Six Keys to Not Failedness

I've been asked twice in the last week to talk about the secret to my success, which both assumes I consider myself successful (not really) and that there's a method I'm aware of (I'm not). I consider myself to be in a state of "not failedness," one where I'm not in an imminent state of failing (how I felt about the first four years), but not quite successful. Success for me is about the next step. The next step could be paying off debt, opening a second store or drastically expanding store offerings. I don't believe in a business steady-state. Great for you if you do.

As for success, here are some of my methodologies:

1. Metrics. I measure everything. If I can't measure something, I'm unhappy with it. We track all our inventory, event data, employee data, customer sales and of course, income and expenses. There are things I can't measure that bother me. For example, I know we've doubled our Magic singles sales in the last year, but I haven't calculated our buy costs, so Magic singles don't interest me. They are suspect, the data is murky, and I grudgingly support them, even though I know they're making me money. I won't be happy until I have reliable metrics. Things I'm not certain about tend to bother me.

Metrics allow me to make informed decisions and keep me impartial. It allows me to drop a game like Flames of War yet keep a game like Warmachine, even though their sales metrics are similar. My gut said to keep it, but my metrics said to say goodbye. Metrics showed Warmachine players were multi-genre gamers while Flames of War players weren't, thus losing a Warmachine player would have worse repercussions than a FoW player. My gut said to dump it, but my metrics said keep it. Sound ruthless? Hey, I just looked at the metrics; nothing personal. Metrics keeps me from over investing in what I love and dumping successful things I don't care about. 
 
2. Listening. I'm not an expert on anything, not in business, nor in gaming. There's a Zen saying: "In the beginners mind there are many possibilities, but in the experts there are few." This means that by keeping an open mind, by considering all sources, by removing your ego from the equation, by ignoring your forgone conclusions and prejudices, you can make clear, unbiased decisions based on all the information. Sure, there are areas we won't compromise on, things we won't carry, events we won't run, but they are based on a lot of listening and a clear plan. The plan does not include me as the center of attention. This is why I work days, the time when business is done, and let the guys work the event filled evenings and weekends.

Listening includes employees, customers, suppliers, and manufacturers. I'm open to any good idea, really, and I've tried a lot of dumb ones and failed at many. Knowing who to listen to is something you develop over time, but it's critical. There are people I wish I had more time to listen to, retailers I would love to network with and game developers I would love to schmooze with, but I generally don't have the time.

3. Work-Life Synthesis. I don't believe in work-life balance. I'm not a factory worker or a cubicle drone so I don't need to get away from the evil overlord when I take time off. I am the evil overlord. I work pretty hard, but I work hard doing what I want to do and delegate an awful lot of what's left. Some of what I delegate is the favorite part of other store owners jobs. If you could only do the fun parts of your job, wouldn't you want to take it home with you? Doing this means I can work 65 hours a week without burning out or feeling "owned" by my business. I've never been happier with my work or my life than now.

4. Product First Prime Directive. My understanding of retail is that my job is primarily to have the stuff you want, when it's supposed to be available. Everything else is garnish. I can't be deterred by my purchasing budget, the rent being due or what day I feel like ordering. If your game has a street date of Wednesday, I get it by Wednesday or I've violated the prime directive. If you don't have the stuff, at the time you're supposed to have it, in sufficient quantities, what good are you? The same is true with special orders, which we do a lot of thanks to trusting customers.

The way I achieve all this is Open to Buy, a process that allows me to separate product purchases from the general business budget. It means there is money to buy product regardless of what's happening in the business. Sure, you can bend this budget for reasons outside of purchasing, but a healthy operations budget will allow for a healthy Open to Buy budget.

5.  Wheaton's Law. Also known as "Don't Be A Dick." Part of being a bit impartial and metric driven is I try not to judge. I game. My customers game. They may not play the same game I play, but who knows? I'm old enough to avoid condemning others because I've grown into being that guy many times. Well, I at least try really hard not to be a dick (the Yugioh crowd frustrates the hell out of me). So I try to be impartial with the games people play, the way they play them, and their own orientation to the world. I deal with a lot of highly functional crazy people. I'm alright with that. And you know what? You might end up liking them. They're mostly pretty cool people.


