Brick & Mortar Store Viability, vs. Online Stores, Etc.

[Glitch695]

Though I have found plenty of threads of people asking if they should drop out of school and open that game store they always wanted to, and plenty of replies advising against it, I wanted to make a thread to have a more concise discussion about the true viability of Brick & Mortar game stores: why they fail, succeed, is online better, and anything else regarding the subject.

With the wealth of posters on DP that are either B&M store owners (past or present) and online store owners (goatDAN), along with everyone who shops at them, I figured we'd get some good answers.

First of all, the usual advice I see to the above mentioned 'drop out of school and live the dream' posters is just how much initial capital is involved, and how much time it takes to launch something like this and run it.

So rule 1, like any small business, is to have enough starting capital for at least a year, and
Rule 2 is to expect to have no life.

Obviously great location is going to be important. Many of the B&M stores I've seen around my area were either in small basement retail spaces with little to no visibility (a store in downtown Waukesha that was literally in a basement off a side street comes to mind), or college-less rural areas where everyone leaves to go to school as opposed to coming in. Being next to a bait shop in a town of 2,000 is not a good recipe for success. I'd say Rule 3 would be: only open in an area with high visibility and foot traffic, and college kids.

I ran a small business with about 15 employees a few years ago, I'd guess that hand in hand with Rule 2 would be Rule 4: don't plan on hiring employees until you're seeing profit. It wouldn't be too hard to operate a B&M store solo if you start with small square footage, and, again, understood that you'll have little life outside of the business. And Rule 5: start small, so rent won't kill you and your store won't look barren with your starting stock.

But these are all basic business tips. The more specialized questions are what we want to answer.

1 - Sticker shock: what do you price your more valuable games in store? Price it too high and scare people off, too low and lose potential revenue from avenues like Ebay.

2 - How much do you offer online? If your best items go on the internet as soon as you get them, you lose the cool collector pieces that would otherwise draw people in. Obviously if they sit there unsold you lose revenue. Perhaps some kind of 90 day inventory rule?

3 - Don't ever bother trying to compete with Gamestop on new items. But do you still want to offer preorders and access to new games, or focus solely on used stock?

4 - B&M vs. Online: with a B&M store, you do have the luxury of items being brought directly to you. It should still be coupled with searching of your own (garage sales, thrift stores, etc.) but an online store loses that storefront for someone to just walk in with their big box of N64 games. What do you online only sellers do to make up for this?

I'm looking forward to hearing some answers on these, and any other questions people may have.

[Johnny Nintendo]

I've mostly only traded online, so my opinion probably doesn't matter. I live in a small town and there are no retro game stores where I live, only a Gamestop. I wish we had one here, but the demand isn't great enough to justify a brick and mortar store in my area. Having said that, with a brick and mortar store you have to pay rent, utilities, business license, etc. With an online store all of that goes away, but you do have to have an internet connection and a computer. That's my two cents, although I do love walking into retro game stores.

[Glitch695]

I've mostly only traded online, so my opinion probably doesn't matter. I live in a small town and there are no retro game stores where I live, only a Gamestop. I wish we had one here, but the demand isn't great enough to justify a brick and mortar store in my area. Having said that, with a brick and mortar store you have to pay rent, utilities, business license, etc. With an online store all of that goes away, but you do have to have an internet connection and a computer. That's my two cents, although I do love walking into retro game stores.

No doubt all those things will set you back. A physical storefront does provide the advantage of walk and drive by traffic though if you're in a well traveled area (like a college campus or business district), along with the ability to have events/ tournaments/ etc. to make your location a place to go to rather than just a store. Also, you'll have both browse-able merchandise and impulse sales, something an online store lacks. You had just better have enough of them to cover that $2,000+ a month that those advantages provide you.

[Johnny Nintendo]

I actually prefer the brick and mortar store. From a risk standpoint though, if you have a brick and mortar store you have to worry about theft, and you may get alot of visitors, but if you have an online store you could have millions of customers. Also with an online store you do have the negative of loads of other online stores, so customers could just find a game cheaper elsewhere online. It just seems like the risks are much smaller with an online store.

[The Adventurer]

I'm also curious about the ins and outs of starting your own used game store; B&M, online, or a combination of both

I'm mostly curious about financing. Are banks likely to give out small business loans or starter business loans for such an enterprise? Is incorporating as a LLC a good idea to protect your assets in case of business flop?

[Schiggidyd]

Brick and Mortar stores are great at ripping young kids off. There's one a few minutes from my house, and last week, I witnessed a middle-schooler buying a Nintendo 64. They charged him 85 dollars!!!
I felt utter disgust! There is much more fair competition online, all the kid had to do was look!

