if you want to succeed, you need to focus on revenue. That means you prioritze making $$ over having a cool gaming store.
Putting TV's in your store costs you $$ and makes you nothing
Having a bunch of tables in your store takes up space, and makes you nothing
Putting an xBox in your store doesn't make you any money
Selling food and drinks is going to cost you far more money in ruined carpet and ruined merchandise than you will ever make on the food.
The trick to making a successful gaming store is balancing the appeal to players with bringing in revenue. Every single LGS I've seen that has failed (and thats plenty) failed because the owner didn't want a business, he just wanted to to have a cool shop where he and his buddies could play Magic.
If you want to succeed, you need to treat it like a busines FIRST. This means if a choice comes up between doing something players want and something that brings $$ into the store, you don't bat an eye by taking the gaming tables away to put up display cases showcasing stuff for sale.
The reality is, MTG doesn't bring in enough revenue to support a store by itself. The profit margins on selling packs are way to small, WoTC charges retailers way to much, the only way to make enough $$ on MTG alone is through enourmous volume done online where you can run through that volume with a minimum staff.
The money you make off MTG will maybe cover 20% of what you need to bring in. Thats why you need more product lines to make up the rest. Not to mention, even during boom times, hobby gaming was a tough business to make it on, in the middle of a great depression wth record unemployment, trying to make a business on a luxury is a real challenge. Not saying it can't be done, but you need to be prepared for the reality, and that reality needs to be, "I want to open and run a successfull business, that just so happens to sell MTG cards", not "I want a cool place to play MTG, tha just so happens to be a business"
Putting TV's in your store costs you $$ and makes you nothing
Having a bunch of tables in your store takes up space, and makes you nothing
Putting an xBox in your store doesn't make you any money
Selling food and drinks is going to cost you far more money in ruined carpet and ruined merchandise than you will ever make on the food.
- TV's are not the issue, I have nice flat screens already sitting doing nothing, extra computers to wire into these LCD's are sitting around as well.
- Tables being in the store ... depends on the size of the store.
- Consoles are only an idea I had, nothing serious I am PLANNING on doing.
- Food and Drink spills on carpet, hope I have hard floors, not looking to have sticking carpet.
Not saying it can't be done, but you need to be prepared for the reality, and that reality needs to be, "I want to open and run a successfull business, that just so happens to sell MTG cards", not "I want a cool place to play MTG, that just so happens to be a business"
That's a no brainer
PS: I have plenty of time to think, ponder and decide exactly what I want to have when the time does come to open.
My LGS has consoles set up for people to play. They require a controller rental and charge by the hour to play. They usually have kids sit there and play all day.
As for MTG stuff, I get a lot of good deals there because they don't deal primarily in MTG. They sell a lot of MTG stuff, I usually just go in for singles. I know the guys who run it they give me pretty good deals to keep my money there and not at online places. (and they still make money at it).
They don't run tournaments very well sadly. They are not sanctioned and I don't really like playing against lesser competition in Legacy, EDH, or Standard. There is some, but my area is pretty small and most of the people there are "newer" players. who mostly just play casually.
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I just want people who redraft to admit this:
"I can't draft objectively unless I am able to guarantee that I receive at least 3 rares. I am also better than most average/new players so I want to make sure that I get the best rares and they end up with worse ones. I care more about the monetary value of cards than actually playing the game for decent prizes."
I PMd you the websites of the two companies I've used (listed in this thread and availible from WotC).
Unless you are using OrgPlayKnoxville's guide to starting a store on the dirt cheep which involves some storefront schenanigins and isn't really the path to making any money in 2-3 years. The margins in the CCG industry are terrible for small shops.
If you can pull 30% gross (counting discounts, sales, shrink, returns et et) and your fixed expenses are $1500/mo (cheep) you need $5000 in sales per month to break even. If you want to make $30,000 per year then you need $13,000 in sales per month. A Minimum wage employee working part time 20 hours per week costs $14000 roughly/yr (say hi taxes) so they have to bring in $4,000 in sales just to exist. I don't know what $30,000/year means up there, but that's not exciting for 60-70 hours a week esp since you have no insurance or anything like that.
Does your wife work? Is she going to pick up shifts? Do you guys have healthcare through her job?
I think there need to be more game/hobby stores, but because I want you to succede, I want you to think.. how can I generate $20,000 in revenue a month? If you can answer that question, then you can get a bank to loan you the money you need (which is likely more like the $20k downpayment these ppl have been quoting).
I've run the numbers plenty of times. If my wife worked my job, I'd do it in a heartbeat, and maybe you guys can get by on less if you're young and don't have kids.
Out of the blackness and stench of the engulfing swamp emerged a shimmering figure. Only the splattered armor and ichor-stained sword hinted at the unfathomable evil the knight had just laid waste.
My LGS has consoles set up for people to play. They require a controller rental and charge by the hour to play. They usually have kids sit there and play all day.
interesting, so they do make money with em. Good Stuff.
As for MTG stuff, I get a lot of good deals there because they don't deal primarily in MTG. They sell a lot of MTG stuff, I usually just go in for singles. I know the guys who run it they give me pretty good deals to keep my money there and not at online places. (and they still make money at it).
Probably could simply sell cards at the low cost and make "plenty" of money doing that.
They don't run tournaments very well sadly. They are not sanctioned and I don't really like playing against lesser competition in Legacy, EDH, or Standard. There is some, but my area is pretty small and most of the people there are "newer" players. who mostly just play casually.
