Hobbyists Shouldn't Open Game Stores

[Ahnehnois]

Conversely, how skilled do you have to be in those fields to run a game shop?

Skill can be acquired on the job. I suspect that even very unskilled people can succeed under favorable circumstances (good location, strong gaming community, lack of competition, etc.). I bet a lot of people don't succeed though, as the overall circumstances for gaming stores probably aren't that favorable.

 

[Umbran]

Well that's largely true. In the human medicine world, dual degree programs (adding an MBA, MPH, etc. to produce a clinician with administrative or business skills) have exploded int he past decade or two for that reason. I don't know how true that is with vets, but I suspect there are similar issues there.

Just so folks know, my wife is a veterinarian, which is how I know these things. Such dual degrees are rare in the veterinary world - the standard training simply doesn't have *time* for it. Your vet has to learn about dogs, cats, horses, cows, goats, birds, reptiles, rodents ("pocket pets") and so on, about medicine, diagnostics, procedures and surgery, all in four years.

Okay. But how well does someone with only a business background do at running a veterinary practice?

As you expect - poorly. The combination of understanding of veterinary medicine and standards of care with business knowledge is rare, and worth its weight in gold.

 

[Umbran]

Skill can be acquired on the job.

My understanding is that skill can be acquired on the job, but only when the business' continued existence isn't dependent upon you learning it. If you get hired to work in a game store, okay. If you sink tens of thousands of dollars into starting a business expecting to learn it as you go, you're pretty much doomed.

 

[Janx]

My understanding is that skill can be acquired on the job, but only when the business' continued existence isn't dependent upon you learning it. If you get hired to work in a game store, okay. If you sink tens of thousands of dollars into starting a business expecting to learn it as you go, you're pretty much doomed.

Yeah. I'm inclined to think older people start businesses more than young people (or at least successfully). Obviously, there are exceptions, but older people have had time to observe their own employers, learn the ins and outs, and have a sense of what to do/not to do.

Plenty of older people have worked for a 19 year old boss who thinks he's hot feces because he's a "manager", when in fact he's a moron who only got the position because he hasn't quit after a year.

So if skill can be acquired on the job, it better be acquired in your previous job, because there ain't much margin for failure when you start your own business.

 

[Janx]

Skill can be acquired on the job. I suspect that even very unskilled people can succeed under favorable circumstances (good location, strong gaming community, lack of competition, etc.). I bet a lot of people don't succeed though, as the overall circumstances for gaming stores probably aren't that favorable.

There's a lot of factors to small business failure anyway. Per the statistics, most small businesses fail in their first five years. The general advice was to have enough funding to last the 5 years to build up a customer base that supports you.

That means having 5 years of your own 'current' salary saved up, plus money for the business's rent, merchandise, etc. Just so you can maintain some semblance of your current lifestyle so your wife doesn't divorce you for losing the house and sleeping on a cot in the back room of the store because you didn't draw a salary and had to eat ramen noodles until the store succeeds.

A really crappy strip mall will charge $1 per square foot (price probably higher now). You'll need about 1000 square feet. So that's $1000/month (which is more than my mortgage w/taxes combined). Electricity (for AC) in my area will probably cost $200/month.

So that's $1200/month you need.

So, to pay your basic bills to keep the shop open, you need $1200.

But wait, there's you. Let's assume you are a middle aged adult, not living at home, worthy of making middle class income of at least $40K (versus being a teacher or a cop, which starts off around there).

$40,000 divided by 12 months = $3,333/month.

Dang. You cost more than the rent for the shop in the crap-hole stripmall.

So now we need $4,533/month to run this thing's expenses.

Mark up on product is x2 in most industries, so if MSRP on a PH is $30, you paid $15 to pre-order that. Which is why in your going out of business sale, you can let it go for 40% off.

So we pay $15 to order a PH, and we'll make that money back plus $15 when we sell it. Remember, we have to order it first, so that's money out of us, before we get to pay our other bills.

Let's see if I do this right...

Since it's times 2 markup, and we know we need $4,533, it's as simple as ordering $4,533 of product, to "make" our main rent (assuming they sell.

