send you showcases, previews, newsletters, that kind of stuff - use that for readable shop material.
One thing that has made us some money is in store storage: If you can fish around and find a used rack of lockers somewhere, or a locking display case, you can charge 5-10 easy a month a locker. If you have a rack of 8 lockers, that pays your phone or internet.
The guy I knew who did comics successfully focused HUGELY on bin service, because those are your repeat customers, but his REAL money was from being a master of ebay. Seriously, dude is an ebay machine. It's what he does every single minute at the store when not helping customers.
I play Pathfinder from 12:30 until 5 every saturday at a gaming store, and while I do not buy soda cans from the shop (I don't really drink soda) the other people at the table often do. I'd say that the store sells our 'table' about 7 sodas (at least) every saturday at $1 a can (plus chips and other salty snacks). I think you could safely raise soda can prices to $1 without upsetting too many people, and still be making a decent profit.
The thing that I 'see' being sold the most in the store are food and snacks. I think the owners make most of their money off of online sales, the owner is usually on ebay when I catch a glance at his computer screen. They also have a game 'renting' system in place, but I have no idea how profitable that is.
I'd definitely have a microwave easily available too, with microwavable foods like hot pockets, corn dogs and burritos. If you drink coffee, you will probably want even just a basic coffee pot since you will be in the store at nearly all times, and you could sell coffee for pretty dang cheap and still be making a bit more money for something that you will probably have there anyways. (Plus coffee smells amazing and game shops need all the help on that front they can get.)
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JohnnyCacheStarting DefensePlace at the tableRegistered Userregular
(Plus coffee smells amazing and game shops need all the help on that front they can get.)
Seriously
one reason I am a "silent partner" and never run the register
Is so that when I drag cat piss man outside and quietly tell him what so many parents, friends, school counselors, etc have not bucked up and told him over the years I can be the safe villain.
Also, in low end retail you get people wanting to use the phone, the bathroom, all kinds of shit that you have to sort of police without policing. For example, if you have a public bathroom, you will quickly learn that you put ONE ROLL of toilet paper in it at a time.
Hey if the answer to that question is "FUCK NO!!!!" He should strongly reconsider. Four years to waste running a crappy game store operation with low expectations? A waste of life if you can't face each day with enthusiasm.
Consider the opportunity cost of running this store, are you prepared to close doors to paths that could take you to something better that you might actually want to do and would sustain your life and soul each and everyday? All so you could say you ran a game store once?
If your true passion in life though is to run a game store and you would gladly do it even if it was free, then by all means carry on, this is your dream. There is nothing greater. If you die, at least you can say you ran a game store, and it was glorious.
Hey if the answer to that question is "FUCK NO!!!!" He should strongly reconsider. Four years to waste running a crappy game store operation with low expectations? A waste of life if you can't face each day with enthusiasm.
Consider the opportunity cost of running this store, are you prepared to close doors to paths that could take you to something better that you might actually want to do and would sustain your life and soul each and everyday? All so you could say you ran a game store once?
If your true passion in life though is to run a game store and you would gladly do it even if it was free, then by all means carry on, this is your dream. There is nothing greater. If you die, at least you can say you ran a game store, and it was glorious.
General update below my response
So I am going to address this and I want to start off by saying I get your point. But, I am about to graduate college with a degree in History. There are not a lot of options for a bachelor level education in that. I currently work in a food court and I cannot face the day with either happiness, enthusiasm, or any sense of progress. Running this shop even on the bad days, would be me working for myself, and furthering my goals and not just slaving away to make corporate profits.
This is in my opinion a pathway to something better. I went from having no idea on what to do to do something I think I will enjoy at least part of the time, and be able to pour myself into something that will have a sense of purpose and progress. So saying if I am willing to do this if I was going to die doing it isn't really a good way to go about this. I am not willing to die for this but I don't think there is anything that will pay me that I am willing to die for. Sadly, I am not born into a wealthy family and must have a sense of income, I do not have the money to just travel the world and be happy.
General Update:
I met with the current shop owner over thanksgiving day with my father, and we looked over the tax records. Everything the owner has said has checked out. Furthermore I looked in with the magic community as the main profit driver and asked some of them what would make the store better, and there is a lot of room for improvement and profits in there. The current owner has done nothing with Magic Singles, I could easily buy those from the players for store credit, and then sell them for double the amount of credit I paid them for. So if I buy a card for 20$ credit (costs me roughly 15 in cash) I can sell it for 40$ and they would buy it. Futhermore I can use the accepted costs for these cards through SCG. If they aren't selling I can sell them to SCG and still make my normal markup in profit. This seemed to me like a great way to drive profits. There was also talk of carrying all of the current standard sets for magic which would not be much more of an investment and should get more impulse purchases.
I asked around to a few people and it seems everyone would be okay with paying 1$ for a soda, so that may be what I mark it up to. Those I mentioned two dollars to seemed to shrug that off as unacceptable. The store is currently kinda filled with the owners junk he will be removing all of this and it will allow a lot more freed up space for events. Overall i think it is coming together and I am gonna pull the trigger on it.
I strongly recommend that you take a night course in cost accounting at your local community college. I'll just say that the apparently huge mark-ups on sodas will make a lot more sense and if nothing else you'll know how to math out how low you can price them and survive.*
*Keep in mind, survival is not just keeping the store open. In the long run survival means being able to save for your retirement and possibly support a family. 17k a year isn't going to do that.
This is in my opinion a pathway to something better. I went from having no idea on what to do to do something I think I will enjoy at least part of the time, and be able to pour myself into something that will have a sense of purpose and progress. So saying if I am willing to do this if I was going to die doing it isn't really a good way to go about this. I am not willing to die for this but I don't think there is anything that will pay me that I am willing to die for. Sadly, I am not born into a wealthy family and must have a sense of income, I do not have the money to just travel the world and be happy.