6. Planning (Luck). Planning looks an awful lot like luck from the outside. The store location was selected by analyzing a 150 square mile area and determining the best place for a store. This was fine tuned with the second store by using customer zip codes to triangulate the best location. The business plan was researched and tweaked based on best practices and revised when new information became available. I talk about each next step of the business incessantly before I act upon my plans. A second store? A second story? A coffee shop? A sandwich shop? A mall store? They've all been investigated, budgeted, scouted, and bounced off smart people who will listen. One day I'll probably turn one of those ideas into a formal plan and just do it. It will look capricious and will hopefully work because I got lucky.

First Six Months

One of the guys who works at the store is taking a small business management class and asked me what my first six months were like. Here are some highlights:

1. The Business Plan. I slaved over my business plan for months. I wrote it in a week while in training at Kaiser in Wisconsin (thanks Kaiser), and then spent many more weeks making the numbers add up. I had help in this, but the elusive part was planning to make money. It seemed impossible. I could come up with the expenses, but what about the income? Occasionally, someone will email me now and ask how they should come up with their income numbers, and I just have to laugh to myself because I did the same thing. The income numbers come from your posterior. Then why would anyone invest in a business? Yeah, I know, right? Mostly because the guy with the plan has done it before. I was the new guy with the plan and I'm very thankful for my investors who had faith I could figure it out.
2. Education. I was a sponge for information, with just a small trade show under my belt and having read a half dozen retailing books. I had never worked retail. I trolled the Game Industry Network forum daily and asked lots of questions. How much change should go in the change drawer? How do I display Magic cards? Then I made an effort to help others with whatever I knew to take the burden off the veterans. I learned Open to Buy, the key to much of my success, from Jim Crocker, how to sell used games from Marcus King, how to manage expenses from Dave Wallace, and anything else the established game trade could teach me. I gave them the benefit of the doubt. Some of what I learned didn't work, but it formed the baseline for that discovery.
3. The hours were grueling. I worked the store alone from when I got there at 9:30 am until I closed at 7 pm. I did this every day by myself except Thanksgiving, Christmas and a New Years weekend. I recall my body physically changing for the better from my previous cubicle work. I recall being exhausted most of the time, a condition I now recognize as counter productive. Working long hours was a badge of honor for me, but it was also a little stupid in some ways. After a year I took Sundays off and after three years I took weekends off. If you want to open a retail store, start with a gym membership.
4. Sales were, as expected, low, but I had a plan, a lot of faith, and enough start up capital to weather it (keyword HELOC). Competitors would visit me and crow about my impending doom. Vulture customers would inform me I needed to discount to compete with the Internet. Tards all of them. My first day in business I did $17.17 in sales (I never had a zero day). My daily average for the first quarter was $299/day (break even was $650, but at least I knew that). My best December day wouldn't even break even in the new store.
5. Saying Goodbye. I visited my friends and family beforehand and said a kind of prison goodbye. I'm off for a few years and probably won't be seeing much of you. I'm doing hard time in small business. I have some serious regrets about this. We adopted my son that first year and when I wasn't at the store, I was at home with him as much as possible. My wife ended up in cancer treatment later on, and I'm still chided for not being around as much as I should have been. There are no personal days in small business.
6. Hard Work was not only the norm, but relished. The vacuuming, cleaning, shelving, and receiving of tons of new stuff all the time was done with a smile. At the same time, as I've mentioned before, there was a "gentleman farmer" quality to it. As long as you can pay your bills, who cares what you do when your house is appreciating $10,000/month. I wasn't a true retailer until the money ran out and the recession hit. The recession will likely turn out to be the best thing that ever happened to me in business.
7. Community. There was no community and no game space. Then again, neither was there much of a community in the area beforehand. This was a key opportunity I had missed before I opened but began to slowly grasp. Understanding I needed game space for community was the lesson in that first store. I could survive fine without the added sales from game space, but there was a disconnect with my customers by not having it. Eventually we made a small amount of space for that community and vowed never to be without it again. Another observation: stores that start without game space have a higher level of retailer discipline when they finally get game space. Game space has a casino quality to it that focuses your attention on just those games.
8. Listening. Part of being inexperienced was being open to new ideas, including what to carry. I learned the hard way about who to listen to, but I generally tried many things and kept what worked and dumped what didn't. I recall visiting with a competitor and asking them if they had any problems with how I did things. The key problem? Wholesale dumping of product lines that weren't working. I learned to soften that up and offer things to other retailers before flooding the local market. When we opened, I had every book from every RPG anyone anywhere was playing. There were probably 100 different systems. I had every major non-GW miniature game (GW, I had learned, was bad), about 150 board and card games that I knew virtually nothing about, and 35 CCGs. I took the shotgun approach, rather than slowly ramping up.
9. Learning Games. I recall during my first Christmas being berated by a customer for not knowing my board games and vowing to fix that problem. We started doing a board game night after hours and I learned about 100 games in the subsequent years.We went from around 150 board and card games to 1000 now.
10. OPM. A big psychological barrier was the concept of ownership. After spending my adult life working for others, it was difficult to grasp that it was my money we were spending. I was very good at spending other people's money, very good at predicting expenses, but I had not concept of saving, optimizing or making money. When it finally dawned on me it was my money in a deep, visceral way, I became a convert of sorts. I scowled at those with their hand in my pocket, at expenses I had to pay, and shrinking margins. 

