Business Protips: How To Make A Living In The Game Development Industry

First, know what type of business you’re wanting to start — knowing which business to start in absolutely crucial in entrepreneurship. For the most part, there are usually three main types of business: cash flow, high investment, and long-term investment businesses. Each business require a different amount of capital and time to get started. Yet, knowing how to be successful in one will inevitably help you be successful in at least two, if not all of them.

Cash flow businesses are the easiest businesses to start because it takes little to no capital to get started. You just have to know what you’re good at. However, this business will eat up a large chunk of your business because in this type of business you are both the brand and the machine behind it. These types of business include starting your own freelance development studio, programming your own games in an attempt to sell them, and so on. Because you are the business, the profit margin is high as you do not need to hire expensive staff and equipment just to keep the company running.

The success of the business is based solely on your ability to attract clients and/or make successful product launches. Eventually, these types of business could turn into a long-term investment business, but we will talk about that later. More importantly, these cash flow businesses have high profits margins and take little to no capital to start. On the other hand, these companies are not highly scalable because they cannot be automated. It requires you to be continually working, and because of this the business cannot be easily be ramped up because you are the brand. If you are thinking about this type of business, think of yourself as the ultimate contractor. The relative success and failure of your business will depend on you.

Next are high investment businesses. These types of businesses are completely different from cash flow businesses. They are highly scalable and automated. They are the software and mobile apps that you sometimes hear about on the news or your Facebook feeds. These are the types of people that have it figured out and they know how to make their money create wealth. To create this type of business, however, you may need a lot of capital unlike a cash flow business. Think in-between $10,000 and $1,000,000, depending on what you’re trying to get into. A few examples would be if you were to create a game analytics platform, a middleware solution for game developers who need more metrics to improve their games, or even setting up housing for budding indie game development teams.

However, once your business is fully integrated you can sell your business with ease, and with a large profit margin to boot. These types of business are usually funded with a loan, crowdfunding, or more commonly with a separate cash flow business. In this type of business, you can choose whether or not to be the brand, but you do not have to be the machine. By not having to be the machine, this can free up valuable time for other pursuits. This time can be spent sourcing or creating other high-investment businesses or even getting started on a long-term investment business. Either way, a high-investment business will lead you to great financial success if you can meet a real demand in the market. Look for opportunities to add real value to other people’s lives. Help them improve their situation and/or make life or business processes easier on them. Set others up for success, and you’ll benefit if you’re in a high-investment business.

Finally, we have long-term growth investment businesses. This type of business is usually brick and mortar or investing in other businesses, and can yield high return on investments if you know what you’re doing. Some examples would be investing in other game development companies, funding the development of indie games, or helping other developers take care of potential obstacles to their success. While this business does not require you to be the brand behind the business, it definitely takes a certain level of business savvy in order to reap a considerable return on investment.

Eventually, this type of business will yield passive income, but it takes a high initial investment and constant maintenance to make sure things are going smoothly. Sooner or later, the initial woes will take care of themselves, but that will only happen after the first couple of years in the business. As stated before, a cash flow business can turn into a long-term business. While this type of business is low-risk, it also takes a long time to make your money back and involves some capital to get started. Most people take the money earned from their cash flow business and invest it into a long-term business. This is a great way to keep the lights on while also increasing your knowledge of certain industries and markets.

Important Takeaways: Obviously, it is important to know what kind of business you want to make when you’re planning on starting your own business. There are three main types of businesses: cash flow, high investment, and long-term growth investment. Cash flow businesses are often simple home businesses that don’t require automation; you are the person making the product or providing the service. While these businesses have high profit margins due to their low starting prices, you’ll have to work an ungodly amount of hours, and the business’ growth is directly tied to you — thus they may not be viable if you’re planning on scaling up rapidly.

Next, high investment businesses are fully automated and usually utilizes a more machine-like management and workflow. These don’t require as much action on your part so you will have more time to pursue other avenues for business growth. Their downside is that they may require a large investment of time and/or money before you can begin, which isn’t feasible for everyone.

Finally, long-term growth investment businesses are similar to cash flow businesses but you have other systems helping you on the side that will eventually take on all of the work load. These businesses often have a large start-up fee and require constant maintenance early on to ensure things are going smoothly, but once the ball is rolling, it gets rolling. The downside to these businesses is that it often takes a while for you to break even on your initial investment. One strategy for creating this type of business is to start with a cash flow business and eventually expand your breadth along the way.

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About Me

Thank you so much for reading! I’d love to hear your thoughts. Leave a comment below, tweet at me @doandaniel, or send me an email.

I’m Daniel, Co-Founder of Black Shell Media & Co-Author of The Definitive Guide To Game Development Success — a super actionable FREE eBook with the most self-explanatory title. Don’t forget to check it out if you haven’t already, it’s packed to the brim with my personal tips and tricks!

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