Starting a Gaming Business: Foolish or Financially Feasible?

[Jokasti]

So yeah, just an idea I had when I saw an empty store for rent. I should make a gaming business. Now, I get these ideas all day long, but this one stuck to me. I don't know why, but it sounds awesome.
How hard is it to make a business? I think I would rent out a small space, spread the news by word of mouth, and buy books, miniatures, gaming stuff in general, all wholesale. About how much money would I need to start this?

[tribble]

very hard. you will probably need to already be rich, because the banks will not loan to you for something like this.

[Milskidasith]

I would assume that it would have relatively massive startup fees, be subject to competition both on and offline, and probably hard to spread the word about.

Not to say that it couldn't work, but you need to know how you are going to network, if you have a good enough market to make up for expenses, etc. It
is also unlikely that running a business will be fun; it is most likely hard work.

As a general piece of advice, massive business ventures are probably not best to do on a whim.

[THAC0]

Foolish.

In general, gaming stores find it difficult to turn a profit with the competition the internet provides.

Your start-up fees would be massive, you'd have to meet all sorts of regulations... not a good idea.

[Haruki-kun]

Maybe you should try a different approach. Try a bookstore or comic book store and have a section for gaming.

[Cristo Meyers]

very hard. you will probably need to already be rich, because the banks will not loan to you for something like this.

This.

Pretty much the only reason the last remaining non-corporate FLGS in my part of Chicagoland is even still operating is because the owner is already wealthy. Wealthy enough to keep the place running even though it rarely, if ever, turns a profit. I doubt that this is an uncommon situation (the owner having to pour money into the store because it doesn't run a profit). They just don't turn a profit very often and just can't really effectively compete with the internet.

It's a sad reality, but the days of the Friendly Local Gaming Store are probably coming to a close.

[Moff Chumley]

Maybe you should try a different approach. Try a bookstore or comic book store and have a section for gaming.

This. Also consider selling music on vinyl. Essentially, the more services you can provide that the internet can't, or can't easily, the better. :smallcool:

[Milskidasith]

With the massive competition of the internet, the fact this appears to be on a whim due to how it seems fun (which I've read it is not; I can't remember the essay, though), and the high startup fees no matter what, I am not sure if starting any business with no real plan is a financially sound idea. While I know you have to try to succeed, those kind of markets are probably either already tapped (other stores/libraries in the area; you aren't going to compete with Barnes & Noble or Books A Million) or there isn't really enough to support them.

I don't want to come off as being negative for the sake of being negative... but in this day and age I find it highly unlikely you would make any money and it would be a massive undertaking, assuming you could get the required capital.

[Haruki-kun]

This. Also consider selling music on vinyl. Essentially, the more services you can provide that the internet can't, or can't easily, the better. :smallcool:

http://i163.photobucket.com/albums/t288/Vaarsuvius89/Ohyou.jpg

It is true, though. How about a nice restaurant?

[crimson77]

So yeah, just an idea I had when I saw an empty store for rent. I should make a gaming business. Now, I get these ideas all day long, but this one stuck to me. I don't know why, but it sounds awesome.
How hard is it to make a business? I think I would rent out a small space, spread the news by word of mouth, and buy books, miniatures, gaming stuff in general, all wholesale. About how much money would I need to start this?

While every gamer, at one point or another, thought it would be cool to have a gaming store, one should take a lesson from Wizards of the Coast, who shut down all of their retail stores in 2004.

One should always think to what is underlying their desires. If your desire is to start a successful business, then spend some time thinking about the corporate culture in which you live and if there is a need that could be filled by your business (something that 40-80% of people could utilize). If your desire is to have a cool place to game, then consider making a gaming room at your home or pooling money together with several friends and renting a cheap studio apartment which could be used just for gaming.

[CoffeeIncluded]

It is true, though. How about a nice restaurant?

Restaurants are even harder to maintain over a long period of time.

[Cristo Meyers]

Restaurants are even harder to maintain over a long period of time.

And, in the current environment, almost as likely to fail completely.

The market's just too saturated, it's just that with the gaming market it's the internet that's doing the saturation.

[Milskidasith]

I remember hearing restaurants have a huge failure rate in the first year, so yeah, probably not the best idea. Also, it requires a massive amount more space than a game store would.

To be honest, there really *aren't* too many services a complete newcomer with no experience could probably enter into. Your best bet would be buying a franchise(ship? Becoming a franchisee?) that doesn't already exist in your area and running that, but those generally require massive startup cash you have on hand, not through a loan.

[snoopy13a]

Restaurants are even harder to maintain over a long period of time.

