Wednesday, January 20, 2021

Applying for an IT Job

 Here's how I would apply for an IT job at this stage in my life. I do not want a job again, but here's my general impression of how I would go about it. My guess is the approach isn't effective, but who knows:

Dear Hiring Manager,

My decade of experience in IT and 25 years of managing employees, clearly qualifies me for the position, but I wanted to touch on something you may not have considered. Running a small business for the last 16 years has provided a perspective on IT that I'm sure few of your IT employees possess. You see, I dislike technology.

I am not enamored with technology, nor do I wish to burden your company with a bunch of soon to be useless gadgets and computers. In small business, you quickly learn that IT is a cost center, an expense that you wish was unnecessary, and to the extent you can make it unnecessary, you do that. Clever technology is not so clever when you're troubleshooting a computer on your office floor on a Saturday night, rather than being with your family. What I'm saying is technology needs to be applied intelligently, and most often in IT, it is not. IT experts are often on to their next gig, long before the return on investment fails to materialize.

As your new IT professional with a small business background, you hire a skeptical expert. You hire a technologist who doesn't slap a business case onto a shiny piece of new tech, but starts with the business case. I want to learn about your business and how technology will advance it, improve it, make it better in every way. I am also fully satisfied to let the "trains run on time," and keep your operation in tip top condition without change. I have nothing to prove and I'm not obsessed with the next tech gig or building the resume.

In short, I wish to partner with your organization, make it my own, understand what makes it tick, and when necessary, and only then, bring it the latest technology to propel it forward. For sixteen years, I applied just the right amount to my business, resulting in a modest 10% a year growth rate, while technology took a back seat to people. A good IT opportunity should have a solid business case, with a thoughtful cost-benefit analysis and prompt return on investment. I can't promise to make your IT a profit center (although I've seen that done), but I can make it a less painful center of cost, while focusing on what matters to your company, the people.

I would be happy to discuss this position and your needs in more detail. 

Sincerely,

Ex IT Guy


Getting The EIDL Loan

With some perspective and some mushy memories, I'm better able to describe to the narrative of the EIDL loan process I went through in April of 2020. Having survived the 2008 housing crisis and not getting my house in order until 2010, I made this a massive priority to educate myself on this loan and be first in line. Some people camp out at Best Buy on Black Friday, I have Google alerts for SBA portals and hit refresh a lot. 

I wanted in first, because being the government, they would: a) run out of money, and b) there would probably be a first mover advantage in scrutiny, meaning they may be too overwhelmed to make good judgements or might implement new rules later, after they ran into problems. As it turns out, I have stellar credit and they really wanted to give me money, which was a bit of a problem.

When I was approved for the loan, they offered me an enormous amount, over a quarter million dollars. I was applicant number 10,000 or something. I was early, I understand finance and paperwork, and they had a lot of money. Eventually they would run out of money and limit loans to a smaller, more reasonable amount. Once I was approved, they offered me a villa in Mexico amount of money. I asked them if I could just take a smaller amount. They told me not to worry. I don't know where this will go, and I can just take what I need, like a line of credit. That made me happy. I can manage a line of credit. But that much money? Are bank accounts even insured for that much? 

They are not.

Then they just dumped the whole amount in my bank account. No line of credit. That's when I learned there are SBA contractors just kinda winging it. So wow! All the money I could ever ask for, business wise, for my completely shut down business that may never open again. I was thinking Guanajuato or maybe the outskirts of Oaxaca. With so little faith in the government and the pandemic raging (really just getting started), I had one foot in Mexico while trying to restart the business. 

And then they came back and asked for something I read about but didn't fully understand. They needed a property lien on everything the business owned, but they needed me to file that with the state. That took a day of figuring out, but it let me read about the "hooks" involved in this loan, and to better understand the requirements.

By the simple loan language, I can't pay myself dividends. Really? Ever? It's a 30 year loan. Are businesses with an EIDL loan over their head forbidden to ever realize profit? Oh, well you just can't pay them with the EIDL money. So if my business makes $5K this week and I use it to pay investors while I borrow $5K from the EIDL fund for allowed expenses, everything is fine? Exactly. Just show a paper trail. Then there was the car. I needed a car to do deliveries. Doing the research the EIDL loan was fuzzy about capital expenses. Ask a lawyer and they interpreted that as allowed. You can buy a car. Ask an accountant and it was certainly not allowed. The accountant had a different understanding of capital expenses, probably one more in line with the government, since it's their job. I bought a car anyway and made $57,000 in deliveries.