These come up often. There's a catch-22 with the B&M stores and low investments. With 7k-10k plus collections you can afford some reasonable stock but would probably be better off online as a starter (via ebay, tcgplayer, crystal commerce storefront), but the problem is keeping your pricing competitive. There's a few dozen online retailers and new ones seem to come out of the woodwork all the time, and many are willing to undercut each other for sales. I know my LGS had a couple months run of pricing their singles below every other retailer on tcgplayer so they'd be the first one seen when people check there, and on anything with a playset a player might use them as the go-to. However this means my LGS was probably working on smaller margins because what comes with the lowest prices, you have to compete with the buy prices.
Also the problem with online is your presence. Until you become well established collections don't fly through the door like they do at a B&M store. I've seen all the stores in my area have insane collections walking through and they get them on the cheap. I don't own a physical store so when i buy/sell singles I'm competing with everyone else who comes out of the woodwork. I have to put a lot more time and effort to compete with these guys. If you have a physical store though you'll never have to worry about finding people willing to sell. I've seen so many players walk in with insane collections. I've seen plenty of active players take huge hits on their collection when a week before they wouldn't sell you their cards for even 80-90% of retail. Having a physical store means your stock will always exist. The local dealer in my town i've watched sell power, high end vintage staples, dual lands on the cheap then sell to one of his fellow dealers when things aren't moving. You'd go in the shop one day and he literally has next to no staples left, then a couple weeks later he's stocked with all 10 duals, maybe a piece of power, some vintage staples, and a lot of the huge legacy/edh cards on top of everything standard players need like nothing ever happened. Online dealers who just start out have competition, because why sell to you when they can sell to the numerous other reputable dealers and you're just a name on the list, but starting off B&M has plenty of risk as well, even if you can acquire anything you'll ever need inventory wise.
I say what I'm about to say with the best intentions. I love that you're thinking of opening your own business, and I would love to see you succeed.
Having said that, I think you're walking into a dangerous situation based on what you've said so far. The lack of working capital is the largest concern, but it seems that the entire venture hasn't been properly thought out.
The general rule of thumb for opening a business is to have 6 months worth of operating expenses in the bank and ready to go. That capital is going to have to cover your initial expenses as well as the monthly expenses for that time period. Expenses include, but certainly aren't limited to:
Initial
- Legal costs for forming the company
- Deposit on rent
- Initial construction/cleaning costs
- Initial advertising costs
- Initial cost of inventory. I'm honestly not sure if the $7,000 will even cover this.
- Website (if you plan on having one)
- Prepaid Insurance
- Computers/Software/POS (think about how you're going to record and track your finances)
- Furniture
- Cash (Not only to make change on sales, but to buy cards as well)
- Any licenses and permits
Ongoing
- Rent/Utilities/Telephone
- Inventory
- Insurance
- Taxes
- Advertising
- Legal/Accounting (unless one of you is a CPA, you'll need to take your books to a professional - the IRS loves to audit small businesses)
- Repairs/Maintenance
- Theft/Damage Allowances
- Wages/Salaries, Including Your Own (unless you're retired doing this on your free time and at your own expense)
Furthermore, you're going to have a lot of trouble getting a bank to loan you money. Banks only make loans that they're sure are going to be paid back. It's a primary source of revenue for them. This means that they hesitate to fund start-ups, hesitate to fund small businesses in general, and never give you all the money you need (25-30% is what I've heard most commonly). Business loans are most often made to large, stable corporations to support expansion efforts (i.e. Home Depot can build a new store via debt financing), because that's a low-risk investment. Small start-ups are generally too risky without the possibility of a large return. Some small banks specialize in small businesses, but they're not going to give you much, and they're going to want to see an airtight business plan - one that includes marketing studies and financial projections over a few years.
The second issue I see is marketing. You haven't given a proper estimate of demand in your area, and it seems to me that you don't really know enough about your customer base in general. How large is the gaming market in your area? If you can't answer that with a number, then you don't know.
Next think about how you're going to reach those people. Plenty of otherwise well-run businesses fail simply because nobody knew that they were even there.
You sound pretty unprepared for this sort of thing right now, but it's not difficult to learn. Apply yourself, do your homework, and come up with a working business plan. There are plenty of resources available online (check the SBA's website for starters). Good luck!
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"In science one tries to tell people, in such a way as to be understood by everyone, something that no one ever knew before. But in poetry, it's the exact opposite." - Paul Dirac
Here's one thing to think about: a store makes about $1 a pack they sell. How many packs do you expect to sell in a month? That will give you your MTG pack income. Singles, you need to pay to get them, so you're probably going to make 30% of thier worth as profit, if you are lucky.
So even if you only need $600 a month, and thats assuming all utilities are covered, and you are paying yourself nothing, if you expect 1/2 your revenue from packs and half from singles, you need to sell 300 packs a month, thats alittle over 8 boxes every month, and then you need to sell $1000 in singles every month. If you do that, you've paid your rent. Can you local MTG community support that level of sales?
For anyone opening a shop i'd also suggest checking out some books from the public library about small businesses, marketing, sales. I've found plenty of informative books at my library, ones like "business plans that work" or another one where business owners each took a page or two to describe what they did, and why it didn't work. There's enough information out there, and in the business world unless you invent a new product someone has sold whatever you are planning to, and probably had many of the same ideas, so you gotta look at what worked and didn't from that model and apply it to your own.
