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[Aquin]

Well, I'll see what I can remember of the experience.

For starters, I did it with a partner.  We started planning the idea of the store in June of 2006.  We didn't open until November 1st.  So it took FIVE months to get everything together.  Pretty crazy, right?

PART 1 - A Crazy Idea

My friend was fed up with his job and I was similarly fed up doing contract work (every time I think of doing more web design, I get ill.)  It was a small town with a tiny population of 6,000.  The area, including other towns, is still not larger than 30,000.

We were just kinda kidding around.  Even though the population is small, gaming is a pretty big thing in Terrace (our little mountain town.)  Oh sure, we had a Wal-mart... but they never got anything in on-time and missed most major releases entirely. 

We wanted to change that.  We wanted a video game store that actually knew what it was doing.  We wanted an EB games, or something similar.

PART 2 - An Idea Becomes A Plan

At first, we thought we should just mention the idea to EB Corporate.  After many phone calls, their response? "We don't service towns of that size.  Sorry."

Huh.  Then my friend said, "Hey why don't we just do this ourselves?  Make our own store?"  I thought he was just kidding around.  The next day he showed me a logo and gave us a name.  "Game Haus?"  Eh, it's a start. 

We were both broke.  We had no idea what sort of costs were involved or even how to do anything at all.  I promised my friend that I would take care of the logistics while he worked his regular day job. 

So how do two young poor guys with no capital and no credit start a business?  It's easier than you think....

The first thing I did was consulted a government office.  I was told to contact 16/37, which is sort of like a non-profit loan and small business operation.  I was put in contact with a man named Marty.

Strangely enough, although me and Jeff (my friend) were hesitant about opening a game store in such a small town, Marty was convinced that it was worth the risk.  At this point I should mention that he is a serious Harvest Moon fan and was looking forward to such a 'joint' in his own hometown. 

16/37 would most certainly approve a loan of $30k to the both of us, if we could provide collateral and a sound business plan.  I had no idea what that meant.  How the hell was I gonna open a business for only $30k?  Was it even possible!?

PART 3 - Essential Skills

My next step was in consulting my parents.  They're both reasonably successful in their own enterprises (my dad works as a concrete contractor and my mother is an accountant.)  My mom made it very clear to me that I would have to be an upstanding book-keeper. For additional income, I would be wise to learn about government grant programs for small businesses and how to keep track of my taxes for possible deductions. 

Let me make this clear:  I suck at money.  It's two years later and I *still* get 'debiting' and 'crediting' mixed up when I'm doing my books in Simply Accounting. 

So I spent a week just learning how to use Simply Accounting and gathering information on government programs.  I also had to learn Excel and how to keep track of physical evidence of transactions. 

I also had to write a 30-page business plan.  This plan would be presented to the board of directors at 16/37, convincing them to give me a business loan.  I spent many days on Google learning about business plans.

So what was in the business plan?

PART 4 - 30 Pages of Pain

First off, I was presenting this to a bunch of investors.  They were not gamers.  They had NO idea what a Wii even was.  Problematic.

I also needed a bunch of information about the gaming industry to prove that, "Yes I know what I'm talking about."  So there were a lot of paragraphs in the plan that looked like this:

A report done by the University of Western Ontario revealed some encouraging figures and ACNielsen provided Canada-specific data. The size of the video gaming industry has grown tremendously; for example, ACNielsen reports a 9% growth in 2004 over the previous year. The growth in years since has also been pronounce. In this 2004 study, the industry made an estimated $416 million in Canada during the first three quarters.

See what I mean?  I spent a lot of time rounding up NPD sales numbers, charts, and ESA figures to impress the big wigs at 16/37. 

The business plan had to clarify that it was a full partnership, 50/50.  Apparently partnerships are dangerous and can ruin friendships.  Fortunately, Jeff is one of my few friends to whom I would trust my very survival.  This wasn't an issue.  It may be for you.

The plan had a lot of resume like qualities as well.  "What can Jeff do that's so important?"  "What does Mike do that's so important?"  "Do you have any references?"
It's like applying for a job.  Except you pay THEM.  What a pain in the ass. 

Here are a few questions that were pretty important for me.