My final understanding was this: If you pay back the loan, nobody cares. Nobody is going to look at your delivery vehicle and send you to prison (an option), if you pay back your loan. Don't pay back your loan and there will be scrutiny and open books and questions about everything. So the answer is win, don't lose. And if you think the SBA is clear in their writing or understanding of how the law is supposed to work, talk to Congress about that. They've been yelling at the SBA for nearly a year now. And with todays shenanigans for EIDL disaster grants, I'm sure they're just getting started.


Thursday, December 31, 2020

Forgetting the Fizz

Every time I meditate, I forget how wonderful it is to center the mind. There are parts of consciousness, reached during meditation, that are beyond thinking and memory. You can't remember the feeling because there is no feeling, no thing to imprint.  You experience this non thinking, but its nature won't allow you to remember, so you forget how wonderful "it" is. If you could remember your non thought, it wouldn't be the thing, since the nature of the thing is non thingness. Still with me?

Working with customers is similar in that it brings an ineffable satisfaction. It's certainly not a deep meditative state of no-thing ness, but it's a satisfaction that's soon forgotten. When I'm away from this for periods of time, I forget about that fizz, that deep satisfaction. I feel like a bit of a fraud. Was it ever there at all? Maybe I willed it into being. You see this attempt to will it into being with new sales people who over do it. They talk too much, too loudly, don't listen, don't engage. Maybe that was me!

When these thoughts arise, you'll probably think the fizz is gone. However, you just can't remember it. It's an elusive feeling. For those of us who delegate fizz, you might think you gave it away. I used to have the fizz, but now someone else has it. John or Tammy have my fizz now. That feels especially true when you disengage and then watch your proteges take up the mantle. Yep, there goes my fizz.  You still have it, you just need to go do the thing, like a reluctant meditator. Fizz abides. You'll slip right back into that ineffable, fizzy feeling. 

You probably won't remember it afterwards though. 


Thursday, August 20, 2020

Lift Off

I am betting on the U recovery, a downgrade from a V, hopes dashed by a uniquely American belief in personal freedom. A U is a V with a trough filled with the corpses of our callously discarded elders. A "U" assumes we will see sales back to normal quickly once a vaccine is in play, which is somewhat optimistic when many industries expect up to three years to recover. They expect something that looks more like a Nike swoosh. I do not want swoosh. If I thought we were swooshing, I might exit. No swoosh.

This willful rush towards oblivion cost my business $90,000. I didn't fully realize this until I applied for a grant this week. It will set me back five years financially, assuming things were back to normal, which they are not. We survived because I borrowed money from my home equity, called on investors for more cash, took a PPP loan/grant that is still questionable as to repayment, and only then dipped into a large EIDL loan to pay off creditors. Any victory lap you perceive me taking is in the context of this tremendous cost for others personal freedoms. 

My strategy forward is fairly simple. Since I'm loaded up with government loan money, I'm rapidly expanding inventory. Some of it will be good choices, some bad, but in the end, and before I make a single loan payment, I'll have it dialed in. I am going to attempt to broaden and deepen my offerings in hopes of drawing in more customers now, boost sales to something approaching normal as time goes by, and be prepared for my approaching U recovery. 

When that recovery comes, be it a U or even the dreaded swoosh, we will be stronger than before. Which is good, because I've got some hefty new loan payments. That's nothing new though, and in fact, they are lower than my recently paid off construction loans, for the game space I can't use, in the retail location rent out of proportion with what's happening.


Saturday, May 23, 2020

We Are All Multi Channel Retailers Now

If you had asked me at the beginning of March, if having an online store was necessary, I would have told you no. The vast majority of retailers make single digits of their revenue from online sales. It's something I've watched closely, because it seems like a logical thing to do, but it actually isn't. Online sales are an exhaust port for dead stock, a blessing, and a curse for everyone else. Most online retailers use Amazon to sell online, and before that Ebay. Many more only sell Magic singles online through TCGPlayer. Only a handful make any reasonable percentage of their sales online through their own branded store, and of course, they're in a "I told you so" mode.

