How to Open a Game Store
Are you a gamer? If you love all things related to games of any kind, opening your own game store may be a great way to turn your passion for and knowledge of games into a business. You can do what you love, talk about what you love, and make a living at the same time.
A retail game store sells games, usually video games, to customers. A game store may also sell traditional board games and card games such as Collectible Card Games (CCGs) or Role Playing Games (RPGs) and video game equipment and accessories. Some game stores are franchises, and some are independently owned.
If you are thinking that just because there are no other gaming stores or a Gamestop in your area will make your business successful, be sure to look at indirect competitors as many hobby stores, comic book shops, and of course stores on the internet, Amazon, and eBay sell games too. Your competitive advantage is more likely going to be the community built around playing games, so be sure to have this strategy mapped out. Customers of game stores tend to be very loyal and not price-sensitive than other types of businesses.
Before starting your business, consider attending the GAMA Trade Show, as most manufacturers and distributors of games attend to show their products and services. Here you will be able to meet other game store business owners and really learn from the people who are doing what you want to do.
According to Statista, the video game industry market size will be $65.49 billion in the United States. That is down from $66.88 billion in 2020, which was an all-time high, probably due to people being home-bound during the pandemic and playing more games. According to IBIS World, the average growth rate of the video game industry from 2016 – 2021 was 14.7%.
The industry will be impacted due to the increased availability of cloud-based streaming games, mobile gaming, and subscription-based online game services. However, demand still exists for traditional video games, and new handheld consoles have come into the market. Hologram gaming is also expected to come to the forefront in the future.
Your target market will be video game and card game enthusiasts, which generally fall into the 18-35 age group.
Skills, Experience, and Education Useful in Running a Game Store
There are several specific skills that you will need to open a game store.
- Experience. You need to be able to talk knowledgeably to your customers about any genre of games, so experience working in a game store, or at least extensive gaming experience, is essential.
- Retail experience. Working in a retail setting previously is valuable so that you know the basics of how a retail store operates.
- Business knowledge and experience. You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
- People skills. You’ll need to build rapport with your customers so that you retain them as customers and keep them coming back.
Checklist for Openting a Game Store
Starting a game store can be an incredibly rewarding experience, but it’s important to make sure you’re prepared for the challenges ahead. Use this checklist to help get your business off on the right foot.
Step 1: Write a Business Plan
After coming up with the idea, the next step in starting your game store should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.
Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you to think through all the aspects of the business and then serves as a guide as you begin.
Related: How to write a business plan
Step 2: Name the Business
Finding the perfect game store name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name. Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.
Step 3: Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a game store, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 4: Select your Location
If you plan to have a physical store, you need to select a location that is convenient for customers with high visibility. The purchase or rent costs in prime locations tend to be more expensive but are usually more desirable due to more traffic and visibility. To lower the initial outlay, you could start out leasing a location rather than buying or building outright.
Depending on your city, a mall can be an ideal location as well.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
While there aren’t specific licensing requirements for a game store, there are general business registrations you need to research, such as a local business license, sales tax permit, Employer Identification Number, and others.
Step 6: Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a game store is another. In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.
Step 7: Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
A game store will need to set aside a budget to cover marketing costs on a continuous basis. Common promotions for a game store include being active on social media platforms and online advertising, as gamers tend to be active on the internet. Developing a website is also necessary, and can help in selling games to customers outside your local area. Good store signage is essential to ensuring people can notice the store.
Every business is going to need a logo. Make a professional logo in no time with the free Canvaa logo maker!
Step 9: Get Business Insurance
There are several types of insurance to consider when starting a game store. A couple of these include:
– General liability insurance can help protect you from third-party claims of bodily injury and property damage.
– Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.
The cost to insure a game store will vary depending on several factors. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.
Step 10: Hire Employees
You will need employees to help you run your game store. Make sure that you select people with appropriate experience and game knowledge.
In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your game store is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost to open a game store?
Here are the typical costs you will face when you open a game store.
– Store lease deposit $1,500 – $3,000 per month
– Location setup (furniture, tables, shelving, display cabinets, fixtures, etc) $2,000 – $5,000
Location deposits (utilities, rent, phone, etc) $250 – $1,000
– Initial inventory $20,000+
– Insurance $200 – $600
– Cash register or point of sale (POS) system – $200 – $1,000
How much does a game store owner make?
The profit margins on new releases are very slim. Unless you are selling a high volume of new games, look to higher-margin items like used games, retro games, and refurbished hardware and consoles.
If the average revenue for a video game is $60 and your cost is $50, you make revenue of $10 per game. If you sell 50 games per day, 7 days per week, your annual revenue would be $182,500 per year before expenses. Your revenue will be higher if you sell equipment and accessories.
Are there grants to start a game store?
It’s extremely rare to find a grant to start a game store. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for a game store?
The NAICS code for a game store is 451120, which is classified under Hoppy, Toy, and Game Stores.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
Related: What is a NAICS code?