[wiggyx]

I'm also curious about the ins and outs of starting your own used game store; B&M, online, or a combination of both

I'm mostly curious about financing. Are banks likely to give out small business loans or starter business loans for such an enterprise? Is incorporating as a LLC a good idea to protect your assets in case of business flop?

LLC is ALWAYS a good idea when starting a business. Other than the fee, which is hardly anything, there is virtually no downside to doing so. Not incorporating has the potential to cause a lot of headache. Definitely not worth the 200 bucks or so that you would save by not setting up an LLC.

[StoneAgeGamer]

I own an online store, but currently do not own a B&M store. There is one huge advantage of an online store over a B&M that you missed. B&M is a much higher risk and a more expensive investment.

Why?

Well first is upfront costs. Online store can be run out of your basement. Online store requires a lot less upfront investment. Second with an online store you can keep your day job until the store is profitable enough for you to work at full time.

I started Stone Age Gamer with my own money. However I also had a high paying job as a software engineer. I originally started it as kind of a side (for fun) job because I am into retro gaming. Since I didn't need to rely on any income from Stone Age Gamer I had very little risk beyond my original investment. My original investment was only $5000. However I invested probably another $5000 over the first few years. Stone Age Gamer did not make me a single cent for almost 4 years. Anything that was made was invested back into the business.

My first year's gross sales were only $6500. Yes $6500, that's it. Granted my initial investment was also very low. If I would have gotten a loan my first years sales would probably have been quite a bit higher. However taking out a loan would have also added on to the risk. However patience, hard work, and of course a little luck and now over 5 years later SAG brings in about $6500 in sales in a week. If SAG would have ever went belly up in the first 4 years my loss (money investment wise) would have only been $10000. Yes $10K is not chump change, but it wasn't going to break me either.

Of course there is always risk when starting your own business. Depending on the amount of risk you are willing to take on is up to you. I wasn't willing to take a lot of risk on for such a niche market. It worked (so far) for me, but it took a long time.

SAG still is not my only job either. I also own another company. I basically work 2 almost full time jobs right now. Soon I will have to make decision with SAG over the next year. Most likely I will have to hire someone to run the day-to-day of SAG so I can concentrate on my other business. I may open a B&M at this time, but I will only open a B&M if I feel the online sales alone can sustain it. Again, because my risk would be low.

[The Adventurer]

I own an online store, but currently do not own a B&M store. There is one huge advantage of an online store over a B&M that you missed. B&M is a much higher risk and a more expensive investment.

Why?

Well first is upfront costs. Online store can be run out of your basement. Online store requires a lot less upfront investment. Second with an online store you can keep your day job until the store is profitable enough for you to work at full time.

I started Stone Age Gamer with my own money. However I also had a high paying job as a software engineer. I originally started it as kind of a side (for fun) job because I am into retro gaming. Since I didn't need to rely on any income from Stone Age Gamer I had very little risk beyond my original investment. My original investment was only $5000. However I invested probably another $5000 over the first few years. Stone Age Gamer did not make me a single cent for almost 4 years. Anything that was made was invested back into the business.

My first year's gross sales were only $6500. Yes $6500, that's it. Granted my initial investment was also very low. If I would have gotten a loan my first years sales would probably have been quite a bit higher. However taking out a loan would have also added on to the risk. However patience, hard work, and of course a little luck and now over 5 years later SAG brings in about $6500 in sales in a week. If SAG would have ever went belly up in the first 4 years my loss (money investment wise) would have only been $10000. Yes $10K is not chump change, but it wasn't going to break me either.

Of course there is always risk when starting your own business. Depending on the amount of risk you are willing to take on is up to you. I wasn't willing to take a lot of risk on for such a niche market. It worked (so far) for me, but it took a long time.

SAG still is not my only job either. I also own another company. I basically work 2 almost full time jobs right now. Soon I will have to make decision with SAG over the next year. Most likely I will have to hire someone to run the day-to-day of SAG so I can concentrate on my other business. I may open a B&M at this time, but I will only open a B&M if I feel the online sales alone can sustain it. Again, because my risk would be low.

May I ask what it cost to design, implement, and pay for your web store front? Its very nice. And as I'm thinking about starting my own online retail project and would like to avoid E-Bay as my primary sales platform if at all possible.

Also, what sort of business licensing is required to sell online like that?

[StoneAgeGamer]

May I ask what it cost to design, implement, and pay for your web store front? Its very nice. And as I'm thinking about starting my own online retail project and would like to avoid E-Bay as my primary sales platform if at all possible.

Also, what sort of business licensing is required to sell online like that?

Actually I hate current store design (maybe because I have been looking at it for 5 years) and current store software. We are trying to re-launch the store in next few months with new design and much better software. Original software I used was very limited in what I could do both functionally and design-wise. Stay far away from Network Solutions stores. I am kind of at a advantage since I know how to develop web sites and can do decent graphic design when I need to. In a past life I was a web developer before I shifted more into software development.