Who do you want to be in life? Yourself? Who is that? Start from there, and work your way backwards. If this store is the best first step you can take toward that goal, do it. If it isn't, don't. What else could you do? I can't answer that for you. Search harder. However, I know people that have been in worse situations than you and in absolutely wretched conditions and still manage to find a path to everything they truly dreamed of, not just stuff that helps them survive for a while.
Make sure this really is the best opportunity for you right now, because once started you're stuck in it for a while. If you go through with this, in my opinion, you should not satisfy yourself with meager expectations. Transform this into one of the best damn game stores anyone around there has ever seen, and then sell it for several times more than what you bought it for. Then move on to better shit. How could you possibly do that? Work your way backwards from that solution and figure out how.
This is in my opinion a pathway to something better. I went from having no idea on what to do to do something I think I will enjoy at least part of the time, and be able to pour myself into something that will have a sense of purpose and progress. So saying if I am willing to do this if I was going to die doing it isn't really a good way to go about this. I am not willing to die for this but I don't think there is anything that will pay me that I am willing to die for. Sadly, I am not born into a wealthy family and must have a sense of income, I do not have the money to just travel the world and be happy.
Who do you want to be in life? Yourself? Who is that? Start from there, and work your way backwards. If this store is the best first step you can take toward that goal, do it. If it isn't, don't. What else could you do? I can't answer that for you. Search harder. However, I know people that have been in worse situations than you and in absolutely wretched conditions and still manage to find a path to everything they truly dreamed of, not just stuff that helps them survive for a while.
Make sure this really is the best opportunity for you right now, because once started you're stuck in it for a while. If you go through with this, in my opinion, you should not satisfy yourself with meager expectations. Transform this into one of the best damn game stores anyone around there has ever seen, and then sell it for several times more than what you bought it for. Then move on to better shit. How could you possibly do that? Work your way backwards from that solution and figure out how.
I appreciate the opinion but you are really addressing something I am not at all concerned with.
This is a terrible idea and I hope it doesn't burn you too badly.
I get your thought but as the only things you have really talked about in the thread is 2$ soda and how I will lose business to Amazon (mind you they can't do FNM a hugely popular weekly event with Amazon packs) makes me think you have a good chance of being wrong on this.
Hate to also beat on the soda topic, but how much do sodas cost at a local gas station? I'd charge at least that, possibly a quarter more. People wouldn't bother to make a trip to save a quarter. But it's definitely your call.
Also definitely get the game store on to google search.
Ziac45 best of luck, please necro this with an update in half a year. I don't think it's a terrible idea, but rather exciting. How much money you'll make will be a result of how well you can manage this. Also a ton of work.
Hate to also beat on the soda topic, but how much do sodas cost at a local gas station? I'd charge at least that, possibly a quarter more. People wouldn't bother to make a trip to save a quarter. But it's definitely your call.
Also definitely get the game store on to google search.
Ziac45 best of luck, please necro this with an update in half a year. I don't think it's a terrible idea, but rather exciting. How much money you'll make will be a result of how well you can manage this. Also a ton of work.
It Is marked on the calendar! Thanks for the luck!
I just really don't understand taking on this level of risk, responsibility, effort, etc etc etc..... for a payoff of only $15-20k a year.
I understand it is not necessarily easy to find a job, even an entry level minimum wage job. But surely it is easier and less risky than undertaking this venture.
I just really don't understand taking on this level of risk, responsibility, effort, etc etc etc..... for a payoff of only $15-20k a year.
I understand it is not necessarily easy to find a job, even an entry level minimum wage job. But surely it is easier and less risky than undertaking this venture.
My thought on that is that I have a good shot at growing the business to above that income. right now he is leaving a number of avenues to increased business untapped. Furthermore it is more than what I make currently, and I also think I need something I can really throw myself into. I have been feeling incredibly listless about things the closer I have gotten to graduating. I could keep working at my current company and move up the ladder to make a very comfortable living, but I don't think I could ever be happy doing that.
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Deebaseron my way to work in a suit and a tieAhhhh...come on fucking guyRegistered Userregular
This is a terrible idea and I hope it doesn't burn you too badly.
I get your thought but as the only things you have really talked about in the thread is 2$ soda and how I will lose business to Amazon (mind you they can't do FNM a hugely popular weekly event with Amazon packs) makes me think you have a good chance of being wrong on this.
Yeah, well as a guy that has a college degree (that's about on par with history),
Nothing about this sounds like a good idea.
You have never run a business and have no experience in this field. The guy who has experience is only making $5000 more off this venture than a college kid working part time at the food court and he's willing to walk away if he can sell a dude like you his inventory. Gee, thanks.
You're thinking incredibly short term. Yes, you are on your parents insurance now, but they wont be able to cover you in 4 years and you'll have to pick that up. From that I take it you are in the US and you probably have at least Stafford loans that you will have to pay that out of your anemic profits as well.
Also, your payroll taxes will double as a business owner since you will be responsible for the "employer paid" portion of your income.
You're taking out a $12,000 loan to make this happen.
The property is on a month to month lease. Six months from now the landlord can say "Fuck you. Starbucks wants to set up shop here." What is your plan for this? How much will it cost you to relocate. Commercial leases generally aren't "month to month". This should raise some pretty huge red flags.
Even if you magically double the business, you still aren't going to be able to save much of anything for the future.
You are young. I know it's p scary right before you graduate college. I remember that very well. You are shooting yourself in the dick if you go for this instead of trying to get even a temp job.
This is a terrible idea and I hope it doesn't burn you too badly.
I get your thought but as the only things you have really talked about in the thread is 2$ soda and how I will lose business to Amazon (mind you they can't do FNM a hugely popular weekly event with Amazon packs) makes me think you have a good chance of being wrong on this.
Yeah, well as a guy that has a college degree (that's about on par with history),
Nothing about this sounds like a good idea.
You have never run a business and have no experience in this field. The guy who has experience is only making $5000 more off this venture than a college kid working part time at the food court and he's willing to walk away if he can sell a dude like you his inventory. Gee, thanks.
You're thinking incredibly short term. Yes, you are on your parents insurance now, but they wont be able to cover you in 4 years and you'll have to pick that up. From that I take it you are in the US and you probably have at least Stafford loans that you will have to pay that out of your anemic profits as well.
