Alan Chargin will be sharing the stories behind how Capitol Hill small businesses got their start. This month, he sat down with Kathleen Donahue, owner of Labyrinth Games & Puzzles at 645 Pennsylvania Avenue, SE. The following conversation has been edited for clarity and brevity.
Alan: Let’s jump right in. Why DC, why Capitol Hill?
Kathleen: My husband and I have lived on Capitol Hill for a long time, and in 2010 when we opened, my son was about to start school here as well. I’ve always loved how supportive the area is of its small businesses, especially Eastern Market, so when I decided to open my own business, I knew this was the place.
Why board games? Was it a big hobby of yours before Labyrinth?
I didn’t start out with a games and puzzles store in mind. I had been working for a small consulting firm for awhile and was ready for a new challenge. I started brainstorming ideas with my husband, but he rightfully shot most of them down– vegan meal delivery service was a prime example! I wanted to be my own boss and have the ability for flexible hours (which proved untrue) and not to have to wear a business suit.
One day, we were searching around for a nice Mancala board for our son to bring to a friend’s birthday party. We couldn’t find one anywhere. This is when we realized that a games and puzzles store could be a great choice. Capitol Hill had both the baby and the adult markets cornered, but not really the in-between. We also thought games and puzzles would be a great option for the “smart/unique” gift. The only hurdle to get over was, can retail still work with online shopping on the rise? I did some research and ultimately decided: Yes, retail could work. The key was to create a community and a place to visit, not just a place to buy things. 7.5 years later, I hope that’s what we’ve done!
Can you tell us more about the journey from having the idea to opening your doors?
I wrote the business plan in August 2010 and signed our lease in September, so we had about two months to build out the interior and develop our inventory before our targeted launch date of Black Friday. Fortunately my husband and I had sufficient savings and reserve money to finance Labyrinth. If we hadn’t, I’m sure we couldn’t have gotten financing. Before the grand opening, I hired two employees and worked with CHAMPS to get my initial marketing out. I also put a questionnaire out on the Moms On The Hill (MOTH) listserv to find out what I needed to focus on most. This was the best decision I made: It turned out to be the most helpful piece of the puzzle.
I was initially thinking of games like Scrabble, Trivial Pursuit, and educational games, but I had no idea how diverse the gaming community was. I had never heard of Magic: The Gathering before, and now thanks to the feedback I received, it represents about one-third of our revenue and we’re one of the top Magic stores in the country. I can’t emphasize enough how much Labyrinth owes its success to all that feedback I received in the beginning and the strong support of the Capitol Hill gaming community.
Was there a particular obstacle you’d say was the toughest in the beginning?
Probably finding our space. It’s harder than you’d think, since most landlords at the time wanted restaurants and not retail. Retail had a higher chance of failure, and they could also charge restaurants higher rent. After a lot of searching, our current landlord ultimately chose us because the space was only approved for retail and the weirdness of the shape and the stairs in the middle made it hard to get it approved for restaurant use.
Was there a specific time you said to yourself, “Hey, we made it, we’re not going to fail”?
NEVER! We were in the black from our first day, which was great, but I didn’t pay myself a salary for the first 3 years, and my husband. I cut a lot of personal expenses during that time and made some sacrifices. I’ve always avoided declaring us a success and instead just try to plan ahead for the next challenge.
You’ve mentioned the challenge of retail with the increase in online shopping. How would you say Labyrinth has adapted and survived despite those challenges?
That’s why we signed a 5-year lease in 2016 instead of a 10-year lease, because I’m terrified! Kidding aside, it’s tough. To adapt, we have to provide excellent customer service. Our staff is incredible. People walk in and say “I need a $20 present for a 7 year old boy” or something, and we can find them the perfect gift. You can’t get that online.
You have to build a community that wants to see your business succeed. We’ve been blessed with a very engaged customer base, which allows us to have around 600 attended events every year. These folks will come and interact with each other and learn new games, and then they’ll even scold people who mention buying those games on Amazon and say “Hey, you just learned how to play that game because of these guys, so you should buy it here.” DC wants to support its small businesses, so you’ve just gotta keep giving them a reason to support you.
If you could go back 7 years, would you still decide to open Labyrinth?
I’m honestly not sure. Some days I think yes, because of the joy that’s come from what we’ve built. I’m just not sure if I’d do retail again. I work way more than I ever wanted to and don’t see my family as much I thought I would. Initially I thought I could just read a book behind the counter and help customers whenever they’d walk in. I think a lot of businesses fail because they don’t understand and prepare for how much time it takes. I’ve worked every Saturday for 7 years. If you’re starting a business, be ready for the commitment and sacrifice that will come along with making it a success.
Looking ahead a bit, what are your goals for the business in 2018?
I want to develop systems that improve my work-life balance and allow me to more easily share my responsibilities. I also want to improve our order and vendor management process. And I’d say we want to offer a full-day summer camp. We have done afternoon camps before, where we take kids as they get out of another camp, but we’d like to try our hand at a full-day camp this year, so stay tuned for that!
Do you ever plan to sell electronics, video games, things like that?
I read an NPR story about the status of the modern world, how people have more and more online relationships but don’t go to dinner parties anymore or interact face-to-face as often. Board games are the way my family and so many other families spent quality time together growing up. I didn’t open Labyrinth to make money necessarily, but I really wanted a business that could grow, that could give a lot of its profit back to employees, that my son could come to, and that would give back to the community.
Sounds like as good a reason as any to start a business. By the way–why the name Labyrinth?
When I was a kid, there was a game called Labyrinth: a box maze filled with holes in the floor. You had to tilt the maze to guide a steel marble to the end without letting it fall into the holes. This was my favorite game as a kid, so it seemed a fitting name for my games and puzzles store. Changing careers at 40 and life seeming more and more like its own maze, the name seemed all the more fitting!
What’s your favorite board game and why?
That’s impossible to answer! Right now, I’m obsessed with Sagrada- it’s beautiful, puzzle-y, and has variable win conditions so each game is really different. My favorite game of all time is probably IOTA, a pattern game sort of similar to Scrabble. Nobody will play it with me because I’m really good at it. If anyone out there is up for a challenge, let me know!
Do you want to mention any specific organizations that were helpful to you in starting your own business?
CHAMPS, for sure. They’ve gone through some transitions but have always been a great help. The DC Main Streets Program through DSLBD was a great resource. Oh, I can’t forget SCORE DC, where I first went to have my business plan reviewed. I attended a few Small Business Administration classes at MLK Library. And lastly, the Hill Rag was very supportive with some initial publicity.
Anything else you want to mention?
People might not know about our aftercare programs. Our aftercare staff is trained and certified to work with children, and we’re currently in 14 different schools working with over 500 kids. DCPS gets another fun and educational aftercare program to offer, and we get to try out all sorts of games with the kids and see what they like and what they don’t. Sometimes we even have our vendors pitch new games to the kids instead of to us and let the kids be the judge of whether or not we should sell it. It’s so much fun!
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