A few years before SAG I attempted to start an eBay store. It failed pretty miserably. eBay can be very good, but it has some limits. I used to sell on eBay and Amazon a long with the SAG site, but managing inventory was a nightmare plus cost was much higher on eBay and Amazon. That being said there are many successful eBay/Amazon sellers. My biggest problem with eBay was the fly-by-night businesses on there. People would start an eBay business buy some stock from wholesalers and then basically sell at wholesale cost to try to get customers. The only thing this really gets you is out of business quickly and it also makes wholesalers not too happy when you devalue their products.

Licenses depend on state. In Michigan only thing I needed was Sales Tax License to sell stuff, however I know in other states they may require other licenses as well or they may call them something different. Its really not that hard to register for a business, but if you want a more mindless approach you can use a service like LegalZoom.com, but it will cost you more obviously. Current storefront is a ridiculous $115/mo. I say that's ridiculous because the bandwidth limits and software you get for that $115 are terrible. Software I am moving to was $1000 flat fee (plus $700 for some custom features I had added) and then hosting fees which is about $30/mo. for semi-dedicated. There are plenty of free and cheaper store software out there.

[Bojay1997]

LLC is ALWAYS a good idea when starting a business. Other than the fee, which is hardly anything, there is virtually no downside to doing so. Not incorporating has the potential to cause a lot of headache. Definitely not worth the 200 bucks or so that you would save by not setting up an LLC.

Actually, there can be significant downsides to utilizing an LLC depending on which state you are operating in. In California for example, just having an LLC requires a minimum annual tax payment to the state regardless if your LLC is generating revenue or not. For that reason among others, many start-up small businesses remain sold propreitorships. From a purely practical perspective, an LLC is going to do very little to protect you from creditors since if you're just starting out, no bank or vendor is going to provide you with a loan or credit unless you also sign a personal guarantee. Similarly, it can be next to impossible to get inexpensive insurance as an LLC as insurers understand that the whole basis for many LLCs is to escape personal liability.

I hope I'm not shattering anyone's dreams here, but getting a small business loan of any kind is nearly impossible in today's market unless you have a very significant track record and you are prepared to put up a significant amount of personal assets and credit against anything you get from a lender. The SBA also won't guarantee risky loans so many small business owners I know who have started out recently have had to save money, use personal credit cards and beg and borrow from friends and family just to get enough to open the doors. Sadly, this lack of sufficient start-up capital is often what causes the businesses to fail simply because few if any businesses are ever profitable for the first few years of operation.

[StoneAgeGamer]

I hope I'm not shattering anyone's dreams here, but getting a small business loan of any kind is nearly impossible in today's market unless you have a very significant track record and you are prepared to put up a significant amount of personal assets and credit against anything you get from a lender. The SBA also won't guarantee risky loans so many small business owners I know who have started out recently have had to save money, use personal credit cards and beg and borrow from friends and family just to get enough to open the doors. Sadly, this lack of sufficient start-up capital is often what causes the businesses to fail simply because few if any businesses are ever profitable for the first few years of operation.

You are right. Also, gaming stores are also a dime-a-dozen and its a highly competitive business. There is a reason why you see so many pop-up and then disappear just as quickly. Most banks want to see your business plan and how you intend on spending the money. This is why I pointed out the huge downside of a B&M was the much higher risk it has. A gaming store would most likely be deemed a risky loan.

I went into SAG with the mindset that I would not make any money from the business for years and that if the business failed it would not ruin me. $10K of my own money was a lot, but it was money I saved and if I lost it all I would not have been homeless because its not money that I owed the bank and I had good paying full-time job.

[goatdan]

Most banks want to see your business plan and how you intend on spending the money.

I think this is a really important point here. I just saw this, and I appreciate the mentioning of us in the thread... Back to this point in just a moment...

If I had to do it all over again, I wouldn't necessarily change anything, but the GOAT Store started in 2000 (officially in 2001) because we got screwed out of a $2000 investment in Atari Lynx games that we bought as part of a different project that we are doing. On one hand, the GOAT Store has grown like mad, I have more games and stuff to sell then I could shake a stick at... on the other hand, we paid off our initial $2000 investment to Gary and me LAST YEAR.

Simply put, we've been around forever, do a pretty darn decent amount of business now per month, and even if I wanted to it wouldn't be a full time gig. We started it sort of on a whim, and while we wouldn't give it up any time soon, we do it for the love of the game / collection / whatever, not for vast amounts of money or anything.

