How much does an eSports center startup cost?

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Zack: That question is always on the front of their mind, “How much does an eSports center cost?” It’s a really broad spectrum depending on what you want to do with your LAN center. At eBash, we zero in on a $200,000 number. That may seem outrageous to a lot of people. I’ve seen a lot of lan centers over the years start up. What they do is that they’ll have a credit card with a certain limit or they’ll have a 401K plan that they can draw off of.

They come in and design their business plan around the fact that they have $75,000 to start an eSports center. What then they do is that they go out and they start making decisions in their business plan all building to that eSport center startup cost of $75,000. The problem with that is that it’s not a subway type of business. You can’t exactly identify all the equipment from these different manufacturers because month to month prices change and building your own computer or buying your computer and those sort of things. You never know in your local area what it’s going to cost to get a sign. Subway I’m sure has factories that are contracted to build a subway sign that’s all the same so they know exactly how much that’s going to cost, for example. You don’t know your local ordinances, what the rules are for so many square feet of the sign can be on the front of your facade of your strip mall or whatever.

The other problem that I see is that people don’t usually budget enough so that for two reasons. Budget enough for both the number of seats you want and to get through the first 9 to 18 months of business. We’ve have just seen that exactly in the last few months of our Indianapolis store in it’s first year. You’ve got to be able to prepare for the word getting out and people getting to know your center and what you’re about. You cannot expect to open the doors, be cashflow positive from day one. One of the things that we always say is that you need to have probably six to nine months of cash reserves when you start the business to make sure you get through those times. Then you also have to have enough systems when you start.

eBash esports center startup cost around $200k to start

I always use the movie theaters as an example. Movie theaters over the years have all consolidated into these big mega-plexes. There’s not many one and two-screen theaters left. If you go on a Tuesday night, generally you’ll walk into a theater and you’ll see maybe a dozen people in this theater that seats 200 people. You think, “What a waste of space and personnel and air conditioning, electricity and everything.” You’re doing the same expenses as you would on a Friday night. The key is that on Friday and Saturday nights you have to maximize your revenue. If you start with a budget for your lan center of $75,000 and work backwards, maybe you can only get 25 stations in your lan center. You think to yourself, “We’ll just build it as we get busier,” I can tell you right now that’s never going to happen.

We’ve seen this over and over again. You’re never going to get busier because people come in on a Friday night and only 25 people can be in your store. If the max you can pull out of a person on a Friday night is 20 bucks, then you have a little bit of a rotation, you may be able to max out at $1,000 in sales on a Friday night with 25 stations. You start thinking about that and you start thinking, “Okay, there’s two weekend nights in a month, Friday and Saturday … Or in a week. Then you’ve got four weeks in a month. There’s basically eight days you can make your most revenue in a given month.”

Sunday through Thursday, you’re just hoping to maybe pay the bills those days, but your money that you’re making is on Friday and Saturday. If you don’t have enough systems, you don’t have enough space, that’s the biggest failure that I see in this eSports center industries. They start small and expect to grow, and it’s impossible to grow because people don’t have anywhere to sit. They’re in that chicken before the egg type of thing where they’re just making enough maybe to just barely get by. They never make enough to add more systems in or to expand the space to the empty strip mall space next door because they haven’t started with that budget high enough.

At eBash, we always say $200,000. That can fluctuate as low as … We’ve started them for about $125,000, and we’ve spent as much as $250,000 depending on the city, depending on the space, depending on all the other things. $200,000 is a pretty good target point to shoot for. If you’re under $100,000 unless you’re in a space that you can share rent with another place and there’s a lot of other things going on, then chances are under $100,000. Otherwise you’re pretty much just doing it as a hobby and as a charity event. You’re just going to never make that money back.

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