I don't know, I see many restaurants and almost no gaming stores.

The problem with restaurants is that they requires lots of hard work, talent and luck in order to be successful. Basically, the model works best with a married couple as owners with one being head cook and the other handling the books and the employees.

Obviously, the cook needs to be good (and ideally it is either you or your spouse), the food offered needs to be demand in your area, the location needs to be decent and you need to hire a friendly wait staff. If all of these variables are met (and you have good luck) you'll be able to make a go of it. It is very difficult though and a restaurant will consume your life.

[Milskidasith]

I don't know, I see many restaurants and almost no gaming stores.

Restaurants are necessary to human living. I'd hazard that over 99% of people in the US, 100% in non rural areas, need to use a restaurant or supermarket in order to survive. The demand is massively higher, so more have to exist.

In comparison, there is pretty much no demand for gaming stores. Online sales are a lot easier for various reasons and a very small percentage of the population uses them. Without a high population density and limited competition, there isn't enough market for a game store to stay afloat.

Restaurants, on the other hand, do have to exist... but the market gets oversaturated and the overhead is still pretty high.


The problem with restaurants is that they requires lots of hard work, talent and luck in order to be successful. Basically, the model works best with a married couple as owners with one being head cook and the other handling the books and the employees.

Uhh... the best restaurants to work aren't husband/wife ventures; that appears in media, yeah, but locally owned restaurants are very likely to fail regardless of your relationship with the cook. Economically, the best restaurants are franchises of fast food joints hiring local kids for minimum wage, or franchises of actual restaurants hiring minimum wage workers as kitchen staff.


Obviously, the cook needs to be good (and ideally it is either you or your spouse), the food offered needs to be demand in your area, the location needs to be decent and you need to hire a friendly wait staff. If all of these variables are met (and you have good luck) you'll be able to make a go of it. It is very difficult though and a restaurant will consume your life.

Yeah, I certainly haven't ran a restaurant, but I'm pretty sure that media portrayals of local restaurants are not the best business strategies. Not only that, but your spouse being the cook literally has nothing to do with it; there are very few people who are attracted to a restaurant based on the owners relationship with the cook, rather than the food and service.

If you want a successful restaurant, get a few hundred grand before loans and open a McDonald's. I'm not saying a family owned restaurant can't work, but your suggestions are incredibly romanticized and seem to imply that "having a spouse who cooks for your restaurant" is somehow required.

If you want to look at it another way, the whole "one runs the business end, one cooks things" is a rather dated way of looking at a relationship.

[snoopy13a]

Restaurants are necessary to human living. I'd hazard that over 99% of people in the US, 100% in non rural areas, need to use a restaurant or supermarket in order to survive. The demand is massively higher, so more have to exist.

In comparison, there is pretty much no demand for gaming stores. Online sales are a lot easier for various reasons and a very small percentage of the population uses them. Without a high population density and limited competition, there isn't enough market for a game store to stay afloat.

Restaurants, on the other hand, do have to exist... but the market gets oversaturated and the overhead is still pretty high.



Uhh... the best restaurants to work aren't husband/wife ventures; that appears in media, yeah, but locally owned restaurants are very likely to fail regardless of your relationship with the cook. Economically, the best restaurants are franchises of fast food joints hiring local kids for minimum wage, or franchises of actual restaurants hiring minimum wage workers as kitchen staff.



Yeah, I certainly haven't ran a restaurant, but I'm pretty sure that media portrayals of local restaurants are not the best business strategies. Not only that, but your spouse being the cook literally has nothing to do with it; there are very few people who are attracted to a restaurant based on the owners relationship with the cook, rather than the food and service.

If you want a successful restaurant, get a few hundred grand before loans and open a McDonald's. I'm not saying a family owned restaurant can't work, but your suggestions are incredibly romanticized and seem to imply that "having a spouse who cooks for your restaurant" is somehow required.

If you want to look at it another way, the whole "one runs the business end, one cooks things" is a rather dated way of looking at a relationship.

Yep, you're right.

[Winter_Wolf]

Being your own boss is HARD. Being the boss of a brick and mortar establishment is REALLY HARD. But it can be done, if you have start-up capital for inventory, renovations, salaries, and licensing fees. Oh dear sweet merciful one, the licensing fees!

The gaming store is so much harder to make into a success than the restaurant. I tried to support my FLGS, but they decided to move way out of my willing-to-drive-there range, and put at least two other stores that DO sell RPG materials between me and them. Even so, I hardly spent enough money there--or even saw enough other customers there--to see how they could afford to stay open. And they were the ONLY game in town.

