Category: Marketing/Business

I somehow came down with something yesterday. I woke up, my throat was sore, I got to work, spent the entire day feeling slightly warm, then got really warm and felt terrible on the train ride home.

I ate some dinner, drank some water, and went to bed. So much for Development Night.

Of course, I was so sick that I couldn’t just fall asleep. I needed to sleep, but I guess my breathing was weird. My heart was beating pretty fast for being stationary. Eventually I did fall asleep, but now I’m wide awake, it’s 10:45PM, and while I’m feeling a bit better, I feel like crap for not being able to sleep AGAIN.

Oddly enough, while I was waiting to go to sleep, shivering in bed because I was so warm and my room is above a garage, I kept having delusions about how my game business was going to work. I imagined what it would be like to have a FAQ that talks about my company. I imagined that GBGames was a lousy name and that I was working on a new one. I imagined talking about how much more trust my business model put in the customer compared to say Sony or Valve: “No DRM here!” I imagined talking to other developers, and I was actually a role model for a number of them. I was a serious competitor to a lot of businesses as well.

I had a number of other images, and I am upset because I would have loved to write all of them down, but every time I became conscious of them, I would immediately forget. It was like I was dreaming, realized it, woke up because I had to breathe (stupid stuffy nose), and forget the important points.

I hate being sick, but I really got excited thinking about the near future. I smiled despite the crappy way I felt. I actually dreamed about the success I was going to have.

Now to make an action plan to make it into a reality.

I’m writing this still feeling a bit sick, so hopefully it isn’t too rambly. I’m just awake enough that I can’t lie in bed anymore, sick enough that I can’t do too much, and my back still hurts enough that I can’t sit up and read a book.

I finally managed to talk to a CPA about incorporating GBGames. I had done a bit of research, but it seems odd that there wasn’t a simple bullet list of items to look at regarding incorporation. I mean, if the government knows what I need to do, why can’t I find a simple list? File articles of incorporation, send in a check, send a form to the IRS, and then…what? I found that I would need a Federal Tax ID, which I could request, but I also learned that there are certain responsibilities such as recording minutes for meetings and paying for the privilege of filing annual reports. I also didn’t realize that even though I don’t plan on hiring anyone, I would be considered an employee of the corporation. The descriptions of the employment laws that I’ve been ignoring up until now will need to be looked over in more detail. I’m sure there is one or two things I’m leaving out, but suffice it to say that it would cost me money and time to maintain the corporation.

And so the CPA suggested that a corporation would be too much effort and cost for very little gain. I had originally decided not to go for a Limited Liability Company, but he advised that while it cost more up front, the maintence of the company would be a lot simpler in this form.

I am planning on running this business part-time initially with no outside investment. I don’t want to hire employees, although I will contract out certain work. I also don’t believe I’ll be able to make any income for some time (I’ll need a game to sell first), and even then I won’t be able to live off of it for maybe a year or four. For now, an LLC sounds a bit more appealing. I can always form an S Corporation later, specifically when I start looking at much more serious income and/or start running it full-time.

I’ve read through the SCORE information on writing a business plan, but now I need to start making one.

Unfortunately, I’ve found that the resources provided by SCORE were very general. Parts of it were not relevant to an online software company, let alone to an indie game development company. Also, most indie game companies are privately owned; there isn’t a lot of publicly available information on them. For the most part, actual developers don’t feel comfortable giving out real stats and numbers, and some would argue that the information is worthless anyway. So now what?

I did what any good technical-minded person would do: I searched online for information. I found this post from the Dexterity archives on Indie Gamer. It’s cool because it has the words of Steve Pavlina along with Thomas Warfield. They liken indie game development to turning a flywheel: the more you work at it, the easier it becomes to stick with it. Both were making a few hundred dollars per month at first, but when they are working consistently at it, the sales just keep increasing. It isn’t a get rich quick method, and I never thought it would be, but it is good to know how long it took to make significant and regular sales. Pavlina also touches on the need to stop thinking like a hobbyist if you expect to actually make money from the business. Definitely good advice, especially since I catch myself thinking too small sometimes. While it does provide some information, it doesn’t delve too deeply in what it takes to create a business plan.

I also thought to check out Steve Pavlina’s articles on Dexterity. I credit those articles and the Dexterity forums with the inspiration that got me thinking about starting up my own game company, and I like to read through them every few months. To Plan or Not to Plan is especially relevant. When I first read it, I thought it was good, but I am seeing it in a new light now. “Failing to plan is planning to fail” was a nice saying a year ago, but I now see how effectively it reiterates the importance of planning for my business. The article also goes into what should be covered, such as sales, cashflow, product development, marketing, and customer service among other items. There’s more to it, but suffice it to say that I’ve found the first solid resource on forming an indie game development company in this article.

The article mentions that the business plan should be two to five pages long, which goes with my feeling that it shouldn’t be a monstrous, formal document. I should be able to write a rough outline and draft within the week. Well, I should be able to dedicate an afternoon or two to the task, but I’ll need to schedule the time when I can.

EDIT: Thanks to Troy Hepfner on the ASP newsgroups, I remembered that I own the book Game Development Business and Legal Guide and that I would probably do well to pull it off the shelf, dust it off, and read it now that it applies to my situation a lot better.

For some time I’ve been reading the words of naysayers who believe that the golden age of indie game development has passed and that there is too much competition. When you were the only one around, it was “easy” to make a living from your games. Now there is too much competition and it is hard to get your name out there. Blah blah blah.

Seth Godin wrote about the proximity effect. It basically describes how most products actually sell well when they are part of a category. Books sell next to other books. Fish sells next to other fish. No one is complaining about how there is too much competition in a bookstore because it is exactly where the sales occur.