Let me know if you have any questions. 

Store News

Spotlight: Fantasy Flight put us in their retailer Spotlight column this month. This is a really neat idea, and one I haven't seen before in the game trade. This is something one of our (now two) trade groups should be doing. Usually retailer rewards are "pat-on-the-back" internal awards that nobody really cares about.

I've thought about writing a column about why there are no "real" retailer awards for the game trade, but the answers are pretty simple. Publishers can produce a beautiful product that nobody cares about (we call them art projects). They can win awards that have nothing to do with any sort of economic success. Retailers, on the other hand, exist solely to satisfy the demands of their local customer base balanced against making profit.

What that looks like depends a lot on the size of your base. How you do it is often an issue of scaling customer satisfaction with profit. You can have vastly satisfied customers and go broke tomorrow. You could be doing a couple million in sales a year and nobody notices you because you don't pander to the "community." Scale of your operation depends very much on your sales base. An innovative retailer in North Dakota won't have the resources, the flash, the presence of one in Manhattan. They can be innovative and interesting in their methods or process, but the shock and awe won't scale. In other words, it's an interesting question with boring answer.

New Employee: We have a new female employee, our first in a couple if years. Please welcome Cassie when you see her.

This is a bit of a departure from how we normally hire as Cassie has extensive retail experience we hope to tap to improve the store. She's more retailer than gamer, although she does play games, so it's an experiment to see if we can transplant a retailer into the game trade and back fill the geek factor rather than teaching retail. Teaching retail doesn't have overwhelming success in my book, so this is worth trying. In exchange, we can hopefully pick up some much needed retail processes.
Having a woman on staff again (our fourth technically) also breaks us out of our testosterone groupthink.

The Game Trade Narrative: Here's the narrative I'm hearing from the game trade, something I've been picking up after the hugely successful Gencon last week, with attendance up over 20%. Before the recession there was a great variety of product, with many little publishers able to make the game trade their primary occupation. The recession came and consumers cut back, sending many of these publishers back to day jobs and reducing variety in stores.

There was a "flight to quality," a term that small publishers hate, as consumers bought sure things and clear winners. In other words, with reduced disposable income, they cut back to essentials for their hobby. As the economy stabilized (I didn't say got better), and money flowed back to the hobby, dollars went to those "flight to quality" winners, so that the bigger game companies now get a bigger share while the smaller companies languish.

My narrative is slightly different. What I see, and I might be alone in this, is an improvement in our sales and thus I take more risks on bringing in a wider variety of product. I'm back to trying out things that look cool with no buyer in mind, albeit in far more moderation than before. I used to do a percentage of purchasing, which bit me hard when the recession hit. Now it's just a few things here and there.

I'm seeing customers come in to buy these things, which sometimes lead to entire game systems. In other words, I see customers and normality returning to my store. I don't see any other way to grow a business though. You need to test the waters all the time. I'm told that's just me though. If you have a store, what do you see? If you're a customer, are you taking more chances on interesting stuff or have your dollars ended up with a few core game companies?

Declaration of Independence

I bought a new car. For most people, that's no big deal. For me, it's kind of special. It has been seven years since I started the store, and for the most part, this has been a time of scrimping along, taking two steps forward and one step back. It has been a time of living in the shadow of my former socio-economic position, on the remnants of former middle class wealth and security. The old car was a reminder of that, as is everything else I have that's nice or premium, from Dwarven Forge to my leather jacket we bought in Rome.

A new car is also a way of saying I'm still here. I made it. The store made it. Others have fallen along the way. I can count at least half a dozen since I started, with the latest only six months ago. Rather than filming that video of me dancing in front of these closed store, an idiotic and childish gesture, a new car exemplifies that prosperity a little better.