Regarding the whole restaurant thing: everybody need to eat, but where I live there are essentially only a handful of restaurants to choose from because all, and I do mean ALL of the newcomers run out of capital within 3 months. It doesn't help that most new restauranteurs make a lot of mistakes that they just can't afford to make, and that if a customer's first experience at a new restaurant is a bad one, you can be sure they'll tell their friends and so on.

If you do try to start up your own business of any type, it can be a very educational experience either way, and good luck, but hedge your bets a little.

[Katana_Geldar]

What's you'll probably have to do is submit a business plan to a bank manager to get a loan, and it's hard to tell if something is viable financially as it differs in particular areas.

For example: there's no gaming store where I am, but a very large book store has effectively cornered the market on RPG, wargaming and card games. So we're not getting one even if they do charge the earth for their stuff.

One suggestion to make it more financially viable is make sure you have places for people to play, perhaps a nominal fee, as well as tournaments for war gaming and card games.

[factotum]

There's an old joke that's pretty meaningful here:

q) How do you make a small fortune in the game retail business?
a) Start with a large one...

[Dr.Epic]

So yeah, just an idea I had when I saw an empty store for rent. I should make a gaming business. Now, I get these ideas all day long, but this one stuck to me. I don't know why, but it sounds awesome.
How hard is it to make a business? I think I would rent out a small space, spread the news by word of mouth, and buy books, miniatures, gaming stuff in general, all wholesale. About how much money would I need to start this?

Well for advertising, we live in the digital age so is shouldn't be that expensive. Just create a blog or facebook page for your store and I'm sure that would attract some attention.

Also, for promotion idea you could frequently host Magic, Pokemon, and other card game tournaments as well as have some sort of D&D gaming sessions. Just one time like dungeons.

Oh! Do you need someone to help design fliers and posters I'd like to formally throw my hat into the ring. This would be a great way to get publicity for my work, not to mention have something to put on a resume, and I'll do it for free. He's some of my stuff just to give you an idea of what I'm capable of:

http://i814.photobucket.com/albums/zz67/Dr-Epic/copy.jpg

Can you spot all the Marvel references?

http://i814.photobucket.com/albums/zz67/Dr-Epic/cookie_monster.jpg

Yeah, I rushed this one in case you're wondering what the line work and handles aren't looking right.

[Jallorn]

As was previously stated, you should try and offer things that are more convenient in person, rather than online. To me, this says space for rent for games, or even planned games that occur on a specific schedule. You need to make it more than just a shop, you need to make it a place people go to hang out with other nerds and game.

[rakkoon]

Games shops around here tend to die after three years. Diversifying would help I think, add occult jewellery and such to your store. And organise events as they say above. And don't use the store to pay off your house and four kids :smallsmile:

[KuReshtin]

The local gaming store where I live started out as a toy shop, and then expanded into selling gaming stuff.
They also have weekly Warhammer sessions on Thursday nights and on Sunday mornings, they organise "40K in 40 minutes" introductions to Warhammer 40K and also do a lot of card games, like organising sanctioned Yu-Gi-Oh tournaments every now and then.

That could be a route to go.
They also apparently have a lot of business over the internet.
http://www.busstoptoyshop.com/

[Syka]

Foolish.

Creating a business on a whim is usually foolish. It's a good idea to have some sort of (realistic) business plan, capital to back it up, and someone with at least a little entrepreneurial experience.

Aside from that, having employee's is tough. It's YOUR fault if they don't get their paycheck, it's YOUR fault if you have to lay them off, etc. It's really, really hard.

[valadil]

Game shops have a fundamental problem. You have to support gamers. Many of them just want to game somewhere that isn't their mom's basement. All the successful gaming stores I've seen offer playing space. You'd have to support that space, and you don't necessarily get paid for it. Sure players will buy the new D&D book or a couple packs of magic, but there's no obligation for them to do so. And you probably won't have marked up your goods enough to offset the hosting costs.

It would be like running a bring your own dinner restaurant. Maybe half the guests buy a soda or a beer, but the rest mooch your space for free.

[Haruki-kun]

Restaurants are even harder to maintain over a long period of time.


And, in the current environment, almost as likely to fail completely.

The market's just too saturated, it's just that with the gaming market it's the internet that's doing the saturation.

I.... well, I don't really know how the economy works in the US.... In Mexico a restaurant's always a good choice.

[Jokasti]

I should clarify: I'm not going to be buying stuff immediately, going out and renting a property now. I agree that starting a business on a whim is foolish. I would like to draft up a business plan, plan how much money I'll need to invest, etc. Thanks to everyone for their advice so far.

