Setting up Shop: Opening a Local Game Store

I'm about to drop a truth bomb on you.

You have a TON of competition out there.

And I'm not talking about the other LGSs around the area...

If you are involved in retail and HATE every aspect of retail (dealing with customers, stocking shelves, pricing product, cleaning the bathroom, managing sales tax and accounting, ect...) this is NOT the career path for you. A Local Game Store (or LGS for short) at its core is like a JC Pennies or a Gamestop. They have a product on a shelf that must be sold in order to make a profit. 

You have to sell product in order to maintain your store front. Period.

That is how your business will stay afloat. If you open your store with the idea that you're going to hang out with your friends and they will buy things from you because "they are your friends" and you give a great discount, you are sorely mistaken. Your doors will quickly close on you. So how does a LGS survive typically? What kinds of products do they sell? Well, it varies depending on which LGS you go to, but in almost every single store independently owned always always ALWAYS sells at least in some capacity...

Yep. This piece of cardboard has built empires.

Yep. This piece of cardboard has built empires.

Star City Games started off like any other LGS in the Roanoke, Virginia area. They sold various products like Warhammer 40,000, comic books, board games in the beginning. But at some point in the business's lifespan, the owner invested quite a bit of money into Magic the Gathering. 


To understand that, you have to understand Magic the Gathering as a game at its core. There are other formats like Commander, Archenemy, and Planechase that vary play quite a bit but we'll stick to the basics for now. Magic the Gathering has players face each other one on one. Each player builds a deck of 60 cards minimum with no more than 4 of the same kind except basic lands, which are used to put into play to summon creatures, spells, enchantments, artifacts, and planewalkers like those seen in its advertisements. Magic the Gathering has seen several sets of cards printed over the course of its lifespan starting back in 1993. When a new set comes out, it phases out the older set slowly over time, never reprinting it except in certain cases like in a newer set or part of a special bundle like in Commander decks and Vaults as limited print runs. Over time, Magic the Gathering's single cards became rarer and rarer to find because of the limited print run.

Thus turning Magic the Gathering singles into this...

Because cards had varying degrees of supply and demand, each card has a value. Commons typically are a quarter, sometimes less. Uncommons typically a quarter as well, sometimes being even as high as 20 dollars in some rare cases. Rares and Mythic Rares can have values ranging from as cheap as 50 cents to as high as a down payment on a car (ala Black Lotus, which honestly wasn't really a rare per se because rares didn't exist back in Alpha/Beta, and I'm getting off track here...). There are things that will lower the price of a card like condition of the card as well as supply and demand of said card. The demand comes from the local tournament scenes like Friday Night Magic but can escalate to the Pro Tour that can give away some pretty cool cash prizes. Depending on what a pro level player is playing and how well they do with said deck in the various formats. Cards that are banned in these competitions in certain formats will also affect the card's value to keep the different formats fresh.

The formats in most tournament play are Standard, Modern, Vintage, and Legacy.

Getting into the buying/selling of Magic singles can be a tricky one, especially now a days. But just know this for now; It can be profitable but it must be done right in order to make it work. It will require quite a bit of money up front and isn't an easy business to get into.

So what can be learned from Gamer's Haven that you can avoid if you want to open up your own store or are currently running one yourself? 

