Well THAT was quick!

[captain_slinky]

Thanks to the watchfull eyes of aquatwo, the following Craigslinst ad has been brought to my attention:

SPANNAWAY GAMING STORE FOR SALE $7K

After a lot of heming and hawing and making excuses as to why I *wouldn't* want a gaming shop in Spannaway, I've decided to at least take a look at it. I've asked for information about the following:

• Monthly expenses. How much does it cost to keep the doors open every month, including Rent, Insurance, Merchandise, Employees, and/or any other expenses.
• What's the proffitability like? Is the shop in good enough shape to support itself, make a profit, or drag me under?
• Any history of break-ins or other crime?

What else should I be asking? I'm sure there's something else that I'm missing, but I can't wrap my head around it right now.

Now I know it's not a COMIC SHOP like I *really* want, but it IS a great stepping stone towards my ultimate goal. And housing down in that area is CHEAP.

Comments

[sasjhwa.livejournal.com]

Nothing to stop you from adding your old books to start and new books after you are established. I would arrange a visit and see what competition there is too. Then visit the competition and ask them their opinion of the store without telling them you are interested in it. You may get interesting information.

[hallerlake.livejournal.com]

How long's left on the lease? How much does that cost? What's your option for renewal?

Do you have any employees? (If so, would you keep any of them?)

How big is the space? How many customers a day? How's parking? Local food?

Where do you make most of your money? (Games are hard these days - price point on printed products has gotten unreasonable, crushing margins - no idea how heroclix or trading card games are.)

Does the (immediately next door) anime store help or hurt your comics chances? Are there other neighboring stores that would help or hurt you? Are you near a school? (You're at least kinda close to PLU and McChord AFB and Fort Lewis, so those are plusses.)

Who are the distributors you're working with and what kind of product access does that get you?

Is your space all front-room, or is there any associated office/warehouse space?

Is the place wired for burglar alarm? Wired for Internet?

Any regular maintenance costs?

[hallerlake.livejournal.com]

Oh yeah.

"What do you use to manage inventory?"

(and associated questions about preventing shoplifting/shrinkage, reordering product when you get low, etc)

[captain-slinky.livejournal.com]

EXCELLENT! Thanks! Many of thoe questions were going to get answered by a personal visit, but yeah! Nice!

[hallerlake.livejournal.com]

Ask up front anyway, it will tell them you're serious.

Or at least use it as a checklist of things you need to get answered.

Also, talk to (Zannah and) Ninjanuity, who probably knows more practical questions as far as game store operation and retail.

But yeah, no substitute for seeing it in person. You may discover that it's undesirable for one reason or another.

I would guess that it is probably rather loud at times, being near the air force base.

[abandonada.livejournal.com]

Keep us informed, ok? This is exciting!

[collisions.livejournal.com]

General business-y stuff: by the way he described it, it sounds like it's a sole proprietorship. This means there is no "business" apart from the owner, and all you're buying are hard assets, future receivables (contracts/subscriptions/etc.), and the general intangibles like existing customer relationships/goodwill and financial momentum. Without a transfer of an incorporated entity to you, his relationships with distributors are useless, since they would base their terms and lines of credit on your financial info, not his. Same with a lease - his landlord would need to agree to sign it over to you if he is a sole proprietor. So keep this in mind. If he is incorporated, then the business is its own entity and existing business relationships with vendors/landlord/etc. are preserved. Running a corporation is more complicated, and you should read up on it or talk to someone. There is a lot of great advice available at the Small Business Administration, randomly on the web, through local chambers of commerce, and in books. Sorry, I got rid of all my relevant small business info a little while back.

Aaanyway, about the business itself: this guy doesn't think there is much value in the business. He's asking $6k for the unsorted entirety of his assets, or $7k for the turnkey operation. I get he wants out for supposed health reasons, but that's not a lot of valuation he's giving the intangibles. Given this, you need to see hard financial data. Ask him for last year's and this year-to-date P&L, 6-9 months of cash flow data (bank statements, invoices, receipts, whatever), the last N tax returns for the business, etc. He says there are no debts, but any contract he has entered (like a lease) that you would take over carries financial responsibility, so get data on all of it. You also want a basic list of durable assets (cash register? tables? fixtures and counters?), including warranties, purchase dates/prices, maintenance histories, etc. If he can't supply this or won't give it to you, you should value his business at $0 and lowball his assets or just walk away.

Regarding assets, another thing to consider is how much all this crap would cost you on the open market. What is he paying for his lease versus comparable places nearby? Any commercial realtor familiar with the area can give you that. How much is his stash worth? He says it's a fire sale, but you know a whole lot about the prices of that kind of stuff - how much are you getting for the $6k? Same goes for other assets - are you getting a good deal?

Lastly, because your experience is in comics more than games, do a basic SWOT. How could you grow the business? What threatens it? Examples: integrating comics could help you increase sales and grow the customer base. How could you accomplish that? Do you have areas for racks, or would you need to expand? Would the existing customers be turned off? Would you need to expand your hours? Would you be going into more direct competition with local shops, who might then target your games business? You could put a couple PCs in the place or set up a WiFi connection. What does that bring you in terms of your customers/market? Does it make sense to expand to selling cold drinks or renting Vespas? Think of all the dumb ideas you can about what the business could do and think a couple moves ahead for each one, seeing what it could bring you. Then do the same for threats. The "Internal and External Factors" section of the wikipedia article does a good job of outlining how to make the lists.

Also - one last thing - go there as a customer first. I highly recommend picking one of the non-weekend event nights on his calendar and just showing up to scope the action. The whole "check out the calendar I just put up" thing is a bit fishy, and you can see just how many people are there on any given night. Plus it gives you a chance to check things out both in the area and in the store. See it as a customer would.

Sooo, there you go. Let me know if you are interested in a longer chat about any of this.

[collisions.livejournal.com]

Also, with a sole proprietorship, you aren't even buying the future receivables if those contracts don't get transferred to you too, and that requires a new contract. I'm sure there are none, so it doesn't matter, but wanted to correct that.

[captain-slinky.livejournal.com]

You've covered pretty much all the bases! ANd in not-so-many words, we've already implemented lots and lots of your suggestions :) A trip to Spannaway is in the works as we speak.

Won't be buying the whole business, going for the low-ball on his inventory and fixtures. A lot of it is up in the air right now, I'd offer him 10% of retail cost and have him throw in the fixtures. Ooh, and a fully fuctional cash register with credit card reader would be awfully nice (been looking at those and the various alternatives over the past few days)! But of course, nothing more gets done till we have an actual visit.

Oh, and preliminary information from the guy; he says he's clearing $1k pure profit each month. No data to back it up, so I'm giving that information as much credibility as it deserves.

Thanks for the input! Any and all advice is greatly appreciated! Now to go and work on my SWOT!