Pinball arcade. Questions about competing

[Silver]

My dad wants to help me start a pinball arcade. He's owned his own business for 20+ years.

I talked to some pinball people and pretty much got made fun of. They think starting it with $20,000 is a joke. I was also told I needed machines from the top 100 pinball machines of all time.

I was thinking I could get a cheap space in a downtown area (cheap being a relative term) and charge $9.25 + tax for all day play. This way you and a friend could have fun all day on a $20 bill.

I want to do it completely without a loan. This way, if it's a rough start, I'm not totally screwed.

If I could get 200 customers per week, I could stay afloat while I'm getting some better games and all that.

There's already a pinball arcade in the area, and they've probably invested $200,000 in top quality pinball machines. My dad says we need compete around them rather than directly at them.

We would be sort of a budget arcade. His idea was to charge 25c per play. I'm not sure if 25c per play is better than a flat rate all day pass.

I plan on amassing a variety of machines over the course of a year or two.

The arcade would be fun, but I just don't see a way that I could make it more fun than the guys who have the best of the best pinball machines which I cannot afford.

How hard would it be to pull of 200 customers per week at $9.25 all day? What could I do to out compete a guy who has better machines than me?

[Freelancier]

I think the pinball people are correct: $20K won't even get you a space for 3 months to put the machines, let alone the machines or the electricity to run the machines and A/C.

I think you need to go find a pinball place that's NOT near your town and talk to the owner about what it takes to open one and the pitfalls. Since these things are local, finding an owner of one outside your local area might make it feel ok to talk with you.

[Silver]

I think the pinball people are correct: $20K won't even get you a space for 3 months to put the machines, let alone the machines or the electricity to run the machines and A/C.

I think you need to go find a pinball place that's NOT near your town and talk to the owner about what it takes to open one and the pitfalls. Since these things are local, finding an owner of one outside your local area might make it feel ok to talk with you.

Well I already ran the numbers, and I can get a decent space for around $1200/month. I can also get quite a few machines if I combine my savings with throwing my income at it here and there. The problem is, the machines aren't going to be the best of the best. Some pinball machines are more fun than others, and the top rated ones are $3500 at a minimum. I want to pick up some less expensive ones at $800 or less and put some work into them myself.

I'm not worried about collecting pinball machines. I know I can do that. The issue is, will I get people in the door without many top 100 machines?

I expect collecting machines will be a long process, as I want to snatch up good ones locally on craigslist and refurbish them myself.

You might be right about the electricity bill. I just feel that if I can get enough people in the door to keep the place afloat, it will eventually thrive. I can add top 100 machines with revenue I collect.

I just don't know how I can compete with a place that has around 80 top 100 machines when I will have around 40 machines that are not top 100.

[Freelancier]

Well I already ran the numbers, and I can get a decent space for around $1200/month.You're thinking about the cost of renting the space... not the cost to build it out, put in flooring, walls, lights, power outlets, water, bathrooms, etc. Get insurance for it (liability, P&C). Get permits for it. Get city/county licenses.

It's not like you can just rent the perfect space in the perfect place and not spend money on it.

[Harold Mansfield]

I agree with the people telling you not to do it.

First of all it's a niche business that's seeing a small resurgence at the moment. I'm not seeing a long term strategy in it.
Second, you're already starting out unable to compete.
Third, and this is the big one...a lot of people start a business with fantasy numbers in their head, "If I can only get..." without any idea if that number is even possible or a plan to get it there. With only $20k, and not having at least as much as your closest competitor I don't see where you'll have the marketing budget to give yourself a chance.
It's not like you're going to open the doors and people are going to come flocking.

It's great that you have a "feeling", but you don't have an actual plan or the budget to execute one. And the plan you do have, just opening and relying on hope until you can build the inventory you actually need to compete and make a profit isn't a good one considering that you'll have overhead to worry about while you're hoping.

What's likely to happen is that the few people in your target market will check you out, see that the other place has more to offer and never come back, and you'll be struggling from behind your entire existence before you realize you bit off more than you can chew and close the doors.



I just don't know how I can compete with a place that has around 80 top 100 machines when I will have around 40 machines that are not top 100.

You can't. Not on this alone.

If this were a restaurant or bar...something with another source of revenue...maybe.
Does the other place suck? Does it have a bad clientele? Bad service? Too expensive?
Is there something they are doing wrong that you can capitalize on? What can you offer that they aren't or can't?
Why should customers choose you?

From what you've said here, you may as well take that $20k and toss it out of the window.

Sorry to be so harsh, but it sounds like you already know this and are trying to talk yourself into it anyway because you want it.

[Freelancier]

it sounds like you already know this and are trying to talk yourself into it anyway because you want it.
This.

There are more interesting ways to throw away money with much lower stress than what the OP is proposing. With just $20K, I'd stick to a home-based service or no-inventory retail business and spend the money on advertising/marketing.

