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sdilley14 · Mar 6, 2008, 10:45 PM

Myself and a friend of mine are thinking about going in as partners on a business. Basically, I'm looking for any advice from people on here who own their own business or have some sort of insight on this type of thing.

The general idea is this: We'd like to open a gaming/media lounge I guess you could say. We'd have a certain number of stations set up where our customers could play PS3, XBOX 360, Wii, and probably a few different classic consoles on 32-37" plasma or LCD setups. We'd also have a certain number of computer stations set up (half Mac, half PC I think) where customers could surf. We could sell energy drinks, coffee, stuff like that. I'd like to have a nice jukebox setup hooked up to a massive iTunes library where customers could pay to create and play their own playlists or individual songs. I'd also like to have a few viewing areas where customers could watch DVDs or Blu-Ray discs.

We would either have a membership setup or a system where customers could pay a certain amount per hour to game/use wi-fi/surf/watch Blu Ray (costs would of course be determined later based on startup costs and the number of projected customers as opposed to the number of customers needed to keep the business profitable).

I realize a massive amount of research and precise planning goes into starting something like this. It's just a very general idea at this point. I'm trying to gather opinions and advice at this point so I can take the idea to the next level in a smart and professional way.

Keep in mind we will be doing this in a large and expanding college town where the only entertainment options on the weekends are paying $15 to go to a movie or go out drinking. We want to make a fun, different, and relatively cheap entertainment alternative for teens/college students/whoever. There is also a small concert venue nearby that a lot of kids go to on the weekends. We would hopefully be able to strike an ad deal with them and I'm sure on weekends that they have shows it'll funnel a lot of kids down to our district.

And on the startup side; Are there any places I may be unaware of that offer incentives for bulk console and display purchases?

So what do you guys think of this idea? Do you think this is something that would pull in a good sized client base? We aren't trying to get rich off of this, we just want to maintain a comfortable, modest living with this and have fun. This is something we could enjoy and be passionate about, which is very important to us.

So what would you do next to get this off the ground? Any books or websites I should check out on this sort of thing? Any input at all is greatly appreciated!

L'enfanTerrible · Mar 7, 2008, 12:06 AM

I say go for it. People will want to hang out there if it's seen as a place to be, and who knows exactly what it is that will be the up and coming generations idea of a malt shoppe, disco or arcade? I think as long as you have a great attitude, people will gravitate towards that, especially if it catches on, ie: people hang out there before or after the concerts at this nearby venue. I think we need things like this because a lot of people are opting to stay home because there aren't many nightspots besides lame a$$ bars and movie theaters.

As far as making money goes, definitely sell coffee, energy drinks and the like, hell- have a full kitchen that serves burgers and shakes and what-not, everyone loves milk-shakes. Garner a reputation for something awesome like that and it's like a money-faucet.

And for the entertainment, setup retro arcade and pinball games amidst comfy couches and flatpanel tvs and for the platforms, rent out the controllers and games.

xbox controllers x 2 : $6/hour
army of two x 1 : $2/hour

x 8 setups x 8 hours = profit!!$!

Oh, and you have to setup a stage for local bands to play once in a while, and for Rock Band the other nights. Just remember to setup some sound-proofing stuff.

Man, after all this, I want to start something like this!

peeb · Mar 7, 2008, 12:14 AM

Be very careful that you understand the market and have a viable business model. A huge proportion of new businesses go under in the first year.

sdilley14 · Mar 7, 2008, 01:03 AM

Originally Posted by L'enfanTerrible

I say go for it. People will want to hang out there if it's seen as a place to be, and who knows exactly what it is that will be the up and coming generations idea of a malt shoppe, disco or arcade? I think as long as you have a great attitude, people will gravitate towards that, especially if it catches on, ie: people hang out there before or after the concerts at this nearby venue. I think we need things like this because a lot of people are opting to stay home because there aren't many nightspots besides lame a$$ bars and movie theaters.

As far as making money goes, definitely sell coffee, energy drinks and the like, hell- have a full kitchen that serves burgers and shakes and what-not, everyone loves milk-shakes. Garner a reputation for something awesome like that and it's like a money-faucet.

And for the entertainment, setup retro arcade and pinball games amidst comfy couches and flatpanel tvs and for the platforms, rent out the controllers and games.

xbox controllers x 2 : $6/hour
army of two x 1 : $2/hour

x 8 setups x 8 hours = profit!!$!

