Figured I should make my own thread rather than continue on in someone else’s.
Ok I started with 4 potential areas to locate and am down to about 2.
1 Southcenter Mall - Tukwila WA (southend Seattle)
2 South Hill Mall - Puyallup WA (east of Tacoma)
Both of these locations have WOTC stores that just closed.
I have tentatively ruled out Tacoma Mall - they have a real nice game store a couple miles away. Auburn Supermall - They have the GW store.
It looks like I am looking at $19 per SF per year, plus (listed estimate) $4 psf operating cost. I am not sure with the listed operating cost what it is expected to cover. I suspect power, water, sewer, garbage, property tax and insurance, but this is a guess. Anyone who has experience with this would be helpful.
The smallest location appears to be around 1200 sf giving me a monthly cost of $2300. These estimates look the same for both South hill and Southcenter.
The Small business loan looks like it would run me 1050 a month, I have considered a larger loan that would come up to 1350 a month, but don't anticipate needing that much startup capital. Phone service should cost me 120 or so. A simple website could be subsumed into my cost of living. Credit card service is rolled into my sales figures assuming .30 per transaction and 2.5% off the top. I am assuming I buy the hardware.
2600 a month would cover my current income, or at least close enough, no 401k but hey who needs to retire. For now I am figuring on dropping the part time employee, though I know I will need one someday, especially if I go the Southcenter route.
If I am not missing anything (please tell me if I am) that means I need to net $6051. After restock and cash handling I should make one dollar for every 2.38 in sales. So I would need to sell $14580 or 175k a year for this to be a viable option. Anything I am overlooking or leaving out?
Southcenter is from a business sense more appealing. It is near the Wizards campus, and located in a convinient location from Seattle or Bellvue. The drawback is a 45 minute commute, which means never seeing my wife. Combine that with working weekends we would virtually be strangers. It is located at the Southern Intersection of I5 and 405.
South hill is thriving, with nearly every amenity offered at south center. I could be closer to the mall for my $2300, but the region is a bit less tamed (sidewalks are optional in much of the area). It's main advantage is that it is 10 minutes from my house. My wife could swing by with dinner after work etc. It would be better for my mental health. But worse for my business. South Hill is only 10 miles from the Tacoma gaming store, and is located off of the smaller 512 freeway.
I wish my initial post had been as clear as yours, hehe.
As far as which location goes, I'd have to say that clearly the closer one would be better for you, but make sure that it will still be successful enough for you. If you can't make enough money to keep your close business then the sacrafice for the farther one might well be worth it.
Those numbers are about the same as the ones I worked up, so I'm also very curious as to others opinions of them. My lease cost is a little less, but I'm looking for more space, so the total is about the same.
Were you planning on focusing on just one or two lines, or did you plan on carrying a full set of game things? Will you carry board games and puzzles? What about mainstream board games? Also did you plan on having tournaments and such? Do you have space for them? Will you charge for them? Is that taken into account in your budget already? I ask that because if you have the space for them, entry fee tournements can be not only a great draw to your store, but also a relatively low cost source of income. (especially if the prizes are goodies from the store that you paid wholesale for!)
-Eben
(Who is jealous that you live in Seattle)
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Whether you're young or old - Go Play!
I am figuring Rpgs, CCGs and Miniatures. My wife asked about comics, but I am not enough of a comic guy to feel that I could make good stocking choices. I have not really considered traditional games.
I would plan on having tournaments, both Miniature and CCG, perhaps leagues for both as well. The mechanics of which I am not sure of yet, Washington has strange gambling laws, as well as unusual tax laws. For CCG's booster draft/sealed deck would be the safest legally. But even if I don't charge if you can get 60 magic players in your store for any reason you will do some bussiness. I figure with 1000 sf I could manage a crowded 64 person CCG tourney. At 1200 it should just be a bit more comfortable. I figure the retail element of my store could be contained in 400 sf. Of course these are all guesses, and I might be underestimating my space needs.
I am planning on in store gaming, and a pretty solid line between the 'store' are and the 'play' area. That combined with a couple security cameras should keep theft way down.
Oh and I don't live in Seattle, I commute 54 miles to work in Seattle. <grin> While the 45 minute commute to Tukwila may seem bad, on a bad day it can take me an hour fortyfive to get home from work, and I commute 2 hours before peak rush hour.