[Silver]

This.

There are more interesting ways to throw away money with much lower stress than what the OP is proposing. With just $20K, I'd stick to a home-based service or no-inventory retail business and spend the money on advertising/marketing.

What about opening up one of those laundromat arcades? People can play pinball while they do their laundry. I think I can get like 8 pinball machines straight off income and use the $20,000 to buy refurbished coin laundry machines, vending machines, and all that jazz.

[Freelancier]

Probably not. Who wants to go to do their laundry in a laundromat that has all the extra random electronic noise? And you still are doing a storefront with all the expenses of that. BTW, do you understand the quality of a laundromat's customers in most places?

On the other hand, if you want to do it like a vending situation where you get to rent a little space and power in some existing laundromats to place one or two smaller video devices, that might get some traction or at least limit what your costs are to start up.

[Harold Mansfield]

What about doing what you're good at, fixing and refurbishing machines for sale and for clients?
If you want to have a store front shop that shows off your machines for sale, or even let's people play them, then do that.
But you seem to be ignoring your actual passion and talent to open a completely different business that you have no experience running.

Just because you know how to fix machines, doesn't mean running an arcade is a good idea.
Instead of trying to compete with another arcade, without any money to do so. Why not make them a client and land a maintenance contract?

Instead of spending years to accumulate machines spending thousands a pop, and still never catch up .25 cents at a time, why not spend that time, effort and money on marketing and selling the machines that you refurbish and making thousands a pop?

Refurbished games and nostalgic machines is a business that has longevity, and high profits. Running an arcade in the digital era is a crap shoot and an expensive risk.

I just think you're trying very hard to ignore the obvious. Your skills aren't in running an arcade. They are in repair and refurbishing machines. A service that people want, need, and products that a targeted niche will buy and pay good money for. Why do you want to ignore that run an arcade where you make .25 cents a play on your work, rather than selling the machines for thousands?

How long, at .25 cents a play, will it take you to turn a profit on your work and labor to refurbish a machine? Months? Years?

[Silver]

What about doing what you're good at, fixing and refurbishing machines for sale and for clients?
If you want to have a store front shop that shows off your machines or even let's people play them, then do that.
But you seem to be ignoring your actual passion and talent to open a completely different business that you have no experience running.

Just because you know how to fix machines, doesn't mean running an arcade is a good idea.
Instead of trying to compete with another arcade, without any money to do so. Why not make them a client and land a maintenance contract?

Instead of spending years to accumulate machines spending thousands a pop, and still never catch up .25 cents at a time, why not spend that time, effort and money on marketing and selling the machines that you refurbish and making thousands a pop?

Refurbished games and nostalgic machines is a business that has longevity, and high profits. Running an arcade in the digital era is a crap shoot and an expensive risk.

I just think you're trying very hard to ignore the obvious. Your skills aren't in running an arcade. They are in repair and refurbishing machines. A service that people want, need, and products that a targeted niche will buy and pay good money for. Why do you want to ignore that run an arcade where you make .25 cents a play on your work, rather than selling the machines for thousands?

How long, at .25 cents a play, will it take you to turn a profit on your work and labor to refurbish a machine? Months? Years?

I hear ya. You're actually 100% correct. I keep trying to steer myself towards a more fun business, but in the end this is about money.

My dad actually has a ton a warehouse that he would allow me to use for free. I'm going to get this business out of my garage and start hiring employees.... Gunna kick this into high gear.

Maybe I'll just put a game room in my house with my favorite games and that can be the fun thing I do, and I'll just refurbish these pinball machines because that's where my talents are.

[Harold Mansfield]

I hear ya. You're actually 100% correct. I keep trying to steer myself towards a more fun business...
What are you going to have more fun doing? What you know and love and (hopefully) making good money doing it, and building a nice clientele and reputation for it?

Or wrangling a bunch of snot nosed kids who are never happy with anything, don't respect anything, dragging a lot of monthly overhead, and at the end of the day cleaning up an arcade and counting quarters? When in that scenario do you have time to actually refurbish any machines?

You want more fun? Play some music at work and surround yourself with whatever decor you want in your shop.

Look, your biggest challenge is going to be marketing your business and selling your products. You're going to need what ever money and resources you have for that and it's going to take some time. Stop trying to blow your wad elsewhere with a ton of overhead.

Set up shop repairing, refurbishing and selling machines. Get some good stock to start you off. Figure out how to ship large items to buyers anywhere in the world. Develop your online marketing plan to get the word out and show off your work including building a great website that takes orders...money.

Get some contracts repairing and providing maintenance on local machines. And then spend all of your spare time reaching out to your target market around the world.

There are so many areas where you are going to need that $20k. Don't look for ways to waste it beforehand.