Why Do Video Game LAN Centers (or any small businesses) Fail?

Usually after a year or two, you will find this at your local LAN Center.

Usually after a year or two, you will find this at your local Video Game LAN Center.

This December we will celebrate our 9th year anniversary for eBash Video Game Centers.  We have had our ups-and-downs over the years.   There have been times when I wasn’t sure if we would be around and other times when I was sure we would have 100+ stores by our 10th anniversary.

I have started almost 10 different companies since I graduated college in 1998 and I can say with confidence that I have plenty of real world experience owning and operating a small business. I get frustrated with our industry time-and-time again because I see so many owners following the same path of destruction.

Back in my software days I would also see other small businesses struggling with the same problems.  Would you like to know what I believe most small businesses fail?

You cannot be one of the biggest consumers of your own product.

What do I mean by that statement?  Look at it from this perspective:  Could an alcoholic be a successful bar owner?

I have been very, very close to many game center owners over the years and it seems that most people get into this business because they love to play video games.  Don’t get me wrong, I think that you have to be passionate about what you do for a living to have a satisfying career, even if you are not the business owner and just an employee.

But I think as the owner/manager you have to be able to recognize the priority of being the engine driving the train instead of one of the box cars just getting pulled along for the ride.

Is there ever a voice in the back of your head telling you there is something else you should be doing?

Is there ever a voice in the back of your head telling you there is something else you should be doing?

Many of you that know me, know that I have a great love of achievements on the Xbox 360.  Over the years I have played in many competitions for Gamerscore that tempts my competitive spirit and makes me push way beyond the normal realms of competitive gaming.  Currently I am still the #2 player in the world on Kinect and I haven’t touched a game in almost 4 months.

But that has caused me problems in the past when I would just perform the bare minimum tasks for the business so that I could concentrate on my gaming.  Instead of putting 50-60 hours per week into growing the business, pushing events, working for partnerships and staying up with technology I would find myself gaming for 6-8 hours each day. Luckily for me, eBash was established enough during these lapses in judgment that the company didn’t die.  I also am surrounded by a great set of employees that could help pick up the slack in the areas that I was neglecting.

That was not the case in the past for our first and only official franchise store. The owner of that store became consumed with a certain game.  If you ever wanted to find him, he was probably at the store sitting at a computer playing.  His attitude followed his success in the game.  He actually threw customers out of his store for playing poorly on his team, threatened to fire employees who refused to play with him and the business itself quickly went from an upward trend to a quick descent into disaster.

In the end he had his back against the wall with creditors and vendors and had to sell the assets of the store to pay a debt with the IRS so that he wouldn’t go to jail. Currently I am considering buying back that location at the corporate level from the current owner just so that we don’t see another store in our industry close down for good.  It will stretch me to my limits, but if we are successful I have potential investors ready to help us build more stores over the next 5 years.

At the same time I am worried about our newest partner store as well.  So much so that I am considering removing the partner program completely and only focusing on building out our own stores.  We are already seeing them choose not to participate with us in events that are going on at all of the other eBash stores and I am hearing reports that they have a gaming machine at the front counter so that they can play while they are “working”.

If you are a video game LAN center owner and you are reading this I would challenge you to answer these questions for yourself truthfully:

1.  Do you game more than 10 hours per week?
2.  Are you struggling to grow your business?
3.  Do you feel you are doing everything you can for your business to succeed?
4.  If you have employees, I challenge you to ask them if they think there is more you can be doing for the business.

I would love to hear from some of you other owners (of any small business) in the comments below if you have similar observations or even opposing ones.

I never try to be the person who only complains or points out things that are wrong, so I am using this subject to start a new series to share some of the things we do for eBash to grow and promote the business that cost little to nothing but require a good work ethic and consistent follow-through.  Subscribe to my blog on the right of the page to receive an email each time I add a new blog.

11 thoughts on “Why Do Video Game LAN Centers (or any small businesses) Fail?

  1. Hi I am actually looking to open a lan center here in new jersey. I was wondering if I could speak with you. Maybe pick your brain. My wife thinks I’m crazy, but this is my dream. This is a serious inquiry, not a joke. If possible how do I get I touch with you. Tank you.

    • Joe – Your wife is right, you are crazy! 🙂 Running a LAN center is a wild and crazy ride and after 9 years we are JUST now getting things figured out so that we make money and can start opening new stores. I don’t have a lot of time to help people get started, so I try to spend time putting up items here on my blog that can help those thinking about starting. I think there is another group at startalancenter.com which might be a good resource for information. Good luck and remember that it is a really fun job, but it isn’t stable and a big risk!

  2. Zack – Looking to get into the business and I’ve found your blog to be very insightful. I was hoping you could outline a little more how you got started in this business from the business/economic perspective. Did you get financing? What square footage of the facility would you recommend and the annual price per sq. ft (highly subjective I know)? Did you enter a Triple Net lease or gross lease? In your experience, what are your slow business cycles?

    Games are great but I love the idea of operating a business more. If/when you can, it would be great to see a blog response to one or all of these questions. Thanks

  3. Thanks for this! I just wanna set Up a Gaming Center here in Nigeria. I want you to help me list out the Devices that I’d need for more advanced gaming service. Thanks

    • Things are going good! Every week I tell myself to update the blog but I just can’t find the time, which is actually a good thing. If you have specific questions feel free to shoot me an email!

  4. My hubs and I have been playing with the idea of opening our own here. There used to be one here but it hasn’t reopened for the last 3 or so years. Which makes me pretty sad. Considering were next to a military base I think with the right push and the right set up we could succeed. Just Everytime I think about everything it racks my brain. Of course I want to do it right the first time around. I think I’ll be the one to keep my hubs online and not be the one to waste away the business by playing all the time. i know this is a horrible question but just so I can set realistic goals. About how much did it cost for start up? I’ll be looking on the suggested forms for even more information as well but just trying to Obsorb as much info as I can. I’m glad to see you’re doing well 😀 Keep it up!! ❤ 7

  5. Hey there! I have been interested in your company for awhile now. I work for a LAN center in northern Illinois and we are currently at a break even point for monthly bills. I was wondering what is the right way to advertise to get new customers in the door? We have a pretty decent following of regulars, but are looking to get more new faces in the door. Also I had read about ggcircuit, could you elaborate more on the idea?

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