ok, it''s always been a dream of mine to setup amy own game development studio & whilst it''ll never happen, I do like to fantasise every now and again. So please humour me. How does this sound for a business model: The model is planned to last one year - so the game MUST be complete within 12 months. To keep down dev costs, it would need to be a PC game - so no PS2/Xbox dev kits required as well as no Sony/MS submissions to go through. The downside of course, is the market is currently less on PC, but the product would need to be good enough to stand above the rest. The financial side is as follows: I would need two partners. One partner would need to be a coderand the other an artist. So we would have our management teamalready in place. designer/Producer - me Lead Coder - Partner #1 Lead artist - partner #2 Each of us would need to get a small business bank loan from the banks. From what I know, in the UK, most banks will agree a £40K business loan if they like your business plan. That would give us £120K in the pot. That £120K would be spent as follows: Wages - P/A: Me - 18K Partner #1 - 18K Partner #2 - 18K The low wage would be just about enough to live on for the year. In addition, each partner will use part of their loan to pay an employee hired on a 1 yrs contract as follows: me - hires 1 coder Partner #1 - hires 1 coder Partner #2 - hires 1 artist This would mean our project would have 2 coders, 2 artist and me as design/producer - a full team (forget about SFX for the minute). The annual wage for each employee would be as follows: 1 x artist - £19K 1 x coder - £19K 1 X coder - £19K Now, I know that''s not much and it''s below the indsutry standard, but I''m hoping there are enough ppl either just graduated or desperate for employment at the moment. So, the current bank balance would look like this: Me: £40K loan - 18K my wages - £19K 1 x employee wages Partner #1 £40K loan - 18K my wages - £19K 1 x employee wages Partner #2 £40K loan - 18K my wages - £19K 1 x employee wages That leaves the company with a balance of £9K still in the bank. Each member of staff will require a desk & PC. Approximate costs are: 1 X PC = £600 1 X desk = £100 1 X chair = £40 1 X sundries (pens/pads etc) = £10 Total = £750 per member of staff Overall total = £4500 So, the current balance would be: Annual wages = £111K Cost of work stations = £4500 Total = £115, 500K Balance £4500 So that would leave us with £3000 to pay for things like electricity, travel costs, entertaining costs (buscuits etc) for publishers etc etc. Finally, we would pay a contractor £1500 to create the SFX and music for the game. I''m not sure if I''ve allowe enough money for that as I''ve no idea exactly how much it would cost, but I think I should be able to find someone for that. It is likely that character voices would be needed and I would look to use amature voice talents - either friends and family or students from a local drama class or such like. By the end of the year, we will have depleted the entire £120K. but we would have a complete game, ready to box and be sold in the shops. Taking a step back, we would need to have some sort of prototype by the end of month 3. This would allow us to start visiting publishers and trying to convince them to publish the game, leaving us 9 months to find a publisher. Location wouldn''t be a problem - I would intend to use my own house as the business address. Luckily, I have a huge garden and a nice big garage that would easily convert into an office for six people to work in. The entire plan pivots on four major things: 1. I would be able to find two partners - 1 artist, 1 coder who would be willing to take the financial risk with me. 2. All three of us can secure a £40K loan from the bank. 3. We can find a publisher for the game. 4. We finish the game in one year. If these four things happen, within one year we''d have a studio with a published game within one year. And as we all know, the first game is the biggest breakthrough - once you''ve done one, more work will inevitablly follow. So, what do you reckon? Good or rubbish plan? Workable or just plain business suicide. As I said, this is just a dream and I''m just spouting off and hopefully have a nice thread and conversation on the subject. Cheers.

quote: Original post by Spyderbird
From what I know, in the UK, most banks will agree a  business loan if they like your business plan.

Banks don''t loan you money because they like your plan, they loan you money if they think your business will be a success and they will get their money back (with interest). They base their judgement on
i. How much experience you have running companies
ii. How much experience you have in the industry you are targeting
iii. How good your plan/business model is.

If you don''t have experience then they will most likely require any loan to be secured against your home(s).

The following are the problem areas with your current business model

1. You have no slack. Everyone is working for the minimum because that is all you have. Development is notorious for slippage so the chances are that your game will be late and you will run out of money and go bust.