Anyway, here's the next thing - you're totally right about how long it can be to start your own business, and how much investment of time there is and so on. What you should really do if you are serious is to take a business class from one of the small business groups in town about starting your own business. They will usually have you write up a business plan, and discuss things in great detail. Gary and I took one of these classes long after we had started the GOAT Store, and there were people in there that had already invested tons of money and started their own stuff... with clearly no plan how to make it make money, and they were hoping they could salvage something. I'm guessing that not many of them did. Gary and I wrote a business plan for a secondary business that we were interested in starting, sort of a GOAT Store spin off, and even though a few of the instructors (who are usually old business men themselves) were interested in doing it, we opted against it.

It will cost you like $50 and 6 nights or something like that, but you'll have a really good idea of what works and what doesn't. I can find the info for the Milwaukee chapter if you'd like, but that's a pretty far way to go. Doing a business plan like that will get you a LOT closer to actually knowing if you think that this should be realistic or not than talking with anyone, even those of us that have done it for years, about if you can.

Writing a good business plan is key to really getting that understanding, and for figuring out what you need to research before you jump in with both feet and end up in a situation that you don't want.

Oh, and the one other thing - find a good accountant and talk with them about how to set it up and what they think. Very early on, when we realized that the GOAT Store was going to make enough money to actually make it into something that's what we did - when we started, we figured we'd sell off what we had and be done. About nine months later, we realized we enjoyed it and wanted to keep doing it, and would make enough where legally we needed to declare that. So anyway, we talked with a really good accountant who asked us a ton of questions like, "What is your inventory cost versus sales prices? This is what the industry average is for second hand stores. Why might there be a difference?" etc. While there are some things that we do not follow, other pieces of advice were completely important for us to stick around even in the not-really-making-money capacity that we have stuck around in.

I hope that helps somewhat!

[goatdan]

I hope I'm not shattering anyone's dreams here, but getting a small business loan of any kind is nearly impossible in today's market unless you have a very significant track record and you are prepared to put up a significant amount of personal assets and credit against anything you get from a lender. The SBA also won't guarantee risky loans so many small business owners I know who have started out recently have had to save money, use personal credit cards and beg and borrow from friends and family just to get enough to open the doors. Sadly, this lack of sufficient start-up capital is often what causes the businesses to fail simply because few if any businesses are ever profitable for the first few years of operation.

Oh, hey - one other thing to add in about this...

It is difficult to get a loan, but it is not by any means impossible, although the key again is that business plan. What Bojay here says is right - most businesses don't get enough start up capital, and that is why they fail, but often that is not necessarily because they couldn't get any loans, but instead because they didn't get enough in the first place. I believe in the business class we took, they wanted you to have capital to operate for three years without making a dime in the plans.

If you go in with a good enough plan, you will have to use your personal background as a sort of "buffer" against any loan that you might get, but it is possible to do so... if you do enough work ahead of time. What has happened is that banks and investors now pay much MUCH more attention to the business plan and viability of a business now than they did a few years ago, and honestly... it's a good thing I think. It means that while it is much harder to get a loan, it's also much less likely that you'll default on it if you can get one since you've got a LOT of eyes looking at that business plan.

[Glitch695]

Oh, hey - one other thing to add in about this...

It is difficult to get a loan, but it is not by any means impossible, although the key again is that business plan. What Bojay here says is right - most businesses don't get enough start up capital, and that is why they fail, but often that is not necessarily because they couldn't get any loans, but instead because they didn't get enough in the first place. I believe in the business class we took, they wanted you to have capital to operate for three years without making a dime in the plans.

If you go in with a good enough plan, you will have to use your personal background as a sort of "buffer" against any loan that you might get, but it is possible to do so... if you do enough work ahead of time. What has happened is that banks and investors now pay much MUCH more attention to the business plan and viability of a business now than they did a few years ago, and honestly... it's a good thing I think. It means that while it is much harder to get a loan, it's also much less likely that you'll default on it if you can get one since you've got a LOT of eyes looking at that business plan.

Wow, a lot of great feedback in this thread already. Though at the moment the idea of doing something like that is only a distant glimmer (I have a pretty nice career minded job and I'm finishing another degree at the moment), it has been something I've always been curious about. I think my purpose for the thread is sort of a catch all for anyone with the broader based questions.
Some background to my idea: I have run a small business in the past, though I was lucky enough not to own it, as the owners signed a seven year lease with yearly increasing rent. By the second year, despite my average 48% margins, rent surpassed our gross and they had to close the store. I did learn quite a bit about what not to do, and what could have worked. I also have 12 years experience in retail management, with business and soon to be marketing degrees. Lastly, I have family that works for the SBA and have a lot of resources at my fingertips. My point is, when I think about someday starting something like a game store, it's with the idea that I would not even consider doing it if my research showed it to be too risky. Which it probably would be. But it's STILL in the back of my head...
My idea was always to avoid loans altogether and just take the start up capital from my savings. I know that this is a double edged sword, but I've never been one for taking out loans. Now operating for three years without making a dime, that seems to be a bit much for me. I was always under the impression that two years was the most you should sit in the red before liquidating and trying to recoup some losses. Regardless, In a business like this, though, where you rely on second hand resales and not wholesale product ordering, I have to assume that risk is much less than something like a restaurant (which, besides bars, have the highest turnover of any new business).

