Sunday, March 29, 2015

Scrutiny Toolkit ® (Tradecraft)

Are you tired of your game store competitors not playing by the rules? Do you feel cheated that you follow all the regulations while they pay their employees in peanut butter sandwiches while skirting the law? Do you wish you could open up a box of legal whoop *** on them like a can of Popeye's spinach? You are in luck!

For $499.99, we're now offering the Scrutiny Toolkit®.
This handy box contains a step by step guide to verification and reporting violations of local, state and federal law. Plus, if you act now, we'll send you "Lease Schmease," our special guide that helps discover and report obvious lease violations by your dishonest competitor.

Here are just some examples of what you'll find in the Scrutiny Toolkit:

Local Laws:
  • Zone Alone. Is their store even zoned for commercial? There are some distributors that will still sell without proof of a real, commercial location. This should get them kicked out of mom's basement for sure.
  • Unlawful Assembly. The most common pitfall of game stores, are they zoned for assembly? Learn what trigger words to use with their local fire marshall for a surprise inspection and a schedule of upcoming Magic pre releases.
  • Hooky Me Now. Is their clubhouse a daytime hangout for local kids? Learn where to find the necessary busy bodies and how to plant bees in their bonnets. 
State Laws:
  • Taxes, Shmaxes. Does your competitor not collect sales tax? How about not giving receipts for certain sales? The Taxes, Shmaxes supplement will help you determine which (or both), and how to encourage a painful sales tax audit from your board of equalization. 
  • Slip and Fail. Use this tool to check if they carry business insurance as well as workers compensation insurance. Most "real" leases require business insurance, but they probably don't have one of those. 
  • Stapler Inspection. Did you know some states like California allow counties to tax common point of sale equipment, like the simple barcode scanner? Don't let a store fall through the cracks!
Federal Law:
  • Peanut Butter Jelly Time. Are your competitors paying their employees in peanut butter and jelly sandwiches? It's time that ends with this special supplement that ties back to Taxes, Shmaxes. The IRS and the Franchise Tax Board make a good couple. As an added bonus, we'll show you how to find the value of the that unreported peanut butter.
  • Inventory Mayhem. Does your competitor consider Magic singles "just some cardboard" with no intrinsic value? Learn about this and other tricks for not paying end of year inventory taxes in the "Mayhem" supplement.
  • Owning the Owner. The cherry on top is the fraud your competitor perpetrates by underreporting their personal income using many of the tricks above. Pete Rose, Leona Helmsley, Al Capone. All taken down by the IRS. Put your competitor in famous company!
Sure, you should probably Mind Your Own Business® (which you can order now for $299.99), but if bad behavior has you down. Order the Scrutiny Toolki® today!

Saturday, March 28, 2015

The Copernican Problem (Tradecraft)

When things are going poorly in the business, I tend to blame myself. I look internally at processes. I consider working longer hours. I wonder if I missed an important sales trend. Was there rain? How about a presidential election? Do I need a vacation?

When things are going well, as they are now, I give credit to the economy. I notice that the population of my county has increased 1.4% in the last year. Perhaps the unseasonably warm weather has kept my high rollers from their ski seasons.

Both approaches are nothing but superstition. Sure, you can give away all the credit and take all the blame, just as the complex calculations to show the sun revolving around the Earth had little day to day consequences to medieval life. Stock market jockeys do this all day long, but they're describing history, the past, which has no bearing on their behavior tomorrow.

The problem with an improper analysis is you don't grow. You'll never get to the moon with those planetary calculations and you'll never figure out what does and doesn't work in your business, accentuating the positive and removing the negative. These are psychological tendencies we employ to avoid painful hubris. The thing about business though, is you did it. Take the credit quietly. And you screwed it up. Take the blame as well. But ditch the superstition. Find the truth.

Sunday, March 22, 2015

Fresh Eyes (Tradecraft)

My trip to the GAMA Trade Show this year was with a good friend of mine who owns a newer game store in Minnesota, as well as investing in Black Diamond Games. He runs a mean Pathfinder wizard as well. Helping him navigate this first show provided a fresh perspective on the game trade. The big question with any decision was: Is it worth it?

My GW sales rep, Daniel, painted this model.
We're fans as well as business people, which
helps with the frustration.
For example, Games Workshop is a constant pain in my ass. It's a company that gives with one hand and takes with the other. So did I tell him to avoid Games Workshop? Umm, no. In his circumstances, there was absolutely no logical way to avoid setting up a new account. As much as I like Privateer Press, I couldn't possibly consider them the go-to miniature company. Their line is too scattered, their intro products not quite coherent, and their tools and paints constantly unavailable. I think a new store with discipline will be more successful with GW. I think that's just a fact.

We talked about why I complain about these various companies. We complain because we care. The opposite of love is not hate, it's indifference.

Every new company we saw went through a similar analysis:

"What about that card company?"
"We do well, but their boxes are sold at wholesale prices online on release."