So that means we need to spend $4,533x2=$9066 in order to make $9066 dollars (assuming it sells). Just to break even as a business, and pay you a decent wage in your small business.

Now with review, I can probably fine tune some things and fix some mistakes. But I just whipped that up.

How many Americans can break down the cost of doing business like I just did?

The ones who can't, probably should not be running a business. I help run my company, so I have developed the skill for breaking down cost of business so we can set prices and determine project viability.


This exercise also shows that a lot of money is needed to keep a business floating until it stabilizes that most folks don't have.


It's not just lack of skill, but total drain on resources starting your own business has. What if you don't have lots of money saved up? What if you don't pay yourself very well at all?

That last is important, because there's all sorts of threads on here where somebody suggests "you don't need to do that, skip it and save money" like not having Cable TV. For a single guy, that might fly. For a middle aged guy with a family to keep happy who's also more likely to be stable enough to attempt a new business, there are expectations of quality of life that have to be maintained.

This is why it is so hard to do a small business. Even with the skills needed. The resource drain and level of work to put in is very hard.

 

[Ahnehnois]

Suddenly, I'm feeling very motivated to consider getting an MBA...

 

[Janx]

Suddenly, I'm feeling very motivated to consider getting an MBA...

I don't know if an MBA is needed to do your own business. I had a chunk of the MBA classes for my degree, due to overlap.

I don't recall a specific class that taught how to do the breakdown. It's more like taking business classes informed me of the kinds of things a business has to worry about that somebody getting a pure computer science degree might not consider.

From there, when my company had a real need to determine our costs of doing business versus what to charge our own clients, I figured out how to calculate that. Being familiar with amortization concepts and accounting helped with that.

I think anybody reasonably smart person can figure it out if they stop and consider the problem at hand. That's the same diligence that has to be applied to the whole "running a business" idea when somebody says "wouldn't it be cool if we ran a game shop!"

 

[Ahnehnois]

Does ENW have a forum for career counseling?

I don't know if an MBA is needed to do your own business.

Depends on the business. In the one I'm working towards (i.e. medicine, the human kind), it has its uses. I plan on being in charge of a lot of people and managing a lot of money and doing a lot of things with it, and I have zero background in any of that stuff. So I am legitimately considering adding an MBA if I can (of course the MD is the hard part). Beyond the education itself, the connections are valuable, and again, connections that I wouldn't otherwise have.

I think anybody reasonably smart person can figure it out if they stop and consider the problem at hand. That's the same diligence that has to be applied to the whole "running a business" idea when somebody says "wouldn't it be cool if we ran a game shop!"

True. As others have said, it's a question of how much money one is willing to spend on either a business run by someone who has no business background, or how much money one is willing to spend getting that background.

 

[Janx]

Does ENW have a forum for career counseling?
Depends on the business. In the one I'm working towards (i.e. medicine, the human kind), it has its uses. I plan on being in charge of a lot of people and managing a lot of money and doing a lot of things with it, and I have zero background in any of that stuff. So I am legitimately considering adding an MBA if I can (of course the MD is the hard part). Beyond the education itself, the connections are valuable, and again, connections that I wouldn't otherwise have.

True. As others have said, it's a question of how much money one is willing to spend on either a business run by someone who has no business background, or how much money one is willing to spend getting that background.

Well don't let me or anybody dissuade you from getting a higher education.

If you don't do the MBA and MD, consider just taking a few classes. I suspect your thinking of running your own clinic or something. Business adminstration would be useful.

I would also seek mentoring from another MD with a clinic. One of my clients is doing that for somebody else while they went to school and now is setting up their own practice. That direct knowledge from somebody actually doing what you intend is better than any class.

I would do the mentoring thing no matter what if I was in your position. A lot of the business we get is through our contacts and their contacts. Having contacts who are doctors, CEOs and vice presidents is done by golf* and by exposure through mentors who are connected. The right mentor can be valuable even after you've "learned everything"

 

[Ahnehnois]

Yep, already on the whole building mentor relationships thing. If I do get into an MD/MBA program, it'll probably be the last anyone hears of me on ENW.