2. You are planning to use staff who are "just graduated or desperate for employment". That only increases the risk of failure.

3. Even if you don''t "fail" you wont be creating a tripple A title in one year with an inexperienced team. That means the game will have to go out via a budget publisher.
i. Budget publishers wont generally sign games until they are finished. That means you need to have enough money to survive for several months after the game is finished.
ii. The money you get back at budget level may not be enough to repay the initial development cost. Even if it is you wont get the money for many months as the game has to sell before you get royalties.

The following are the problem areas with the actual business plan
1. It doesn''t provide any detail of what your income will be. Banks wont loan you money until they see where the money will come from and when.
2. You''re planning to find customers after you borrow the money. Again a bank will expect your plan to clearly identify who your customers are (which publishers) before lending money.
3. No SWOT analysis
4. No market information

Basically there are loads of bits missing from your plan. I suggest you do a search for "business plan" in your favorite search engine. That will doubtless throw up a host of links to sites that can explain what you need to include.

Dan Marchant
Obscure Productions (www.obscure.co.uk)
Game Development & Design consultant

Thanks for your detailed reply - very good reading.

I take your point re'' banks and loans - you are of course 100%right.

"1. You have no slack. "
Hmm, again - 100% right. And I know that games development DEFINATLEY needs that slack. So that''s a big oversight on my part.


"2. You are planning to use staff who are "just graduated or desperate for employment". That only increases the risk of failure."
whilst I can see why you''re saying this, my [limited] experience with home development teams shows that there are many talented ppl out there in this category, but they lack the experience, vision and organisational skills to get a project done by themselves. I genuinely believe that they have a lot to offer. Don''t forget that the two partners would NOT be from this category - but others with a bit of industry experience (like myself).

"3. Even if you don''t "fail" you wont be creating a tripple A title in one year with an inexperienced team."
Yes, of course - no illusions of grandure here. But I do think that the first completed game goes a LOOONG way to getting you more work.

1. Budget publishers wont generally sign games until they are finished. That means you need to have enough money to survive for several months after the game is finished."
Hmm, again - good and valid point. The plan didn''t take this into conideration. As is your point re'' the revenue made from a budget game....

Re'' you''r points about the business plan itself - this was only meant to be a VERY basic formula. ALL of your points are correct, but the plan was in no way meant to be used as a presentation to any bank etc. Hence the ''loads of bits missing''.
Your suggestion about doing a ''business plan'' search is a good one, and one that I will take on board.

Thanks again for all your time taken to reply to my post. Gave me good food for thought there!

And as a side point Mr Marchant - I had a look at your site and noticed that you used to work at SCi? As did I!
Small world eh? [Although my position there was on a much, much...... MUCH smaller level than yours)...

regards.

quote: Original post by Spyderbird
And as a side point Mr Marchant - I had a look at your site and noticed that you used to work at SCi? As did I!
Small world eh? [Although my position there was on a much, much...... MUCH smaller level than yours)...

regards.

Just tried to email u but the email address listed with Gamedev doesn''t appear to be correct/active.

Dan Marchant
Obscure Productions (www.obscure.co.uk)
Game Development & Design consultant

Your plan seems unlikely to get off the ground in its current guise (unfortunately because it would be very cool to convert your garage and work leading a dev group like that). I doubt very much you''d get the loans required on the basis of "I want to hire some people with no industry background and make a profitable title in my garage when 80% of ''real'' games fail to break even". Leaving no slack is also very unwise, for instance you seem to have forgotten the cost of licensing software like visual studio, getting a network running and decent internet access.
While I agree many 18-year-olds have great programming skills they are unlikely to have knowledge of designing flexible code that can be changed/reused. Writing code with others is REALLY hard compared to solo stuff (as I''m sure you know) and managing people to be responsible with updating their code is a big deal.

Next, if you want to show something after 3 months you need to have planned the game down to fine detail BEFORE the 1 year period if it''s not to be a cobbled-together demo which is incapable of being turned into a game.

Then there''s the cost of actually forming a company (not too much) and the hassle of checking all the employment/health+safety laws - if you go in as partners and hire someone they can sue you if they hurt their back when the chair falls over a bump in the floor!

