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?

  3. As the technolStarting a LAN center does take preparation, and while the article gives solid advice, it falls short on information that is useful to say a prospect to our industry. The inherent issue with this piece is it echoes the same sentiments one would find on any industry website regarding businesses that fail—lack of planning is planning to fail.
    .
    So here’s my two-cents, from someone that manages a LAN center, is the network architect, technology director, web designer, and customer service manager—surround yourself with people that know the industry. Take me for example, I have background electronics, mechanical, computers, networking, and customer relations. In addition, I understand enough about economics, markets, and trends to write a solid business plan. For all my head knowledge, the one reoccurring component to starting a business is interfacing with professionals that specialize in areas that you do not.
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    Two decades ago, I witnessed the very first LAN center in a southern market launch. One bright engineer, and the other, a skilled business manager—partnered together, scripted a Point-Of-Sale program, and opened with 30 computers. It was ground-breaking, and it was a hit practically overnight. The business plan was solid, the expertise was on point, and the rest relied heavily on the fact there was no competition.
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    What is the competition bringing to their business model should be your first consideration. Second, do they target a broad or narrow market, and what kind of services, amenities, and comforts are they providing. Lastly, is the location traffic-oriented, convenient, appealing, and accessible, and to what degree are customers willing to travel, is there parking, and does the business deliver content that creates return business, or just mediocre one-time visits.
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    The meat and potatoes for a LAN center is in catering to the market, bringing talent to the design phase, be it industry professionals, gaining a solid education yourself, and taking the time to understand your customers. Anything less, you’re better off selling lemonade—that doesn’t take a lot of talent.

    My suggestion is study what is involved in starting a business, from the basics of location planning, market research, technology infrastructure, cost projections, staffing, point-of-sale solutions, hardware, software, licensing, marketing, insurance, to events, website development, to get you started. There is much more to LAN centers than just hard work. The knowledge skills and abilities required will not be easily learned, so take it from me, surround yourself with people that are subject matter professionals that have experience under their belt, proven track record in this industry, and those with successful ventures, well established, and are profitable.
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    In closing, I knew a man with no eduction, but understood people. He managed other managers, whom in turn, managed others below. When the chiefs upstairs said cut two-million dollars from the budget, he held a meeting, asked each of them one question, ‘Can you help me reach this goal?’. They went back to their departments, collaborated with others, and returned to give their recommendations. Needless to say, no one was fired, and collectively they all contributed to the success of the business.
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    My dad retired from Paramount Studios as one of the most respected department director simply because he did not try to be everything to everyone, just managed the resources around him.
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    A successful business owner will understand the goal, move toward it through education, training, research, and doing so with others’ help, advice, feedback, input, and support.

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