Oh, and you have to setup a stage for local bands to play once in a while, and for Rock Band the other nights. Just remember to setup some sound-proofing stuff.

Man, after all this, I want to start something like this!

I was thinking the exact same thing about pulling kids in before and after concerts. And you're right, people need a fun alternative to the otherwise lame entertainment options out there.

Its exciting because there are so many possibilities. Guitar Hero tournaments, Rock Band, Halo tournaments, maybe we could do an open mic type of thing once in a while, we could have a pay-for-music-video type of area. There's a TON of fun things that could happen. I'd like it to be a clean, modern setup too (new couches, modern lighting fixtures, flatscreens, nice hardwood tables and stands, etc.).

I understand that starting a business means you are basically married to it and you need to devote most everything you have to the success of that business, and that's why I want to do something like this. I've really never seen this type of lounge/shop/whatever you want to call it. I could totally see kids coming in and playing some Guitar Hero, sucking down some Monster, and checking their Facebook. And I realize not every kid has the means to afford a nice computer, a nice gaming setup and all of the other things we hope to have. Why not centralize all of that and deliver it in a single package?

I think another thing we have going is that my friend and I are, if I do say so myself, young and hip. It sounds cheesy, but I think this type of business begs for youthful and relatable ownership in a way. We'd definitely want to run a place where ANYONE feels comfortable being there. Let's face it, having management that look like they could be your parents at a place like this wouldn't help matters I don't think.

And most important from an ownership prospective, this type of business is something I could really get lost in. I love gaming and music as does my friend, we actually have fun setting up networks and home theaters and things like that...this is something I would have no problem staying up all night working on if I had to. It's something we could be passionate about and believe in, which I feel is essential to a thriving business.

Andrew Stephens · Mar 7, 2008, 03:40 AM

don't underestimate the cost of making sure you always have the latest and greatest games and hardware available. This will soak up quite a lot of your profit.

plus rent, rates, electricity, maintainance, staff, advertising etc etc etc

make sure your business plan, p&l and cashflows are very robust and accurate.

l008com · Mar 7, 2008, 05:05 AM

Yeah I don't see this kind of business taking off. Its going to cost you a lot of money, and most of these kids are going to rather play at home anyway. Plus people are going to be trying to steal your **** like 24-7. There was an internet cafe type place in my town for a little while. It was looked upon as really sketchy and finally it closed down.

But as far as actually starting your own business. Its really easy. I went to the town hall, paid a few bucks, and got a business certificate. Named the company MacFixer. Guess what I do :-). Then I just went to a bank, opened up a bank account in the businesses name. Then I threw up a website, made some cards, and bam. Business. I only do onsite work so I have no rent, very little liability, and my only equipment fees are whatever I wanna buy for myself.

peeb · Mar 7, 2008, 10:25 AM

What I'm worried about when I look at your plan is that you have a lot of fun things, but a lot of fix outlays, capital costs etc, and a clientele who don't necessarily offer you a huge income stream.
How many coffee and energy drinks and game rentals will you need per month to pay the rent, pay for flat screen TVs, maintenance, games, electricity, staff, insurance, building renovation, couches, computers, etc?

olePigeon · Mar 7, 2008, 10:42 AM

Don't forget that your business will be mostly dead Monday through Friday until 4PM, as that's when all the kids are in school.

By the way, insurance and taxes are expensive.

mduell · Mar 7, 2008, 08:58 PM

I don't think memberships will work, just go with hourly rates. Perhaps a discount for buying blocks of hours up front (which people will forget about).

There were a couple places like this in my hometown, but they all shut down after a few years. Why go to the place when everyone has an Xbox or PS3 or whatever at home?

turtle777 · Mar 7, 2008, 09:05 PM

Originally Posted by sdilley14

Keep in mind we will be doing this in a large and expanding college town where the only entertainment options on the weekends are paying $15 to go to a movie or go out drinking. We want to make a fun, different, and relatively cheap entertainment alternative for teens/college students/whoever.

Dude, open a bar with integrated copy shop that specializes in fake IDs

-t

vmarks · Mar 7, 2008, 09:10 PM

Figure out exactly what it is you want to provide.

Burgers and Shakes require a grille. A grille requires a vent hood and health inspections for the food service. If you rent a location that isn't already set up for that, expect 250k USD just to get that set up properly.