What are the store hours?
If we need a 3rd employee, what will be their hours and compensation?
Are there any rules about food, drink, and behaviour?
What does my store do that others do not?
What's happening in the industry and how can I take advantage of it?
Who is my competition? (cough: Wal-mart)
How will I advertise?  How much does this cost?
What is the cost of marketing materials (business cards, signage, website hosting)?
Who are my suppliers?  Are they ripping me off? (short answer: always)
What are my start up costs?


Blah blah blah, the list goes on.  See next post.

[Aquin]

PART ETC - The Important Stuff

There are a lot of little things that slip by when you first think of opening a business.  Here are a few examples:

I need decorations such as posters.  I got mine from various websites and eBay for about $2,000.  We ended up selling most of it anyway.

Signage - business cards, an outdoor sign, an open sign, and cards indicating game section in-store.

Furniture - We bought couches and televisions for about $5,000.  One of the ideas of the store was that you could open up any game and play it for a few dollars an hour.  It's kinda like the demos in EB, except you get to sit down and hang out.  We even had old systems with old games hooked up.  Our Nintendo got a *lot* of action.  Rock Band was another popular item.

Seriously, you pick the game you want off the shelf and just play it with us there.  It wasn't really any more expensive than an arcade and if you BOUGHT the item afterwards, we didn't charge you for playing it.

$3,200 on security.  We needed bars over certain windows and we had minor security.  I can safely say that this was a complete waste of money.  You gotta pay insurance anyway and they'll usually cover the damages up to a certain amount.

$4,000 was spent on inventory that wasn't brand new.  That's right, we cleaned out a bunch of pawnshops and did some special orders on-line.  You want to play Umihara Kawase Shun on a JP PSX?  We can do that.

We had to consider monthly hydro + internet costs.  We used the internet a lot for games like Castle Crashers (we bought quite a few indie games on PSN and XBLA.  CC was quite popular.)

$4,000 on office equipment (like computers and stuff.)  We had one bitchin' computer rig for showing off PC demos.  Thank you NCIX (seriously, they are the best.)

$4,000 on renovations.  We needed new carpeting and walls.  I still remember the day Jeff and I painted the walls with primer and paint.  It took the whole damn day and we were covered in it by the end.  We also had some spiffy black tiles installed at the entrance.
In hindsight, the counter was a complete waste of money.  A fold-out table propped up with some black table-cloth COMPLETELY fools consumers for less than $50.

We also had to drop $16,000 on inventory.  That's where things got a little screwy.

[Aquin]

Before I get started on inventory, I seriously cannot STRESS how much work it is.

For starters, it took me two months just to secure a location for rent.  It takes a lot of work to find the right place.  We needed a small-ish space.  We got an 18000sq. ft location which honestly was still too big.  If I could do it all over again, I'd easily settle on 1300ft.  Then you gotta wonder what kind of deal you're getting from the landlord.  Fortunately I was able to secure the place for $1,000 a month.  That's honestly pretty good and included heating and property taxes.  The location wasn't great though.  You don't want to be too far from downtown.

It took many conversations and a lawyer to review the lease agreement before we were even allowed to make a move.  Trust me, when it comes to doing anything business-related, you'll be doing a lot of meetings.  By the end of September, Jeff and I were just laughing at our own misery.  We were in the car rushing to make the next appointment EVERY HOUR OF EVERY DAY.  Obviously Jeff had to quit his job just to keep up.  It was completely ridiculous.

I mean, we had to book an appointment for the carpets and get them done after painting the walls.  We had to book security installation, alarm installation (which is mandatory for insurance), oh and insurance appointments, loan appointments to review the current business plan, etc. etc.

The worst job in the whole mess was given to Jeff.  He tried to track down a video game supplier.  Now let me tell you something:  this is harder than it sounds. 

The warehouses that supply video games really hate small orders.  In fact, they won't ship less than a 10,000 copies of any particular item.  So you won't be dealing with a warehouse, unless you're Wal-mart. 

As a smaller business, you end up talking to a middle man.  He buys 10,000 items, ups the price and sells them at 1,000 a piece.  Then you buy from the next middleman for 2-3 copies at a time.

By the time you get your hands on an item, the Cost of Goods price isn't much lower than the normal retail price.  There is no way to avoid this situation.  If you're a small fish, many suppliers will just hang up on you.  Jeff ran into this a lot.  We were lucky to find a few suppliers that would deal with us.