"What about these cool board games?"
"They sell just ok, but they use Kickstarter. Avoid most of them because of market saturation."

"What about these cool dice?"
"Yes, I love them. They're never available through distribution. You'll need to go direct."

"Should we even bother with Reaper miniatures?"
"Tough call. Here's the facts."

"These guys?"
"Poor discount."
"These guys?"
"They lie to us."
"These guys?"
"They bring in problem customers."
"Those guys?"
"Yes, but they sell mostly direct."

I had him take pictures of everything I thought he should carry; mostly board games. His $10,000 bank roll was tapped by the end of the day.

These various game trade weaknesses are actually game trade strengths. It's like the big box stores are giant health care companies who only want healthy patients, but the game trade? We do hospice work. We take all comers. We'll take your sick, your dying, your economically troubled. We'll hold their hands all the way to the end, when they leave us holding the (colostomy) bag.

Going to the show with fresh eyes also let me consider older options I had shut the door on. For example, opening a second store went from a bad idea, to a preponderance of evidence suggesting its inevitability.

It comes down to a couple factors. We're in year six of a game trade expansion. Is there a bubble? If you think there's a bubble, you behave differently. You don't expand. You don't take on excess debt. You are cautious. You can certainly have a six year bubble, as we know from housing (which had a 20+ year bubble). However, at some point, your mind switches from bubble to long term trend and you start making more aggressive decisions. That's where I'm starting to lean.

Assuming we're in an expansion trend, there is a good deal of evidence that suggests an experienced game store owner can hit the ground running. It took me years to become profitable in my first store. It was exhausting and I will not willingly do that again. How about 18 months? I've seen three experienced retailers open second stores and nail it in 18 months. It requires knowledge, discipline and a lot of experience, but not as much capital as I blew gaining those things the first time. I have no doubt I could be one of those guys. I'm not saying I'm going to open a second store, but I no longer have barriers, thanks to a fresh perspective.

Oh, and I'm more comfortable with long term leases thanks to this thinking. A decade in a "do over" situation seems like hell, but a decade doing what I do now? No problem. That's the hope with our current location, a long term lease with expansion money.

Thursday, March 19, 2015

Interview and Gama Trade Show (Tradecraft)

I did an interview on The Company Bard, "the gaming careers podcast." We talked about the game trade from a retailer perspective. It was a solid, nuts and bolts interview with a lot of crunchy numbers. You can listen to it here.

This week I'm at the Gama Trade Show in Las Vegas. The show feels packed, with retailer attendance up 20% from last year. It continues to grow rapidly. This is very good news, since game stores are also continuing to grow and proliferate. Nobody goes to Gama unless they're serious about improving their business.

There are three main components to this show: retailer seminars, publisher seminars, and the trade show floor. A fourth component is networking outside and within these events, and not surprisingly, that's where I've been getting the most insight into the trade.

From the retailer seminars, I didn't come across anything that revolutionized my business, like my last show, two years ago. I did come across many best practices I was able to load "into the hopper" for changes back at the store. That change management function was a critical skill I learned at that 2013 show from Dave Wallace.  This year it was mostly ideas about human resources and events. We're all about constant improvement.

The publisher seminars were fine, with a couple of interesting juxtapositions. On one hand, we had Reaper Miniatures stand in front of a room full of retailers, asking where the hell their product was in the distribution channels, and answering "Don't know." Everything is cool on our end. Don't know. "Don't know" comes off as ignorant or deceptive, so it wasn't surprising it kicked off a retailer discussion of whether Reaper was still right for game stores, or necessary, or even relevant with their direct to consumers Kickstarter model.

That's hardly the take away you want for your company after spending thousands of dollars going to a trade show. Poor messaging. Moreover, after telling us "don't know" why we can't get stuff through distribution, they handed out a catalog with about a dozen high value rack deals and told us not to order from them; go through distribution. Riiiiight.

I mentioned that juxtaposition. If you want to see a company handle messaging correctly, the WizKids seminar was an inspiration. WizKids has really screwed the pooch (technical term) with supply of Dice Masters. Did they show up and say "don't know?" Hell no. I'm not a big fan of this company, but the CEO, Justin Ziran, showed up, explained exactly what happened and why, what's happening now, and what they're doing in the future to avoid the problem of stock outages. He put his cell phone number on a presentation slide. It's safe to say, "he knew." I came away from Reaper wondering if I should disengage. I came away from WizKids sending emails to my staff asking how we could engage further.

The show floor. I mentioned in a previous post I came with a bankroll to spend. If all goes to plan, I will have spent $5,000. How did I spend it? My first stop was a small playmat company, one of several. I promised to buy $500 in mats, but they had no order forms or catalogs. That meant I couldn't really place an order, but they'll call me. I give it a 50% chance of happening.

