Sunday, June 12, 2011

1,000,000 Square Feet

Fred Hicks has an excellent article about making a living in the game trade from the publisher side of things, so I thought I would springboard it into what it takes from the retail side, the man in the middle. I'm going to start from the position that I'm doing it. I'm making a living running my store. It's not a great living and it's helped, but not propped up by, my wife who has a second income. I could do it on one income and still make house payments and own cars, but it would be a challenge. I expect to make more money over time, but it's an aspiration not shared by most store owners.

In the beginning.... there was capital. To start a game store requires a large amount of capital, usually $50,000-100,000. More is better. It's possible to do it with less if you have a lot of experience. I sucked my home equity dry to come up with my capital and tapped four investors. The investors were a good decision, the home equity, not so much. Often the capital is a windfall, like an insurance settlement, lawsuit gone your way, or your great uncle kicking the bucket. These windfall stores are often poorly planned and short lived.

Rarely does the capital come from the guy who saved up over the years, working as a clerk in a game store, and finally leaving the nest to start his own business. That would be ideal. In fact, consider vacuuming some floors at a game store for a while and earn interest on your nest egg instead. I vacuumed over 1,000,000 square feet of game store in my first three years. It's a humbling experience. How many times do you think I mumbled "I have a master's degree!" to myself before I could vacuum with a quiet mind? It's a bit like Tibetan Buddhist prostrations as a preliminary practice. It's a gut check. If I had $50,000-100,000 to give you as a grant (pretend I'm your great uncle), I would first insist you vacuum 1,000,000 square feet. Game store preliminary practices.

Then there is the capital paradox. Those who are savvy enough to run a business, to manage a $50,000-100,000 investment, know it's absolutely foolish to drop it into a game store. Heck, I did it, but have a hard time imagining doing it again. This is the hard lesson and inside joke of veteran store owners, the realization that they started from a position of financial ignorance. I'm contemplating a second store, so this has been on my mind lately. If I had accumulated this nest egg, I would be more likely to save it for my kids college, for retirement, perform some real estate jujitsu, or just sit on it, banking the $5,000-10,000 a year in interest. Heck, that's driving a new car for the rest of my life. But I'm not here to discourage you, I'm here to suggest how it's possible.

Let's take a step back. Before we discuss capital, lets look at the compensation plan. Most stores start from scratch, paying the owner nothing or very little, or promising to pay at some future mythical Middle-Earth calendar date. Screw that. Screw that hard. Before a penny was spent, loans signed or partners sought, I figured out how much I needed to live on and built a cocoon of a business plan around that number. That number was inviolate. It was the seed from which all things grew, including the financing. It was the end all, be all of agricultural metaphors. Nothing happened without that seed being nourished. If the plan couldn't support that number, then the plan was wrong. So how much money was that?  It was X. X is whatever you want it to be, provided your plan supports it and you have enough capital to support your plan.

X, your salary, is best understood as what you would pay someone else to run your store. If you can't afford this number from the start, you've already failed. Your plan is bad. You don't have enough capital.  X for me was in the low 30's and has grown to the high 30's over the years with heated discussions over cost of living adjustments. Profit distributions make up my income beyond that and only recently, after about 5 years of struggle. I don't get benefits, but I'm healthy. I don't get any fringe tax write-off type bonuses, like a cell phone or car allowance. I do the job. I get paid. That's because I have investors and investors don't like schemes to reduce profit, of which they get a percentage.

So what kind of attitude do you have to have to run a game store? You have to be both passionate and dispassionate about games at the same time. I don't have a lot of time for sentimentality. As my primary source of income, the store is run like a business, not a club house, hobby, relaxing second income, or place to spend my twilight years. It has to be successful. It must grow or die. We're not talking about inflation level, one step ahead of The Reaper growth, we're talking about double digit intelligent growth. High growth puts my kid through college and saves for my retirement. This is a key difference between my store and many other stores. There are games I love. Then there are widgets I must move. If your personality allows it, love your widgets.

In exchange for this meager compensation, this average store manager salary, plus potential future profits, you will never put it down. It will always be on your mind. You will work long hours, even when you're not there. Perhaps you have a day off over time or weekends eventually, but even then, you'll be thinking store, checking mail, watching Facebook. You are on call 24-hours a day.

Some will find this exhilarating and will integrate it into their personal lives successfully. Others will chafe at the leash (noose), find no rest and see little reward. They will seek escape and shortcuts that don't exist. There is a line of lazy business books that teach you how to blow off your business for success and profit. There is no shortcut. Oh, and this is your best case scenario, assuming that you succeed. There was a period of about 2 years when I wished my store would either break out and be successful or just fail. The purgatory period was excruciating.

So yes, I do it. You can do it. Do you want to do it? Do you have to do it? Is it in your blood? Is it all you can imagine doing? Are you clear it's about cleaning bathrooms and selling widgets and only rarely playing games you love? Is there anything else you could possibly do to support yourself? Most importantly, have you vacuumed your 1,000,000 square feet?

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