[Flickerdart]

Providing services for gamespace might work - hosting tournaments and all that jazz. Can't really replace that with the internet.

[Cristo Meyers]

I.... well, I don't really know how the economy works in the US.... In Mexico a restaurant's always a good choice.

It's just that, in most areas, there are so many restaurants in a given area. I can name no less than a dozen within 5 miles of where I live, and that can easily triple if I go out to 10 miles. That's a lot of competition, most of which has been there longer than you have and already has an established customer base. In fact, in the time I've been here I can only think of one place that's actually managed to stick around past the year mark.

It's a Catch-22, it's almost impossible to compete in the large markets and there's just not a large enough customer base in the smaller ones (like the town I grew up in, which still had five).

You've got to make a big splash on the market almost immediately or you're just going to get muscled out by the established restaurants.

[Lord Loss]

Two big points of advice:

Tournaments and events (such as room to Roleplay/ tournaments involving adventures like ToH) are an amazing way to turn a profit in this venue. Also, advertising where gamers will see it is essential. I've seen many succesful ones near my place. One is succesful by selling gaming things as well as board games, movies, coins (for collectors), video games, etc.

i think this has chances of working and chances of failing miserably. I reccomend reading this first:

Number thirty-four will prove to be useful (http://www.rpg.net/columns/list-column.phtml?colname=businessofgamingretail)

and This (http://www.rpg.net/columns/list-column.phtml?colname=counter)

[VanBuren]

Game shops have a fundamental problem. You have to support gamers. Many of them just want to game somewhere that isn't their mom's basement. All the successful gaming stores I've seen offer playing space. You'd have to support that space, and you don't necessarily get paid for it. Sure players will buy the new D&D book or a couple packs of magic, but there's no obligation for them to do so. And you probably won't have marked up your goods enough to offset the hosting costs.

It would be like running a bring your own dinner restaurant. Maybe half the guests buy a soda or a beer, but the rest mooch your space for free.

Maybe offer some sort of food options, like nachos or somesuch? Brings another service gamers can't get off the internet, meshes well with possible gaming needs.

[THAC0]

Maybe offer some sort of food options, like nachos or somesuch? Brings another service gamers can't get off the internet, meshes well with possible gaming needs.

If you're offering anything other than pre-packaged candy bars, you'll probably have to meet even more regulations regarding food-prep, and then you'll have to forbid outside foods.

Seriously, I haven't seen any gaming store turn a profit in the past decade.

[Gullara]

The only gaming store I have experience with is part of a chain, Comic Readers. Privately owning one would be an entirely different situation, and much more difficult.

My only recommendation would be to get DCI sanctioned with Wizards of the Coast so you can hold Magic: The Gathering events.

[jmbrown]

A gaming store isn't unreasonable or foolish and don't let anyone tell you otherwise. Like starting any independent retail store it requires a lot of preparation and the 1st year will make or break you. I know someone who retired from the marines and started a gaming store with a business plan and and good practices. In a year's time, the store expanded to four buildings and is the most popular gaming store in the area, totally beating out the two Games Workshops we have. I also helped a friend setup a video arcade aimed at college students and both gaming store and arcade have been going strong for 5+ years.

1. A good location is paramount. You want a shop within 15 minutes drive (at the most) of your target demographic. If you can find a place about a mile away from a high school or college, you're golden. If you're in a city you already have your work cut out for you but in a city area you want a place next to cheap parking or a public transportation area like a subway. You want to be where everyone is walking.

Second, you want to be close to a food source of some kind. In a commercial center, this is already taken care of for you. Being next to a 24 hour food source (7-11s or AM/PMs are awesome) is a great bonus.

2. You cannot survive specializing on one particular product. Very, very few stores, even "back in the day," survived specializing in one product. They're called "hobby" stores for a reason; baseball cards, trading cards, board games, plastic models, RPGs... you have to sell it all. This is a niche market but when you combine multiple niches you get sales.

3. You need an internet front. There's no way around it. During my business planning stages I went around to every successful comic book and hobby shop in Seattle and each one has an online store whether it's a fancy webstore like Noble Knight Games or a simple eBay store. The internet is too large and powerful to ignore but it also makes a great place to sell backstock and stuff you don't want to clog your shelves with. Get a facebook account or something and befriend people. Use twitter to send updates and store events. Use craigslist to advertise items you might be selling but can't seem to find a buyer for them.

4. Entice people to buy other products. This is the downfall of every failed hobby shop. The average gamer has a comfort zone they don't like straying from and the non-gamer has little to no interest in gaming at all. Do community events like Magic tournaments and D&D Encounters but you should also do free demostrations of other games. Buy a game and designate it the in-store copy. If someone wants to play the game, let them. I would've never discovered how much frikkin' fun some board games like Carcassone and Bang! were without the store having free versions for everyone to play.

