Opening a new eSports center in today’s market can be exciting, challenging, and invigorating, all at the same time! We discovered this while building The eSports Cave, a “soon-to-open” gaming lounge in NW Austin, Texas.
Obviously, opening a new business of any kind takes capital. Lots and lots of capital. (In other words, capital means money!) You can obtain a business loan, or refinance your home, if you are lucky enough to own a home, or on the other hand get a personal loan from your rich Uncle Bobby. When you and your partners secure the capital to open the business, just double or triple the amount you thought you needed. That should do.
Structure for Your Gaming Lounge
After this is secured, you decide the type of business you wish to have (for instance, a gaming center!), and then decide if your business model will be an LLC (Limited Liability Company), an S corporation (lots of larger small business use this form), or some other form of business. Each has their advantages, tax ramifications, and benefits. Therefore, we at The eSports Cave chose a partnership in the form of an LLC, because there are three of us as founders and owners. You can read more about choosing a business type HERE.
Connor does everything and anything having to do with gaming systems, from building the hardware, to software research and planning, creating an online presence, including website building and maintenance, creating social media, branding, marketing, and above all creating the best LAN center for The eSports Cave.
Jeff does most of the financials, accounting and tax documents (Quickbooks was our choice for maintaining our important monthly tax records). Certainly he is the one who makes sure our “i”s are dotted and our “t”s are crossed! This is a very large part of developing a new business.
Sue helps with finding the right space, being “general contractor” including coordinating flooring, steam cleaning, painters, electricians, handyman services, window cleaning, and so forth). She’ll also help with social functions like birthday parties, corporate events, and marketing.
You can learn more about our team HERE.
Planning for eSports Center Success
Firstly create a solid business plan, complete with your business model, demographics, and basic plans of what exactly, you are going to do with this business, how it’s structured, and why it will succeed. This will be shared with prospective landlords later on.
We also hired a tax accountant to help with monthly, quarterly, and year end filings, and to give us good advice on how to best maintain solid record keeping habits.
A good business law lawyer is essential to ensure that your legal status and paperwork is in order, from creating the LLC (or other legal entity you create), to ensuring you have the correct documents in place so you are protected as a company. (Don’t forget to update your wills!)
Speaking of protection, you should additionally develop a good relationship with an insurance agent, who can provide the peace of mind by putting a good commercial policy in place for your new endeavor.
Finding a Space
Now that your basic structure (or most of it) is in place for the business part your gaming café, it is time to find a location! This is an exciting, but sometimes frustrating procedure. You need to find a realtor that is knowledgeable and well-versed in COMMERCIAL real estate. Now is NOT the time nor place to use your in-laws, your great Aunt, the wonderful realtor who helped you find your first home, your neighbor, or your boss’ wife! It is time to find a commercial realtor who:
1) Above all knows your area in which you want to open your eSports center. Demographics, new development, future development, restrictions, DOT plans, traffic patterns, and many other items to consider.
2) Specializes in retail space (not restaurants, medical offices, office buildings, or other types of commercial spaces). After all, you want your gaming center to be located in a retail area, not in a high rise medical or office space building.
3) Understands the rental market and average rental prices (for retail space) in your area, or in the area where you wish to open your gaming center.
4) Willing to work with “first-timers”. You need someone with patience to explain the terms and expectations of commercial rentals, quite different from the residential vocabulary, terms, conditions, and expectations with which you may already be familiar. (I’ve been a landlord of residential property for 25 years, however I knew NOTHING about COMMERCIAL real estate rental terms, conditions and expectations!).
5) Has a personality that blends with your own personalities, idiosyncrasies, and foibles. You and your partners helping in “the search” need to get along with your realtor! He/she will be a person with whom you spend more time than with your family or significant other during the search time period.
The Right Location for a gaming Center
We at The eSports Cave found a fantastic realtor who not only understood our confusion with new terms and conditions from the commercial landlord, but was patient and took time to educate us on how to properly negotiate the tricky path of commercial real estate rentals
During our search, we found that what appears to be a perfect space can easily fall apart due to many other factors required. These factors include:
1) Amount of demolition required. This incurs extra costs, additional permits, and an extended build out time, all while you are paying rent on the space (but not generating any income!).
2) Amount of parking available. During tournaments, additional parking is needed not just for participants, but also for spectators.
3) Other retail spaces next door to space. Certain store uses would not make “good neighbors”. For instance restaurant/cooking odors, dry cleaning fumes, smoke/vape shops are a few examples of odors that may drift into your clean LAN center and bother your players, depending on the construction of ceiling and vents.
4) Shopping center restrictions. For example, some of the spaces we considered had restrictions on “use”. One location had a “no arcades” clause with an existing customer, a bank, so that a gaming lounge, being a new category of use, fell into that category.
5) Access. One location had a new highway overpass going in next to building, which would have not only brought lot of dirt and dust into our clean gaming cafe, but also have made it very difficult for our players to actually get to the parking lot.
6) Landlord approval. This one was tricky. Many landlords had no idea what we were talking about, so therefore turned us down as prospective tenants. Gaming café (will you serve lattes?), gaming lounge (will you serve alcohol?), eSports center (people come to play fantasy football?), LAN center (people rent your computers to service their business needs?) were all terms that confused landlords, not sure WHAT type of crazy business this eSports Cave was going to conduct! However, Connor put together a 15-minute power point presentation to show prospective landlords exactly what this all meant, and how the growing popularity of gaming centers has doubled and tripled in a few short years.
FINALLY, after months and months and months of searching and visiting many sites, we found a landlord who not only understood our type of business, but saw the potential growth possible for an eSports center and arena, and had the perfect space in which to run our it. So, we have been fortunate to find not only a great landlord, but also a realtor, lawyer, accountant, and insurance agent who all helped us to create our new business. (References available upon request.)
After all this time, we are looking forward to opening The eSports Cave in the next couple months, as we put the finishing touches on our new space. I hope this article gave you some insight into the many components involved in creating this type of business and finding the perfect spot in which to open it. This is exciting for us, and we look forward to seeing you all at our eSports center, The eSports Cave, very soon!