Also, your payroll taxes will double as a business owner since you will be responsible for the "employer paid" portion of your income.
You're taking out a $12,000 loan to make this happen.
The property is on a month to month lease. Six months from now the landlord can say "Fuck you. Starbucks wants to set up shop here." What is your plan for this? How much will it cost you to relocate. Commercial leases generally aren't "month to month". This should raise some pretty huge red flags.
Even if you magically double the business, you still aren't going to be able to save much of anything for the future.
You are young. I know it's p scary right before you graduate college. I remember that very well. You are shooting yourself in the dick if you go for this instead of trying to get even a temp job.
So just to address this you have a lot of things wrong. The guy who currently runs the shop had 0 experience running a business before then, and he even admits that he has not done the best job with it. Four years from now if my income remains so low I will qualify for a large subsidy on my insurance. I do have stafford loans but it is pay it from my 15,000 income from the shop, with far less expenses in the way of rent (250 compared to 500) or from my 12,000 income with far higher expenses. Sure I can move up where I am but it takes years to even get on fulltime and even longer to advance up the pay scale to any reasonable amount.
Payroll taxes will not double for me as I can write off the employer contribution as a sole proprietor. I will still have to pay the employee cost.
I will take out 0 loans for starting this business. I can pay the current owner back over time, even if I go out of business I can ebay the entirety of the inventory and come away with enough money to pay back what I owe him. I am meeting with the landlord this coming month to discuss the lease and try and get on a longer lease. Even if I don't this is not an amazing location for anything other than a destination store.
Cost of living in this area is tiny, if I can save some money making 3,000$ less than I currently make in an area that is twice as expensive I should be able to save doing this.
Ziac45 on
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Deebaseron my way to work in a suit and a tieAhhhh...come on fucking guyRegistered Userregular
You're still comparing the store to what you are doing right now. People generally make considerably more money after they graduate than they do during college.
i will take out 0 loans for starting this business. I can pay the current owner back over time,
This is what a loan is.
Your payroll taxes will double. Yes, you can write off the amount paid as the employer portion, but that just reduces your taxable income by the amount paid.
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JohnnyCacheStarting DefensePlace at the tableRegistered Userregular
You guys are really, really inserting personal bias into this and not reading what he's posting about business costs and COLA where he's at. And his degree is in history, not petroleum engineering - his non grad-school path is pretty bleak anyway. Game stores actually can and do make money. True story. The shop as it sits is making someone an income greater than he's making now, and his plan is to immediately expand the hours and services 12k for inventory is nothing, as long as it's the right inventory - I would say 36k or more of things that are have been shelved less than 12 months. I wouldn't pay for anything residing in inventory more than a year.
For a simple optional purchase of inventory, on what he seems to be implying is a low- or no- interest carriage without security - he also gets whatever fixtures and hardware the store has. *Depending on what the 12k in inventory is* this could be a great deal. Cases, cash register, refrigerators, shelving - none of that stuff is actually free and getting it as a package with inventory is a value add.
Be very careful with the Magic singles. While you can get prices online the other second half of the equation is going to be understanding stock levels.
Let's look at Purphoros, a card that was gonna be big time from the latest set. Go look at his price history. See how it cratered? If you bought a shit load of them release weekend and just now realized that they've done nothing but sit in your display case doing nothing?
Singles can be very volatile, if somebody could somehow figure out how to us Big P well in a top tier deck he'd be up and running again. His counter example is basically Master of Waves, and that price elbow happened entirely because of the events of a single Pro Tour weekend. Do you follow the Pro Tour? Because if not you'd have let a couple hundred bucks walk out the door that weekend. If you reacted late and bought up stock a week later you're back in the situation of Purphoros again.
I think Deeb's point basically boils down to this: What is your best upside scenario? Double the stores sales? So you're walking away with 24k a year? That sort of thing could be accomplished by working at the food court and spending all your free time (which you're already giving up) looking for a "real" job. It would probably be less work overall and carry much less risk. The only real positive is the "fun" factor of working at a game shop....and that'll get old after awhile. That might be a good thought exercise, write down varying levels of take home from the store. 5k, 10k, 25k, 50k. Then figure out what sales need to do to bring that money in. Sales of x, y, and z. Then write down what you think the percentage chance of getting to that sales level is. Remember, these percentages have to add up to 100%. This is hard look into the mirror time.
Regardless of what you decide, I wish you the best of luck in this endeavor.
I am not saying it's a terrible idea, or that there's not money to be made. I do strongly recommend a course in cost accounting though. This is accounting specifically aimed at helping managers make decisions. It will show you how to budget, set prices, and reveal huge costs that you are unlikely to consider on the surface.
But for the negativity in this thread, look at it this way: unless the OP is ok with making 17k a year he's going to have to change something. It sounds like he plans to advertise more, which is probably good, but is that enough? Game stores are notoriously hard to make money on. If the OP isn't willing or able to look for and exploit every possible revenue stream then he's in for a rough ride.
All things considered, I'd say go for it. If nothing else you'll gain valuable experience. But take that cost accounting course. And for God's sake get some legal advice to make sure you're protected financially. The last thing you need is for this place to go tits-up leaving you without a job _and_ in tens of thousands of dollars of debt.
Be very careful with the Magic singles. While you can get prices online the other second half of the equation is going to be understanding stock levels.
Let's look at Purphoros, a card that was gonna be big time from the latest set. Go look at his price history. See how it cratered? If you bought a shit load of them release weekend and just now realized that they've done nothing but sit in your display case doing nothing?
Singles can be very volatile, if somebody could somehow figure out how to us Big P well in a top tier deck he'd be up and running again. His counter example is basically Master of Waves, and that price elbow happened entirely because of the events of a single Pro Tour weekend. Do you follow the Pro Tour? Because if not you'd have let a couple hundred bucks walk out the door that weekend. If you reacted late and bought up stock a week later you're back in the situation of Purphoros again.
