Saturday, May 26, 2012

Game Store in a Box

The economy is improving, the shove it indicator of people quitting their jobs to move on is up, and there does seem to be quite a bit of money sloshing around out there, both with consumers saving more and businesses hording cash. So naturally, people are looking to start their own businesses, including the dream job, owning a game store.

I've written extensively about the many aspects of a retail game store, but I thought I would condense some advice down to five points for those looking to do it right now. I get a call or email from a prospective game store owner about once a month, so I figured I would put up some prerequisites so you can ask the important questions later.

1. Capital. Simply put, you need a lot of money, and that means $50,000-$100,000 or more. Most stores fail within 18-months because they simply run out of money. If you have less than $50k, you better be in a very low cost of living part of the country. If you're going to do it on a shoestring, you better have extensive business experience, and therefore, probably don't need my advice. If you want to make a reasonable wage at this, you'll need to be at the top of the money range.

2. Research. Do extensive research on the game trade and retail. If you find you're too diverted by actual games, and can't get into the spirit of the game trade, you're probably going to be unhappy running a store. Follow game store owners using social media and join the Game Store Resource Forum. Get a variety of opinions, as every store owner has them, and there are no right or wrong answers, only right or wrong answers for each individual. Visit SCORE and consider a SCORE mentor and definitely take a few of their free classes. Consider working in a retail store if you haven't. Consider taking a class or two at a community college (or through SCORE) on accounting and small business management. You won't have time later. You can't research too much, really.

3. Business Plan. Telling you to write a business plan is shorthand for finding a location, designing your value proposition (what are you really offering), and learning all the expenses associated with a retail business. It requires you to write profit and loss statements, income projections, and other financial artifacts that you will need later. Writing your business plan is your introduction to researching your field and how your business will operate. Open a store without a plan, or at least the research required to write one, and you probably won't make it. If you're business plan is feeling hopeless, you're getting close. Profit margins are slim.

4. Gut Check. Why exactly are you doing this? Assuming you can do nothing else and nothing else will scratch that small business owner itch, how much money do you want to make? Write that into your business plan. Your money at the beginning will need to reflect that. Do not, under any circumstances, open a "protest store." These are stores that open because the local store owner doesn't run his store like you think he should. You do not "steal" customers, you create them, and protest stores inevitably fail, while hurting the original store and the community it claims to serve. Expect to put in 60+ hours a week your first few years and don't expect that number to dip below 50, probably ever. I think "part time" stores are a waste of your time and money.

5. Exit Strategy. What is the end goal? Selling for a profit in entrepreneurial fashion won't be worth your time, so figure out what you want to accomplish, for how long, and what failure looks like. Decide how much skin is in the game ahead of time, as it's easy to lose your life savings or your house in pursuit if these kinds of dreams. Write your exit strategy into your business plan. If you have partners, make it very clear how you each will exit and how you will value the business at that time. Write it down now, as I promise you won't agree when it's time.

If you do all these things, I would be very happy to talk with you and help in any way I can. I may want to take your photo to prove you exist.

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