Since I’ve been writing plans for others who want to open a store, I’ve read a few business plans that clients have assembled themselves, and I’ve noticed some consistent gaps and omissions. Let’s talk about them so that if you decide to undertake this huge effort yourself, you don’t make the same mistakes.
Mistake #1: Using a Template
A template can have its uses. It’s good for establishing structure. It’s good for reminding you of topics or needs you might not have thought about in your excitement over operations (the fun part of the job for most people). But templates you find online aren’t meant for you and your situation. General business advice might not apply here. Relying on it can lead to inaccurate assumptions about how the industry works or how your store should operate.
For that matter, I’ve seen templates that talk about game stores or game centers, and they’re clearly talking about other industries—like video games or even casinos. They use general jargon that’s meant to sound specific but could apply to any business.
Mistake #2: Insufficient Market Research
Sun Tzu said “If you know the enemy and know yourself, you need not fear the result of a hundred battles.”
I spend quite a bit of time reviewing local competition before writing a plan for my clients. I always ask clients about their local game stores, and they often under-estimate how many game stores are in their area. I use my Store Comparison Checklist as a guide.
You can find these stores with a simple google search of “table game store” and your city’s name. You can sometimes find more through the large retailer locators on the Wizards of the Coast and Games Workshop websites—if they’re not carrying their products, don’t worry about them.
Often, the existing stores are weak and not a worry. While they’re fewer in number and prevalence than they used to be, the Magic “clubhouse” style of store, with minimal inventory, weak branding, partial open hours, and unattractive fixtures still exists (and likely always will because of how cheap they are to open). For one of my recent plans, though, I found a store that was virtually identical to the plan proposed by the client—and they were awesome at it. The only saving grace was that it was almost an hour away. That brings up a crucial point—if you’re not better than the competition at something, you’ll have a hard time reaching your full sales potential. The last thing I’d want to do, for example, is try to plop a game store in the middle of Gnome Games’ territory.
Competition is okay. Strong competition near your intended location with a great deal of overlap with your business model—the combination of these factors creates a problem.
Mistake #3: Underestimating Operational Costs
You can’t anticipate everything. Most people get the big things: rent, payroll, cost of goods. But they project low on most of these costs and they overlook loss (which includes shoplifting but also damages, distributor errors, POS mistakes, and others), cleaning (you’d be surprised how fast mop-heads, air fresheners, carpet cleaning, Swiffer replacements, etc. add up), maintenance (air filters, light bulbs, ballasts, replacing broken chairs and broken glass), and other minor costs. Payment processing fees are another 2.75% that’s forgotten on most plans. At $300,000/year, that’s an $8,250 oversight! The totality of these oversights could exceed your “fudge factor” and leave you broke.
Mistake #4: Inaccurate Sales Projections
Predicting a store’s sales is extremely difficult—and even moreso if you’re not already involved in game retail. If you’ve worked in a game store before, you have some insight. Otherwise, you might not have any idea where to start.
Let’s look at two scenarios: one where the business owner estimates low, and one in which the estimate is high.
Aaron projects his opening sales at $10,000/month and slashes his planned inventory purchases to adjust. He has one copy of each of the core D&D rulebooks. He starts with two booster boxes of Magic. He doesn’t buy the Asmodee best-sellers rack but does buy a single copy of most titles. Likewise, he cherry-picks titles across the board and puts one of each on the shelves. He opens in a 1,500-sf suite instead of the adjacent 3,000-sf suite he could have chosen.
When he opens, the first day or two is slow but then customers start to come in. They tell their game group about the new store they discovered, and their friends come in. The first groups buy up the best-sellers, leaving nothing on the shelf for the others. So for the other 3-5 friends who come in, the store’s empty. People come in asking for Games Workshop, which Aaron didn’t bring in at the start, planning to bring it in later when he grew. They go home empty-handed, maybe buying a paint jar or two.
Aaron did well than anticipated but he’s created a poor impression on some customers. Certainly good customer service can fix many of these cases, but some damage has been done that will take time to recover. Refilling the shelves immediately can fix some image problems, but there are others.
Magic players fill the game room on Friday night, leaving no room for D&D or board games. So that category grows to its limit while others stagnate. Also, if the game room isn’t large enough to fix everyone who wants to play, some players will go elsewhere. And that’s dangerous. One time at FLGS, I lost one keystone Magic customer, and an entire play group went elsewhere—10-12 weekly, loyal customers who took their spending to another store. Nine years later, they still play Magic, having spent tens of thousands of dollars collectively at other stores. That group often fostered new players, so the total downstream loss of that one player is incalculable.
This mistake is recoverable, but it does stunt the store’s long-term growth. The important point to note is that Aaron’s not broke. He has a lot of missed sales opportunities (maybe $200,000 worth), but he’ll survive to move into the larger suite at the end of his lease. Let’s go the other way.
Brad is very excited about his game store. He thinks he’ll open to $30,000 his opening month and he’ll reach over $400,000 in his first year. He buys a frame for his first dollar three months before opening.
Brad turns the key and flips open the sign on day one…and crickets.
The marketing machine he put into motion before opening does bring in customers, but the difference between his expectation and actual sales forces a reality check. His first week is $1,800. His first month is $10,000. His rent is due, and he’s crying. He’s committed to a $6,000 lease (plus 3% annual escalation, plus CAM) for 3 years—he signed as personal guarantor for over $400,000 in commercial rent, and at this rate he’ll be out of money in 4 months. He cannot recover from this.
Mistake #5: Not Identifying a Unique Value Position
Identifying and emphasizing your unique value proposition is crucial in creating a business plan that sets you apart from your competitors and attracts customers. Your UVP is what makes your store the only store in the world (or at least in your market) to provide that service or product to your customers. Ideally, it should be something that a competitor can’t easily shift his business to match. If another store in your city can remove your uniqueness with a new policy or a product display, your UVP isn’t very strong.
Unfortunately, identifying your UVP is the one essential skill that requires real genius. I can’t create that for you. Sometimes it arises organically from your business model. Sometimes it’s a key reason why you’re opening a store and it’s closely tied to your business model. Whatever it is, the sooner you identify it, the more successful you’ll be.
Reading a few articles won’t keep you from making mistakes. I can help you avoid the business-destroying ones. Forgetting to buy a scale for buying used Legos can be fixed with a $30 order on Amazon. Be thorough, and be careful.