Well I figure it’s been a while since I wrote about my progress with getting my arcade started and now is as good a time as any. At the moment I am still in limbo – I just need the cash to purchase my equipment and this has certainly been the most difficult part of getting my business running so far. I needed to go through all the motions of getting the credit union collateral which includes the equity in my house, my car and every arcade machine I currently own as well as the games I plan on buying. Apparently that is not even close to enough as they will only value the games at 20% of their value due to the market being a specialty or niche. You see, the banks/credit unions want collateral that doesn’t depreciate in value and that is worth the same amount that I am asking for. Since my home isn’t paid off, I can only use the equity I have in it to mean anything. I was pretty shocked that the arcade machines would be rated that low and I even talked with my distributor about it and they were kind enough to talk to the bank but due to SBA guidelines, they won’t budge.
So they came back to me and are willing to give me $20,000 – which for any other business would probably be more than enough but in the arcade industry, that’s enough to buy me one or two brand new games – heck I’ve even seen plenty of games that cost much more than that. And I need to have several new games to be attractive enough to customers so I can maintain a proper cash flow. Fortunately my distributor pointed me in the direction of a financial company that works with people in the amusement industry on a regualr basis known as Firestone Financial. I had heard of them before but didn’t know I could look to them for financing. So I have sent some information along to them including my business plan and we’ll see how it goes. Hopefully it will not only be a quick process (my goal is to be open by the end of the month) but that I’ll also get what I need. If not perhaps I can use both this and financing from Firestone to get started. I don’t like the idea of having three total loans I’d have to worry about if that turns out to be the case, in addition to everything else I’ll have to pay to keep the business running, but I suppose that these are the risks we take to live our dreams.
Hey, I just wanted to say that I admire your go gettem attitude. You will be successfull. I live in a very small town were there is nowhere kids can go to hang out. My husband and I are loooking into opening up a hang out for kids. My question to you is do you think it is better to buy or lease arcade games?
Thank you,
Michelle
Thanks Michelle. As far as purchasing the machines, it depends on your finances. If your credit is really good getting financing should be easier but when I tried for it they wouldn’t let me do it until I had been in business for six months. Also if you are able to buy the machines outright that is a good way to go as if you lease it you have to make payments on the machines and depending on interest you may pay more for the game in the long run. Definently look into some used games, there are still some older games that still make decent money but if you get a new game or two that is a good way to attract attention. At least GlobalVR and Raw Thrills is working on bringing their prices down.