If you're going to serve alcohol, it's going to take the liquor license.

You've got to take into account exactly what it is you want to provide, and figure out how to deal with it.

If you do web stations, you've got liability there.

If you do plasma/LCD screens, you've got to put some acrylic or something over them to prevent breakage. Budget for replacement controllers. Home gaming controllers are not built to take the punishment that arcade equipment is built to withstand.

Figure out what your insurance hit is going to be like.

Make good friends with the local police. You're in a college town and you're providing a place for kids to hang out. Inevitably you'll eventually have some trouble, and you want to have that good relationship in place. It won't get you any favors, but it won't hurt you any either. Starting a business is investing yourself in being a part of the community. You're going to want to do the good things like making friends with police and firemen (first responders), like taking part in the chamber of commerce, and making friends with fellow business owners.

Is there a bowling alley in town? Nearby? Your business isn't incredibly different - it's light amounts of beer/food service of some kind, and an activity for entertainment. Go and talk to the owner. You might be able to learn something.

l008com · Mar 7, 2008, 09:11 PM

Indoor skate park/bike track. Places like that are PACKED in the winter. You'll be shitting money.

l008com · Mar 7, 2008, 09:13 PM

There are really two issues here. One is the topic, how to start a business. And the other is this particular business model, which it seems most of us think is probably not a good idea. But most successful ideas don't look good until someone tries them and they work.

vmarks · Mar 7, 2008, 09:16 PM

If you do an indoor skatepark, you've again got the liability, insurance, and again, the potential for trouble. Consider whether those costs, and the investment in a larger space to rent, all the plywood to set it up, is more or less than the games arcade, and whether or not one serves the market better or worse.

torsoboy · Mar 7, 2008, 10:13 PM

Originally Posted by l008com

But most successful ideas don't look good until someone tries them and they work.

This idea is not unique and has been tried by many other businesses.

The problem with these types of places (especially in your case) is 1) the games/internet will attract mostly geeks and/or hard-core gamers that don't deal well with others, 2) after a movie, concert, whatever, the guys are most likely on dates and have something besides video games on their minds, 3) chicks very rarely want to go hang out at a video game shop (even your ultra cool one), and they will not appreciate being taken on a date to one, 4) since not many girls will show up, the ones that do will get too much attention and feel out of place, 5) since there will be no girls at the place the non hard-core and/or geeky gamers will not want to be there on their free time, resulting in the cycle starting over at #1 above. And lastly, #6) you would never make up the money you spent on all of the TVs, computers, game systems, rent, paying yourself, etc. with a place like this. People will not pay more than a few bucks an hour to do something at your place that they can already do in their dorms for free (with cheaper beverages and food).

Basically, it's a computer geek/gamer's dream business, but my prediction is that it would tank in just a matter of months. This view is based on seeing the outcome of other similar businesses around here... a college town with not much to do on a Saturday night.

l008com · Mar 7, 2008, 10:17 PM

On the other hand, a business like this: RYE Airfield :-D

Macfreak7 · Mar 7, 2008, 10:19 PM

Very good idea, IMO. As long as you're willing to pour in the $$$ for your initial "capital" expenses and then for your day to day expenses, it would be a cool idea. Just make sure you have a business plan (or a roadmap), AND a back up plan (or an exit strategy) in case things don't work out. Outside of that there will be tons of things you'll learn along the way so keep an open mind, take advice from everyone but only make your own decisions.
Charge a good amount for the membership fee, but then make sure you provide good service to justify that.
Don't forget to strike up a partnership deed that's clear to the point.
Stay focused and keep it simple.. and it will be a hit.

HackManDan · Mar 7, 2008, 10:33 PM

Just make sure that before you sign a lease, or any other contractual obligation for a certain tenant space, that you get the okay from your local city officials. I'm a city planner, and a part of my job is clearing businesses for their chosen location and ensuring that they meet applicable city regulations (especially parking requirements). If you don't meet your city's zoning regulations, you'll be stopped cold. I've seen people who've already signed leases get denied a business license because their business wasn't allowed on a particular piece of property. In fact, I would actually visit your city hall and speak with a city/town planner and learn two things: where you can operate (what type of zoning), and what standards you have to meet (such as parking requirements). If they tell you something’s going to be problematic, it’s best to know upfront before you get in too deep.

funkboy · Mar 7, 2008, 11:14 PM

This business model does not make sense in my mind, and I am in your target market (18 - 28 year old single male with expendable income). Sure, it would be fun to try some of the games... and if done right I could see myself going occasionally... but I think many people would be asking the question, "How is this different than being at home and playing?"