I don't have much opinion on one location over the other - they're both a little far from me (in Kenmore, just north of Seattle) to visit regularly. Still, I'd like to stay notified of your progress if you can post it here or add me to your mailing list. Perhaps we can help spur on some business for you down there with some in-store demonstrations of Pax Draconis? Have you considered any special grand opening events? I remember some older threads here about a new store that kicked things off with as many demonstrations and prizes as possible.
karolusb wrote:It looks like I am looking at $19 per SF per year, plus (listed estimate) $4 psf operating cost. I am not sure with the listed operating cost what it is expected to cover. I suspect power, water, sewer, garbage, property tax and insurance, but this is a guess. Anyone who has experience with this would be helpful.
I know very little about mall rental, but my understanding is that the operating cost pays for the common areas of the mall -- the walkways, food court, toilets, et cetera. It can be a big hidden cost if you don't look out. Make sure you get a maximum figure for that kind of cost, and if possible a guarantee that you won't be paying more per square foot than any other tenant in the mall.
I wouldn't count on power, tax or insurance being included in the operating cost. It might be, but you're going to want to look very closely at this and everything else in the mall contract. Malls are the toughest people for small retailers to negotiate with; they hold most of the cards and it's hard to get them to bend on anything.
Another thing to look out for is that a lot of malls charge a percentage of gross sales in addition to standard rent. Go over a certain threshold of sales and your rent can go up quite a bit.
You may want to consider rounding up a good real estate lawyer or agent or both if you're going to negotiate with the mall. A friendly retailer with lots of mall negotiation experience would also be useful. Negotiating mall rent well takes experience and brass balls, so good help can make a big difference here.
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The smallest location appears to be around 1200 sf giving me a monthly cost of $2300.
I don't know Seattle real estate, but in New England that would be pretty good rent for what you want to do.
I've got a big "BUT" to go with that, though. Location within the mall is very important. There's a huge difference in foot traffic between the main travel paths and the little dark corners. $23/s.f. may be a very good deal in a good location, but if you're on the third floor between two clothing-for-grannies stores, you're going to be in trouble.
Again, this is where an expert advice is a Very Good Thing. However, the basic things I would be looking for are,
a. Am I on the floor where most people enter and leave?
b. Am I on the main hallway instead of a side hallway?
c. Are my prospective neighbors appealing to the same basic demographic I'm shooting for?
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A simple website could be subsumed into my cost of living.
No. BAD karolosb, no biscuit!
Never shunt off store expenses to personal expenses. In fact, you should go the other way any time it's reasonable and legal to do so.
There's two reasons for this rule:
1. Shunting business expenses into personal expenses is just a bad habit. You're fooling yourself about your true costs, and if you take that far enough, you can end up losing your house trying to save your business.
2. If you pay for something, you're paying with after-tax dollars. If the business pays for it, that's before-tax dollars. The more expenses you pay with before-tax dollars, the lower your taxes are, which means the more after-tax dollars you have left for you.
Quick super-simplified example:
a) JohnCorp has sales of $110 and expenses of $10. John gets $100 in before-tax dollars and pays about 20% in taxes. John ends up with $80 in his bank acount.
b) JohnCorp has sales of $110. John pays 20% in taxes on that $110, leaving him with $88. He then pays the $10 in expenses that JohnCorp passed to him. John ends up with $78 in his bank account.
Moral: <b>always</b> make your business pay its own bills (unless your tax accountant tells you otherwise). In this specific case, have your business cover the computer utilities.
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If I am not missing anything (please tell me if I am)
You're missing business insurance (that's your liability and property insurance, not the insurance on the mall real estate). Not a huge expense, but it's probably at least $50 to $100 a month.
You're missing advertising. You probably don't need to do much, since you're relying on mall traffic, but a good Yellow Pages ad is a good idea. I don't know Seattle phone book rates but I'd plan on spending at least $100 per month, and my gut says an effective ad is probably going to be $200 or more per month. (I'm assuming you have some short-term advertising money in your start-up budget, just to introduce yourself to the area.) It's optional, but I'd consider putting aside $50 a month to advertise in whatever school program or charity opportunities come your way.