A new car also says I'm aspirational, that I'm looking towards the future, that I know where I'll be in five years. Since we just signed a five year lease, it didn't seem unreasonable to assume I could afford a five year car loan. Having that additional cash for a payment was a combination of beating down expenses (the lease re-negotiation alone could cover the payment) and stronger sales.

Rather than just another practical car, the car I bought had some "want" attached to it, rather than just need. I could have bought a Civic, but I bought the car I wanted, a Volkswagen GTI. I could have been frugal and bought the TDI diesel instead, but I didn't. I could have bought a used car, but I didn't. I could have waited a few more years for the economy to improve and for a larger down payment. But you know what? I didn't and I have nothing to be ashamed of.

And as for security, I feel more confident with the continued health and survival of the store than any job I ever had, which incidentally never lasted more than two years. And honestly, at a certain point you need to just live your life and stop worrying. I reached this point with my house this year. I would rather rent forever than spend another moment worrying about house values.

Speaking of being ashamed, scrimping, saving and cutting costs has been what I've done over the last few years to keep the business afloat. There is some survivors guilt in this purchase. Why did I make it while others didn't? How much of that is luck and how much is good planning? Am I living on borrowed time? I'm seven years into this. I've never been seven years into anything except my marriage, and that's no walk in the park either.

Then there are the legions of unemployed and underemployed customers. I feel for them. I emphasize with them daily. One told me about how he had his car re-possessed -- today. So buying a new car is something I generally don't talk about. I don't park in my usual space and I check the mail every day to see if my new license plates have arrived. Once the plates show up, the car is no longer new in my mind. There is a ton of guilt because I really do feel for them, look out for them and wish them success, as elusive as that has turned out to be. What I tell myself is I've made it this far and I don't need to apologize, but it's not really what I feel.

A new car also means I have interests, responsibilities and hobbies that transcend the store. I've got a new car ownership blog, since I like blogging and found a long term ownership blog key in my choice of cars. I don't have the money or the time to do anything crazy to the car, but I am enjoying the fruits of ownership with a new stereo system and some incredibly fun road trips. So buying a new car says I do other things too. That said, I definitely have a small business lifestyle that meshes business and my personal life inextricably in a 24-hour a day cycle. Like other people in that position, you take your enjoyment where you find it.

So to downplay this, yes, if you work really hard for seven years, you too can buy a new compact car with five years of payments. In that framework, perhaps it's no big deal. But man do I feel I've risen above when I put the key in the ignition. I have achieved non-failedness. Up ahead I can see success.

Summer Role Playing Sales 2011

Here's what's doing well and how it compares to last year:

Top 10 Role-Playing Sales

2010	2011
1. Dresden Files RPG: Volume 1	1. Pathfinder RPG: Core Rules
2. Pathfinder RPG: Core Rules	2. Pathfinder: Ultimate Magic
3. PF Advanced Player's Guide	3. Pathfinder: Advanced Player's Guide
4. Dark Sun Campaign Setting	4. Pathfinder: World Guide: The Inner Sea
5. D&D - Monster Manual 3	5. Warhammer 40k: Deathwatch RPG
6. Pathfinder RPG: Bestiary	6. Pathfinder: Game Mastery Guide
7. Dresden Files RPG: Volume 2	7. Deathwatch: Mark Of The Xenos
8. D&D - Psionic Power	8. Pathfinder: Bestiary 2 HC
9. PF Gamemastery Guide	9. Pathfinder: Bestiary HC
10. Legend Of The Five Rings 4E	10. Dark Heresy: Daemon Hunter
Top 5 Role-Playing Games
2010	2011
1. Dungeons & Dragons	1. Pathfinder
2. Pathfinder	2. Dungeons & Dragons
3. Dresden Files	3. 40K RPG/Rogue Trader/Dark Heresy
4. Legend of the Five Rings	4. Hero Games
5. 40K RPG/Rogue Trader/Dark Heresy	5. Call of Cthulhu

So.... that happened. This has been the Summer of Pathfinder, really the year of Pathfinder. D&D ambles along, mostly selling back list products that are slowly disappearing. Other games are emerging though, including a resurgence of Call of Cthulhu and all things Chaosium that I haven't seen out here before.

Gencon is this week, but what's big? There's a new Lord of the Rings RPG, but the buzz on that is quiet. We'll obviously sell dozens of Ultimate Combat for Pathfinder, which releases tomorrow. That tends to overshadow just about anything "big" from Gencon. Is there something you're waiting to be released in the RPG arena? Is there something out now not getting its due?