I'd recommend looking into doing other things on top of Magic... Board Games (could host a local BG group... ask around in Boardgamegeek.com if there are locals looking for a play space), Video Games (used and new, rent time on Xbox/Ps3 network play), food and pop, other card games like YuGiOh (might make you laugh, but if you have a bunch of locals looking for a space to play... it's cash for you).
Here a plan that i would do at my store if i owned one. You run a magic tournament every week perhaps saturday legacy or standard or whatever your friends play. You would be wise to run yugioh events too so as you can generate revenue from that market. Then once a month have a nice magic/yugioh tournament with a nice prize and advertise the hell out of it. You would get other players from other stores to come to your shop if you had a nice prize like a dual land or FOW or Jace 2.0
Here a plan that i would do at my store if i owned one. You run a magic tournament every week perhaps saturday legacy or standard or whatever your friends play. You would be wise to run yugioh events too so as you can generate revenue from that market. Then once a month have a nice magic/yugioh tournament with a nice prize and advertise the hell out of it. You would get other players from other stores to come to your shop if you had a nice prize like a dual land or FOW or Jace 2.0
As for running "better" tournaments than others, I used to run tournaments in the basement of a book store couple years back. We had a solid turn out for a local style tournament, 30'ish or so give or take a few, I am not totally sure, it's been a bit but we had a ranking system set up that ran for 6 months and then every 6 months it reset, but we had prizes for top dog. We also had rankings for overall tournaments just for bragging rights that never reset.
Ranking systems make the events a little more competitive, people hate to miss tournaments because it hurts there rankings, we kept the tables full every weekend. Make your local tournaments more competitive than the surrounding areas, people WILL come.
I'd recommend looking into doing other things on top of Magic... Board Games (could host a local BG group... ask around in Boardgamegeek.com if there are locals looking for a play space), Video Games (used and new, rent time on Xbox/Ps3 network play), food and pop, other card games like YuGiOh (might make you laugh, but if you have a bunch of locals looking for a space to play... it's cash for you).
As I said earlier, video games are generally a major mistake, especially if you're not in a very small town.
The initial cost is fairly huge, you're looking at an easy $1,000 or more with games added in. Then you have to keep buying the latest "Cool" games. If it's a PC Network, you're required to purchase multiple copies, or risk the potential for a store-killing lawsuit (Yes, it isn't likely, but it is possible). All of this to offer something that it's very likely people can already get at home without rental fees.
Further, selling games is a complete waste. You're *NOT* competing with Gamestop, Bestbuy, and Wallmart. They get their games earlier than you, they get preorder and exclusive bonuses, and they can sell them cheaper than you can. You don't have any angle, the only reason people are going to bring in used games is to trade them, and you're *not* going to have the tens of thousands you'll need to have a significant enough stock to get people to trade.
That said, you can do a couple things video game related.
-Arcade machines, can be bought for between $300 and $1k, depending on the title. You'll get your money back in spades by Players waiting for events to start. Don't fall for the "Many games in one" things, they're illegal builds of an emulator, often shoddily made, and often buggy as heck.
-Deal in Nostalgia items, Legacy Engineering sells Atari replica USB joysticks, resell them. Thinkgeek sells replica Nintendo USB gamepads. Ebay has plenty of systems and cartridges. Fleamarkets have even more. Using this as a launching point, you can gauge interest in an even more lucrative nostalgia line, PM me if you want info on that, but it's really something you couldn't predict, you may or may not live in an area with a strong market for it.
-Arcade machines, can be bought for between $300 and $1k, depending on the title. You'll get your money back in spades by Players waiting for events to start. Don't fall for the "Many games in one" things, they're illegal builds of an emulator, often shoddily made, and often buggy as heck.
ahhh neat idea, have a single quarter arcade game sitting over in the corner for people standing around between rounds. Can you picture an old school Galaga game sitting there or even Dragon's Lair? haha memories but might be a good idea.
I can't help but disagree with the statement that video games are a mistake. When Magic puts out a crappy release, It's going to be the poor kids who want to play the new OMG FPS game that will rent Xbox time to play it and keep you healthy. I saw this happen locally... Scars tanked for one local shop and attendance was down across the board for Magic. It was the video game rental time that kept the shop going... Also, you can rent big screen TVs and things like big couches to test the idea first. If it doesn't draw, then you didn't invest thousands into a failed prospect. Every town is different, and in big cities (esp ones close to a school), video games can succeed VERY well.
I can't help but disagree with the statement that video games are a mistake. When Magic puts out a crappy release, It's going to be the poor kids who want to play the new OMG FPS game that will rent Xbox time to play it and keep you healthy. I saw this happen locally... Scars tanked for one local shop and attendance was down across the board for Magic. It was the video game rental time that kept the shop going... Also, you can rent big screen TVs and things like big couches to test the idea first. If it doesn't draw, then you didn't invest thousands into a failed prospect. Every town is different, and in big cities (esp ones close to a school), video games can succeed VERY well.
ahh nice thinking, being close to a Middle School has kids walking home stopping by to play consoles for a short bit. Thinking also as you said, they may have consoles at home, but do they have the opportunity to play there consoles on like a 50+ inch wide screen? Little stuff like that could help matters some. Just ideas.
as far as i can see, Crimson Shame has had the most helpful response so far. if you're the original poster, check his response.
from my perspective - it appears that you're approaching this with the best of intentions, but you could definitely do with some research in the following areas:
- you mention that magic players "come out of the woodwork" and there's a significant player-base available..... can you quantify this? can you give a conservative estimate? (do NOT overestimate, always give the lowest, worst-case-scenario estimates, otherwise you might find yourself up the creek. it's better to be pleasantly surprised than horrified at losing money)
- you say that the local authorities are practically asking people to start businesses, and will be willing to help.. this is great! find out how much exactly. find out what sorts of businesses they want to fund. they may want to fund community projects or green technologies. it may limit your decisions. find out for sure.
