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Message: <blockquote data-quote="tf360" data-source="post: 710856" data-attributes="member: 2105">From my twelve years of working with small businesses, the most common mistake made by new business owners is undercapitalization.  It's really just a fancy term for lack of working capital.  Having a large wad of cash is a good thing, since it takes several years to build a solid business.  Credit is also essential.  Cash flow is never a constant, it fluctuates constantly, so if the business experiences a slow patch, it can rely on credit to maintain its inventory and meet expenses without having to purchase such items C.O.D.  Most novices go into business thinking that once they purchase their inventory and pay some of the upfront costs, i.e. lease on the retail space, fixtures, employees, renovations, etc. that all they have to do is count their money and live off the profit.  The person soon finds out their initial investment dries up, and they are unable to keep the business afloat.Location is also key, but it doesn't compensate for poor business sense or lack of customer service.  Two comic book/trading card businesses situated right near the local schools went out of the business in the past two years, largely because the owners priced themselves out of the market by charging tremendous markup's on the CCG's that they sold.  Once Pokeman and Magic, their two big cash cows died down, they promptly went out of the business.  This definitely proves that the business requires some diversification, i.e. sell more than just d20 and D & D material as well as maintain competitive pricing.  Other gaming systems, such as Warhammer and wargaming also help.  The one major local FLGS sells a lot of products on ebay, since ebay provides a guaranteed sale rather than having a product, especially a marginally popular one, sit on the shelf for months at a time.  My advice is that the person running the business has to have enough working capital to meet the upfront costs as well as another 18-36 months of capital to absorb any losses attributable to the business.  It also helps if you have a two-income household so long as the other income earner is not contributing to the business.  Just a few of my personal insights.</blockquote>

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