#4: Buying vs. Opening

[RPGnet Columns]

http://www.rpg.net/columns/businessofgamingretail/businessofgamingretail4.phtml

Summary:

Which is better, buying an old store or opening a new one?

Go to the column (http://www.rpg.net/columns/businessofgamingretail/businessofgamingretail4.phtml) for more information.

[Old Geezer]

"It doesn’t discuss due diligence, partnerships, analyzing sales records or other issues. That subject’s not even on the schedule at present, but it might be worth adding. You tell me."


YES!!!

How's that?

[GreenOzzy]

"It doesn’t discuss due diligence, partnerships, analyzing sales records or other issues. That subject’s not even on the schedule at present, but it might be worth adding. You tell me."


YES!!!

How's that?I concur with the Geez'

[LBrownIII]

Well, based on the assumption that only 1 out of 10 or so people who read a thread post in it, I'll assume we have enough demand for that article. I'll add that into the mix next month, while it's still topical.

Also, I seem to have a formatting issue. I'll try to get that fixed so it doesn't hurt your brain to read the article.

How are we doing on generic business vs. game store-specific. Are you able to keep track of which is which so far?

[COLWebbSFMC]

Also- did I miss what a CAM fee is?

[GreenOzzy]

Also- did I miss what a CAM fee is?A CAM fee is a "Cleaning And Maintenance" fee. Stores located in places like malls and shopping centers pay a fee to the owners to clean and maintain the areas all the stores share, like walkways and parking areas and such.

How are we doing on generic business vs. game store-specific. Are you able to keep track of which is which so far?I haven't had any issues figuring out what advice counts for game stores and which doesn't.

[LBrownIII]

My commercial retail guide gives CAM as "common area maintenance." It'll get more complete discussion in the article on negotiating commercial leases. Essentially, the landlord likes to pass charges like security and parking lot maintenance on to you. If you let him, he'll pass on every charge other than the mortgage. That, too, if he can find a way.

Thanks for catching that. I try to avoid using acronyms until I've defined the term first.

[Nilus]

I use to frequent a game store that switched owners about 4 times in 5 years. They use to be a top notch game store and the original owner actually made money when he sold. Of course then the CCG card market busted and the place started to lose money and the owners kept jumping ship.

The thing that always got me was I liked this store so I made friends with every owner. All of them complained about the same thing, there shelves were full of old games and they had no capital to get in new games. A valid complaint but the problem was that the first owner was a pack rack business. He never marked down a single product and kept everything. So the store was bulging with books, games, video, etc, etc.

What killed me was that everyone one of the owners refused to try any sort of sale to get rid of some of their stock. They all thought they had a gold mine in books, but never realized if they took a few piles of the dusty crap in the back, shoved a few 50% off stickers on it. They could not only make more space in the store, they could have capital coming in to buy new books and games. Which is what keeps the people coming in.

Eventually I think the last owner closed up and god knows what happened to all those books, maybe the buy 1 get 3 free guys bought them up in a huge lot.

[LBrownIII]

the buy 1 get 3 free guys bought them up in a huge lot.

That would be Marcus King, who writes the Behind the Counter column. I know he buys a lot of closing game stores--up to 30 a year, I think.

Failure to supervise the inventory all the way through its lifespan, including liquidation, is a major reason for store failure. I'll explain the full effects on the store at some point, but I have a lot of topics to cover before then.

[tornspace]

There is no thread for article 3, so I'll respond here.

Just a note on my experience with the SBA. I go into Commerce Bank to inquire about SBA loans. The woman tells me that they only offer SBA loans to companies that have been in business for 3 years!

Um, doesn't that sort of defeat the purpose of the SBA?

[LBrownIII]

Yeah, that doesn't make any sense.

At least on the surface.

The SBA isn't a 100% guarantee--it's normally an 80% guarantee. If you default on a $100,000 loan, the bank recovers $80k. Maybe the bank wants to hedge its bets even further. It could be in a high failure area. I dunno.

Try others. I searched the SBA site for a list of 7(a) lenders, and I didn't see one. You might call the office nearest you and see if they can provide you with one.

[SiddGames]

Hi Lloyd,

Just found your column today - fantastic stuff. Thanks very much for sharing your insight and experience in the (game) retail business.

I'm thinking about opening an FLGS in 2008; my goal for this year is to complete my business plan and then take a gut check - is this really what I want, and am I really ready for the risk and effort?

For anyone interested, I've started a guild on www.BoardGameGeek.com called "FLGS Think Tank" for people to discuss FLGS ownership; everyone is welcome to offer their thoughts there (BGG registration is free if you're not already a member). Incidentally, BGG is where I heard of you and Marcus King, in this thread (http://www.boardgamegeek.com/thread/170818).

http://www.boardgamegeek.com/guild/342

Cheers,
Mike

[LBrownIII]

Hi, Mike.

I read through the existing discussion, but I'm spread pretty thin right now. I might make a cameo or point out anything that seems like it might steer you in a vastly wrong direction, but otherwise I doubt I'll spend any time over there.

I hope you understand that the advice of a non-store owner is limited in value. Incorrect guesses and just plain bad advice won't get you anywhere, and things like "treat your customers well" are so vague as to be largely useless.

The one post mentioning the business plan preparation is spot on. Creating a business plan is a huge task. I've written a bunch for pay and a few for myself, so I know he's not exaggerating when he says spend 40-50 hours on it.

[SiddGames]

Oh yes, definitely take anything with a grain of salt from non-business owners. I was hoping to get people who are currently in game retail to join the guild. I posted the guild link here mainly for other readers who might be interested.

Looking forward to the next column!