- loans are a possibility, but remember that small-business startups are high risk and most banks won't touch you. even if you get one, it will have high interest and they probably won't give you as much as you need. my advise; don't get one unless you absolutely must. and never get more than one unless you're onto a sure-fire winner.
- once you've estimated your player-base, get talking to them. advertise, give out numbers at events, get yourself known and find out how they would react to a shop of the kind you're proposing. will they frequent your shop? is there anything that's missing from the local scene that you can provide? do they want specific events and facilities that you hadn't considered? will they buy product? do they want singles? drafts? find this out and make sure people are honest about it. if everyone goes "yeah of course i'll buy boosters" after some cajoling and prompting, that won't help you - it's false information. have some questions memorized and just ask everyone you meet, asking them to be honest.
- lastly, you're entering into a market populated by a customer-base that loves to ***** and whine more than any other customer base in the world. these are the people that spend money on a game that they constantly complain about. people also quit magic regularly, and players are fickle - they'll stop frequenting game shops for the smallest reasons. make sure you've got the stomach for this, it might be hard to deal with, because you're basing the success of your shop on the creative decisions made by a small group of people hundreds of miles away. if they make a rubbish set, you'll notice.
sometimes you just need another pair of eyes to see what you've missed.... you can PM me if you like, to discuss any plans that you don't feel are airtight (and they NEED to be airtight). remember, if it goes belly-up, you stand to lose a LOT of money. better be prepared than suffer the consequences.
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Modern: G Tron, Vannifar, Jund, Druid/Vizier combo, Humans, Eldrazi Stompy (Serum Powder), Amulet, Grishoalbrand, Breach Titan, Turns, Eternal Command, As Foretold Living End, Elves, Cheerios, RUG Scapeshift
I have a question: Someone like me that plans to start a store up in a couple of years how would I want to go ahead and try to make starting money. I agree with the business loan being rough to get. I "hope" things go as I plan for the next couple years or so, I should have around 20k-24k cash stored up. This is NOT from me saving money from my pay check, Income tax for 2 years being around 14k and then I have money coming to me in the area of 10k'ish. I have a steady job, I work for the State of Georgia in Law Enforcement, so ... I am not rich and do not see me becoming rich from my job.
I want to do something on the side to make a little extra cash to shove into the stores savings acct, and I thought of selling singles on Ebay, how profitable is that, purchase a box, pull the higher priced cards out and stick em on Ebay at low cost and sell them? then rinse and repeat buying boxes and selling singles.
I have a question: Someone like me that plans to start a store up in a couple of years how would I want to go ahead and try to make starting money. I agree with the business loan being rough to get. I "hope" things go as I plan for the next couple years or so, I should have around 20k-24k cash stored up. This is NOT from me saving money from my pay check, Income tax for 2 years being around 14k and then I have money coming to me in the area of 10k'ish. I have a steady job, I work for the State of Georgia in Law Enforcement, so ... I am not rich and do not see me becoming rich from my job.
I want to do something on the side to make a little extra cash to shove into the stores savings acct, and I thought of selling singles on Ebay, how profitable is that, purchase a box, pull the higher priced cards out and stick em on Ebay at low cost and sell them? then rinse and repeat buying boxes and selling singles.
It non wholesale prices you'll only make money cracking boxes during pre-sales (which you can't guarentee) or during the first week of release or so and even that is a crap shoot. On average you're going to need a minimum of about 5 cases to guarentee distribution, and you are going to want to sell everything out of those boxes you possibly can.
The issue with pre-sales is of course since you don't have a real distributor, you can't guarentee your product shipments and you might get stuck with some angry customers.
Normally I'd tell you to go for it to start establishing your brand, but right now with ebay fees being so dang high you're talking tiny margins.
Of course if you're active in the trade scene and/or buy collections that can suplement and help get you some contacts.
TLDR: If you want to do it to establish your brand, do it, just know that you might find the margins too small for your time, esp if you have an unestablished account.
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Out of the blackness and stench of the engulfing swamp emerged a shimmering figure. Only the splattered armor and ichor-stained sword hinted at the unfathomable evil the knight had just laid waste.
Best advice i can give is dont be an ass****. This is how my former lgs went under, the owner was cool when he opened, held weekly tournaments, had a nice selection, reasonable prices, always had time for the customers and was a nice guy. Then after a year or so he just became an ass****. He hiked prices, marked even ☺☺☺☺ty singles cards up by 5x's there value, overcharged on boosters, would never helo a customer without getting iritated and during the weekly tourneys would shoo away anyone who had been knocked out sending them outside even in the winter even if they were someone's ride.
Since they were not in anymore, even if they wanted to browse and buy stuff. Or a personal one that happened with me, i was there after school (was a 3-4 min walk) looking through some manga for maybe 5 mins trying to see all the new stuff and decide how to spend money and and came up tome and asked me to leave his store and accused me of trying to shoplift since i had spend so much time in one section. Last-time i ever went there.
TLDR version, dont be an ass to the customers, you must be a businessmen first but dont forget were the business is coming from.
