Sunday, September 4, 2016

Starting a New Game Store: Professional Services (Part 8)

In part 7 we went over equipment. Now lets look at the professional services you need to get started:

You don't need a lot of professional services on a regular basis with your game store, but you should spend a little money up front so they can help set you up. Here are the ones you want to consider:

Accountant: You should do your daily book keeping, which includes entering deposits, writing checks, and categorizing expenses. It's really as simple as that. You should consult with an accountant to set up your books (Chart of Accounts) and help you choose your accounting software and version. I recommend you use them later to do your annual taxes, which is why choosing the right software is important.

I think it's a waste of money to hire a book keeper. Part of owning a small business is keeping your finger on its pulse. You need to know every nickel going in and out. That's not something I think you should delegate. If you look at a program like Quickbooks and just can't figure it out, you should take pause. If you have trouble with your personal finances? This will be ten times more complex. Stop and think about if this is for you. Maybe one of the things you do to prepare for this endeavor is take an accounting class. One semester of accounting should make you a Quickbooks wizard.

Startup Costs: $300 + $200 for QuickBooks

Attorney: You don't need an attorney, but you do need to be your own attorney by incorporating your business as an LLC or a corporation. Each state has pros and cons of each. The IRS sees them as the same. I started an LLC in California and converted to a corporation to save on taxes. Nothing but trouble. Some states have the opposite problem. Research which is best for you and your state. Especially look at fees and taxes on gross versus net income. Nolo has a "how to form an LLC in any state" book for around $50. Incorporation fees vary dramatically by state. We're going to say this costs $250, but it could be as high as $520.

This is another area that I think you should work through on your own, so you understand what's required to run an LLC or corporation. You could pay an attorney to draft this for you, but unless it's perplexing, do it yourself. If you have partners or investors, I strongly recommend you write or hire an attorney to write a shareholder agreement. Your incorporation documents are the bare bone requirements for the government. Your shareholder agreement describes the structure of the organization and how shareholders interact with each other under various (often trying) circumstances. I had one done last year and wish I had known about it in beginning.

Startup costs: $50, $1000 or more for a custom shareholder agreement, LLC or corporation filing fee: $250

Banker: Once you have your EIN number from the IRS and permission from the organization (there's probably a form for that), open a business checking and savings accountant. Find a convenient location that's easy to make daily deposits, preferably a community bank who will be more open to working with a small business. I don't believe credit unions allow business accounts, but let me know if I'm wrong. Many community banks are surprisingly willing to work with a small business, so if you can introduce yourself and what you do and begin that introductory process, you may have good success in the future when it comes time for loans or if you have a problem or issue.

Startup costs: -

Payroll Service: You will need your EIN for payroll as well. Set yourself up as employee number one and begin the process of getting paid and paying proper taxes. Talk to your accountant about this if you've chosen an LLC, as some states don't want you on payroll as an LLC owner working in the business (I did it anyway). Most payroll services are the same. Try to find one that guarantees proper payment of taxes, meaning they pay the penalties if they get it wrong.

Startup costs: -

Graphic Designer: Find a graphic designer to work up your store logo and provide you a set of graphics for various purposes. You also need a website. If you have the skills, do this yourself. At the very least, you need a landing page with your domain name with store hours, directions, contact information, a pointer to your store Facebook page and basic information about what you do.

The tendency is to run everything through Facebook, but I think that's a mistake. At the very least have this bare bones website. If you're more ambitious, design your site to have regular updates on new products, a blog, a calendar and other useful content that drives people to visit. I last updated my website in 2010. It's a terribly old HTML only design, but it has all the basics and a dynamic calendar, so it's still useful.

Along with your new website, you should have a new email account set up with your domain name as well. I use Yahoo for hosting my business account, but I'm sure there are better options.

Startup costs: Logo work: $300, Website design: $3,500

Professional Membership: Is there a game store retailer professional organization to join that offers a welcome package and helpful tips for starting out? Sadly no. I do highly recommend you spend the money and go to a GAMA Trade Show before you open. Many retailers will credit going to one of these shows for saving their business or getting it off on the right foot. If you have to choose between a new website or better computer or going to this show, go to the show. Pack your mornings with educational seminars and spend your afternoons roaming the halls looking at the product you intend to bring in.

Startup costs: $1,500 for 4 days at the GAMA Trade Show

IT Professionals: Hopefully you can set up your new network and manage your computers on your own. Make sure to include a wired connection to your POS system for PCI compliance. Everything else can be wireless. That cable run is our startup costs.

Startup costs: $150

Advertising Push: You've got your website up. Your store Facebook page is configured. Inventory is on the shelves. Spend some money to get people into your store for a grand opening celebration. Target your market on Facebook. Have a local radio station pimp your store. Hand out flyers. You'll want a monthly ad budget equal to 2-3% of your gross sales, but you should do a huge push when you're ready.

Startup costs: $3,000+

I think we've covered all our initial costs at this point. If I've missed anything, please let me know. Figuring out all the costs is the toughest part of building your plan, but being prepared is crucial for your success. I also expect you'll try to cut these costs, find cheaper ways, or do without some of these starting out. That's a good sign.

Next time we'll need to pull all this stuff together for our total costs and come up with some sales projections. We need to project a break even point, our return on investment, and then speculate on where and how this will be possible.

In Part 9 we look at our break even analysis, coming up with the last expense: start up losses.

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