Was I wrong? Small business is not about planning for 100 year floods, it's about being nimble with the opportunities and threats presented and quickly pivoting in times of crisis. It takes about 100 hours to add 1,000 descriptions to an online store. Stores generally have somewhere in the 2,500 to 5,000 item range, with the big boys upwards of 15,000.  If your big store can spend 1,500 hours, we'll call it $18,000 in California wages, just so customers can view items from home and you get a few percent in direct sales, you are probably uniquely successful in this trade. It makes no sense in normal times.

Now things are different, and for long enough to just as well be permanent. Customers are scared and are not returning to businesses as they re-open. They would still like delivery to their homes. I bought a delivery vehicle for this purpose, as I'm that certain this will continue. Having an online store is an essential part of delivery and curbside pick up. How long will this continue? The answer is longer than you can survive without an online store.

The next year to eighteen months will be a challenge for retailers. You may not need an online store after that. You may be able to dodge this 100 year flood a second time. However, you probably can't survive this period without an online presence. You are also going to have to figure out outreach online. Facebook might have worked in the past for most customers, but you'll need to figure out where the rest of them have gone in the online world. If I thought my Pokemon kids were unresponsive on Facebook before the pandemic, they are absolutely missing in action during it. My marketing to them had been Wednesday night Pokemon.

So if you ask me in two years, will an online store be necessary, I would tell you probably not. I don't believe shopping habits have been permanently changed. I believe humans are social creatures and they thrive with social interactions, and providing that will be even more important when you can safely do so. I also don't know of any other retail business model that works without that social interaction, barring some online monopoly fueled by Wall Street capital. Yes, Amazon simply wins in a pandemic. There is no competing model.

If you ask me now if an online store is necessary now, I would say absolutely and you are very late to this party. Most retailers I know have been building their online store since late March. Those who spent the time to do it right and integrate their POS systems with an online store took longer to launch, but saw perhaps double the sales of those who put up something quick next to their point of sale systems. POS adjacent. I'm doing both, propping up our integrated online store as quickly as possible, while adding items to our stand alone online store for emergency revenue, until which time we swap in the integrated one (hopefully next week).

In normal times I would recommend going to conventions, community outreach and other channels for sales, but I'll instead recommend you look within. Search for fruit at the top of the tree. We are accustomed to doing cost-benefit analysis, and only reaching for low hanging fruit. In this time of fruit deficit, no fruit is too high. When there are no customers to serve, your time has no value. Find ways to generate revenue that you may have discounted in the past because the benefit was only marginal.

Gift wrapping is a good symbol of this. If your store doesn't do it, because "you're not good at it" or you just simply didn't see the point, get yourself a gift wrapping station today and watch a YouTube video or something. Find out what customers want and stock it, even if it's outside of distribution. This isn't a new retail channel, but it's an opportunity to tap new revenue, and when this is all over, your store will be that much better for it.

Monday, April 27, 2020

Game Store Problems and Solution in the Age of Social Isolation

After my dismal assessment of the hobby game store, I wanted to delve into the root causes and some possible solutions during this COVID-19 pandemic. There are three problems right now when stores re-open, lack of events and outsized real-estate, the effect lack of events has on staffing, and unpredictable demand of product in breadth and depth. Let's look at each of these and see if there are some solutions.

Events result in a significant portion of store sales. They drive sales of product, either directly with CCGs or indirectly, with games that drive tertiary demand. You play Magic, you buy product to play in the store, while if you play 40K, you buy product later, after you've have your rear end handed to you. When there is no in-store gaming, which is a cornerstone of the modern hobby game store, there is significant reduced sales. Often it's a big event that pays the rent. Events are so integrated into the model, we really don't know to what extent this will effect sales, but my guess is 20-40%. When I moved from a no event store to a store with events in 2008, my sales rose 48% the first year.

