The Number 1 reason LAN Gaming Centers Fail

I’ve been asked to write something about what I’ve seen that resulted in LAN Centers failing.  I will do so now.  I will tell you now thou, I’m not going to sugar coat it.  I’m going to be honest.  Because, as a business owner you need to always be honest with yourself and the assessment of what you’re accomplishing with you business.

They fail because they didn’t prepare.  They were not ready to run a business and unable to adapt to changing environments.  I’ve seen this time and time again.  I’ve seen the centers I ran after sold become damn Pizzerias and just video games shops.  Because, the buyers weren’t prepared for the investment it would take to make an entertainment service business work.  They didn’t properly research what they were getting into.  They witnessed what I was accomplishing with the center and thought it would be turn-key.

A business is not turn-key whether you buy a pre-established one or start one yourself.  It requires a lot of hard work.  Staying in touch with your customer base.  You will need to stay on top of market trends. You will have to do the job of several people starting out, and probably for as long as you run the business.  Being a business owner is not easy.  It is not for those that aren’t willing to take risks, then smart enough to plan for the repercussions if those risks do not play out properly.  When you become discouraged you have got to have the ability to hold your self up.  Because there will be a time when those around you will not hold you up.  You have to be a one man wrecking crew.

I’ve seen time after time, a young entrepreneur that is in love with gaming want to start a game-center.  They are great at getting people rallied to their cause, getting banks to loan money, and making friends.  What they do lack is simple business sense.  They do not or choose not to perform ROI analysis regularly on their business. (ROI = Return On Investment).  They half-ass  attempt marketing their business.  Those that make it a year usually let the business stagnate.

I see a lot of people going into the gaming retail industry because they want to make friends, or they have delusions of hosting rock-star sized tournaments in the first 3 months (Not saying this last can’t be done but you better have a lot of backing and money to invest to make something like that a reality).  I’m going to summarize the 1 reason they fail now:  They were not prepared to run a business.

I’ve poked on some hard truths here and I’m sure it’s likely to ruffle some feathers, but anyone that has run a business prior to running a Game Center can easily tell you from watching another owners day-to-day operations that failed.  It was because they didn’t understand things as simple as keeping your books regularly, paying taxes, constantly marketing, keeping a clean establishment, and many other common business rules.

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Comments

  1. Would you say that it’s more or less the same reasons any small businesses fail?

    Close to my hometown there was a sandwich shop Jo Jo’s Deli. They had deli sandwiches, fries, hot dogs, ect. diner/deli type simple but VERY good food.
    My mother did some art work on the inside of their store the atmosphere was cool and they were packed EVERY day they were open. The food was just too good. The owner didn’t bother paying the taxes and the place closed up.

    I also experienced what happens when a business owner or owners ignore things like insurance, payroll, repair and supply bills. Even after 20+ years in business if ownership changes all of that great business progress can be undone in a matter of 2 – 3 years.

    • @Robert: That’s pretty much what I’m getting at in the article, is that most people going into business for themselves weren’t ready in the first place. Notice I never bring up anything that’s really all the lan center specific. IMHO its all about work ethic and what you are willing to do.

  2. Great article

    I have been wondering why there are so few LAN-centers in my country of Norway. There are tons of LANs every holiday, a lot of players, and the market is just growing.

    I am now attempting to set one up. However, as most don’t think “business” when they do it, that is all I do. In some ways perhaps slightly overdoing it.

    We have been working on getting to know the various gaming communities and working with them in hosting events. We know what kind of equipment is sufficient and how the various communities like to play their specific kind of game.

    The plan is to use crowdfunding for investment. In addition there are sponsors. The few I have talked with have been asking us about our social reach, and it does look like a very important factor. That is why we are now working out a social media strategy, which we will combine with an all out media strategy, working with the various press in the country.

    Do you have any suggestions on how to really get the sponsors aboard, or any thoughts on the other topics?

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