[Bojay1997]

Wow, a lot of great feedback in this thread already. Though at the moment the idea of doing something like that is only a distant glimmer (I have a pretty nice career minded job and I'm finishing another degree at the moment), it has been something I've always been curious about. I think my purpose for the thread is sort of a catch all for anyone with the broader based questions.
Some background to my idea: I have run a small business in the past, though I was lucky enough not to own it, as the owners signed a seven year lease with yearly increasing rent. By the second year, despite my average 48% margins, rent surpassed our gross and they had to close the store. I did learn quite a bit about what not to do, and what could have worked. I also have 12 years experience in retail management, with business and soon to be marketing degrees. Lastly, I have family that works for the SBA and have a lot of resources at my fingertips. My point is, when I think about someday starting something like a game store, it's with the idea that I would not even consider doing it if my research showed it to be too risky. Which it probably would be. But it's STILL in the back of my head...
My idea was always to avoid loans altogether and just take the start up capital from my savings. I know that this is a double edged sword, but I've never been one for taking out loans. Now operating for three years without making a dime, that seems to be a bit much for me. I was always under the impression that two years was the most you should sit in the red before liquidating and trying to recoup some losses. Regardless, In a business like this, though, where you rely on second hand resales and not wholesale product ordering, I have to assume that risk is much less than something like a restaurant (which, besides bars, have the highest turnover of any new business).

Having watched many of the independent gaming stores in Southern California close over the past five years, I think there is no doubt that a game store is a very risky business. The competition on the used side from Gamestop is massive and that doesn't even factor in Ebay, Craigslist, swap meets, etc...where sellers have little or no overhead or all the new retailers like Toys R Us, Best Buy and even Target now which are selling used games. While the amount of capital required to start a video game store is probably less than a restaurant, I certainly don't think the risk of losing the business and your entire investment is any lower. While I can understand the urge to own a small business, I really don't understand the desire to run a small game store as I just can't imagine many areas where you can gain a competitive advantage over all the competition out there.

[StoneAgeGamer]

Now operating for three years without making a dime, that seems to be a bit much for me. I was always under the impression that two years was the most you should sit in the red before liquidating and trying to recoup some losses. Regardless, In a business like this, though, where you rely on second hand resales and not wholesale product ordering, I have to assume that risk is much less than something like a restaurant (which, besides bars, have the highest turnover of any new business).

Well the more invest or get a loan for the higher your initial sales will most likely be, but it also means you are in more debt or invested more of your own money. I know you said you aren't interested in taking out loans, but to start a B&M will require a lot of money. I know some people who have started some with like like $10K because they found a place with cheap rent. All that I know of went out of business pretty fast. Honestly if I were going to start my own B&M tomorrow I would probably look to get a loan of $100K to $150K and I already have a somewhat successful online store that brings in steady income. To start a B&M from scratch with no online presence would be quite an undertaking.

Patience is important, that's why I think starting online is better and then working to B&M + online is much less of a risk. Like I said in previous post with a $5K investment the first year I only grossed $6.5K. Now I know this isn't exact, but my guess is if I would have gotten a loan for lets say $50K my gross sales would have probably been quite a bit higher, but probably not exponentially higher. Maybe instead of $6.5K they would be $40K. You do have an advantage of the business experience which like Dan said is very important, but there is no business school that specializes in gaming stores. There will still be a lot to learn and you will make mistakes that will cause you to lose money early on. I bought a ton of different stuff to re-sell on SAG when I first started. I still have some of it 5 years later. I thought it would sell well, but I was wrong and I learned.

I am not trying to talk you out of it of course. You are just speculating right now anyways. I am sure if the time comes you will make the decision that is best for you.

[evildead2099]

Glitch695: Stilwell is a great place to set up a B&M store. The infrastructure's poor enough that digital downloads are not an option for the town's residents, and Charles took A-to-Z Pawn's entire collection of video games with him after he finished his last shift.

[goatdan]

Two points worth noting...


Now operating for three years without making a dime, that seems to be a bit much for me. I was always under the impression that two years was the most you should sit in the red before liquidating and trying to recoup some losses.