If you could truly make it a social place... that may be the deciding factor.

Video games, though... that's very much a home thing. But with the right twist, you're right, it could be the next big thing... I don't know what would make it worthwhile to go out and do it instead of just staying at home with friends though, for cheaper... How has GameWorks fared?

Dave and Buster's is an adult arcade, with video games, skeeball, and alcohol. This does seem like a positive way to do it... cleaner and friendlier than a bar... people buy credits when they walk in the door that go on a rechargeable card. Realize that these credits may be lost in the future, they may not use them all up that night... and they'll want to spend the credits once they pay for them up front. That kind of idea could make some sense... and encourage repeat business. "Hey, I still have $5 left on my card... let's go there tonight!"

IceEnclosure · Mar 8, 2008, 01:01 AM

$5 at Dave and Busters might cover your first swing of a golf club..

RobOnTheCape · Mar 8, 2008, 09:27 AM

If you don't know marketing yourself, then you might want to explore hiring an outside marketing firm. This can be one of the most important investments you'll make. These people know how to use the net, media, and getting you up and running towards marketing yourself with great tips. Some I know can do graphics, web, and major outreach into communities about clients services in ways I would never have thought of.

Andrew Stephens · Mar 9, 2008, 05:29 PM

also I'm willing to bet that the EULA of every video game specifically prohibits using them in this manner

olePigeon · Mar 10, 2008, 10:52 AM

Originally Posted by Andrew Stephens

also I'm willing to bet that the EULA of every video game specifically prohibits using them in this manner

Depends on the company. Blizzard specifically has a special licensing deal just for internet cafés, so do many other game companies.

hyteckit · Mar 10, 2008, 11:27 AM

Hmm... college students.

Games and movie viewing. So your target audience are college students who are male. I say hire some girls in skimpy outfits to serve beverages. Make a killing on selling soda, coffee, and other drinks. Instead of calling it Hooters, I say call it SHooters aiming at the gaming crowd.

Make sure you have lots of startup capital. Don't underestimate the cost. Many businesses fail because they don't have enough capital to last 3 months without any business.

peeb · Mar 10, 2008, 11:59 AM

That's a great idea! Yes, you can definitely make a small fortune with a business like this. Erm, as long as you start out with an enormous fortune....

ort888 · Mar 10, 2008, 12:58 PM

This idea is not profitable. It sounds like a decent one on paper, but the reality is very different.

There just isn't any profit in it. Your target audience is essentially broke kids. Broke kids don't have any money. That's why 99% of coffee shops fail. Internet cafes aren't exactly popping up all over either.

Everyone has a computer. Everyone has a TV and everyone has a game console. You might be able to provide an outside environment that is fun, but at the core you are offering a service that is just something people already have, but now costs money and requires them to go out.

You're also going to run into all sorts of unforeseen licensing complications. All those nasty FBI warnings that people skip over on the movies and games? Well, they are talking about people like you, who will be making money off of them. Especially the iTunes library you mentioned. Do you know how complicated music rights are? Technically you cannot play CDs in a place of business. It's against the law. You have to have radio or satellite radio. something that has been pre-designated for commercial use. There are actually agents that go to businesses and write them up for playing illegal music. It's happened to people I know. I can only imagine that the exact same scenario would also apply to games and movies.

I don't mean to sound harsh, but this has long been a fantasy of mine and a few friends of mine. Not this exact idea (actually something much cheaper to pull off) and we can never figure out a way to make it work. I've known people who have tried similar ideas and the bottom line is always that this target audience doesn't have that much money. Not for this type of thing anyway.

MacosNerd · Mar 10, 2008, 02:17 PM

An interesting idea to be sure but one that I don't think you'll turn a profit. There's many posts here stating the same thing.
high capital costs to get the business off the ground. medium to high overhead costs in running the business and limited appeal to your target audience.

Before you jump in too deep. Divide your budget/overheads costs by what you want to charge to see how many customers you'll need to turn a profit? If the number is rather high you'll be operating at a loss for a while, how long would you be able to run a business w/o making money? You need to factor that into the equation as well.

