Lessons Learned at the Last Level – How to open your own LGS for $3000

Partners are the keyTrade Routes

Business has always been attractive to me, even when I was young. Right out of high school I knew I wanted to run my own Local Gaming Store.

I decided to abandon my studies in Computer Science and instead open a gaming establishment with two of my like-minded friends. Thus, The Last Level was born. This is where the story and the lessons begin. The partnership. Partnering up was essentially what enabled the title of this post to be true. It is also a large contributing factor as to why the business inevitably closed but that’s getting ahead of the story.

At the time my friends and I were discussing the idea of partnering together, the owner of the LGS we had spent a large amount of time during high school and earlier had decided to close his doors. He had gotten a new job and was planning a family so he didn’t want to manage a Magic retail store any longer. This appeared to be the opportunity I had been waiting for. I spoke to the owner of the store John Hlaj, which was known as Deja Vu Games, about my idea and he seemed interested. He was looking to dump whatever he had left and I was a willing customer. We worked out a deal to purchase all the display cases and furniture that the store had as well as whatever stock he had left when he closed. This alone saved us hundreds of dollars in expenses. By dealing with the owner and picking his brain about his business, we were also able to secure a distributor which at the time was a big mystery to us.

I will also always remember the advice John gave me when I told him I wanted to essentially take over the community he had built. He said “owning a Magic store is a labour of love. If you don’t love the game, the players, and the idea, you’re not going to be happy with a store.” 100% true.

Lesson – Owning your own business is some of the hardest work you can do. If you’re not up for the long hours and hard labour don’t do it. If you aren’t self motivated to achieve success, working for yourself is not a good idea.

Lesson – Becoming the steward of an existing Magic community after a store closes is very effective.

$3000 is not a large amount of money to invest in starting a retail business but I want to illustrate how it’s possible under certain conditions. Here’s a breakdown of where the money went and what you can expect to need to start your own bare bones operation.

  1. Rent (first and last) – $1800 – This was the big one and one of the most important. At $900/month The Last Level was getting a decent amount of floor space bang for our buck. Looking back on our decision it wasn’t the best location for where we wanted the business to go but it taught me another lesson about Magic retail locations. Parking is very important.
  2. Furniture – $700 – This is where we got very lucky. The furniture pieces we were able to pick up, while not in pristine condition, allowed us to spend a fraction of the price compared to acquiring new ones. To give you an idea we were able to get eight 8″ tables, 30 chairs, table clothes, a pair of display cases, slot board for displaying booster boxes, and a cash register.
  3. Sealed Product – $500 – After getting a distributor contact from the owner of Deja Vu Games, we decided to start with the minimum amount of sealed product that we could manage. In this case that meant about 2 booster boxes of the three most recent sets. This isn’t much but it’s enough to run limited tournaments and can be easily be replenished as the stock gets sold. You can spend a considerable amount of money stocking up on sealed product, especially now with the myriad of products that WotC offers. The key to being profitable is knowing what will sell and what won’t. Start off with the minimum amount of stock and if it moves off the shelf stock up again. If it doesn’t move, wait till it gets off your shelves than try something new in its place.
  4. Singles Inventory – $0 – Here’s where we saved the most money. Singles sales have the highest margin and so should be a store’s primary focus. In our case we had three separate collections that had been built over several years which we were willing to part with for the sake of our business. This allowed us to start off with the minimum viability we were looking for. If a collection is not part of your start up plans, expect to set aside several thousand dollars for buying cards from your customers because simply put, if you’re not selling singles as a Magic retailer, don’t even bother with a business.

With that break down in mind, let’s consider why having partners made The Last Level possible. In addition to splitting the expenses of starting up by each partner contributing money to the cause, there being three of us solved one critical problem that would have come up immediately had it been just myself. To operate a retail store somebody needs to man the till and give customer service. If I were going it alone that would have been a recipe for disaster and I would have needed a considerably larger amount of money saved up right from the start. Most people giving advice on how to start a business would tell you to have a years worth of expenses saved up before hand to cover the business until it becomes profitable and can stand on its own. As a one man operation there would be no such safety net and the store would have flopped within the first two months.

Lesson – Don’t underestimate how long it will take to acquire customers during the start up period.

With three partners, one of us would be able to man the store at all times while the other two could continue to work at other jobs which could in turn support the business until it could support itself. In a sense this would be like spreading out the initial funds over the first year instead of up front before the opening day. This is what allowed The Last Level to open with a minimum of up front costs and operate smoothly for the first year. The danger of this approach is that partners can be unreliable and even friends may not be on the same page as you. In my case, my friends were not as enthusiastic about the business as I was and ultimately drifted away from the idea.

Lesson – Choose your partners very, very carefully.

These are the basic lessons learned while opening The Last Level while also simultaneously being a blue print for how to open an LGS with the minimum amount of money possible. One thing you may have noticed while reading this is The Last Level must not have sold any other products besides Magic. This is true at the beginning, we later expanded our inventory to include other items but initially it was all Magic all the time. The reason this worked is that Magic brings in a lot of revenue and can support a business on its own. The caveat to this is that a business can be more profitable by diversifying its offerings. Typically an LGS is more than a Magic store, otherwise it would be an LMS.

This is the first installment of Lessons Learned at The Last Level. I hope they may help you in your journey with Magic or at least give you a better understanding of what your LGS owner is trying to achieve with their business.

If you found this interesting leave a comment and let me know, ask some questions. Start your own business. Share it.  Any of those things is cool. Until next time.

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Thomas Traplin
@tomtraplin
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  • Gonzalo

    hi, a couple of friends and i are trying to open a LGS since one of our LGS is diying and the other one is more of a Yugioh store than anything else with some magic tournaments with very short rounds(30-35 mins) so we want to unify the community with the new store, my question is how do you contact a suplier or where do we buy our stock, thanks

  • Tomtraplin

    Hey Gonzalo, that’s awesome! I wish you the best of luck. The easiest way to get a hold of a supplier is to either call them or set up an account on their website if they have one. It can be area dependent but http://southernhobby.com/ and
    http://www.gtsdistribution.com/ are two distributors you can contact to get started. You can also purchase wholesale product directly from Wizards of the Coast once you’re involved with the Wizards Play Network. Something to keep in mind though is every distributor will require you to have an existing brick and mortar location. You’ll need to have that first and be able to prove it before you can set up an account with anyone. Hope that helps!