This was what they suggested in the class that I took. Essentially, the first year you have a lot of unexpected expenses - Oh, the TV you had the game system being shown off on broke, the computer died and needs updating, the software you started with sucks and you need to replace it, you forgot to hire someone to remove snow, etc. The idea is that the first year you really understand and get a grip on your expenses and spending, the second year you work with those parameters, and the third you're hopefully making money.

The thing is that you don't want that buffer to be too thin. For example, let's say that you have a GREAT opportunity come up, but you need to invest $25k to make it happen. If you're too close with your cash, you can't invest the $25k. And, then that opportunity passes. It's far easier to make money if you can do things that make sense the moment they make sense.

I can tell you that it is way easier to run the GOAT Store when I can go, "Ooo, we need a whole bunch more [pick your system] games" so I go buy 200 of them then when I in the past would go, "Ooo, we need a whole bunch more [pick your system] games." and then would try buying them in lots of like 5 for a year in a row. A few years ago, thanks to us being the size that we can do this, we bought a MASSIVE collection of literally thousands of stuff... it was a good deal for both us and the seller, as the seller didn't have to go about selling it all individually, and we really both felt like the price we paid was fair, but it was also a good deal for us because we could break it up and sell it on our site and make a decent amount off it. We would have NEVER been able to do that if we didn't have some money in reserve.

We're different, since we've been around so long, but getting the right amount of money is for the same concept.


Regardless, In a business like this, though, where you rely on second hand resales and not wholesale product ordering, I have to assume that risk is much less than something like a restaurant (which, besides bars, have the highest turnover of any new business).

Well, sorta. Here's one thing to consider and a big part of the reason that there aren't many classic-minded video game stores that are out there -- the market for buying retro games is relatively limited, especially when compared to the market for new games. Selling online gives you a much bigger market to do that with. Otherwise, you need to keep your offline prices pretty competitive with online ones - a good rule of thumb is popular titles can be a little more (your Marios, Sonics and Zeldas for instance) then online, but your anything else will do less than online. It's hard to keep that stuff in stock.

I have developed a few relationships with brick and mortar stores that buy retro games because we often will buy a lot of their non-popular stuff so they can clear it out at a slightly discounted rate, and then we sell it online for a normal price. It benefits both of us - we get the stock, they don't have massive issues with holding onto rarer stuff forever and then not getting much for it. It's a nice relationship.

Again though, I think that we're really set up well. We don't have the best web site presentation because ours is built from the ground up - there was no software when we started - and it takes us time that we both don't really have to update things... between our real jobs, us both being new dads, and the MGC, it takes us a little longer to update things. But, even with that, I honestly don't know if I could make a full time go of it if I just devoted all my time to it...

...it may be worth you messing around online and seeing if you can keep a little eBay store open for a while or a little online store of your own for a few months. It allows you to dabble in it, and see if the lots of extra time is worth all the extra stress for not-much-cash. If you can start making money at it, then if you open a brick and mortar, that both serves as collatoral for any loans, and as a funding source that you can rely on in addition to the store's funding. It's basically win-win, except for the loss of time.

[StoneAgeGamer]

I can tell you that it is way easier to run the GOAT Store when I can go, "Ooo, we need a whole bunch more [pick your system] games" so I go buy 200 of them then when I in the past would go, "Ooo, we need a whole bunch more [pick your system] games." and then would try buying them in lots of like 5 for a year in a row. A few years ago, thanks to us being the size that we can do this, we bought a MASSIVE collection of literally thousands of stuff... it was a good deal for both us and the seller, as the seller didn't have to go about selling it all individually, and we really both felt like the price we paid was fair, but it was also a good deal for us because we could break it up and sell it on our site and make a decent amount off it. We would have NEVER been able to do that if we didn't have some money in reserve.


Purchasing power is a huge advantage, but you must be careful with it. I did not take out a credit card in SAG's name for my first 3 years. If you look at my gross sales the first 3 years they do go up each year, but once I got a credit card and was able to purchase way more at a time and not be as stingy with my money my sales sky rocketed. I think this worked out for the best for me because it took me awhile to figure out what are best items to buy and what I can sell them for. So not having a credit card for first 3 years I made me really consider what I was buying and really allowed me to learn what got me the best bang for my buck. Sometimes I do regret not getting a credit card earlier, but other times I do not.

I bit off topic...

I honestly consider The GOAT Store one of the best classic gaming stores there is. When I started I obviously looked at a lot of different retro gaming stores and The GOAT Store was the one people seemed to have trusted and recommended the most. I sometimes like the take the Miracle on 34th Street approach and send my own customers there occasionally if you guys have something I don't. You guys are a trusted pillar of the classic gaming community and its hard not to respect that.

[Greg2600]

I love true classic game stores, which display memorabilia, and have employees who know the hobby. Also love the ones that do things like tournaments, swap meets, and get togethers. What I don't like are stores which operate like mini-game stops.