Sticking on the tone of assuming you WILL do this, without inserting further bias about whether it's a good idea, I hope you already realized this. If you didn't, you need to really figure out what to do to train your mind to be sharper in business.
You sound like you're thinking of the singles market as a way to turn store credit directly into cash. That's not true at all.
You'll be trading store credit (money out of your pocket PLUS opportunity cost in that your customer now no longer has to give you as much money to get cards) for speculative futures on the value of cards.
If you're dealing with the old stuff dual lands and whatnot, this is a relatively stable (for magic cards) value. However, if you're doing it with the current chase rares of the recent sets, note what Devoutly said about cratering values. Then also note that the second a block rotates out, almost every card in it craters. Any inventory you couldn't move out in time is stuck on your shelves and you'll be doing bargain bin stuff that people will STILL never buy at a quarter a pop.
And if you hadn't already thought about everything above, you aren't thinking like a businessman yet. If you can't start thinking that way, you WILL go out of business.
Honestly the only thing I'm really worried about the OP is his lack of experience running a business. I'm sure there are things he'll pick up over time, but there's tons of things like payroll, taxes, simple maintance that are going to be a huge learning curve.
If there's any simple business courses that you can take, I would do it OP.
I know it seems like we're piling on you OP, but as others have pointed out, there's just a lot of little(or big things) that stick out about this whole deal.
The whole set up kinda reeks of desperation on the owner's part. I still find it weird the deal he's cutting you, and more importantly, that he doesn't seem to be asking for a payment right off the bat.
Much like the month to month lease, what is there to keep your friend from coming up to you in two months and asking for his full amount owed?
And not sure if anyone's mentioned this, but in a worst case scenario, be prepared to lose your friend over this.
Yes, if you have a payment plan, get it in writing that you are doing month to month. Build in some deferment and forbearance time too.
You know, like a real legitimate loan has.
Did you negotiate how much of the stock you were buying and for how much of cost? I'm telling you right now it's worth about 50% of that 12k, and probably much less. Like I said before. Go in at 25% of wholesale, and work up from there. If it get past 50%, the dude is trying to fuck you.
You really should also take some classes on business management, like dealing with inventory. Do you know how to do write downs and inventory shrinkage?
Businesses are hard.
not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
I recommended earlier that the OP should be trying to talk himself OUT of this, and find reasons that what people are seeing as red flags ARE red flags - not the other way around. My impression is that he already decided before his initial post, and is talking himself into it / defending his idea. This isn't the approach I would take and I don't think it's the right approach for a big decision, but to each their own.
I'll say this - there is definitely risk involved. He should absolutely consult with a lawyer and an accountant before making any agreements at all. Even if he's looked through the books, he should have an expert look through them as well, he should have a contract drawn up between the old owner and himself regarding the inventory (price, repayment terms, and options to return it / owe a reduced amount if the business fails), and he should at a minimum speak to the landlord about terms of the lease.
On the other hand, he's young, and there isn't a tremendous amount of risk involved. Assuming he is careful to minimize risk and doesn't take out loans (minus the initial loan to his friend for inventory) or enter into something binding / with high termination costs like a long-term lease, the worst case scenario is he walks away and maybe owes his friend a couple thousand dollars. It won't be a great situation, but it won't necessarily be a life-destroying one either and - even if the business folds - the experience be valuable or open future job opportunities.
The biggest thing I would worry about is the time commitment, as he seems to be underestimating the amount of time involved in running a business (for all intents and purposes) single handedly. Working a second part-time job isn't IMPOSSIBLE, but it's a hellish grind and shouldn't be treated as anything other than a worst-case scenario. Even if he can do a lot of administrative tasks at the store (a double edged sword if business is that slow) there is a massive time commitment on top of store hours.
Also, the OP needs to realize that a write off does NOT mean something is free or an expenses is trivial. It's a dangerous trap that a lot of business owners get caught in. You still need to pay the full cost of (whatever expenses) up front, the only benefit is that you can then reduce your calculated income when you pay taxes. Taxes which will likely be next to nothing due basically a poverty-level income for optimistically a few years. Write offs are beneficial for people with another real job that makes substantial income, or when the business is pulling in substantial income.
The OP has demonstrated a few common misconceptions about taxes that indicate he needs to spend a lot of time learning about accounting, or hire someone to do his books / taxes for him (an option a business can't really afford NOT to do). This is far and away the biggest concern I have with him running a business. Just about anyone can 'run' a business, and in a lot of circumstances the right business / location takes active negligence to fail. Very few people can run a business WELL, and it takes knowledge and experience. A niche business like a game store in a smaller community is one that needs to be run smartly to succeed. If the OP hasn't already, he should be going to his local library and checking out (and reading cover to cover) every book he can find on management, running a small business, inventory, etc.
If he hasn't been spending every spare minute of his free time learning about small business administration and preparing a business plan, budget, etc - not just talking on a forum about 'is this a good idea', he's not ready or committed enough to succeed.
Taking a business course is a good idea and I plan on looking into that. On the subject of magic singles, I will not buy anything that has freshly released. The way some of the game stores I have spoken with is that they wait a month after a new set releases for the majority of the prices to stabilize. I am going to lower myself into this slowly and not carry a lot of the cheaper common cards that sell for a quarter, and only buy a few of each card at first. That will give me time to get used to how they move in terms of volume before going into it full on.
I am also not looking at this in terms of the fun factor of working at a game store. With changes and advertising if I only double the sales (which right now sit at 19.5K profit after this year) I would be okay with taking home 30K for a few years. The cost of living in the area is incredibly cheap and I can't stress that enough. Also as the way the buying of the store is going to be handled it will show that the Owner has sold all of his inventory off at the end of the year. There is little risk in him coming back and saying he wants the store back as with the sole Propreitorship he is not truly selling me a business, the licensing and all that will be in my name and effectively Game store as run by old owner will go out of business, and a new store under the same name as run by Ziac45 will open.