We are overstored. Losing events for a year means hobby game stores have too much square footage, too high a rent. 1,000-2,000 square feet of unusable space could cost as much as $6,000 a month. Commercial leases are usually multi-year affairs, although some stores will have month-to-month leases. Those who can downsize would be wise to do it, if they can do it cheaply. Last time I looked at moving, it was going to be a $50,000 expense, so the idea of moving to a small space and then moving back to a big space in a year, is unrealistic. I've suggest mothballing the business, if you can possibly put it away and get a job for a while.

The other option is lease modifications. Right now, most landlords are not having this. If they don't want to forgive rent, they certainly don't want to change your lease. This catastrophe has happened too quickly for them to absorb or comprehend the damage. When we begin to re-open, and it's clear a lot of stores remain closed or simply can't pay rent, cracks in their armor will form. During the 2008 recession, I was able to re-negotiate my lease. I only expect this to happen if we are economically impacted for the rest of the year, such as the predicted comeback of the virus in the Fall. There is no evidence lease modifications will work now, but keep an eye on your neighbors.

Will online events work? When you're out of crisis mode, if you can wrap your head around Magic Arena or D&D online, these are great for keeping communities alive. Our Magic judge has been great in running Magic Arena for our community, and we've had success with volunteers stepping up and running D&D games for kids. The ideal store would have a business oriented partner handling the overwhelming tasks of survival and re-start and a more events oriented partner doing outreach and online event coordination. If you can do both of these yourself, you are far better prepared for this than I.  There is no direct revenue of any significance involved in this, but it keeps your customers engaged, entertained, and hopefully planning to return to your store later.



The second problem is the reduction in staff hours. My store was open 85 hours a week, with at least two to three people on staff most of those hours. My payroll costs have grown 50% in the last five years due to increased event space. This is because of the growing demand for events. The business was pretty relaxed from 10-5, when I worked, but it was hopping after hours until 10 or 11pm. We will likely change our hours from 11-7, like I had when it was just me working the store, with no events. I only need about half my staff to run with these hours.

Knowledgeable staff are critical to a hobby game store. It takes six weeks to train a staff member, but six months to have them truly competent (six years to mastery). Losing any of them is a huge economic loss in itself. How do we retain them during this crisis? The PPP loan is a stop gap solution, one I've received. It will cover my payroll for the next two months, starting this week. I'm giving starting bonus hours to help compete against overly generous unemployment benefits. 

PPP is set up very badly, in that it starts while businesses are still sheltered in place. Businesses are competing against the government who gave employees huge bonus money, more than they would have made working. I never thought I would use the term "burn rate" again, but here we are. I need to get my payroll burn rate up, regardless of the value of that labor. If I can maintain high payroll costs, my PPP loan is forgiven.

We're using PPP hours to populate our new point-of-sale system with item descriptions and photos to sync to a new online store. Hopefully some of that money will be used for generating direct revenue in June. What will happen in July, when PPP runs out and demand is a mystery.

Increase labor demand. Reducing head count is inevitable without some other method of increasing demand for labor. Increasing non conventional sales may take care of some of this. Curbside delivery, contactless home delivery,  and online shipping can be part of the solution. Right now we're seeing artificially high online sales of around 20-30%, all for home delivery. Most game stores who did online sales in the Before Times will tell you it was only in single percentage digits. Online sales for most stores was supplemental, and it was neither necessary nor relevant to most stores.

When people can shop again, I anticipate a larger than previous percentage of online shopping using various delivery methods. It would be wise to have your store set up so customers can shop at home for pickup or delivery. This demand should last a year to eighteen months, but it may just entrench a trend that was already growing.

I'm considering leasing a vehicle for the business for deliveries. That's how confident I am this will continue for a while. These type of sales are time consuming and lower margin than in-store sales, but if they maintain your most important asset, your staff, they're worth slogging through for a while. If I can afford it, I plan to give up most of my store hours as an owner to provide a much needed shift to an employee.

Product demand relates to what degree of sales decline we're likely to see, if any, and what sales patterns will change, if any. During The Great Recession, a lot of vanity product dried up and disappeared. A lot of cool things you see on Kickstarter today would have been carried directly by innovative game stores ten years ago. I was proud of that extra effort. Our ability to be the curator of cool has shifted online, at least for the alpha customers.