Unless you or your wife have professional training in bookkeeping and tax accounting, you need a professional keeping your books. Bookkeeping should be pretty cheap -- a $25 a month checkup is probably enough, because you can (and should) do most of the books yourself. you can probably get a simple business tax return -- and if you keep your books right, it will be simple -- for about $200 per year. Maybe less, maybe more -- I <b>do</b> have professional training in this field and I'm too lazy to get the help I probably really should get, so I'm not up on current market prices.
Those are the only three items that come to mind sitting here at home, but I'll glance at my P&L tomorrow and see if there's something I'm blanking on.
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So I would need to sell $14580 or 175k a year for this to be a viable option. Anything I am overlooking or leaving out?
Possibly, but aside from the areas mentioned above I don't see it. Again, the mall contract is where I'd be hunting for surprise costs.
Note that with the extra costs above I'm figuring your target for sales should be more along the lines of $185K per year. Given good mall traffic, I think you can do those numbers fairly quickly.
Note also, however, that if the mall rental covers fewer amenities than you think, then the sales target is likely to to go over $200K. IMHO that's still very doable, but you'll want to make sure you have plenty of capital to sustain yourself in case you get there slower than you think you will.
As far as the two locations go, I would favor the one that gives you more time with your family. However, what I would do is negotiate with <b>both</b> malls. Play them off each other if you can, see how much better the offers get, and take the package (offer + environment + family factors) you like better.
FWIW, I walked the Southcenter mall a few years ago and liked it. Assuming it's kept itself up and the other mall you're looking at is similarly lively, I think both of them are very interesting prospects.
I figure with 1000 sf I could manage a crowded 64 person CCG tourney.
Let's run some numbers on that.
If you've got 64 players in the 1000 s.f. store, you're allocating each player less than 16 square feet. That's a 4 foot by 4 foot space, and that's assuming there aren't any fixtures and product in the way. That's not comfortable for the players, and you won't have anyone else in the store. 1200 s.f. isn't much better -- you're looking at a 3x6 player space and you still don't have any fixtures, product or other customers in the room.
Another issue to consider is that a large portion of your customer base does NOT want to share space with 64 teens and twenty-somethings, a significant fraction of which are going to be smelly and socially stunted. If you want to go all Magic all the time, you can -- but if you're serious about carrying other products, then you need to give your non-Magic customers plenty of space to examine the products they're interested in without getting creeped out by the Magic players.
If big tournaments are your heart's desire, don't run them in the store -- negotiate with the mall to run them in the food court or another public venue. Use your store space to provide the nerve center of the event and product sales.
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I figure the retail element of my store could be contained in 400 sf.
Probably, yes. But do you really want to contain it that way?
Unless you're running events all the time, and unless your events are providing 2/3 or more of your sales, then restricting your merchandise to 1/3 of your available space is wasting money.
With that in mind, let's see if you can generate enough income from an 800/400 s.f. split to justify doing it. I'm going to use your $175K/yr. sales estimate because it's kinder to you.
If you go 1/3 store, 2/3 event space, then your non-event space should generate about $58K of your sales. That's $145 per s.f. per year, and if you can't do that in a mall, you're already doomed. I don't think we have to worry about that.
Your event space should generate at least $117K per year. That's $2,250 per week. You have 800 s.f. to work with, and my experience is that 20 s.f. per player is reasonably comfortable. I think you can hit an average of 32 players in an 800 s.f. space and have a space people actually enjoy playing in.
If you can run one full-up 32-player tournament a day, 7 days a week, assuming normal product margins (that's a big assumption, but I think it's justifiable), then you'll have to charge your players $10 to hit your sales targets. That's better than I expected it to be. Assuming you can get the peeps in the door, I'd say it's practical, especially since you have other options like $25 tournaments 3 days a week.
What concerns me about this model is staff issues. If it's just you, then you're either not running the tournament or not running the register. This opens up the question of who *is* running whatever you're not running, and how they're going to be compensated for such a regular effort. Resolve that and you're in pretty good shape.