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Currently Playing 1994 Magic The Rack Type 1: B/W Zombies Modern: Kuldotha Red Legacy: Pox, Oath Vintag: 10 Proxy Merfolk Pauper: Pestilence, UG Threshold EDH: Karn, Roon, Sliver Queen, Xiahou Dun, Arcanus
from my perspective - it appears that you're approaching this with the best of intentions, but you could definitely do with some research in the following areas:
- loans are a possibility, but remember that small-business startups are high risk and most banks won't touch you. even if you get one, it will have high interest and they probably won't give you as much as you need. my advise; don't get one unless you absolutely must. and never get more than one unless you're onto a sure-fire winner.
.
Theres a very large number of different organizations that are willing to give out loans based on differing things like are you a minority,disabled etc..There are also federal loans for small business too and even some states offer them too. I'd recommend checking out the following books as a place to start some basic research: Small Business for Dummies, Second Edition
ahhh neat idea, have a single quarter arcade game sitting over in the corner for people standing around between rounds. Can you picture an old school Galaga game sitting there or even Dragon's Lair? haha memories but might be a good idea.
Yup, Galaga, Pacman, Missle Command, Donkey Kong, Track & Field, can't go wrong there. Mortal Kombat or Street Fighter, or even Tekken are also good choices.
Dragon's Lair is a bit of a no go though. It's rare, the cabinets are obscenely expensive, they don't make laser disc players anymore, and alot of the discs are starting to fail today. I dearly loved that game though, always dreamed of owning one, that's how I know about them. Looked into buying one last year.
I can't help but disagree with the statement that video games are a mistake. When Magic puts out a crappy release, It's going to be the poor kids who want to play the new OMG FPS game that will rent Xbox time to play it and keep you healthy. I saw this happen locally... Scars tanked for one local shop and attendance was down across the board for Magic. It was the video game rental time that kept the shop going... Also, you can rent big screen TVs and things like big couches to test the idea first. If it doesn't draw, then you didn't invest thousands into a failed prospect. Every town is different, and in big cities (esp ones close to a school), video games can succeed VERY well.
I've gotta disagree with you. First, that's a huge amount of money to gamble on "Maybe", and I can't get onboard with the poor kids thing. If they're poor, they don't have money to blow on renting console game time.
Big cities have a better chance with that, only because you have a bigger sample size to pull the few people who will be willing to do it.
Let me put this another way, I just graduated from a big name college with ~24,000 students. In the 4 years I was there, I didn't see the video game room rented out once, except for the yearly competition. I can't imagine that if you have 24,000 college kids and can't rent the room for college subsidized prices, that you could rent the room in a average town with an average population often enough to make money.
I've gotta disagree with you. First, that's a huge amount of money to gamble on "Maybe", and I can't get onboard with the poor kids thing. If they're poor, they don't have money to blow on renting console game time.
Big cities have a better chance with that, only because you have a bigger sample size to pull the few people who will be willing to do it.
Let me put this another way, I just graduated from a big name college with ~24,000 students. In the 4 years I was there, I didn't see the video game room rented out once, except for the yearly competition. I can't imagine that if you have 24,000 college kids and can't rent the room for college subsidized prices, that you could rent the room in a average town with an average population often enough to make money.
Agreed on this- Look at the cost you'd have to sink just to have one functional:
HD Display and cables- you'd be lucky to get out under $500.
Consoles- $200 per, unless you feel like a Wii or retro hardware
Games- You'll have to buy them all pretty much when brand new at full cost, and if you wanted a library of rare/interesting games, they'll pretty much maintain thier value used. So, $60 a pop.
Controllers- $25 a pop, and you'll have to have several on hand to deal with breakage. Even the best made controllers start to fail after heavy abuse, as since the kids don't own them, you can bet they'd be treated worse than people's home controlers.
How much do you expect someone would pay to play a game for an hour?
Even purchasing modestly (which you really couldn't do if you'd expect people to use it- if you don't have an up to date library, why would they bother?), you're in the hole nearly a grand from the get go.
Even if you found some fool to pay $10 an hour, you'd have to have them playing for 100 hours to break even... and that's just with one set-up- and ignoring that breakage will occur, and theft is entirely possible.
Now, consider that just one terminal probably isn't going to be good enough for any sort of really compelling gameplay- unless you're talking about Wii, Kinect or Move party games, Rock Band or Guitar hero or the like.
No matter how you divy it up, you're going to be on the hook for either purchasing new-peripheral based games, or additional set-ups for local multiplayer, or kicking in for service fees to allow for online gaming.
This is ALL before you see dollar $1 out of this, and long, long before you see any profit.
Unless videogaming was a mainline of your store, it's just not at all wise, and well... setting foot into the videogame store market is even more treacherous than the local gaming shop market, as the initial buy-in for stock is going to be even more.
Thing is though, it's not college kids I see renting the Xbox time at our local shops. It's the neighborhood kids. Their parents give them $10 to occupy them for an evening and send them on their way. I've been playing at this shop long enough to see these kids literally grow up there.
Putting TV's in your store costs you $$ and makes you nothing
Having a bunch of tables in your store takes up space, and makes you nothing
Putting an xBox in your store doesn't make you any money
Selling food and drinks is going to cost you far more money in ruined carpet and ruined merchandise than you will ever make on the food.
The trick to making a successful gaming store is balancing the appeal to players with bringing in revenue. Every single LGS I've seen that has failed (and thats plenty) failed because the owner didn't want a business, he just wanted to to have a cool shop where he and his buddies could play Magic.