If the business was dying I would try and talk down the price to 50% or 25% but the fact is the business is worth more than what he is selling it to me for. I am paying inventory cost for a huge amount of stuff, Tables chairs, counters, display cases, and the fact is I can walk in come January 1st change nothing, do no work before hand and the business would continue to make a profit.
I also understand that there is a lot of concern that I have no experience running a business, but that cannot be changed. I have no experience doing it and the only way to get experience in running a business is to actually dive in and do it.
You should pay much less than cost for his stock. It's not as good as if you ordered it from the suppliers right now. There is wear and tear on the furniture. The popular stuff is sold and you are left with the things that simply will not move - probably dog eared and greasy. You need to talk down to at the most 50% and hold a big sale to re-open the store (and clear out old stock). Too many game stores have well-thumbed expansion sets to a game they no longer sell, still at full price on the shelves. Or in a bargain bin that never changes. This makes the store dreary and depressing and takes up space.
It sounds like you have decided to do this, so I will limit the "should I?" advice to mirror what a few others have said: from the income you are talking about, you can probably do better with any 4-year degree (or 2) hunting around the job market for an entry level position. That said, happiness is just as important as money (so long as your bills are being paid), so I totally get that angle. Just bear in mind that there are more jobs out there than these two options, even if they are not readily apparent.
But it looks like you are committed so the main advice I can give is, as others have pointed out, you will not only be running a small business but you will have to constantly stay on top of relevant gaming culture. This sort of business is research intensive, especially if you want to get in to the trading. DevoutlyApathetic gives some pretty solid examples from the Magic community, but this also extends to what is trending on kickstarter, in the world of minis, collectibles, and other board/card games.
Posts
Actually, Shakespeare, I was illustrating a demand curve. They're very useful for determining pricing.
He isn't competing with the local corner shop. He is monetizing the space he is providing. People are "out" and successful businesses charge a premium for that. As an example, bars typically don't allow outside food and drink for trivia nights, and neither should he if he's going to put the effort into maintaining the space. For the packs, he is competing with amazon and if Johnny Gamer is that cheap, he's probably already buying from them as opposed to the "rip off" brick and mortar store.
Out of curiousity though, how do these events generate revenue? Is there an entry fee, or do you just hope that people will buy your stuff.
It's helped out by the fact that expanding your army and/or buying a new army falls on the 'addictive things' scale somewhere between heroin and blowjobs.
Actually, his snacks *are* directly competing with any sort convenience store/gas station within walking distance and to ignore a nearby business like that would be folly. Now, I agree with you concerning the 'no outside food/drink' - that's pretty standard for places, however, I think you missed my point that there's absolutely nothing preventing someone at his store to look at the clock during Friday Night Magic and say, "Well, I've got 20 minutes left until the next round. I can walk across the street to the 7-11 and grab a quick drink." If they're not finished the drink in time they can just stash it in their car or pockets (hoodies are 'a thing', afterall). Now, I'm not saying that Ziac's store should try a price war with the 7-11 (Ziac would be competing with the 7-11, but they wouldn't be competing with him back), but a having something like that nearby should absolutely factor into any decisions made.
Also, I think it's a bit of a leap to suggest that just because someone doesn't want to pay ridiculously marked up prices for soda ($2.00 for a can of soda is, in my mind, rather exorbitant) that they're unwilling to pay retail on gaming material. There's a pretty long league's worth of difference between buying models for one's army versus little bags of potato chips and soda cans. The one I need to have for my hobby/game, and the other just makes me fat. I understand there being some sort of mark up as a "table tax", but after a certain point, I can simply wait to grab something to eat or drink.
And, FWIW, the Magic players are, in my anecdotal experience, more likely to buy singles from sites like StarCityGames.com and TCGPlayer.com than bulk packs from Amazon. These are sites that Ziac should probably become aware of should he decide to to jump into all of this.
Edited due to: "curse these fat fingers" and "inner-grammarian".
Jolt still exist?
edit: oh shit!
Here's how we stay in business (not the only strategy, but one that has worked here)
We focus on playspace, open gaming, open painting, and atmosphere. A large, clean, bright store with lots of playing space. We have a pretty thriving co-ed gaming community and that is in a town of about 75,000
The store is about 2500+ Square feet and after three years in business, the "payoff" day in the month is just getting to the middle (meaning 15 days to pay for the store and 15 days that pay cash to the owner). after re-stocking, we pay expenses and the owner is walking with about 1200 a month (after taxes)
The store carries minis, magic, and comics. We do not have an exclusive "no food or drink" policy. What we have is limited storage space and refrigeration, so if someone comes in with a bag of taco bell and a soda, they finish it and buy cold ones from the machines. We do not have a formal or strict "no secondhand sales" policy. What we do is offer consignment sales on used items other than magic. Magic we buy and sell with much better rates obviously for in store credit than cash.
if we pie-charted the store's sales, ALL MINIS would be roughly 55 percent of gross sales. Magic would be about 30.
If you break minis up, it's more like 30% 40k, 30% Magic, 25% other mini games, 15% everything else.
The owner doesn't drive so he uses turn key vending - they provide vending machines, stock them, everything, and just give him roughly 50% of the profit. I don't personally recommend this for max profit, but it suits this particular guy because of his situation vis a vis driving. But on a 75 cent can of pop he gets about 16 cents. Upside being, no money comes out of the register to stock it, the stockist does that.
On profits; volume vs maximums - we make a 15 cent profit on water at 25 cents a bottle, it's the only independently stocked item in the store. You are giving people a "good deal" at .50 cents and making a tidy profit per bottle.
Your best bet, soda wise, for ROI is a fountain, but fountains are actually only great deals if you have enough volume, and then you typically have to work with a drink vendor, and their terms can really alter the equations. For food, you want to sell dry snacks and maybe something things that can be microwaved - you don't want to be preparing any food, that gets into health inspections.
On discounts and competing with only: Think of and post some mini buying programs, give people a 5% discount on orders over 200 or so and another 5% if they pay in advance.
On buying existing inventory:
Obviously I would have to know exactly what it is to tell you more than grossly if it is a good deal, but what is the MSRP on the stuff you are getting for 12k?