The how do you plan to sell this? Through a mainstream publisher? Publishers put out a tender for a game idea which companies can ''bid'' for with demos - the winning company gets a lump sum on completion or something like that. This would be good if you got some in advance, but you''d have to do the demo on zero buf=dget to get funding.
Or you could sell online either by download or mail-order CD. You can get credit-card sales quite cheap but publicity is VERY important.

And so on...

This is really negative I''m afraid but I see no hope for your idea as is. However I have a few thoughts you could think about to get your own game team...

For a start, using your garage sounds good as it''s cheap. It''ll also add value to your property unless parking is very hard without it.
Working over the net is the obvious way part time but not conducive to actually getting a product finished. Maybe finding people who could work 2-3 days a week full-time with another job or part-time jobs. They could also work in spare time. They should either bring their own PCs or put up the cost for them and then own them (you need control over the specs of the machines). On this basis people might accept the ''get a share of the profits'' salary - though this may be zero many young coders would probably love to support themselves with rubbish work while beng in a real game team even if for free - seeing it as doing their hobby but with like-minded others too.

How''s that sound (long post!)?

What about software costs ? 3ds Max, Maya, Visual Studio, Windows licenses, etc... all of that is going to add up quickly.

If you want to complete a game in 12 months with an inexperienced team, you''ll likely have to license third-party libraries, middleware/third-party engine. This is going to cost a lot too.

Y.

I agree with Ysaneya, so you may wish to consider using a third party engine for your first game to make the coding process a lot less harsh on your newly-graduated prorammers and give you more time to add special features to your game. This also gives you a little slack time-wise.

You also said that you AND partner #1 will hire a coder, and stated that would give you a total of 2 coders. I thought partner #1 was also a coder?

Stay Clausal,

Red Sodium

Dan - sorry, I had miss-spelt my email address and when I re-entered it, the forum control system failed to send me my new password. Had to contact admin etc... Just got it today.

My email address is now the right one.

A few Points.

So you want a bank(or more than 1) To leand three people each 40k to invest in a new busines. (I''ll assume your 3 people have the credit or property as surety)

You are going to select your business partners primarily on their ability to be near your location, and raise capital. The Rich do not necessarily make the best coders, colleagues OR Team Leaders & Managers.


Who owns what if the worst happens ?

You havent allowed for Bank Charges, Legal Fees, Accountants, Company Startup Fees

In the UK, if you employ someone, allow another 12% (iirc) for employers Contributions to National Insurance, sick pay, admin fees etc. Again, none of this is in your plan, which leads me to think you need to extend your research

(of course, in the some of these have a percentage write off against tax, so you need to ask an accountant for exact figures)

Yu are paying your directors less than their staff, but no mention of shares / profit bonuses etc, again for a business plan these will need to be considered.

I would also suspect that you should consider a 4th partner, or raising the loans, 9k is no contingency for a project of your magnitude. If you think your operating costs in 1 year will be £120k, you need to borrow closer to £200k. What if a member of staff (or worse a director) leaves. Any idea how long it takes to recruit, and retain a member of staff.
Or if you need a contractor to cover whilst 1 of your staff is long term sick, or pregnant, and you have to carry the costs of her salary for N months by law..

These are all just my £0.02, but feel free to ask qns on my text, or mail me if I can help clarify my thoughts.

No offense is meant if my typing is terse, it''s been a long day

Bp

Sorry to be at the detail level, but a 1/2 decent Bank Loans Approval officer will want to know the answers to these Questions.

Bp

1 year is way too unrealistic for a good game, for a beginning company. After the first project you''ll have experience, and codebase you can reuse (at least parts of) for next projects.
But the first project will take at the very least 18 months, for a team that size. Unless you license an engine, which is not part of your business plan. Besides, let''s assume that you will make the game in 12 months. That doesn''t mean you will get the money in 12 months. Finding a publisher, negociating with them, etc. can take quite some time. I also assume that a publisher will try to extort you, because they know you are disperate (afterall, you need to pay back the loan+some interest). Self publishing is an option, but you won''t get much money at once, and requires marketing experience, some money (for advertising), etc.