[sloan]

Lots of wordy responses, and I have only glanced over most of them.

I have a substantial collection, with many duplicate consoles, controllers, and games. Why do I need a business loan to start, when I already have inventory?

[VideoGameRescue]

I love true classic game stores, which display memorabilia, and have employees who know the hobby. Also love the ones that do things like tournaments, swap meets, and get togethers. What I don't like are stores which operate like mini-game stops.

I totally agree and that's the way I want to run my store

[StoneAgeGamer]

I love true classic game stores, which display memorabilia, and have employees who know the hobby. Also love the ones that do things like tournaments, swap meets, and get togethers. What I don't like are stores which operate like mini-game stops.

I agree, if I ever did a B&M store I would want it to be this way.

[StoneAgeGamer]

Lots of wordy responses, and I have only glanced over most of them.

I have a substantial collection, with many duplicate consoles, controllers, and games. Why do I need a business loan to start, when I already have inventory?

There is more to a business than inventory.

[goatdan]

Purchasing power is a huge advantage, but you must be careful with it. I did not take out a credit card in SAG's name for my first 3 years. If you look at my gross sales the first 3 years they do go up each year, but once I got a credit card and was able to purchase way more at a time and not be as stingy with my money my sales sky rocketed. I think this worked out for the best for me because it took me awhile to figure out what are best items to buy and what I can sell them for. So not having a credit card for first 3 years I made me really consider what I was buying and really allowed me to learn what got me the best bang for my buck. Sometimes I do regret not getting a credit card earlier, but other times I do not.

I mostly agree with this. I can honestly say that we got a credit card after probably the same amount of time, and thanks to the MGC ended up running it WAY up, only to get it mostly paid off after each show, and then it kept going like that in a cycle every year. Essentially, if you have that sort of resource, you have to be careful / smart enough not to spend $10k let's say on something that doesn't pay back for a half year. You'll lose enough in interest that unless it is an absolutely mind-boggling good deal, it isn't worth it.


A bit off topic...

I honestly consider The GOAT Store one of the best classic gaming stores there is. When I started I obviously looked at a lot of different retro gaming stores and The GOAT Store was the one people seemed to have trusted and recommended the most. I sometimes like the take the Miracle on 34th Street approach and send my own customers there occasionally if you guys have something I don't. You guys are a trusted pillar of the classic gaming community and its hard not to respect that.

I really appreciate hearing that! It has been a hard, tough time to get as far as we are in the retro gaming world, but I think that one thing that has definitely helped us is that Gary and I didn't get into it to make money necessarily. I'll be honest - making money would be nice, but our goal was to help people collect games that they really wanted, and maybe help some people do some cool stuff. With products like the Dreamcast releases we have done and the Jaguar Skunkboards and stuff, while we have made absolutely no money on those, hearing that people are enjoying them are what makes us keep doing it. Someone a while ago claimed to me that Maqiupai had become his favorite Dreamcast game, and he was serious about it. That's where we get our reward from :)

I can also tell you that I have only heard good things about your store from people. I hope that you guys continue to do what you do too - even if there is 100 stores like this, I don't view anyone as competition, but instead just another great outlet to get cool stuff from.


Lots of wordy responses, and I have only glanced over most of them.

I have a substantial collection, with many duplicate consoles, controllers, and games. Why do I need a business loan to start, when I already have inventory?

Wordy responses because if you're serious, it's a BIG FREAKING STEP to take.

You have inventory - great. That's step one. Here's the short version though of things you still need...

You need to get a URL, set up software of some type (and free software is generally free for a reason, and not free software is pretty pricy usually), if you are going to take credit cards, you need to pay a lot for that ability, you need a place to store that inventory, you need packing materials, and so on. You also need a LOT of time to actually get your web site noticed by people. You can do this in a few ways, either by really pricing your stuff low so people buy it there - low / no margin sales, by paying for advertising - expensive, or by going everywhere and posting about your site every chance you get - annoying, and not so hot PR. Otherwise, you're looking at it potentially being years before anyone notices.

On top of that, there is something that I refer to as a "critical mass" that you need for each console for it to actually succeed. What I mean by this is that you need to have a certain amount of games in stock at any given point, or else it makes it difficult for people to justify their order. If you head to the GOAT Store, and you found 50 NES games, and you wanted one, even if it was relatively cheap it's a lot of work to order one game. If instead you go and find 400 NES games, and you find 8 that you want, you feel better about the purchase and you are more likely to come back.

For our sales, you can actually see when we hit that point. When our selection on consoles is down, we sell almost *nothing* on them. Even if we have some selection, it isn't worth it for people. When our selection goes up, *everything* sells better. Doesn't matter what is being offered usually.