Is the 12K for inventory your only takeover cost?
What is the square footage you're looking at?
What is the location like in terms of parking, nearness to other stores, etc?
This pertains to your hours. We're near several bars, theaters, and coffee shops so later hours work out for us. We're open 11-7 every day. We have a clerk that works for min wage and a professional painter that works Sundays for credit. Employing someone at minimum wage sucks balls, but on the other hand, he's a college kid on a scholarship and working much more than one day a week is not to his liking anyway.
We have extended hours (till approx 10-12) on: Monday is a movie night, usually an episode of MST3K or some other "bad" movie.
Wednesday is board game night (Board game night is popular to the point of turning into a scene; this is our most diverse night of customers and also turns into kind of a nice potluck)
Thursday is a late night (until 10) for open magic
Friday is FNM
Sat we try to run some demo mini games and those sometimes run into the evening
Sunday is a sedate day and we're only open 12-5
Magic nights are a BIG sales driver, actually, so if you are planning on being somewhat magic focused, yes late event hours are "worth it"
Re insurance: Obviously if I could predict what insurance will cost when you are off your parents plan, I'd be a genius political pundit. But I don't know of a single state in the union where exchange insurance for someone making 17,4 a year will cost you much more than 40-50 bucks. You should be able to get a bronze plan for 20 bucks or so.
My advice on comics: If you do comics, focus on building bin service. Have bin users file a card, and sign some paperwork saying if their bin gets out of date, you will bag, board, box and ship it say 3 times before cancelling it. Bins become steady income, and are a good service for single issue collectors. Every comic we sell comes with a bag and board for .25 by default. This is essentially cost; it's worth it to us as a value-add for bin customers and to prevent shop reading for singles.
The comics distributor will send you showcases, previews, newsletters, that kind of stuff - use that for readable shop material.
One thing that has made us some money is in store storage: If you can fish around and find a used rack of lockers somewhere, or a locking display case, you can charge 5-10 easy a month a locker. If you have a rack of 8 lockers, that pays your phone or internet.
I host a podcast about movies.
I play Pathfinder from 12:30 until 5 every saturday at a gaming store, and while I do not buy soda cans from the shop (I don't really drink soda) the other people at the table often do. I'd say that the store sells our 'table' about 7 sodas (at least) every saturday at $1 a can (plus chips and other salty snacks). I think you could safely raise soda can prices to $1 without upsetting too many people, and still be making a decent profit.
The thing that I 'see' being sold the most in the store are food and snacks. I think the owners make most of their money off of online sales, the owner is usually on ebay when I catch a glance at his computer screen. They also have a game 'renting' system in place, but I have no idea how profitable that is.
I'd definitely have a microwave easily available too, with microwavable foods like hot pockets, corn dogs and burritos. If you drink coffee, you will probably want even just a basic coffee pot since you will be in the store at nearly all times, and you could sell coffee for pretty dang cheap and still be making a bit more money for something that you will probably have there anyways. (Plus coffee smells amazing and game shops need all the help on that front they can get.)
Seriously
one reason I am a "silent partner" and never run the register
Is so that when I drag cat piss man outside and quietly tell him what so many parents, friends, school counselors, etc have not bucked up and told him over the years I can be the safe villain.
Also, in low end retail you get people wanting to use the phone, the bathroom, all kinds of shit that you have to sort of police without policing. For example, if you have a public bathroom, you will quickly learn that you put ONE ROLL of toilet paper in it at a time.
I host a podcast about movies.
Suppose right after working there 4 years, an armed guy busts in the store and kills you. Was it worth it?
xbl - HowYouGetAnts
steam - WeAreAllGeth
[FallingDown.jpg]
Consider the opportunity cost of running this store, are you prepared to close doors to paths that could take you to something better that you might actually want to do and would sustain your life and soul each and everyday? All so you could say you ran a game store once?
If your true passion in life though is to run a game store and you would gladly do it even if it was free, then by all means carry on, this is your dream. There is nothing greater. If you die, at least you can say you ran a game store, and it was glorious.
General update below my response
So I am going to address this and I want to start off by saying I get your point. But, I am about to graduate college with a degree in History. There are not a lot of options for a bachelor level education in that. I currently work in a food court and I cannot face the day with either happiness, enthusiasm, or any sense of progress. Running this shop even on the bad days, would be me working for myself, and furthering my goals and not just slaving away to make corporate profits.
This is in my opinion a pathway to something better. I went from having no idea on what to do to do something I think I will enjoy at least part of the time, and be able to pour myself into something that will have a sense of purpose and progress. So saying if I am willing to do this if I was going to die doing it isn't really a good way to go about this. I am not willing to die for this but I don't think there is anything that will pay me that I am willing to die for. Sadly, I am not born into a wealthy family and must have a sense of income, I do not have the money to just travel the world and be happy.
General Update:
I met with the current shop owner over thanksgiving day with my father, and we looked over the tax records. Everything the owner has said has checked out. Furthermore I looked in with the magic community as the main profit driver and asked some of them what would make the store better, and there is a lot of room for improvement and profits in there. The current owner has done nothing with Magic Singles, I could easily buy those from the players for store credit, and then sell them for double the amount of credit I paid them for. So if I buy a card for 20$ credit (costs me roughly 15 in cash) I can sell it for 40$ and they would buy it. Futhermore I can use the accepted costs for these cards through SCG. If they aren't selling I can sell them to SCG and still make my normal markup in profit. This seemed to me like a great way to drive profits. There was also talk of carrying all of the current standard sets for magic which would not be much more of an investment and should get more impulse purchases.
I asked around to a few people and it seems everyone would be okay with paying 1$ for a soda, so that may be what I mark it up to. Those I mentioned two dollars to seemed to shrug that off as unacceptable. The store is currently kinda filled with the owners junk he will be removing all of this and it will allow a lot more freed up space for events. Overall i think it is coming together and I am gonna pull the trigger on it.