Right now I'm sitting on a pile of low interest, long term, six figure, EIDL loan money, that could transform my business. I could double my inventory. Quadruple it, if I were a mad man. I could turn my game space into shelves. I could transform my store into a gamers dream, and I could do it now and have it ready when we re-open. I would be a dark lord of games, all shall love me and despair!



That assumes I know what's going to happen. It assumes I expect normal, and not dark times ahead where I lose money every month for a year. It most importantly assumes I know what customers will want when I re-open. Do I double my 40K offerings? Do I go deeper on board games? Do I finally buy six figures in Magic singles? I simply don't know what they'll want, and to what degree, and neither do you. I must wait and see. I may diminish and go into the south (I'm learning Spanish).

I'm expecting a bit of a W recession, where we've been hit hard, we'll see a strong initial recovery, and then we'll get hit again in the Fall. Governments will be more reluctant to close down then, and they'll likely use technology to aim closures and re-open more aggressively. If I thought this were actually over, if I believed in the V instead of the W, I would make very different decisions. With a W, you keep your powder dry and look for opportunities to keep everyone working and the money flowing. If I believed in the V, I would make a grand gesture or plan to return to normal earlier. Pick the wrong letter and you move at the wrong time.

Saturday, April 25, 2020

The Future of In-Store Gaming

Without in-store gaming, the hobby game store business model is broken. Let's not pretend it's not. If we survive the year, it will be because of charitable customers. A store with game space has a Useful Value Proposition. It's not unique, not special, but it's expected and it's critically important.

Social gaming is something you can't get online. You can't get the breadth of social gaming at home with your friends or family. It's a critical loss leader of a service that defines the hobby game trade. Our stores are designed around it and our staff and hours reflect it. A straight retail store is not a long term viable business, at least not for anyone who has space and staff set up for such a store. It wouldn't surprise me if upwards of 40% of our sales are tied to in store gaming.

Customers ask, when will you have in-store gaming again? I don't know. I can tell you we may have closed our in-store gaming a little late, carefully following bare minimum CDC and county guidelines, but we won't be opening it too early. There's no amount of pressure or economic injury too great to risk what we know is a killer. There are stores planning to open with customers wearing masks, playing in pods. Umm, no. I guarantee you, there will be stores doing this, but it's grossly irresponsible and you shouldn't engage. One of the things I dislike about this community is the inability to hold bad actors accountable.

The key term is social distancing
. As long as there is social distancing, meaning you stay six feet from each other in public spaces, there is no in-store gaming. Let's not pretend the 40K crowd can play their game while carefully abiding by the six foot social distancing rule. It's a fantasy. Let it go. As long as social distancing is recommended, there will be no responsible in store gaming.

What happens next?  There are half a dozen studies suggesting we'll have some sort of reverse social gathering recommendations. We'll start with curbside delivery, then no more than five customers in the store, no more than five people gathered for an event, then 50, then 100, then maybe it will be normal again. This could take a year or longer. Some customers will never in-store game again, just as some people will never go to a movie theater again.

What I would like my customers to understand is:
  1. I have a strong financial motive to get in-store gaming back up and running as quickly as possible. Don't think I'm dragging my feet. Peoples livelihoods depend on it eventually happening.
  2. I know you're young and invulnerable and aren't overly concerned with dying of a virus that mostly harms the old and infirm, but we need to work together to keep our community safe.
  3. I won't compromise the health of my staff or my customers, even if staff or customers are willing to take risks. Please don't come to me with justifications or reasonings as to why your event is different. 
  4. Likewise, there will be those who think we are reckless for following new opening guidelines. If you can't abide by our painfully difficult decisions, please leave. There were angry people on both sides before and that won't change.

I need to ask customers to support small business during this critical transition period with their money. New games are being released. Buy that friend you haven't seen in a month a gift certificate. Store owners know our value proposition, what we offer, is compromised. We need customers to vote for our survival with their wallets. Please continue buying from us, even though it's scary and we aren't offering your regular event.

Right now, stores doing home or curbside delivery will tell you they're only doing 20% or so of their previous sales. That means 80% of previous customers are not helping. If you want to see your local store continue to exist, we need you to actively spend your money to make this happen, even though we aren't offering the same experience you've grown to love. We'll get through this together.