Tuesday, February 28, 2012

Boom Time Psychology

It appears that the game trade is booming. I have to preface that statement, because there are plenty of struggling, failing, and flailing stores this does not apply to. However, unscientific polls and discussions seem to point to great strength in the trade. We're riding that wave, and as I've stated, I'm highly dubious it will last since it's based on the shifting sands of the CCG market. That said, we've seen steady growth in all our departments for years and I expect it to continue despite the boom.

This success tends to mess with my brain as I try to plan for the future. There is fear of complacency, that with the extra money you start loosening up purchasing, employee hours or you start buying those things on your need list. I would call it a "wish" list but every store has things they need that they can't afford.

The situation reminds me of stories of Great Depression era people whose relatives discover money squirreled away in their homes after their deaths, despite the departed having millions in assets. Survival instincts are hard to break and it's often more comfortable to go on with your tight budget than accepting that you can change your habits a bit, you can loosen up. Tightening up is how we got the money in the first place.

Heck, most retailers are even afraid to mention that they're doing well in fear of the consequences from customers, employees, competitors and even the landlord (everyone complains their doing poorly to the landlord). If you don't have a culture of transparency, you're at the mercy of rumors and erroneous perceptions.

The danger of not addressing the reality of success is you don't progress. Retailers are like sharks, in that they must keep moving or they die. There are product trends you can miss, competitors that need addressing, events that need re-organizing, employees that need hiring, inventory that needs culling, and debts that need servicing. Plus, if you're ambitious, there is probably a long term expansion plan or the desire to set yourself up for financially for the future. I would love to own a building, for example, the Midwest game store retirement plan, but in California that's impossible without a couple hundred thousand dollars in cash.

In our current situation, we've got money in the bank that could be used for: a) expanding our game center, b) paying off all our debt, or c) the foundation of my son's college fund. There is no right answer on this one. There is no particular time in which you're supposed to take your draw and be content (c).  There is no best time to expand your business and hope you've got a long term future (a). It's always good to get out of debt but you don't want to miss an opportunity (b). The answer to this question will depend entirely on the mind of the business owner.* 

The most difficult thing about running a small business is there is no blue print on when things are supposed to happen, including success and failure of any variety.  What's the chance of failure in year eight compared to year three? It's the same. It doesn't get any easier or less risky, so we sew $20 bills into our clothes when times are good while occasionally running out of bags because ordering extra seems extravagant and wasteful. We try to keep our enthusiasm up for a job we can't easily quit. We are successful because we constantly feel the pull of the entropy of failure.

So small business owners have stress when things are bad and stress when things are good. The key to long term success, I think, is enjoying both of these as curious puzzles that need solving.

* the answer is a

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