If you think that keeping a business like this open is as easy as just owning inventory, like I said - give it a shot, and see if it is for you. The more, the merrier, but it really isn't that easy.

[Glitch695]

Glitch695: Stilwell is a great place to set up a B&M store. The infrastructure's poor enough that digital downloads are not an option for the town's residents, and Charles took A-to-Z Pawn's entire collection of video games with him after he finished his last shift.

Great idea! Maybe I could set up right next door to the Chinese restaurant then. Either that or rent half of Stilwell Flowers & Everything Nice, I bet poor Colleen could use the money.

[Glitch695]

I am not trying to talk you out of it of course. You are just speculating right now anyways. I am sure if the time comes you will make the decision that is best for you.

Actually, this thread may be my way of getting past that silly whim. Sometimes you have to actually vocalize your bad idea for it to sound bad :)

[Glitch695]

Well, sorta. Here's one thing to consider and a big part of the reason that there aren't many classic-minded video game stores that are out there -- the market for buying retro games is relatively limited, especially when compared to the market for new games. Selling online gives you a much bigger market to do that with. Otherwise, you need to keep your offline prices pretty competitive with online ones - a good rule of thumb is popular titles can be a little more (your Marios, Sonics and Zeldas for instance) then online, but your anything else will do less than online. It's hard to keep that stuff in stock.

That's a good point. Obviously your demographic area has to be there, i.e. a college campus, etc. Conceivably you could plunk a restaurant down just about anywhere there's people, and if the advertising is good and the food is worth coming back for, you could succeed. I sometimes do watch Restaurant Impossible or whatever it's called, where the jacked British guy goes around to failing restaurants and points out just what was wrong with them. You want to scream at the TV and ask these people just what the hell they were thinking when it sounded like a good idea to open a sports bar in San Fransisco that serves PB&Js and staff it with their unemployed, inexperienced family. (I sometimes wonder at just how some local businesses get open. There was a store I once saw in, I think it was Kewaskum, that sold soaps carved into teddy bears and other cuddly animals. I don't know who thought that was a good idea, but my guess is it didn't last long.)

StoneAgeGamer, your point as to the large starting capital is certainly correct. My cousin owns a white water rafting/ Kayak business, and after he scraped by on a loss for two years, somehow managed to get another loan and did a massive advertising blitz as a Hail Mary. He's going on his eighth year in business now and guesses he would have been profitable those first two years if he had just had that extra bit of money for increased marketing.

As an aside, have either you or goatdan been following the evolution of the First Sale law that is currently being challenged? It's quite scary to think about. While I know the threat, if repealed, will be mainly as a tool used to bludgeon overseas companies in an effort to lead to zombie manufacturing here, it could have serious ramifications for people that run businesses such as yours. Curious to know if you have an worries about this!

[crazyjackcsa]

I ran a flea market store for awhile. I covered my costs in the end it wasn't worth the $4 an hour I made.

I've never run a store personally, but my parents have.

I can't really add too much more to the conversation that hasn't been covered by GOATdan and SAG, what

I can tell you is owning the building you're in is a huge advantage. It's even better if there is an apartment above it.

At that point you're really running two businesses though, one as a landlord, the other as the actual store.

The benefit is of course, one helps pay for the other. Renters cover/offset the cost of the building.

[goatdan]

As an aside, have either you or goatdan been following the evolution of the First Sale law that is currently being challenged? It's quite scary to think about. While I know the threat, if repealed, will be mainly as a tool used to bludgeon overseas companies in an effort to lead to zombie manufacturing here, it could have serious ramifications for people that run businesses such as yours. Curious to know if you have an worries about this!

I do. Every so often something like that comes up, and usually a bunch of people email me and tell me, and then we look into it and it's all fine. Here is the most important thing when it comes to it, from the Wiki article (but factual, from all the research I have done):

The owner of the material object can then dispose of it as he sees fit. Thus, one who buys a copy of a book is entitled to resell it, rent it, give it away, or destroy it. However, the owner of the copy of the book will not be able to make new copies of the book because the first-sale doctrine does not limit copyright owner's reproduction right.

...so, I can buy your copy of Max Steel for the Dreamcast, and then I am the owner. Then, I can sell the game to someone else.

What I can't do is buy your copy of Max Steel, and then go, "Okay, now I can reproduce this at will."

The biggest things that this are trying to address is two things:

1) They are trying to make it so that companies cannot illegally produce or import forgeries of intellectual rights products from overseas.

2) They are trying to make it so that you can't buy Halo 5 (or whatever), copy it, and then sell the original. Right now, that law is VERY undefined... it seems like you can make backups for personal use, but then you are supposed to destroy them when you give back the original. Essentially, this makes keeping those backups illegal.

It could *potentially* play into the ROMs world, but it won't play in the physical one :)