Steve Pavlina’s article on how to create successful shareware games mentioned the idea of selling the sizzle instead of the steak. The difference between your freely available demo and your full version is what you are selling. Don’t tell me that I’ll get the five levels from the demo. I already have them. Tell me about the 100 levels I’ll get if I pay for the game. Of course, if you go to a higher altitude and compare your offerings with your competitors, what are you selling now? You may offer 105 levels, but if the other game can run on an operating system of the player’s choice, will it matter?

At a bar, you don’t have to sell vodka. You should have to sell why your vodka tells a better story than the other guy’s vodka.

You should be concerned about how your potential customers will perceive the benefits of paying for the full version, but you should also think about how paying for your full version compares to paying for someone else’s full version. Why should I buy Flatspace 2 when I could buy Gish or Tribal Trouble? Why should I pay for Darwinia when I could pay for Geneforge 3? Why Alien Flux instead of any of the above?

Of course, no one wants to get into a silly cold war by claiming to have one more feature than the competition. Mainstream game developers and publishers already do so when they make a sequel to a game that has more graphics, more sound, more controller buttons, more more more more more…

Still, there is more to worry about than how your game competes with itself. Indie game portals may make it easier to get an audience, and obviously competition is a concern, but you basically have to convince the potential customer that your game is well worth the money AND worth more than an offering from another developer.

I’ve had a chance to read through some of the materials I’ve received from my visit to SCORE. For the most part, I know about the different things involved in running a business, but I’ve never dealt with the details. I haven’t asked the hard questions.

For example, “What business am I in?” How I answer this question will pretty much dictate how I run my business, so I can’t just blow it off. Perhaps while I write my business plan, I’ll change or refine the answer. Still, it is a very good question that I’ve never answered. I will need to describe my business in terms of how it works, how I plan on making it profitable, and should also identify clear goals. I already know why I want to be in business, but I will need to clarify the how and what.

Since marketing is an important aspect of any business, it deserves its own section of the business plan. It’s tough, but I’ll need to be able to identify who my customers are. “Gamers” isn’t good enough, but am I going to be targetting casual game players? Interstitial gamers? Hardcore gamers bored of the mainstream offerings? How about people who would otherwise be hardcore game players but can’t overcome their fear of a complicated interface? Whose life do I want to change? What’s my pricing strategy? Is the market for my kind of games growing?

It will be a lot easier to direct and control my own business if I have an idea of the resources I’ll have to use. I can’t make good decisions if I am not sure how much money I’ll have to work with from one month to the next. I’ll need to specify a startup budget as well as an operating budget.

Who is my competition? And not just other indie game developers, either. What other products and services are competing with me? People don’t watch television as much, but it still poses an alternative if I don’t make my offerings compelling enough. For that matter, people might prefer using instant messenger clients and talking with their friends rather than play my game. Identifying the competition allows me to try to enhance my own offerings.

I’ve never addressed these questions in detail, but I can already see how doing so will go a long way towards improving my chances of succeding.

It’s one thing to tell people, “Yeah, I am planning on starting my own business.”

It’s another thing, you know, to start.

Almost two weeks ago, I made an appointment with SCORE, which is a resource partner of the Small Business Administration. SCORE stands for Service Corps of Retired Executives, and it is made up of volunteers who help existing and emerging small businesses. A few people had suggested I talk to the SBA to get free information about starting and running my own business. It was slightly frustrating since their websites don’t make it easy to find the information you want. Some of it is outdated, as SCORE lists Triton College as a location. When I called, I was told that office closed two years ago. Whoops. I made the appointment for the office located in downtown Chicago. It turns out that it is also in the same building that the train station is in, which is convenient.

Usually a meeting is for an hour, and the mentor will provide feedback on what it is you want to do. In my case, I wanted advice on what I needed to do to form my own company. I had read articles on the subject of legal entities, such as subchapter S Corporations and Limited Liability Companies, but they were always generalized for the United States and not Illinois. It’s good general informationt to know, but I needed specifics. I wanted to know what I would have to do to incorporate GBGames. I can fill out forms and even pay another business to do it for me, but what then? Does GBGames have any obligations as a business? Do I have to prove that I am trying to make money? Do I have to actually show revenue within so many years? Profit? Can my business be revoked if I don’t meet some simple requirement? Taxes? Startup costs? What can I write-off as an expense?

The mentor said that he was surprised that I had as much knowledge about the subject as I did. Apparently most people come in with an idea for a business. The mentor usually provides guidance in the form of “Well, did you think about this aspect?” and otherwise points out potential pitfalls. Still, he did give me a bit to think about. He handed me a number of pamphlets, articles, and government tax form instructions.

For some reason I haven’t written out a business plan yet. Part of it is probably because I only recently decided to actually start my company, and so I am finding a lot of thought processes that need to be changed. I find I am still in the mindset of “someday” on some issues.

A budget should be written out. I have some money in the bank, and I have some idea of what my expenses will be, but I really should try to get the details. I only have so much money in total, and some of it will have to go to non-business expenses. I’ll need to worry about food and rent among other expenses, and so knowing how much I can dedicate to my business will be very important.

In any case, it is good to know that I can get free information on the subject. SCORE allows walk-ins as well as appointments for after-hours. My mentor said that I seemed very enthusiastic and that I appeared knowledgeable at least in the types of issues I might have to deal with as a business owner. That’s much better than finding that I am seriously lacking. B-)

I have a few more things to read, but it seems that forming a business won’t be very difficult. If I ask for professional assistance it might just be to verify that the forms are filled out correctly. I’ll likely make another appointment for next month. Nearly unlimited, free, and professional advice is a great deal.