*Keep in mind, survival is not just keeping the store open. In the long run survival means being able to save for your retirement and possibly support a family. 17k a year isn't going to do that.
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Who do you want to be in life? Yourself? Who is that? Start from there, and work your way backwards. If this store is the best first step you can take toward that goal, do it. If it isn't, don't. What else could you do? I can't answer that for you. Search harder. However, I know people that have been in worse situations than you and in absolutely wretched conditions and still manage to find a path to everything they truly dreamed of, not just stuff that helps them survive for a while.
Make sure this really is the best opportunity for you right now, because once started you're stuck in it for a while. If you go through with this, in my opinion, you should not satisfy yourself with meager expectations. Transform this into one of the best damn game stores anyone around there has ever seen, and then sell it for several times more than what you bought it for. Then move on to better shit. How could you possibly do that? Work your way backwards from that solution and figure out how.
I appreciate the opinion but you are really addressing something I am not at all concerned with.
I get your thought but as the only things you have really talked about in the thread is 2$ soda and how I will lose business to Amazon (mind you they can't do FNM a hugely popular weekly event with Amazon packs) makes me think you have a good chance of being wrong on this.
Also definitely get the game store on to google search.
Ziac45 best of luck, please necro this with an update in half a year. I don't think it's a terrible idea, but rather exciting. How much money you'll make will be a result of how well you can manage this. Also a ton of work.
It Is marked on the calendar! Thanks for the luck!
I understand it is not necessarily easy to find a job, even an entry level minimum wage job. But surely it is easier and less risky than undertaking this venture.
My thought on that is that I have a good shot at growing the business to above that income. right now he is leaving a number of avenues to increased business untapped. Furthermore it is more than what I make currently, and I also think I need something I can really throw myself into. I have been feeling incredibly listless about things the closer I have gotten to graduating. I could keep working at my current company and move up the ladder to make a very comfortable living, but I don't think I could ever be happy doing that.
Yeah, well as a guy that has a college degree (that's about on par with history),
Nothing about this sounds like a good idea.
You have never run a business and have no experience in this field. The guy who has experience is only making $5000 more off this venture than a college kid working part time at the food court and he's willing to walk away if he can sell a dude like you his inventory. Gee, thanks.
You're thinking incredibly short term. Yes, you are on your parents insurance now, but they wont be able to cover you in 4 years and you'll have to pick that up. From that I take it you are in the US and you probably have at least Stafford loans that you will have to pay that out of your anemic profits as well.
Also, your payroll taxes will double as a business owner since you will be responsible for the "employer paid" portion of your income.
You're taking out a $12,000 loan to make this happen.
The property is on a month to month lease. Six months from now the landlord can say "Fuck you. Starbucks wants to set up shop here." What is your plan for this? How much will it cost you to relocate. Commercial leases generally aren't "month to month". This should raise some pretty huge red flags.
Even if you magically double the business, you still aren't going to be able to save much of anything for the future.
You are young. I know it's p scary right before you graduate college. I remember that very well. You are shooting yourself in the dick if you go for this instead of trying to get even a temp job.
So just to address this you have a lot of things wrong. The guy who currently runs the shop had 0 experience running a business before then, and he even admits that he has not done the best job with it. Four years from now if my income remains so low I will qualify for a large subsidy on my insurance. I do have stafford loans but it is pay it from my 15,000 income from the shop, with far less expenses in the way of rent (250 compared to 500) or from my 12,000 income with far higher expenses. Sure I can move up where I am but it takes years to even get on fulltime and even longer to advance up the pay scale to any reasonable amount.
Payroll taxes will not double for me as I can write off the employer contribution as a sole proprietor. I will still have to pay the employee cost.
I will take out 0 loans for starting this business. I can pay the current owner back over time, even if I go out of business I can ebay the entirety of the inventory and come away with enough money to pay back what I owe him. I am meeting with the landlord this coming month to discuss the lease and try and get on a longer lease. Even if I don't this is not an amazing location for anything other than a destination store.
Cost of living in this area is tiny, if I can save some money making 3,000$ less than I currently make in an area that is twice as expensive I should be able to save doing this.
This is what a loan is.
Your payroll taxes will double. Yes, you can write off the amount paid as the employer portion, but that just reduces your taxable income by the amount paid.
For a simple optional purchase of inventory, on what he seems to be implying is a low- or no- interest carriage without security - he also gets whatever fixtures and hardware the store has. *Depending on what the 12k in inventory is* this could be a great deal. Cases, cash register, refrigerators, shelving - none of that stuff is actually free and getting it as a package with inventory is a value add.
I host a podcast about movies.
Let's look at Purphoros, a card that was gonna be big time from the latest set. Go look at his price history. See how it cratered? If you bought a shit load of them release weekend and just now realized that they've done nothing but sit in your display case doing nothing?
Singles can be very volatile, if somebody could somehow figure out how to us Big P well in a top tier deck he'd be up and running again. His counter example is basically Master of Waves, and that price elbow happened entirely because of the events of a single Pro Tour weekend. Do you follow the Pro Tour? Because if not you'd have let a couple hundred bucks walk out the door that weekend. If you reacted late and bought up stock a week later you're back in the situation of Purphoros again.
I think Deeb's point basically boils down to this: What is your best upside scenario? Double the stores sales? So you're walking away with 24k a year? That sort of thing could be accomplished by working at the food court and spending all your free time (which you're already giving up) looking for a "real" job. It would probably be less work overall and carry much less risk. The only real positive is the "fun" factor of working at a game shop....and that'll get old after awhile. That might be a good thought exercise, write down varying levels of take home from the store. 5k, 10k, 25k, 50k. Then figure out what sales need to do to bring that money in. Sales of x, y, and z. Then write down what you think the percentage chance of getting to that sales level is. Remember, these percentages have to add up to 100%. This is hard look into the mirror time.
Regardless of what you decide, I wish you the best of luck in this endeavor.
But for the negativity in this thread, look at it this way: unless the OP is ok with making 17k a year he's going to have to change something. It sounds like he plans to advertise more, which is probably good, but is that enough? Game stores are notoriously hard to make money on. If the OP isn't willing or able to look for and exploit every possible revenue stream then he's in for a rough ride.