Our main supplier ended up being Multimedia Tech in Vancouver/Richmond.  After a few false starts, we became friends with a few of the salespeople there.  We actually got a few deals every once in awhile.  They would give us free posters and toys if they had them.  No foolin' we got an Altair statue for free.  That was pretty cool.

----------

So you found a supplier?  Fine.  What are you gonna stock?

Let's face it:  you kinda need all the customers you can get.  Wal-mart can afford to make mistakes with their inventory.  They accidentally order 1,000 copies of Two Worlds that nobody wants and it doesn't matter (seriously, they sat there for months.)  They just throw them out and make money elsewhere in the store.  You don't have that luxury.  If you buy too many copies of Folklore and a few don't sell... that's right out of your pocket. 

Here's what I learned about inventory --

Don't carry mini-games.  Believe your gut; they don't sell.  When we brought in Wii mini-games, they never went anywhere.  Maybe it was our target demographic: gamers. 

Don't carry crap.  This comes back to the demographic.  99% of our customers, no joke, knew the Metacritic score of their purchase before-hand.  It doesn't matter what your personal gripes are with Metacritic, use it.  It will save your ass.

Don't carry sports games.  Sports games sell really well... statistically.  You are not a statistic.  If you buy baseball games and nobody in town likes baseball, you're stuck with a bill.  Find out about popular sports in your town first.  Terrace is big on Hockey and Golf and those were the games that tended to sell.  We never sold a football game despite stocking them, nor a baseball game.  We did sell a few soccer games and I think we sold a basketball game ONE time. 

Don't carry a lot.  "Oh wow GTA4 is guaranteed to sell a lot!"  Yes, yes it is.  Don't buy more than necessary.  Look, you'll be re-ordering each week anyway.  Don't get carried away in one week.  This is where pre-orders come in handy.  Take the number of pre-orders and add about 30%.  Obviously this only works with highly anticipated titles.

Don't carry indie.  WAIT WHAT!?  I can't believe I just said that.  Well...it's *kinda* true.  Look, buy it because YOU want to play it and you think it should be in the store.  Seriously, just carry one copy at a time.  If it sells, replace it.  Don't get carried away with indie stock.  It should take up shelf-space and be displayed prominently, but it won't be a major seller.

Honestly, most of the time you should only have 1 or 2 copies of every game in stock anyway.  So here's the run-down -

Don't carry bad games.
Don't carry sports games for unpopular sports.
Don't carry a lot of stock.  1 or 2 for each game is fine, unless it's popular.

[Aquin]

Services are your Friend

Look, you gotta set yourself apart from the competition.  This can be done in a variety of ways.  Let me tell you what we did.  It worked!  Honest!

1) Carry video-game merchandise.  T-shirts, statues, stuffed toys, posters, etc.  This stuff will sell.  Unfortunately it's impossible to find a supplier for this stuff.  We ended up taking whatever we could find.  Fans don't mind paying your bottom line to get something they really want.  The only thing we had that didn't sell?  A stuffed DQ slime.  I refused to part ways with it.

2) Run a website.  My blog was born of that website.  Every week I would post about retro games that I thought were fun to play.  I set up downloads for freeware and retro games and generally kept tabs on the industry in my own way.  We tried setting up an online store... it didn't really work.  eBay will rip you off and eCommerce is kind of a hassle if you're a small business.  I recommend staying away from online selling until you're established and think you can handle it.

3) Offer service. As I said before, we let people play games on our comfy couches and nice big screens.  It took off in a big way.  Also, that's $5 an hour where we don't have to worry about replacing product.  It's pure profit.

4) Special ordering is good.  One of my jobs was to provide special ordering for customers interested in 'special items'.  I was asked all sorts of things.  From tracking down a copy of Thrill Kill to tracking down a cartridge for the Atari 2600.  Collectors' forums and eBay are your friend.  But you also need to be knowledgeable.

"Hi... I'm looking for a game.  It uh... had school girls in it.  I think they were trapped in a house.  I can't remember anything else."

"Clock Tower for the Playstation?"

"Yeah that's it!"

5) Run contests.  The Smash Bros tournament was especially intense.  I recommend doing it at least once every other month.  Don't get carried away though.  We did the first time and the tournament went on well past 8pm.  Dumb dumb dumb.  Just stick to one or two games.