If you want to succeed, you need to treat it like a busines FIRST. This means if a choice comes up between doing something players want and something that brings $$ into the store, you don't bat an eye by taking the gaming tables away to put up display cases showcasing stuff for sale.
The reality is, MTG doesn't bring in enough revenue to support a store by itself. The profit margins on selling packs are way to small, WoTC charges retailers way to much, the only way to make enough $$ on MTG alone is through enourmous volume done online where you can run through that volume with a minimum staff.
The money you make off MTG will maybe cover 20% of what you need to bring in. Thats why you need more product lines to make up the rest. Not to mention, even during boom times, hobby gaming was a tough business to make it on, in the middle of a great depression wth record unemployment, trying to make a business on a luxury is a real challenge. Not saying it can't be done, but you need to be prepared for the reality, and that reality needs to be, "I want to open and run a successfull business, that just so happens to sell MTG cards", not "I want a cool place to play MTG, tha just so happens to be a business"
- TV's are not the issue, I have nice flat screens already sitting doing nothing, extra computers to wire into these LCD's are sitting around as well.
- Tables being in the store ... depends on the size of the store.
- Consoles are only an idea I had, nothing serious I am PLANNING on doing.
- Food and Drink spills on carpet, hope I have hard floors, not looking to have sticking carpet.
That's a no brainer
PS: I have plenty of time to think, ponder and decide exactly what I want to have when the time does come to open.
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As for MTG stuff, I get a lot of good deals there because they don't deal primarily in MTG. They sell a lot of MTG stuff, I usually just go in for singles. I know the guys who run it they give me pretty good deals to keep my money there and not at online places. (and they still make money at it).
They don't run tournaments very well sadly. They are not sanctioned and I don't really like playing against lesser competition in Legacy, EDH, or Standard. There is some, but my area is pretty small and most of the people there are "newer" players. who mostly just play casually.
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Unless you are using OrgPlayKnoxville's guide to starting a store on the dirt cheep which involves some storefront schenanigins and isn't really the path to making any money in 2-3 years. The margins in the CCG industry are terrible for small shops.
If you can pull 30% gross (counting discounts, sales, shrink, returns et et) and your fixed expenses are $1500/mo (cheep) you need $5000 in sales per month to break even. If you want to make $30,000 per year then you need $13,000 in sales per month. A Minimum wage employee working part time 20 hours per week costs $14000 roughly/yr (say hi taxes) so they have to bring in $4,000 in sales just to exist. I don't know what $30,000/year means up there, but that's not exciting for 60-70 hours a week esp since you have no insurance or anything like that.
Does your wife work? Is she going to pick up shifts? Do you guys have healthcare through her job?
I think there need to be more game/hobby stores, but because I want you to succede, I want you to think.. how can I generate $20,000 in revenue a month? If you can answer that question, then you can get a bank to loan you the money you need (which is likely more like the $20k downpayment these ppl have been quoting).
I've run the numbers plenty of times. If my wife worked my job, I'd do it in a heartbeat, and maybe you guys can get by on less if you're young and don't have kids.
Probably could simply sell cards at the low cost and make "plenty" of money doing that.
What are your LGS's tourny numbers?
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Also the problem with online is your presence. Until you become well established collections don't fly through the door like they do at a B&M store. I've seen all the stores in my area have insane collections walking through and they get them on the cheap. I don't own a physical store so when i buy/sell singles I'm competing with everyone else who comes out of the woodwork. I have to put a lot more time and effort to compete with these guys. If you have a physical store though you'll never have to worry about finding people willing to sell. I've seen so many players walk in with insane collections. I've seen plenty of active players take huge hits on their collection when a week before they wouldn't sell you their cards for even 80-90% of retail. Having a physical store means your stock will always exist. The local dealer in my town i've watched sell power, high end vintage staples, dual lands on the cheap then sell to one of his fellow dealers when things aren't moving. You'd go in the shop one day and he literally has next to no staples left, then a couple weeks later he's stocked with all 10 duals, maybe a piece of power, some vintage staples, and a lot of the huge legacy/edh cards on top of everything standard players need like nothing ever happened. Online dealers who just start out have competition, because why sell to you when they can sell to the numerous other reputable dealers and you're just a name on the list, but starting off B&M has plenty of risk as well, even if you can acquire anything you'll ever need inventory wise.
Having said that, I think you're walking into a dangerous situation based on what you've said so far. The lack of working capital is the largest concern, but it seems that the entire venture hasn't been properly thought out.
The general rule of thumb for opening a business is to have 6 months worth of operating expenses in the bank and ready to go. That capital is going to have to cover your initial expenses as well as the monthly expenses for that time period. Expenses include, but certainly aren't limited to:
Initial
- Legal costs for forming the company
- Deposit on rent
- Initial construction/cleaning costs
- Initial advertising costs
- Initial cost of inventory. I'm honestly not sure if the $7,000 will even cover this.