5. Offer incentives for people to actually buy stuff. My FLGS has a membership card; $25 for a year to get a 10% discount on everything in the store. People use gaming stores as a place to hang out for the most part but when you actually give them a reason to buy crap they will.

You also need to be friendly and personable. Gamers are fickle and judgmental, probably more so than any other consumer. If you piss them off, they probably won't come back. Gamers in general also like personal relationships hence the term "friendly" local gaming store. You want to know all your best customers by name and call them by their name. They'll come back just because the atmosphere is so great.

Starting a business, any business, is a major investment and you need a rock solid business plan. Talk to other people in the field and ask questions about how they started up. They probably won't discuss their business strategies but a handful are willing to do so. Your business plan should always underestimate profits and you need to expect the worse while writing it because the bank most certainly will when they review it. The more realistic, stringent, and detailed you are the more the bank is willing to approve your loan.

[Iferus]

If I would want to do that amount of work and be my own boss (something you should consider seriously), I would do it this way:

1) Start a local gaming club. Advertise (both on- and offline). Get the MiB's to do a Munchkin competition, do a Magic boosterdraft - the easy and fun stuff. Find a cheap location such as a community center to do this.

2) Find a club member to share the burden of your store-to-be.

3) Get a loan for a hobby store, and figure out whatever hobbies gamers might also have. Sell this stuff - have at least as much of this as you have games. Comics, fantasy books, vinyl, juggling/circus equipment.. As long as it's small enough to have an attractive amount of choice without taking too much space, it's golden.

4) Reel in customers via the gaming club. Use a back room or (even better) the second floor as a club gaming location. Sell snacks. Have regular demos.

[Joran]

It's mostly foolish unless you have a rock solid business plan, great location, and enough financial backing to start it up and weather the first couple years. Also, the manager needs to be able to connect and form a stable and loyal customer base and know what kind of things will sell and won't sell. Even so, from what I can see, the profit margins are pretty minuscule.

http://www.gameshark.com/entertainment/features/437/Cracked-LCD-40-There-Will-Be-Games-Pt-1.htm

Here's a tale of woe from a person who opened a store.

[kyoryu]

It's possible, I'm sure. But you'd better have a business plan.

Understand how you plan on making money, what your expenses are. Know what kind of traffic/volume it'll take to break even, and how realistic that is going to be.

[Don Julio Anejo]

I toyed with the idea of opening my own bar or cafe sometime in the faraway future. Talked to my dad (hedge fund manager so he knows his stuff).

Here's why small businesses fail:

Undercapitalizaiton. This is the biggest one. You have to be able to absorb any losses you encounter, shrug them off and move on unphased. You can't do that if you don't have enough money, any unforeseen loss can and probably will kill you. And you will have unforeseen losses, that's why they're unforeseen. As a rule of thumb you want to have about a year of operating costs in cash on hand.
Bad business plan or lack thereof. This was already discussed in this thread to a large extent, so I'll leave it at that - know your customers and have a good strategy.
Market oversaturation. You never want to move into a market that's already saturated, existing businesses already have market share and a loyal customer base. Instead you want to find a niche that lets you exploit an untapped market. Such as opening the first gaming store in a large city.
Cash flow management. You need to be able to accurately calculate how and when you will have cash inflow/outflow. What this means? Even if you make enough in a month (say, $30,000) to cover all your expenses (say, $25,000), you make it over the course of the entire month instead of all at once. While your bills are often due on the first. Which means a cash flow problem - you may not be able to cover all of your expenses if you have less than $25k in the bank on the first of the month. Ties in with undercapitalization.
Did I mention undercapitalization?
Lack of advertising. Word of mouth doesn't work very well if you have no customers to begin with.


Here's a few of the things that make small businesses successful (I only remember a few of them, there's more):


An innovative marketing strategy (i.e. Amazon.com at the time was revolutionary)
Finding a niche where you have no competition
A little "kink" that makes your particular business special. Like this one story about two exactly the same bars across the street from one another in a tourist spot (Turkey if I'm not mistaken). Both were exactly the same except one of them had a scoreboard where the owner kept tabs on which country ordered the most drinks. Guess which one was the most successful? Tourists simply couldn't pass by without feeling patriotism, leading them to buy lots and lots of drinks just to outdrink others. PS: Norway was first, Russia second, Germany third.
Good business plan (ties in with 1 and 2) and good capitalization
Good advertising.