Saturday, August 17, 2013

The Third Bucket (Tradecraft)

After the big bucket expenses of payroll and rent, we come to the third bucket, best described as "other." It contains the huge amount of money we spend on advertising (a little less than 2% of our gross sales), the enormous credit card processing fees (the highest in the industrialized world), the lightly regulated world of business utilities, (a larger small business concern than healthcare),  and being in California, sky high insurance premiums. Our insurance category includes  business insurance, workers comp insurance, and auto insurance for our spiffy van. Note the distinct lack of health insurance. I don't see that changing anytime soon with the Affordable Care Act, which pretty much bypasses us.

These four categories are two-thirds of our miscellaneous bucket, and if you're going to worry about expenses or try to hammer them down, you want to start there. Beyond these categories, there is a lot of discretion. When times are tough, the discretionary expenses are where I tend to cut, assuming I've already been doing my job on the top four.

This is were you'll see us diverge from many stores, as the remaining expenses include a lot of specific line items related to our business, or in the case of our most current year, high categories like outside services. Outside services for us included our accountant, a team of architectural consultants and IT people for our new POS system. We've been busy preparing for the future.

Lodging, meals and travel including my trip to the GAMA Trade Show, something I recommend doing every couple of years, along with the three game conventions we attend each year. As they say, you have to spend money to make money. Meals also includes the occasional employee spiff, like when I have staff work all day getting our POS up and running (this week). The least I can do is buy them a sammich, right?

So when times are tough, I sweat the small stuff. Otherwise, focus on the big expenses.


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