Five things you need to consider when starting a games studio
Fundamentally Games' Ella Romanos gives her top tips for game development startups
Starting a business in games in tough. In games in particular, founders often have no or little experience in business, whether they are graduates or industry veterans.
Some come with significant experience in making games and with a network, others start with no commercial experience making games. Whatever their background, founders are stepping into the unknown. They learn as they go, from peers, from partners and stakeholders, and increasingly from a range of great support programs available to the industry, such as accelerators and mentoring schemes.
Having founded three businesses over 14 years in the games industry, I've learned a lot of lessons (often through mistakes!), over the years, and choosing my five top tips from those wasn't easy! But these are five things that I wish someone had told me when I started my first business.
#1 Have a shared vision with your co-founders
Starting a business takes over your life. It's a huge commitment and everyone who starts a business has a reason for doing so, and a vision for what they want to achieve. However, defining that vision into something tangible can be a challenge, even to yourself, which means it's even more difficult to ensure that vision is clear to others.
Starting a business takes over your life. Everyone who starts a business has a reason for doing so, and a vision for what they want to achieve
Yet it is critical to ensure that all the founders have a shared vision, and that this vision is able to be clearly communicated to your team and stakeholders. To do this, a starting point is to discuss between you -- what does success look like?
Success comes in many forms, however whenever I ask start-ups this question, they usually focus on the success of the business. Yet starting a business is a personal endeavour, and your personal goals are as important as the business goals -- not only to you, but to your co-founders, because those goals will inevitably affect them in the future.
For example, if your personal goal is to be considered the world's best game designer, then that may influence your decision making on the games you want to make, whereas if your co-founders' personal goal is to get rich, then that may influence them to make a different decision. Without understanding those personal goals, you can create conflict in your business that, without open communication, may put the business itself at risk in the long term.
So how do you define what success looks like for each of you? A useful exercise is to for each co-founder to write down (individually) what success means to them commercially, creatively, and personally -- each co-founder may have multiple ideas under each success type, but it is important that everyone puts at least one idea under each type.
Then compare notes and discuss each point, and from there, agree together what success will look like commercially, creatively, and personally for your business. It is important that any success measures are tangible e.g. 'make enough money to pay rent' is not tangible, 'make at least £100,000 per year' is.
#2 Define your appetite for risk
This is also a personal question for each co-founder and is effectively the inverse of measuring success. This question is really about your bottom line -- how much risk are you willing to take in the business? The reason it's personal is because risk in a business is personal risk for a founder. If you take a big risk and it fails, a co-founder who doesn't have savings may not be able to pay their rent, however that may be a risk they are willing to take, for the potential long-term gain.
But appetite for risk is not static, it isn't something you can define when you start the business and just assume will stay the same -- what if a co-founder is willing to take that risk at the beginning because they have just graduated, have no commitments and know they could go back to their parents to live if things go wrong, so the potential upside is worth it at that point, but three years later, they get married, have kids and a mortgage? Personal commitments can change quickly, particularly with founders who are young.
For founders who start later, their risk may be more predictable -- on the other hand founders who already have commitments have higher risk to start with, and that may impact the decisions you make in your business from day one.
So how do you address this? It starts with an open conversation about your personal situation and what your bottom line is. From there, as a team the co-founders can use that to inform the business plan and goals. Ongoing, having an open channel of communication about personal matters is key.
Making time to discuss these things, and feeling that you can talk to your co-founders about personal issues is key, not only for risk appetite, but also for broader and equally important considerations such as mental health, stress (inevitable in a start-up!) and simply having a positive relationship between the co-founders.
#3 Manage your cash
As I'm sure you know if you're starting a business, cash is king. Whereas when you are more established you will worry about Profit and Loss Statements and balance sheets, in reality when you start-up, what you're worried about is cashflow. How much money is in your bank right now and, the most important question of all: how many months until you run out of money? (which is commonly referred to as the 'runway')
Appetite for risk is not static, it isn't something you can define when you start the business and just assume will stay the same
It's critical that the co-founders know the answers to these questions at any given time, and it's also critical that this information is reliable, as it is a key basis on which decisions will be made. However, as a start-up you're also very busy doing many things and probably don't want to be spending all your time looking at cashflow when you could be making your game, so having a reliable, thorough cashflow management process can be time consuming.
By taking time at the beginning to setup processes, you can make cashflow management reliable and time efficient -- helping you make informed decisions, reduce errors and spot problems early.
So how do you set up processes like this?
Use a system like Xero to manage your income and outgoings from the start. If you can afford a bookkeeper, it may be worth it -- if you can't, then do some basic bookkeeping training yourself. There are cheap online courses, for example on Udemy, that will give you the basics.
Have a cashflow management system that allows you to:
- Clearly see when you will run out of money
- Add in forecast figures, against your actual figures to date
- Easily update on a regular basis and know that you can trust the information it outputs -- at minimum once a month
- Output reports
- Model scenarios e.g. what will happen to your runway if you hire a new artist
By taking time at the beginning to setup processes, you can make cashflow management reliable and time efficient
You can try to do this in excel (I used to), but it is very easy to make errors, and it is time consuming to update. When we started Fundamentally Games, I discovered Float, and it's been a game changer.
It pulls the actual figures from Xero, is visually easy to understand, shows your runway at a glance, outputs reports, and has a great scenario modelling tool. Best of all, I only have to spend a couple of hours a month updating it, and I know I can trust the information it provides to me.
#4 Turn frustrations into challenges
Being a founder of a start-up means you are constantly dealing with problems, whether it's related to money, projects, clients, HR, partners or a million other areas you're responsible for.
It can be really frustrating when you come up against what feels like brick walls, and particularly when you feel like you're trapped in a catch 22.
A common catch 22 as a start-up is that you're pitching for work or funding, whether it's from an investor, publisher, or client, yet you can't win a pitch because the person you're pitching to doesn't have confidence in you because of either your lack of track record or lack of progress in your project. Yet how else will you get a track record or progress that project, other than by getting that work or funding?
So how do you deal with those things? My perception, from knowing many founders over the years is that founders who are most likely to succeed are the ones who face those catch 22's head on and treat them as challenges to overcome -- rather than getting frustrated with themselves or the world in general.
#5 Take the long view
Most game start-ups are founded because the founders want to make great games. And usually that means the founders have an idea for the game they want to make when they start, and it's often their dream game.
However, most businesses when they start, are lacking in experience, resources, money -- or all of these things! Therefore, rushing to make your dream game as your first game may not be the best decision. Perhaps it's better to wait until you have the experience and resources to really do that game justice.
Most successful games developers didn't become successful overnight, and most developers didn't have a hit with their first game -- rather they learned from failures, started small and built up over time. Taking the long view is often a better way to do justice to your dreams and aspirations but is counter intuitive to most of us (myself included) who want to dive right in and achieve those dreams now.
Ella Romanos is COO and co-founder of living games publisher Fundamentally Games. Originally a programmer, she has 14 years of experience building and managing game studios, teams and projects, and has a deep understanding of the resources, funding methods, processes and commercial considerations of taking games to market.