Re: Can one start the FLGS?

Seebs <usenet-nospam@xxxxxxxxx> wrote in
news:slrnft9ul4.b5o.usenet-nospam@xxxxxxxxxxxxxxx:

On 2008-03-10, Terry Austin <taustinca@xxxxxxxxx> wrote:
What happened to them all? I find that people how have
incorporated "many busuinesses" ususally have done so because
they kept failing. Otherwise, why would you need more than one?

One or two were sold off, one or two failed. My last one
failed, my current one's profitable.

Most businesses fail.

Especially game stores.

It does suggest that, but you keep talking about how seriously
you're *not* planning on taking this. That suggests you have no
idea what you're getting in to.

I think you miss a key distinction.

I'm taking it very seriously. I'm just taking very seriously
the fact that whoever runs it won't be me.

I'm doing research on behalf of whoever might end up running
this. I might be the one to provide an initial business plan,
and -- if the plan looks good and everything checks out -- maybe
even some starting capital.

If you're not looking to at least be an investor, you're wasting
your time.

And I'm giving you answers, based on nearly 30 years experience
_in retail management_. The first answer is, you need to get a
hell of a lot more serious about this than you seem to be.

Once again, I'm serious about it, but my plan has absolutely
been that I will *not* be the one running it.

My plan of not being involved isn't because I think a retail
store will magically run on its own; it's because I expect
someone else to run it.

Nothing wrong with being a silent partner. Find someone with a lot
of experience at retail management for the other half.

Your biggest single expense will be the cost of goods. Plan to
pay 50-60% of the suggested retail for stuff (it varies by what
kinds of goods, I'm given to understand that 40% discounts are
fairly normal in gaming, 50% if you can deal direct with
publishers).

Okay. That's good to know. I'd been guessing 30%, 40% helps.

At 30%, most retail operations literally could not stay in
business. (There are exceptions, but they are few and far between,
and for the most part, not actually retail in the traditional
sense. Mostly, they're mail order outfits that happen to have a
store front.)

Your second biggest expense will be payroll. Don't count on
people willing to work "for free" (which would probably be
illegal) or "for cheap" (because if they do it as a hobby, it
simply isn't important enough to treat as a job). And by
"payroll," I mean more than wages. You'll also have to pay for
worker's compensaion (which will cost you far more than you
will likely believe), taxes, unemployment insurance, social
security, fees to a payroll service (and trust me, you *don't*
want to try this without one), and so on. Note that I haven't
mentioned benefits, like medical insurance. For a minimum wage
employee, for the mandatory stuff, figure they will cost you
about twice their actual wage.

Yes. The only "for-free" I had in mind was some consulting on
accounting. The rest would be people working hourly, most
likely.

Those two items will probably run you in the neighborhood of
80%, or more, of your total revenue. Then, you have rent (and
unless where you live is *very* different than here, rent for
retail space *will* include a percentage of you total revenue
every month), utilities, your own taxes, etc.

Interesting about the revenue -- I haven't seen that in any of
the ads yet, but maybe that's fine print.

It's possible it's different in some places, but that's normal in
the big city, so to speak. Talk to a commercial real estate outfit
about it. Don't be afraid to negotiate.

As I have noted, your net profit will be less than 5%. You
can sort of fudge on that by being one of your own employees,
and thus your own living comes from that second biggest
expense, but you have to be very careful about that. Especially
since you're talking about getting it going and not being a
very active part of it. As an investor/silent partner, expect
to spend tens of thousands of dollars, and get a pitiful
return, if any at all. It would literally be cheaper to hire
someone to drive to the nearest big city and buy your game
stuff for you.

Ahh, but I like my home town, and I like gaming, and if I can
cause my home town to introduce hundreds of college kids to
gaming every year, that'd be a good use of some resources.

It would also very likely be cheaper to simply set yourself up on
an auto-ship basis with some mail order house to get one of
everything published, and use the money you save to advertise your
new gaming club in the campus newspapers. In all seriousness, that
would probably accomplish the same things you seem to be after -
have everything published available, and promote gaming as a hobby.

In all seriousness, find someone with retail management
experience. *Real* management experience, as in, making hiring
and firing decisions, making buying and merchandising
decisions. You _must_ have someone who is intimately familiar
with the legal requirements of an employer, and a retail store,
or you're running naked in to a mine field. You can't afford to
hire an HR service to do this stuff for you. If you can find
someone with the experience to run it, give them partial
ownership, and be a silent partner. And stay out of their way.

Fair enough.

That's going to take some searching, but it may be possible.

If it's not, give up. Seriously. Don't waste you money backing
someone who isn't experienced enough to make it work.

It
may even be possible, if the market is worth it (and it may be;
there's another 20k people ten miles away who have nowhere to go
for gaming...), to simply interest someone in doing this and
then stay COMPLETELY out of their way, except as a customer.

If they have the backing. However, as Seawasp noted, a successful
new retail store needs to have at least 2-3 years of operating
funds (assuming *zero* income) to be properly financed.

The hard part is figuring out what the costs are. I did back of
the envelope estimates on what it would cost, and concluded that
it is obviously impossible that there are retail locations in
this town, because there's no way any of them could be making
money. Clearly, at least some of the costs must be much lower
than I expect.

Start up costs won't be the big issue, I suspect. It will be
operating costs, especially labor. As a WAG, based on what I know a
hardware store costs to open, if you're talking about a small
retail space - a few hundred square feet, maybe - I'd guess you're
talking about low to mid tens of thousands to get the space, and
fill it up with stuff to sell. If you want to be open seven days a
week (and you really *need* weekends if you want the student
crowd), with reasonable hours, you're talking at least 10 hours a
day, so you need at least three or four full time employees. Even
at minimum wage (what the hell is minimum wage these days?
California's is higher than the national standard), they're going
to cost you $20-25k a year, so with a manager (who *will* make
more) you're talking $100k/year in labor. Shorter hours can save a
*lot* on that, and might be a good idea in the beginning, until
there's enough business to support more. It could probably be done
by being open late afternoons in to evening during the week, maybe
four or five hours, with one employee, and 12 hours on weekend days
with two. In theory, the manager could be the only employee during
the week, and as a part (or full) owner, his wages don't really
count.

The problem then, of course, would be finding someone willing to
finance a part-time business, but it can be done.

I'd start by talking to whoever handles retail space rentals in
your town, and finding out what rents would be. Then, talk to any
and all of the gaming distributors about opening stock orders to
get an idea of how much it will cost to fill the store. That should
give you an order of magnitude on how much you're talking about. At
a guess, I'd say double that as a *very* rough estimate on what
fixtures and counters and stuff will cost, and use that to decide
if it's worth further research.

--
Terry Austin

"There's no law west of the internet."
- Nick Stump

Jesus forgives sinners, not criminals.
.

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