Just like a lot of business owners, new game store owners make a lot of mistakes. Partly due to too much enthusiasm and partly due to lack of experience.
Following are the top 5 rookie mistakes that new game store owners make and how you can avoid making them yourself.
#1 Their Game Store Is Under Capitalized
It’s worse to start a business under capitalized than it is to not start the business at all. When your game store is under capitalized, that means you don’t have the cash reserves to ride out the months with lower than average sales.
It also means you won’t be able to take advantage of the hottest new product or opportunity because you won’t have any extra money to buy in.
It typically takes an average of 12 to 18 months for a retail business to start becoming profitable. Of course, it can be done in less time, but you have to plan for the future where your business will take a while to find its feet.
Don’t screw yourself and your fledgling game store by giving it a run way just long enough for it to crash and burn.
#2 They Pick A Bad Location
The location of your game store will be one of the major deciding factors in your business’s ultimate success.
Pick a location that is too obscure and you’ll save money on rent, but you will also limit your ability to grow and reach a mainstream audience.
Pick a location with great foot traffic and you could be buried in overhead, unable to sustain your monthly costs and reducing your already limited runway.
Finding the right location means planning extensively, doing the research into your ideal customer base, and negotiating the lease so you get a good deal. The lease is one area where you should almost always work with a lawyer to make sure your not being taken advantage of or getting into trouble later on.
#3 They Rely Too Much On One Product Line
New game store owners often get into the business because of their love of a particular game. This can lead them to making a crucial mistake in setting up their business where they rely entirely on one category to make sales.
A game store’s inventory should be treated like an investment portfolio.
Each product line is similar to a type of asset you can have in your portfolio. Stocks, bonds, ETF’s, commodities, and the like.
If your portfolio is 100% stocks, when the stock market tanks (as it inevitably does) your portfolio goes down in flames too.
Relying solely on Magic, or board games, or Games Workshop miniatures, no matter how profitable in the moment, means your business’s success is tied to the success or failure of that particular product line. Everything ebbs and flows in the game trade, your favourite category as well.
Sometimes (all the time) novice store owners have to make do with a (very) limited inventory budget, if that’s the case, priority number one should be to figure out what other products your customers want to buy and then start expanding in those directions.
Ideally, like a properly balanced investment portfolio, your inventory should be counter cyclical. That is, when one product waxes in popularity, another rises. This way your sales growth is more of a smooth incline rather than a roller coaster of anxiety and stress.
Having a greater variety of products on the shelf also allows you to attract more customers, and more of each customer’s disposable cash. What’s not to like?
#4 They Don’t Do Any Marketing
Word of mouth is extremely powerful, but it’s also extremely unreliable. One of the biggest rookie mistakes new game store owners make is relying entirely on word of mouth to promote their business.
Real businesses market. You can have the greatest product ever but if you don’t get out into the world and share your message, no one will buy it.
One of my favourite quotes I’ve heard recently directly applies to this point.
“Put your product in danger of being purchased.”
Don’t rely solely on word of mouth and the goodwill of the universe to market your new business. A good rule of thumb is spending 2-3% of your gross sales on marketing.
Effective marketing is one of the most powerful tools in your toolbox when done correctly.
#5 They Don’t Plan Enough
Many of the previous rookie mistakes come down to this one. New game store owners rarely plan enough before starting their venture.
Planning means more than just writing up the physical document, it’s also the research and experience that goes into it. You may be selling games, but the business is mainly retail. If you don’t have any retail experience, you’re going to have a steep learning curve to figure it out. Why not get that out of the way before you put tens of thousands of dollars on the line?
Speak to store owners and get their perspective, check out the Manaverse Podcast to get some in-the-trenches advice, and visit your Chamber of Commerce at least once.
Get the data you need to make better decisions.
Planning before you make your move could save you hundreds of thousands of dollars and/or 3-5 years of your life. Don’t skip it.