05 - Plan your business before you start

Submitted by ehanuise on Thu, 21/03/2013 - 12:09

05 - Plan your business before you start

Location, location, Location

Starting a business from scratch is a rare opportunity. To make the most of it, the very first thing to consider is the location you will operate from. If you cannot easily relocate, you can at least assess the pros and cons of your current location and know what shortcomings needs be addressed.

If you do set up your business far away from your current location, you will need to relocate, so private requirements such as a nice neighbourhood, nearby schools, climate, etc. will somehow overlap with the business criteria that will follow. I focus here on the business aspects only.

Study business laws and taxes in your and other locations

This is a global economy, which opens a lot of interesting opportunities. No matter which country you choose to relocate to, you will have to pay taxes. This is the way most countries in the world support their government spending for public infrastructures and services. However, it pays to shop around. Once you have a few suitable locations in mind, do the legwork of comparing the costs of setting up and running a business in each of these locations and see which is best. Keep in mind that setup costs are a one time thing, and that taxes and recurring costs are running expenses. Also add in a contingency share as there will be hidden expenses and surprises once you actually are operating your business : local taxes on utility, business permits, and other local regulations that may not be visible when doing research. If at all possible, have a chat with one or several business owners from the locations you are considering, they will be able to give you more in depth information based on actual experience.

Compare office/warehouse pricing

Along with the taxes and expenses, consider building costs when renting or buying. Office space and warehouse space come at a premium in some places and are very cheap in other. Will you have your own warehouse at some point or will you mostly work with external logistics providers ? Also try to get more information on the evolution of office and warehousing property in that location over the past 10 years. This should give you a rough trend, maybe the prices are high now but it's a very good long term investment to own a building there. Especially since loan repayments are often business expenses, so they come before taxes.

Consider logistics costs

No matter whether you intend to have your own warehouses or to use an external provider, you will need to move product from factory to warehouse, and from warehouse to distributors. If you choose a very remote location that has dirt cheap office and warehouse costs but you have to pay a fortune in transport every month, you're not getting a good deal overall.

Consider the various logistics options : road, train, or ship. Is there an industrial port or train hub nearby ? Are you near a major freight and logistics hub ? This could become a major asset as your company grows.

A print run of 3.000 small card games will fit on a couple pallets and could be stored in a garage. The print run of Dragon Rage (1.500 boxes) was 8 pallets. A 3.000 or 5.000 units print run of a big box game will be anywhere from 10 to 40 pallets, so you absolutely must take logistics and warehousing into consideration before you order your games!

Is there a local community of Players ?

You can't create or develop games in a vacuum. A publisher needs to stay in touch with gamers when playtesting and developing games. Major cities are your best bet in that regard, especially cities that have an university. At worst you will be able to set up a local game group from scratch and attract gamers to it. Be aware that if you choose to relocate in a small rural town, you will need to be on the road more often. Check out for existing communities in the area you will operate in on Google, Boardgame Geek, Meetup and Facebook.

Is there a local community of Authors ?

Some cities host prominent gaming groups, and have several published or budding designers regularly attending. This is quite an opportunity if you can be located near or in such a city. You will get first sight of new hot games, and will be able to get specialist feedback on your games during development. You will also be able to help fostering the local creative community, improve your understanding of the creative process, and educate them on the constraints of development and production so they can integrate them in their future designs.

Is there a local community of Publishers ?

This is of course quite rare, but if there is one or a few other publishers in or near the location you are considering, so much for the better! In Belgium, I am blessed to have several other publishers nearby such as Repos Prod, Pearl Games, Sit Down, Whyme, Smart games, ... all within driving distance. It is really a tremendous advantage to be able to ask them questions about the trade or compare notes on a supplier, an event's organisation, or other business matters. If I was to relocate to Alaska I would lose these opportunities.

Can you grow ?

When choosing your location also consider your growth options. If you set up in a floor of a shared building in a busy town, when your business grows and you need to accommodate a few employees, you will need to relocate. Your warehousing needs will also grow along with your company. If you factor in growth from the beginning, it will be easier to manage. The whole point is to be prepared : if you know what is your 'plan' for when you reach 2, 5, 10 and 20 employees, or when your storage needs grow from 2 pallets to 200, when that time comes you will not need to distract yourself from running your business as you already know what to do. It's much better to plan ahead for that growth when you start and things are quiet than when you are running full steam and focusing on nurturing that growth.