All things considered, I'd say go for it. If nothing else you'll gain valuable experience. But take that cost accounting course. And for God's sake get some legal advice to make sure you're protected financially. The last thing you need is for this place to go tits-up leaving you without a job _and_ in tens of thousands of dollars of debt.
0431-6094-6446-7088
Sticking on the tone of assuming you WILL do this, without inserting further bias about whether it's a good idea, I hope you already realized this. If you didn't, you need to really figure out what to do to train your mind to be sharper in business.
You sound like you're thinking of the singles market as a way to turn store credit directly into cash. That's not true at all.
You'll be trading store credit (money out of your pocket PLUS opportunity cost in that your customer now no longer has to give you as much money to get cards) for speculative futures on the value of cards.
If you're dealing with the old stuff dual lands and whatnot, this is a relatively stable (for magic cards) value. However, if you're doing it with the current chase rares of the recent sets, note what Devoutly said about cratering values. Then also note that the second a block rotates out, almost every card in it craters. Any inventory you couldn't move out in time is stuck on your shelves and you'll be doing bargain bin stuff that people will STILL never buy at a quarter a pop.
And if you hadn't already thought about everything above, you aren't thinking like a businessman yet. If you can't start thinking that way, you WILL go out of business.
If there's any simple business courses that you can take, I would do it OP.
The whole set up kinda reeks of desperation on the owner's part. I still find it weird the deal he's cutting you, and more importantly, that he doesn't seem to be asking for a payment right off the bat.
Much like the month to month lease, what is there to keep your friend from coming up to you in two months and asking for his full amount owed?
And not sure if anyone's mentioned this, but in a worst case scenario, be prepared to lose your friend over this.
You know, like a real legitimate loan has.
Did you negotiate how much of the stock you were buying and for how much of cost? I'm telling you right now it's worth about 50% of that 12k, and probably much less. Like I said before. Go in at 25% of wholesale, and work up from there. If it get past 50%, the dude is trying to fuck you.
You really should also take some classes on business management, like dealing with inventory. Do you know how to do write downs and inventory shrinkage?
Businesses are hard.
I'll say this - there is definitely risk involved. He should absolutely consult with a lawyer and an accountant before making any agreements at all. Even if he's looked through the books, he should have an expert look through them as well, he should have a contract drawn up between the old owner and himself regarding the inventory (price, repayment terms, and options to return it / owe a reduced amount if the business fails), and he should at a minimum speak to the landlord about terms of the lease.
On the other hand, he's young, and there isn't a tremendous amount of risk involved. Assuming he is careful to minimize risk and doesn't take out loans (minus the initial loan to his friend for inventory) or enter into something binding / with high termination costs like a long-term lease, the worst case scenario is he walks away and maybe owes his friend a couple thousand dollars. It won't be a great situation, but it won't necessarily be a life-destroying one either and - even if the business folds - the experience be valuable or open future job opportunities.
The biggest thing I would worry about is the time commitment, as he seems to be underestimating the amount of time involved in running a business (for all intents and purposes) single handedly. Working a second part-time job isn't IMPOSSIBLE, but it's a hellish grind and shouldn't be treated as anything other than a worst-case scenario. Even if he can do a lot of administrative tasks at the store (a double edged sword if business is that slow) there is a massive time commitment on top of store hours.
Also, the OP needs to realize that a write off does NOT mean something is free or an expenses is trivial. It's a dangerous trap that a lot of business owners get caught in. You still need to pay the full cost of (whatever expenses) up front, the only benefit is that you can then reduce your calculated income when you pay taxes. Taxes which will likely be next to nothing due basically a poverty-level income for optimistically a few years. Write offs are beneficial for people with another real job that makes substantial income, or when the business is pulling in substantial income.
The OP has demonstrated a few common misconceptions about taxes that indicate he needs to spend a lot of time learning about accounting, or hire someone to do his books / taxes for him (an option a business can't really afford NOT to do). This is far and away the biggest concern I have with him running a business. Just about anyone can 'run' a business, and in a lot of circumstances the right business / location takes active negligence to fail. Very few people can run a business WELL, and it takes knowledge and experience. A niche business like a game store in a smaller community is one that needs to be run smartly to succeed. If the OP hasn't already, he should be going to his local library and checking out (and reading cover to cover) every book he can find on management, running a small business, inventory, etc.
If he hasn't been spending every spare minute of his free time learning about small business administration and preparing a business plan, budget, etc - not just talking on a forum about 'is this a good idea', he's not ready or committed enough to succeed.
I am also not looking at this in terms of the fun factor of working at a game store. With changes and advertising if I only double the sales (which right now sit at 19.5K profit after this year) I would be okay with taking home 30K for a few years. The cost of living in the area is incredibly cheap and I can't stress that enough. Also as the way the buying of the store is going to be handled it will show that the Owner has sold all of his inventory off at the end of the year. There is little risk in him coming back and saying he wants the store back as with the sole Propreitorship he is not truly selling me a business, the licensing and all that will be in my name and effectively Game store as run by old owner will go out of business, and a new store under the same name as run by Ziac45 will open.
If the business was dying I would try and talk down the price to 50% or 25% but the fact is the business is worth more than what he is selling it to me for. I am paying inventory cost for a huge amount of stuff, Tables chairs, counters, display cases, and the fact is I can walk in come January 1st change nothing, do no work before hand and the business would continue to make a profit.
I also understand that there is a lot of concern that I have no experience running a business, but that cannot be changed. I have no experience doing it and the only way to get experience in running a business is to actually dive in and do it.
But it looks like you are committed so the main advice I can give is, as others have pointed out, you will not only be running a small business but you will have to constantly stay on top of relevant gaming culture. This sort of business is research intensive, especially if you want to get in to the trading. DevoutlyApathetic gives some pretty solid examples from the Magic community, but this also extends to what is trending on kickstarter, in the world of minis, collectibles, and other board/card games.