BTW, don't assume that "if you can get 60 magic players in your store for any reason you will do some business". Competitive Magic players are "price-sensitive" (that's the nice word for "cheap bastards"). With the exception of sealed-product events, they will not buy decks and boosters at a price point that gets you a good margin. Any high-margin business you do with them is going to have to come from accessories and singles sales, the latter of which involves a lot of labor-intensive customer service.
This doesn't mean you can't make money from them. But it may not be as easy to do so as you think.
Originally posted by karolusb For now I am figuring on dropping the part time employee, though I know I will need one someday,
Hold the train. Got up this morning and this was staring at me through a wheel of fire.
What are the mall's hours, and do they have the (standard) "your store must be open whenever the mall is" clause in their lease?
If they do, and the mall hours are the typical 10-12 hours/day 7 days/week set-up, then you <b>need</b> at least one part-timer, and you probably need two. Trying to cover those kinds of hours alone will kill you, your marriage, and/or your business within a year.
I guess I phrased my initial post a bit unclearly, in no instance am I looking at in mall space, the required hours would kill it for me even if the 32$ psf didn't. The southcenter location (both are examples I haven't hit up a real estate agent yet) is about 2 miles from the mall (southcenter is a huge shopping district) and about 1/4 mile from a movie theatre, in a nice strip mall. The South hill one is similar, next to a grocery store, about 1/2 mile from the mall. Both locations are standard NNN leases.
The 4$ psf operating costs is the most common figure listed by the real estate companies. Figures as low as 2.5$ and 5.5$ I have seen, but 90% list 4$. I will follow up with a realtor on what this means.
When I say subsumed by my cost of living for the website I do not mean to ignore the tax benefits, merely that I already pay for a space, hosting, 'unlimited' bandwidth, after design (which I can probably squeeze for free) and updating which I would have to do myself, I wouldn't expect it to incur any costs that my salary estimate (which after talking to my wife I realize is 300$ a month to low) doesn't already include. Heck if I can pull it off I'll sell my car to my corporation for the tax benefits.
I work in accounting now, and with a good software package I don't doubt I could manage monthly operations. I would probably need a tax preparer at least once, but hopefully not more than that. My mother in law does her business taxes, so I am assuming I can handle it.
I will call my agent and see what he says about insurance cost. And digest the rest of what you said and see what I come up with.
karolusb wrote:I guess I phrased my initial post a bit unclearly, in no instance am I looking at in mall space
Ah, the picture suddenly becomes much clearer. I was a bit puzzled by the rent quote, but New England real estate is so damn expensive that I figured it just must be cheaper out west.
Given that you're not in the mall, I'm on the fence about the rent. It's not a bad rent given the the product mix and likely sales per square foot, but I'm concerned about getting sales up to speed without the built-in foot traffic of the mall. Unless you find an absolutely fabulous location, I think you're going to have to be more aggressive in your advertising, especially in the first year.
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The 4$ psf operating costs is the most common figure listed by the real estate companies.
Now that I know what I'm looking at, I feel more confident saying that the operating costs probably estimate the triple net part of occupancy. If so, the estimate probably covers water & sewer, building insurance, and real estate taxes.
Power and heat are probably separate and not in the estimate. (Different businesses can have very different needs in this area.)
Sounds like you're in good shape on the accounting front. I also took a look at my P&L, and the aforementioned power and heat are the only other categories that jump out at me as far as possible significant expenses go. Those vary so much by building that you're just going to have to look at previous utility statements for the space and come up with your own estimate.
Addendum: One thing did just come to mind -- check the state and city property taxes, because they could be significant.
cheers,
Chris Aylott
Last edited by Chris Aylott; 03-19-2004 at 12:29 PM..
Traffic is my biggest fear as well. I know people. And to not presume too much I can likely get some prime advertising 'free', but that is only going to go so far.
Advertising is the one area I know nothing about. With the exception of networking/word of mouth I am at a loss. A billboard seems ridiculous. TV and Radio I am pretty sure wouldn't be cost effective for the audience I am expecting. A good phone book ad seems like a good idea, though I wouldn't have guessed it cost so much.
The space mix can be adjusted, my intent is to use what is needed for the retail element, I just don't intend to sprawl product over every inch of space. Gaming space seems critical to me, it's what would set me apart from Borders. I assume cost of the footage is a cost of doing bussiness.
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