- Website (if you plan on having one)
- Prepaid Insurance
- Computers/Software/POS (think about how you're going to record and track your finances)
- Furniture
- Cash (Not only to make change on sales, but to buy cards as well)
- Any licenses and permits
Ongoing
- Rent/Utilities/Telephone
- Inventory
- Insurance
- Taxes
- Advertising
- Legal/Accounting (unless one of you is a CPA, you'll need to take your books to a professional - the IRS loves to audit small businesses)
- Repairs/Maintenance
- Theft/Damage Allowances
- Wages/Salaries, Including Your Own (unless you're retired doing this on your free time and at your own expense)
Furthermore, you're going to have a lot of trouble getting a bank to loan you money. Banks only make loans that they're sure are going to be paid back. It's a primary source of revenue for them. This means that they hesitate to fund start-ups, hesitate to fund small businesses in general, and never give you all the money you need (25-30% is what I've heard most commonly). Business loans are most often made to large, stable corporations to support expansion efforts (i.e. Home Depot can build a new store via debt financing), because that's a low-risk investment. Small start-ups are generally too risky without the possibility of a large return. Some small banks specialize in small businesses, but they're not going to give you much, and they're going to want to see an airtight business plan - one that includes marketing studies and financial projections over a few years.
The second issue I see is marketing. You haven't given a proper estimate of demand in your area, and it seems to me that you don't really know enough about your customer base in general. How large is the gaming market in your area? If you can't answer that with a number, then you don't know.
Next think about how you're going to reach those people. Plenty of otherwise well-run businesses fail simply because nobody knew that they were even there.
You sound pretty unprepared for this sort of thing right now, but it's not difficult to learn. Apply yourself, do your homework, and come up with a working business plan. There are plenty of resources available online (check the SBA's website for starters). Good luck!
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So even if you only need $600 a month, and thats assuming all utilities are covered, and you are paying yourself nothing, if you expect 1/2 your revenue from packs and half from singles, you need to sell 300 packs a month, thats alittle over 8 boxes every month, and then you need to sell $1000 in singles every month. If you do that, you've paid your rent. Can you local MTG community support that level of sales?
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As for running "better" tournaments than others, I used to run tournaments in the basement of a book store couple years back. We had a solid turn out for a local style tournament, 30'ish or so give or take a few, I am not totally sure, it's been a bit but we had a ranking system set up that ran for 6 months and then every 6 months it reset, but we had prizes for top dog. We also had rankings for overall tournaments just for bragging rights that never reset.
Ranking systems make the events a little more competitive, people hate to miss tournaments because it hurts there rankings, we kept the tables full every weekend. Make your local tournaments more competitive than the surrounding areas, people WILL come.
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As I said earlier, video games are generally a major mistake, especially if you're not in a very small town.
The initial cost is fairly huge, you're looking at an easy $1,000 or more with games added in. Then you have to keep buying the latest "Cool" games. If it's a PC Network, you're required to purchase multiple copies, or risk the potential for a store-killing lawsuit (Yes, it isn't likely, but it is possible). All of this to offer something that it's very likely people can already get at home without rental fees.
Further, selling games is a complete waste. You're *NOT* competing with Gamestop, Bestbuy, and Wallmart. They get their games earlier than you, they get preorder and exclusive bonuses, and they can sell them cheaper than you can. You don't have any angle, the only reason people are going to bring in used games is to trade them, and you're *not* going to have the tens of thousands you'll need to have a significant enough stock to get people to trade.
That said, you can do a couple things video game related.
-Arcade machines, can be bought for between $300 and $1k, depending on the title. You'll get your money back in spades by Players waiting for events to start. Don't fall for the "Many games in one" things, they're illegal builds of an emulator, often shoddily made, and often buggy as heck.
-Deal in Nostalgia items, Legacy Engineering sells Atari replica USB joysticks, resell them. Thinkgeek sells replica Nintendo USB gamepads. Ebay has plenty of systems and cartridges. Fleamarkets have even more. Using this as a launching point, you can gauge interest in an even more lucrative nostalgia line, PM me if you want info on that, but it's really something you couldn't predict, you may or may not live in an area with a strong market for it.
ahhh neat idea, have a single quarter arcade game sitting over in the corner for people standing around between rounds. Can you picture an old school Galaga game sitting there or even Dragon's Lair? haha memories but might be a good idea.
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ahh nice thinking, being close to a Middle School has kids walking home stopping by to play consoles for a short bit. Thinking also as you said, they may have consoles at home, but do they have the opportunity to play there consoles on like a 50+ inch wide screen? Little stuff like that could help matters some. Just ideas.
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from my perspective - it appears that you're approaching this with the best of intentions, but you could definitely do with some research in the following areas:
- you mention that magic players "come out of the woodwork" and there's a significant player-base available..... can you quantify this? can you give a conservative estimate? (do NOT overestimate, always give the lowest, worst-case-scenario estimates, otherwise you might find yourself up the creek. it's better to be pleasantly surprised than horrified at losing money)
- you say that the local authorities are practically asking people to start businesses, and will be willing to help.. this is great! find out how much exactly. find out what sorts of businesses they want to fund. they may want to fund community projects or green technologies. it may limit your decisions. find out for sure.
- loans are a possibility, but remember that small-business startups are high risk and most banks won't touch you. even if you get one, it will have high interest and they probably won't give you as much as you need. my advise; don't get one unless you absolutely must. and never get more than one unless you're onto a sure-fire winner.
- once you've estimated your player-base, get talking to them. advertise, give out numbers at events, get yourself known and find out how they would react to a shop of the kind you're proposing. will they frequent your shop? is there anything that's missing from the local scene that you can provide? do they want specific events and facilities that you hadn't considered? will they buy product? do they want singles? drafts? find this out and make sure people are honest about it. if everyone goes "yeah of course i'll buy boosters" after some cajoling and prompting, that won't help you - it's false information. have some questions memorized and just ask everyone you meet, asking them to be honest.