6) Used stuff.  Look, I know it's sort of a big deal for developers... but you need used sales.  Look, when you buy something new and resell it, you're lucky to make $10.  That's not bad... except you paid $50 and sold it for $60.  When you buy and sell used, you're dealing with 100%+ profit margins.  Buy for $5, sell for $10.

Make sure you pay more than the pawnshops and make sure everyone knows it.  You want to be their first pick for selling back games.  One major thing we did?  Quality control.  We didn't buy back just anything and we paid more for premium items.  You'll be surprised by your customers.  We got a FUCKING COPY of Zelda Master Quest for Godsakes.

And when I talk used stuff, I mean it.  We got customers looking for N64 and Playstation stuff.  That isn't made anymore.  Our retro sections saw a lot of action and we had to scour the corners of the earth for that stuff.

Honestly... if I were to do it all over again... I would focus on used sales and retro sales a whole lot more.  The profit margins are higher, they're more popular items (since they're generally cheaper), and it's reliable stuff.  You don't know if the next GTA will indeed be a big success, but you're guaranteed a sale with Ocarina of Time.

7) Do other things.  Eventually I even agreed to teach game design to a few interested people.  We had VG music from OC Remix playing in the store.  Uh... what else?  Look, nerd it up as much as possible.  They are your target demographic.  There are two kinds of customers:  ones that come in, perhaps buy, and leave never to return.  They suck.  You want the other kind.  All you need are a few loyal customers with high salaries to keep a business going.

[MrChocolateBear]

Aquin, Thanks a ton for that. Lots of good information.
To Aquin!

[kyn]

I really enjoyed reading those posts, sorry it didn't work out in the end, but it really sounded like a fun store.

[george]

wow thanks Aquin, you are excellent  . It sounds like you have the experience to give this kind of thing another go sometime, if you're not sick of the whole thing already.

[Aquin]

Honestly, it was a blast!

I would open up the store in the morning and normally we would get about 15 actual paying customers throughout the day.  We'd also get a lot of browsers. 

I'd usually do all the books and worry about advertising and calling people in the morning.  The only real day of work was Monday.  On that day Jeff would make a list of what we needed and what was coming out over the week and we'd call our supplier to get our hands on the necessary stuff.

It was also the day we got our stock from the last order.  Sometimes we'd get stuff later in the week to match up with important release dates.  We had a notepad of customer names and phone numbers to call people about their orders.

Most of the time was spent playing Mario 3 or Guitar Hero or Castle Crashers.  It was either that or talk to customers about video games.  Really, there was no way to screw it up.

We closed for a number of reasons.  For starters, we opened in an area of terrible economic stability.  The unemployment rate in Terrace is higher than anywhere in BC which is higher than anywhere in Canada.  Then the government took away the spending money of the Nisga'a, which were a huge source of income for us.  Then the credit market fell apart.

Jeff and I decided, that before we were in waay over our heads, to close up shop.  It was the right decision, because the following Christmas killed a lot of local retailers with poor business.

Jeff is now working as an Assistant Manager of EB Games in Vancouver (at least I think he's got that position now.  It's only a matter of time.)  I'm back to doing contract work, but I'm thinking of going into game programming.  Probably not the best time to look for such a job.  Ah well.

[Radix]

Fantastic posts, dude.

Trust me, when it comes to doing anything business-related, you'll be doing a lot of meetings.  By the end of September, Jeff and I were just laughing at our own misery.  We were in the car rushing to make the next appointment EVERY HOUR OF EVERY DAY.  Obviously Jeff had to quit his job just to keep up.  It was completely ridiculous.

I haven't even finished securing the office yet and the running around already sucks. So looking forward to this next part!

[MrChocolateBear]

Radix, you plan on opening up a video game store?

[Aquin]

Good luck Radix, I know how much paperwork is involved.  Buy a file cabinet, save every piece of paper you get, and prepare yourself for the Yearend to come. :D

[Radix]

Haha, I'm not gonna pay tax!

MrChocolateBear: Nah, it's an office, nothing to do with games. I'll probably use it two or three days a week as a distraction-free environment for development though.

[MrChocolateBear]

Ah cool! Always nice to have a good workspace. You'll have to post pictures once you establish yourself.