Behind the Counter

People write me asking for advice about opening a store all the time. I think maybe they would be worth a read, so I am going to attempt to share a bit.

Not to worry, Bob is not his real name, and I took out all identifying information (such as city, state, email, etc). If you have questions for me, please email me, I will reply. I may also use your letter for an RPG.net article.

Here is one such letter, and my reply:

Hey, Marcus!

Wow! First off I wanted to say thank you for the articles you posted back in 2005. I am reading them for the first time and I am really impressed. I am looking to start my own retail gaming store and I wanted to know if it would be all right with you if I bounced some ideas off you. Basically, long story short, I am a long time gamer who has a genuine love of the industry, but I never thought I could make a living from it. Anyway, I tooled around doing a lot of stuff (for example: getting two masters degrees I don't want to use), but not really being able to figure out a plan in life. I spent a lot of time hanging out at my LGS and I befriended the owner. I've picked his brain about the industry many times, go to as many cons as I can, and keep up with releases and product reviews using the vast resources available on the net.

I want to pursue a retail space and start a business. I think I have a unique store concept that would differentiate myself from other stores in the area. I am not interested in competing with my friend. I have been shopping at his store since 96, we are friends, and I don't think it would serve either of us to do so. With that in mind, none of the local stores in my area do much with historical games. I was thinking about opening a game store with a theme around military history. With many new and exciting products on the market and the growing popularity of Flames of War and the like, I feel like I would be offering something unique. I would of course include board games like Risk, Axis and Allies, and Diplomacy, reference and history books and magazines such as the Osprey publications and Wargames Illustrated, and even DVDs from the history channel series.

I guess my first question is: do you think an idea like this even stands a chance? I understand that location, foot traffic, rent, and many other factors need to be calculated, but from a starting off, getting ready to right the business plan, seed of an idea stand point, what do you think? I see some immediate positives. Keeping track of stock and keeping stock up to date would be easier as I would not have to worry as much about GW's, PP's, or WotC's insane release schedules, on the other hand nothing I stock would barring the very popular boardgames would have their market saturation. Anyway, I have rambled enough and you obviously don't know me from Adam, but after reading your articles I really felt that it would be great to pick your brain. If you get a chance and can respond to any of these thoughts it could be greatly appreciated.

Sincerely, Bob

Dear Bob,

Here is the thing. Lets figure out what your monthly bills would be. This is called "The Nut" and is the point at which you may start turning a profit. Let me use my shop as an example: Rent: $1200 for 800 square feet of retail space, and 400 of storage. Utilities: $300 a month (elec, gas, water, phone) Internet Access: $50 a month Insurance: $150 a month Advertising: $300 a month Labor: $9 an hour, x 50 hours a week, x 4.3 weeks a month = Apx $1900 a month (doesn't matter whether I am paying someone else, or myself - $9 an hour to man the store alone). Incidentals: $150 a month (snow removal, paint, carpet cleaning, cleaning supplies, flyers, whatever).

This is the minimum it costs ME to be open: $4050 a month.

Now, with a 47% margin (markup) on goods sold, I make $470 for every $1000 sold. I will have to sell about $9,000.00 in WARGAMES to make my nut. (numbers here not being exact, cause I don't have a calculator on my desk right now).

Do you think you could sell $10,000 (to be profitable) of just Wargames each month? I could not, but I am in a smallish town of just 100,000 people. Of course, if I were in a larger city, my costs would go up for rent, labor, probably utilities, and advertising, too.

Of course, you may not know this, but my experience says that markup on Flames of War is LESS than 47%, and markup on new DVDs is in the 15%-20% range. Many publications (periodicals, like Magazines) have a 20% markup, books usually have about a 30-35% markup. Tools and such, and paints, get closer to the 47% range.

While you have characterized GW, PP and WotC has having crazy release schedules, I can attest that my own experiences are REALLY positive with GW and WotC releases. But, we just about make our nut each month with GW and Wotc New and Used products, as well as support items like card sleeves and paints.

So. Could your store model work? Sure, maybe. Here is what I tell retailers who pay me the big bucks to consult to them: What store you want to own has absolutely NOTHING to do with what your customers may want. If you want to own the store you would like to own - find another line of work. If you want to own a successful, profitable retail business and you will stock, sell, promote, advertise and push whatever games/products your customers WANT to buy and play - THEN you have about a 15% chance for success. Throw in 70 hour work weeks for 3 years, and your chances go up to 30%. Add in a very supportive spouse that will buy the groceries when you can't, and maybe you get up to 50%. These are all just my guesses, based on 24 years of owning my own businesses, and 3 marriages. heh.

Me? I would stock milk if I could sell 200 gallons a week at a profit of $1 per gallon. I am a vendor, a merchant, a pedlar. I don't care what I sell, as long as it is legal, and I don't find it objectionable. I could own a grocery store, a hobby store or a hardware store and be JUST as happy.

Something to think about....