I used to dream of opening my own shop Part 2

Hello again guys,

I received a lot of messages asking for part 2 of my dreams of opening my own MTG shop. Some even sent me business proposals, vacant commercial spaces to help me make my dream into a reality, offered to be my business partner, or encouraged me to revisit my dream. I’m sure you want to know why I decided not to open my own shop, so here are my reasons and I am sharing these to you so you can also review your decisions before you commit to owning your own gaming shop.

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You need to dedicate your time.

I don’t have much of this given I work on a demanding full-time job with a multinational company as HR, people problems and company issues have me pinned down most of the time.

Contrary to popular belief, it takes more time to run a store than just being there at 5:30PM, set-up the store for 6pm FNM pods, then wrap it by 11PM. The amount of time you invest in your store is directly correlated to the amount of money you will be earning. A shop that’s open only when you’re free means you will not earn money outside game nights. That’s fine if you’re firing 30 man FNMs daily but sadly you don’t own the city to monopolize it like that. You also need to earn on off-peak hours and you can only do that if you’re dedicated to your shop.

Some people can pull this off by working part time in their shop and still have day jobs, but if you ask them to answer you honestly, it isn’t working. A full time job is usually where they source most of their income. Their shop just adds some more into their cash flow to pay for the car, or for electricity, or to chip away from their children’s tuition.

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You also need to study peak and off-peak hours and days in the week so you will know which time you need to be in the shop. The above picture does not resemble the Magic hours we know but its a diagram that helps you frame your plans on when your shop should be active, lulling, or quiet.

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Understand where people spend their money on.

I realized you can’t make an MTG shop earn money and keep above break even by just selling cards.

If you think MTG shops can survive purely by pushing card boards and running events, you are wrong. Nowadays, shops need to find alternative means to earn their customer’s money. Some go via the food route which is usually the easier income stream to tap. Sell snacks, iced teas, candies and cigarettes have been the norm to keep stores earning. Some combine tabletop game rentals to further tap additional market like kids and family. Some embed their MTG shops into pre-existing businesses like a restaurant to earn on days when Magic activities are low.

MTG shops usually feed on kids and the young professionals. However most of their days are spent inside schools and offices. You only start earning their money after classes (4pm) or after work (5pm). Kids can stay out maybe until 6PM on weekdays and 8-9PM weekends, while adults can stay late until 11-12am. That is your window of earning. Within that 4PM-6PM-10PM, or 5PM-11PM is your selling period. Compared to the lull period in the morning, your time spend earning is far less that the time you spend not earning.

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Sure, you can choose not to open to save on electricity in the morning and open around 3PM instead to catch the kids after school, but still you failed to earn from 9:00AM to 2:59PM. This is why we can’t rely on just the players for income. Whatever you earn between the peak hours will not be enough to sustain rent, staff salaries (if you hired people), utilities, and have enough money for stocks.

You need to have alternative income streams to make your shop earn and be profitable.

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Have enough capital.

When I finished my planning, I realized I needed 500,000 in cash to renovate a 50sqm commercial space, have the money to pay for rent/utilities for a year and have enough money to buy stocks and card accessories to last me 2 Magic blocks. We’re not even talking about my salary as store owner yet.

It’s not a joke to open a business. I am a very pragmatic and realistic person so I am not satisfied with having just the right amount of money for 3-6 months and allow myself to believe that the shop will soon pay for its own. This is very risky and very scary. You have to give your shop some time to attract customers and have its own usual goers before you even think about relying on the shop’s income to sustain itself. You will need enough spare cash to keep the store running above water despite not having solid earnings in the first 3-6 months.

When you open a shop, you usually don’t count the calendar days as days of earning. Days of earning are usually where you have events. These are Fridays for FNM, and Saturday/Sundays for Showdowns, PPTQs and Trials. You need to money to burn on days you don’t have an event. Most shops these days run events daily, switching between formats and by doing so they can keep their income steady. This won’t work if multiple shops within your vicinity run the same format that day. You will end up pulling customers apart which can result to insufficient players to fire pods.

You also need to think about fixed cost. Rent is an example of fixed cost. Whether you’re open or not, with or without customers, fixed cost will chip away from your capital or earning. Apart from rent, you have internet and land line cost, water, administrative dues (if you open on leased commercial spaces or malls), security and staff salary. If you add all of these, the amount you end up with is what you deduct from sales. After the deduction, the amount you’re left with is what I call “income after cost”. I’m not an accountant so I don’t know the proper name for that is but essentially that’s the “almost NET” income you earned in that month. Will all that go into your pocket?

No.

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You have to set a salary for yourself. You can’t just take the month’s earnings as your salary because that’s just bad business strategy. You need to set a salary for yourself to know if your shop is profitable AND sustainable.  Not setting a salary for yourself opens up a lot of risk for overspending, wrong budgeting, faulty cash flow, and dirty balance sheets. That’s why even business owners have salaries, because it helps them distinguish their money from their business’ money.

After my computation, I felt that my salary from my full-time job was still better and not something I’d be able to give up in exchange for a slower and lower income stream from the shop, commensurate to the time it will demand from me once I start it.

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Experience equals Power.

I have never opened a business in my entire life and I know once I do, I will have more questions than answers. I knew I needed someone who can guide me. No one from my family had business in the past. I can have all the theories in the world but nothing beats experience. I decided to get help from a friend.

Running a business is like the diagram above. A bunch of elements, factors, and information must be connected to make the cogs turns and make the business run smoothly. You need to understand the market, the location, the merchandise, the profit margins, etc. to make sound decisions. Yes you can learn these through experience, but the more you spend time doing trial-and-errors, the more money you burn.

Ask help. If you know someone who is good in doing business, or has experience in marketing, merchandising, or maybe owns/runs a business of their own you can merge your MTG shop with, why not go for it? Remember you are investing your hard earned money into this business so you have to make sure you will get it back and build from it.

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The allure of having your OWN business is pretty amazing but there is no harm in partnering for good reasons. Don’t block the idea off just because you don’t want to split your earnings with somebody. Remember this – splitting profits is better than losing money alone.

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Will I ever revisit my dreams of opening my own MTG shop?

Yes. I still dream of having my own shop. I just need to be at the right time, find the right place, and have the right people to make it happen. I actually dreamt of competing with Neutral Grounds one day or become the second largest table top gaming store. Who knows? I might draw the perfect plan to do this in the future. Only time will tell.

Thanks for reading and for coming back for updates. As mentioned above, my time these days is really limited with work piling up, my wedding in 7 weeks and home renovations. I will probably write even less as I approach my wedding day but I promise to share my wedding experiences with you guys.

A good blog title could be: Missis or Magic.

Ciao,
Vanson

 

 

 

 

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