  1. Plan ahead. Lay out your business budget. Itemize what it is that you need and price it out. Budget how much inventory you are going to have, the space that you are going to be setting up shop in, how much you need to have on hand while you get started.
  2. Think about what kind of business you are going to be opening up and what value you can bring to your community. If there are local game stores around the area, think about what they are doing right and what they are missing. Maybe you can cater to that area that is neglected. Also don't just sell board games and card games. Is there another market you can tap into? What works well with a LGS? Maybe a coffee shop? How about a sports bar like establishment for gamers?
  3. Set up an online store front. An online store front sells products 24/7, even when the retail doors are closed. Consider how you are going to ship packages off, how much to charge for shipping, what to do about returns, tracking shipped product, and marketing your website. 
  4. DIVERSIFY! DIVERSIFY! DIVERSIFY! You must NEVER EVER EVER bet your business on one thing. Always have multiple revenue streams somewhere from multiple different products. This way, if one fails, you are not out of business. Did I mention Diversify? This is the one thing that I did not do for Gamer's Haven. I invested quite heavily into Warhammer 40,000 and when sales plummeted on that front, I was forced to build up on something that I wasn't working on and play catch up so that the business didn't immediately sink. And Magic isn't full proof either. If Wizards decides to stop doing Magic (which honestly isn't going to be anytime soon as of the time of writing this article) then you will be in the same boat I was in when Warhammer 40,000 sales dropped. Even if it is other card games, board games, comic books, disc golf, whatever that may be (that is legal mind you), do something else to bring in revenue. While it may not bring you in as much revenue, it most certainly will keep you going while you find something to either replace the lost revenue or shift directions for your business.
  5. Treat your customers and your distributors well. Even in the darkest of times, they will be your saving grace. Your customers are the ones who are buying your product. Your distributors are the ones who supply the product. This means keeping a nice clean store, being fair with your prices, keeping your word to your customers, paying your distributors when you say you are going to pay them (preferably cash, more on that later) and being fair with your rulings in events. Treat them well and they will treat you well. Trust me, both customers and distributors will warn each other about bad/shady business people. Word of mouth can be a great marketing technique but it can also be the most damaging if you are not great to do business with.
  6. Know what you are signing up for and do your homework before hand. True story. I signed up for a great SEO marketing campaign that cost me $14,000 over the course of a year. The company did a fantastic job and generated a TON of traffic to the website I set up for the business. But there was one teeny tiny problem: I didn't have a web store. The best way I can describe it is like driving 100+ people to your website every single day with nothing to do and you not getting any revenue from it. Yeah, I paid my fair share of stupid tax on that one. Research a project before you dive head long into it. Don't do what I did. Please. I beg of you. 
  7. Don't go into debt for your business, EVER! It is the main reason when my business closed, I could walk away from it and not have to worry about a debt collector calling me wondering where their money was. When I went to school for marketing, I took a finance course and was taught a very important lesson about "Other People's Money". OPM is the idea that you are borrowing money to better your business. If you borrow too much, you eventually hit a plateau where no matter how much you borrow, you will end up further and further in the hole. I thought about it when I was starting up my own business and realized that the reason for this was because of a little thing called "Risk". Here are two scenarios:
    • Lets say you borrow $10,000 and had 4% interest to pay on it over 5 years for product you are putting on your shelf. That means the bank gives you $10,000 to use but you owe $10,000 plus 4% interest over 5 years to pay them back. This equates to around $174 a month minimum you are paying over the course of 5 years. Your distributor is happy because they are getting paid and you can make the monthly payments to the bank. Doesn't sound too bad right? What happens when you don't generate enough revenue to pay them back? Trust me when I say that this happens in business a lot. There will be times where you don't make great sales, you still have to pay the rent and utilities, and get new product in to make good on launch day sales. Are they gonna be kind and understanding and let you pay them back when you can? Of course not! You owe them money! Even if you default and close your business down, someone will be coming knocking on your door looking for that money. That debt gets sold to a debt collections agency and they start calling you directly. Because guess what? Its not tied to the business, it is tied to the OWNER of the business, YOU! And yes, it is all 100% legal for them to do it (within reason of course).
    • Now, lets take that same $10,000 and paid the distributor directly with cash for it our of your Debit card (NOT CREDIT CARD). Your distributor is happy because they got the money up front and the product is now yours to do with as you see fit. You don't owe the bank, you don't have to bargain with the distributor about when your next payment will be. Its a simple one off transaction. If your business closed tomorrow, your distributor or bank won't mind one bit. Why? Because you paid them already up front and never dealt business with the bank for the loan mentioned earlier.
  8. Make time for yourself when you can. Believe me when I say that owning a store is hard work. I spent over 70 hours a week working the business, even on my "days off". As much as I loved doing it, there were times where I wanted to just take a breather for once. People will make assumptions about you and think that you are lazy just sitting behind the counter not doing much of anything. Some people may even think you're going to close shop within 6 months, maybe sooner. But then there are people that do rally around you when the times get rough. Take some time to appreciate and give thanks to those people that stood by you. Even if its something small like a plaque.

I hope this helps in your future business excursions.