- lastly, you're entering into a market populated by a customer-base that loves to ***** and whine more than any other customer base in the world. these are the people that spend money on a game that they constantly complain about. people also quit magic regularly, and players are fickle - they'll stop frequenting game shops for the smallest reasons. make sure you've got the stomach for this, it might be hard to deal with, because you're basing the success of your shop on the creative decisions made by a small group of people hundreds of miles away. if they make a rubbish set, you'll notice.
sometimes you just need another pair of eyes to see what you've missed.... you can PM me if you like, to discuss any plans that you don't feel are airtight (and they NEED to be airtight). remember, if it goes belly-up, you stand to lose a LOT of money. better be prepared than suffer the consequences.
I want to do something on the side to make a little extra cash to shove into the stores savings acct, and I thought of selling singles on Ebay, how profitable is that, purchase a box, pull the higher priced cards out and stick em on Ebay at low cost and sell them? then rinse and repeat buying boxes and selling singles.
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It non wholesale prices you'll only make money cracking boxes during pre-sales (which you can't guarentee) or during the first week of release or so and even that is a crap shoot. On average you're going to need a minimum of about 5 cases to guarentee distribution, and you are going to want to sell everything out of those boxes you possibly can.
The issue with pre-sales is of course since you don't have a real distributor, you can't guarentee your product shipments and you might get stuck with some angry customers.
Normally I'd tell you to go for it to start establishing your brand, but right now with ebay fees being so dang high you're talking tiny margins.
Of course if you're active in the trade scene and/or buy collections that can suplement and help get you some contacts.
TLDR: If you want to do it to establish your brand, do it, just know that you might find the margins too small for your time, esp if you have an unestablished account.
Best advice i can give is dont be an ass****. This is how my former lgs went under, the owner was cool when he opened, held weekly tournaments, had a nice selection, reasonable prices, always had time for the customers and was a nice guy. Then after a year or so he just became an ass****. He hiked prices, marked even ☺☺☺☺ty singles cards up by 5x's there value, overcharged on boosters, would never helo a customer without getting iritated and during the weekly tourneys would shoo away anyone who had been knocked out sending them outside even in the winter even if they were someone's ride.
Since they were not in anymore, even if they wanted to browse and buy stuff. Or a personal one that happened with me, i was there after school (was a 3-4 min walk) looking through some manga for maybe 5 mins trying to see all the new stuff and decide how to spend money and and came up tome and asked me to leave his store and accused me of trying to shoplift since i had spend so much time in one section. Last-time i ever went there.
TLDR version, dont be an ass to the customers, you must be a businessmen first but dont forget were the business is coming from.
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Theres a very large number of different organizations that are willing to give out loans based on differing things like are you a minority,disabled etc..There are also federal loans for small business too and even some states offer them too. I'd recommend checking out the following books as a place to start some basic research:
Small Business for Dummies, Second Edition
Yup, Galaga, Pacman, Missle Command, Donkey Kong, Track & Field, can't go wrong there. Mortal Kombat or Street Fighter, or even Tekken are also good choices.
Dragon's Lair is a bit of a no go though. It's rare, the cabinets are obscenely expensive, they don't make laser disc players anymore, and alot of the discs are starting to fail today. I dearly loved that game though, always dreamed of owning one, that's how I know about them. Looked into buying one last year.
I've gotta disagree with you. First, that's a huge amount of money to gamble on "Maybe", and I can't get onboard with the poor kids thing. If they're poor, they don't have money to blow on renting console game time.
Big cities have a better chance with that, only because you have a bigger sample size to pull the few people who will be willing to do it.
Let me put this another way, I just graduated from a big name college with ~24,000 students. In the 4 years I was there, I didn't see the video game room rented out once, except for the yearly competition. I can't imagine that if you have 24,000 college kids and can't rent the room for college subsidized prices, that you could rent the room in a average town with an average population often enough to make money.
Agreed on this- Look at the cost you'd have to sink just to have one functional:
HD Display and cables- you'd be lucky to get out under $500.
Consoles- $200 per, unless you feel like a Wii or retro hardware
Games- You'll have to buy them all pretty much when brand new at full cost, and if you wanted a library of rare/interesting games, they'll pretty much maintain thier value used. So, $60 a pop.
Controllers- $25 a pop, and you'll have to have several on hand to deal with breakage. Even the best made controllers start to fail after heavy abuse, as since the kids don't own them, you can bet they'd be treated worse than people's home controlers.
How much do you expect someone would pay to play a game for an hour?
Even purchasing modestly (which you really couldn't do if you'd expect people to use it- if you don't have an up to date library, why would they bother?), you're in the hole nearly a grand from the get go.
Even if you found some fool to pay $10 an hour, you'd have to have them playing for 100 hours to break even... and that's just with one set-up- and ignoring that breakage will occur, and theft is entirely possible.
Now, consider that just one terminal probably isn't going to be good enough for any sort of really compelling gameplay- unless you're talking about Wii, Kinect or Move party games, Rock Band or Guitar hero or the like.
No matter how you divy it up, you're going to be on the hook for either purchasing new-peripheral based games, or additional set-ups for local multiplayer, or kicking in for service fees to allow for online gaming.
This is ALL before you see dollar $1 out of this, and long, long before you see any profit.
Unless videogaming was a mainline of your store, it's just not at all wise, and well... setting foot into the videogame store market is even more treacherous than the local gaming shop market, as the initial buy-in for stock is going to be even more.