I remember a few years ago a guy was basically trying to do the same thing, though he wasn't using large flat screen tvs. He closed up shop after a year or two because he could not create the critical mass to keep it going.

Not saying that will happen to you, but just keep in mind that you'll need to build up a customer base to keep your business going and if that takes awhile you'll need the cash reserves to pay for insurance, rent, payroll, taxes, supplies, maintenance on the equipment etc.

Andrew Stephens · Mar 10, 2008, 02:22 PM

I'd also consider that most places that rely on gathering people together like this - think kiddie soft play centres, spots bars etc actually make way more profit on the food and beverages. The gaming etc would be your draw. The profit would come from all the coffee/beer/food they consume whilst playing.

hyteckit · Mar 10, 2008, 03:01 PM

Originally Posted by Andrew Stephens

I'd also consider that most places that rely on gathering people together like this - think kiddie soft play centres, spots bars etc actually make way more profit on the food and beverages. The gaming etc would be your draw. The profit would come from all the coffee/beer/food they consume whilst playing.

I agree that the profits would be coming from food and beverages, and that the games are just the draw.

l008com · Mar 10, 2008, 03:18 PM

Then why not just open a restaurant?

ort888 · Mar 10, 2008, 03:19 PM

That's where the problem comes in. Gamers and college kids are cheap. If you aren't serving beer, how much do you really think you'll get from food sales?

turtle777 · Mar 10, 2008, 03:58 PM

Originally Posted by ort888

That's where the problem comes in. Gamers and college kids are cheap. If you aren't serving beer, how much do you really think you'll get from food sales?

That's where the problem comes in. Gamers and college kids are mostly under 21. You can't serve beer, so how much do you really think you'll get from food sales?

-t

olePigeon · Mar 10, 2008, 04:14 PM

Originally Posted by l008com

Then why not just open a restaurant?

Because he wasn't to lose money over time, not all at once.

finboy · 05:02 PM

Originally Posted by peeb

Be very careful that you understand the market and have a viable business model. A huge proportion of new businesses go under in the first year.

Yup, starting a bidness isn't for the faint of heart. But I say go for it, too. It's really tough to make a go of things, but live and learn! Good luck.

By the way, there's probably a book about starting a business in your area (state) that you need. That may be enough. Find a good CPA to work with and that will help.

Forget incorporating -- it's a useless expense for what you get. At a small level, you don't get any benefits from that structure. Limited partnership or LLC might be worth it, though, but probably not at first.

Forget borrowing from a bank, unless you borrow personally and invest the amount in the business.

If you want some idea of the kind of clientele you'll attract, and how much money they'll spend, find something similar and observe. We used to have things called "arcades" where people would hang out and play coin-op machines. Maybe find one of those to watch. Also, look at other places that people "hang out" and their cost structure -- pubs, for example -- and that's what you've got to beat.

Regarding the idea that "games are just a draw": you've got to make money on them, at least enough to pay for wear and tear. You can't compete with 7-Eleven for food sales, nor can you compete with Momma's basement.

Acts of Gord used to have a pretty good breakdown of the target market's monthly dollars.

If you're near a college campus, you might get something like this to fly. Pool halls are a great example. Note, though, that usually someone else owns the pool tables, and pool halls don't rely on fancy sound systems as part of the game experience.

ort888 · Mar 10, 2008, 05:00 PM

Good idea. Find a few local arcades and see how they are doing...

TravisReynolds · Mar 11, 2008, 01:07 AM

That is a really good idea, would people be able to throw lan parties? I bet that would be a huge hit!

hyteckit · Mar 11, 2008, 01:52 AM

College students spend a lot of money on food and beverages. Most students don't cook or eat at the dormitory.

They need a place to chill and grab a bite and a few drinks during their study break and night out.

Zeeb · Mar 12, 2008, 02:17 PM

Your money definately wont be made on kids playing games or watching movies in a public place as many others have stated here. People have that crap at home and its why movie theaters are having a hard time. People leave the house to get *away* from solitary activities like video games and movie watching. You might get a decent bar going by having a few PS3's and Xboxes lying around that people can play for free while they spend money on alcohol--it would only be a gimick. You could have two flat screens placed behind the bar and people could play while drinking early in the evening. In order to keep playing for free they have to keep drinking.