Define your production and logistics path

How will you produce your games and bring them to your customer's hands ? There are many paths that can be followed so you have to assess which best suits you.

Some publishers insist on making everything in-house : art, printing, assembly, packing, shipping, etc. This allows for a total control on quality, timing and price, but is incredibly complex. I think it is worth considering each step of the path and decide whether you want to handle it internally or to use an external provider for that. To me, a game publisher's most important work is to acquire or create great games, make sure they are fully developed, and give them the best possible chance on the market. Using external suppliers allows you to focus on that core business, without distractions. When you run a production plant or a logistics operation, are you still doing publisher work ? Won't the management of issues such as workforce or machinery amortization distract you from your core business ? This is a call that you will have to make for your own business; Each publisher is different, has different skills, and different views on this.

At Flatlined games, I chose to focus on game development and outsource production, logistics and distribution as much as possible. Sure each supplier eats up a bit of the margin but overall it allows for a very lean operation with low overhead. This might change over time, as all publishers need to reassess that path on a regular basis.

Define your identity

Another thing to plan ahead is your identity. What will your business be to the public ? What kind of games will you publish ? What audience will you target ? Where will your games be sold ?

This is also where you set up your business plan and values. Will you only produce in your country or are you open to outsourcing ? Do you want to be and brand your company as eco friendly ? Do you want to have miniatures in all your games ?

Name and Brand

You need a name for your business. Finding a good name is quite a task, and once you have found a suitable name that conveys the image you want your business to have, you must also make sure it is available. Copyright and trademark your name and logo to protect them from third party use. It will give you some leverage should someone set up a company with the same name in the same business, or use it on counterfeit products. Don't be paranoid, however, it's still a somewhat rare occurrence in this business.

You need a company name that works internationally and is not rude or offensive in other languages and culture so make sure to do some research. Google is your friend.

You then need a logo. Keep in mind a good logo works both in colour and black and white, works well when using just black and white as opposed to shades of grey, and ideally is line-based so it can be blown up to any size as required.

You should also have a company motto that sum up your identity. Flatlined Game's motto is 'Fun games for smart people'.

Editorial line

What games will you publish ? All publishers want to publish only games they love and believe in, as they will spend countless hours and energy developing them before publication, but beyond that you need an editorial line. Will you make children games ? family games ? hobby games ? Will you focus more on theme or mechanics ? Will you favour historical games or avoid them ?

As you publish games, the public will get acquainted with your editorial line and know what to expect from your company. This will strengthen your brand, and consolidate your image. Designers will know what kind of games to show you and what kind of games you're not interested in.

It can be as simple as 'we make only pirate-themed games' or 'we make historical war games' or it can be more complex and subtle.

For Flatlined Games, the editorial line is to publish only games with a strong theme (fantasy, SF, pirates, ...) and to stay away from historical games or abstract designs. This is complemented with another internal guideline to focus on niche games : only publish games that are unique to their kind, or that fill a now empty market niche. Dragon Rage was a good example, there was no other fantasy hex and counter wargames still on the market when I reprinted it.

Short and long description

Even if you do not make it public, you need to write up a short and a long description of your company, its business plan, and its editorial line. This will give you a baseline to compare your results to over time, and will also help you communicate internally and externally about your business identity and values.

Challenge your plan

At this stage you also have to challenge your business plan.

Do some basic marketing research.

Start off with a SWOT (Strengths, Weaknesses, Opportunities, threats) analysis.

SWOT is market research 101. You graph Strengths, Weaknesses, Opportunities, and Threats in a square in order to assess where you will sit in the market. http://en.wikipedia.org/wiki/SWOT_analysis

Other basic market analysis tools to consider :

Porter's five forces http://en.wikipedia.org/wiki/Porter_five_forces_analysis

The six forces model http://en.wikipedia.org/wiki/Six_Forces_Model

These are a quite few other market analysis tools. These are really just the basics, you should investigate this further and read a couple marketing books to further your analysis.

Ask around (retailers, distributors, authors, publishers, community)

Show your business plan to other professionals (retailers, distributors, publishers) and ask for feedback. Talk about it with your banker and investors. Check out the numbers and ask if they are realistic A retailer won't need hours of market analysis to tell you that a $50 boardgame focused on dogs cross-breeding will never sell 3000 copies per month.

Do not use your friends, family and other people who don't know much about the board games business as sounding boards! They are well meaning and want you to succeed but will not be able to give you relevant feedback. You need professionals with actual market experience here.