Next was airbrushes with Grex. I've wanted to bring in airbrushes for years, and these were beautiful, with quiet compressors. Unfortunately, they had a six page retailer application. I was determined though and went back to my room, filled out the app and handed it in, along with one of their forms of suggested starting stock and a demo kit. They took my credit card information and I spent about $1,200.

Combo GCK03 gravity feed airbrush with compressor, Tritium TG3 gravity feed airbrush, Genesis XGi3 gravity feed airbrush, Genesis XSi3 side feed airbrush, 2 AC1810-A 1/8HP mini compressors, a variety of nozzle kits, replacement needles, airbrush holder, valves, hoses, adapters, cleaning kits and a full demo kit. 

Then I walked right over to Vallejo, saw their new Model Air airbrush paint line, and emailed my Alliance rep to get me one. $600. Some people have been waiting for this line for years, and I just happened to hit it on release.  Who knows, it may even show up today at the store. In fact, there were probably half a dozen games where it was all about a quick photo sent to my sales reps at the distributors.

Next I found the old Wench card game, which despite the controversial name, has nice pin up art that I know is appreciated by a good number of both my male and female customers. I picked up a couple displays off their table and they ran my credit card right there. $90. Stop judging me. 

I vowed to place a direct Koplow order this year, after seeing them at trade shows for 10 years and not really being able to get their stuff. I was helped by a friendly gentleman named William Niebling, who many in the game trade know well. They tell me he has been there for years at the Koplow booths, and I somehow didn't engage him before. Nevertheless, he was happy to write me up a $1200 order as I pointed to various products.
Plastic display boxes of opaque dice, double dice, Japanese/Chinese dice, 54 sets of hanging polyhedral sets, box of sand timers, box of wooden dice, L-C-R- display, 5mm mini dice display, two types of pawns, 20mm tactile dice, hit dice, compass dice, 55mm opaque dice, jumbo polyhedral dice, jumbo life counters (14 in a plastic fish tank), "life stones," two each of 7 colors.

What about Reaper? Well, I did place an order through ACD for a couple rack deals, both the Bones and the Pathfinder metal models. It came out to around $1,000 and I was told there was at least a months lead time and don't hold your breath.

If I've learned anything from the game trade, it's not to hold my breath.

Thursday, March 12, 2015

Into the Pit

The Pathfinder adventure we commissioned for our Kickstarter campaign, Into the Pit, is now available for purchase on the Paizo website. We went all out with professional designer Amber Scott to create this fantastic adventure, inspired by my own campaign, and themed around the store.
Here's how it's listed, and I'll admit, it has me excited:

Into the Pit (PFRPG) PDF

Black Diamond Games

Between the city of Tara and the valuable black salt mine known as the Pit stretches a barren expanse of dusty badlands. Decades ago, prisoners were sent to the Pit to labor in its lightless depths. Now it stands abandoned of living workers, inhabited only by the spirits of the dead and a vicious salt drake. Reclaiming the mine would bring great wealth to Tara and industry to its people. All the city needs is a group of heroes brave enough to venture into the Pit…

"Into The Pit" is a Pathfinder compatible adventure designed for four 7th-level PCs. By the end of the adventure, PCs should be midway between 7th and 8th level.

The adventure centers around the exploration of a multi-level underground black salt mine called the Pit, but the adventure offers more than a straightforward dungeon crawl. The PCs’ initial patron is the Black Knight, king of Tara. Over the course of the adventure, though, the PCs may receive an offer from Na’Kriss, the salt drake who lairs within the mine, to serve his needs instead.

Author and project manager: Amber E. Scott
Cover art and border design: Caitlin Bauer
Cartography and graphic design: Robert Brookes
Layout and design: Marie Small

44 page adventure, including full color maps for both GMs and players (unmarked).
This professionally developed adventure was part of the Black Diamond Games expansion Kickstarter.

It was extravagant when you consider only a couple dozen people received it through the Kickstarter. The adventure cost about $200 per person when you take the cost of production divided by those who chose that backer level. If you balked at the $25 Kickstarter pledge, please consider supporting us at this more competitive price point. We do get money, just like every other PDF centric RPG business. 

If we can break even on this adventure, we'll probably do another one. And just like that, I've become a game publisher with poor business practices. 

Future Blog Post: I'm investigating "key man" insurance and how to ensure your business continues after you're dead, while still taking care of your family. For most, it's a quick liquidation fire sale, but what if you've got something worth preserving? It's an option for those with strong management and strong business process.

Tuesday, March 10, 2015

The Last Two Percent (Tradecraft)

The Law of Diminishing Returns basically states that your effort put into a problem will eventually far outweigh the desired results. The goal becomes getting a process far enough along, and not sweating the details. In business nowadays, "close enough" is good enough. We see this all the time in various industries.

My POS software company recently announced a version 2.1 at the same time they announced 2.0, promising to fix the 2.0 bugs with that future version. Car companies are desperately trying to increase sales by homogenizing and dumbing down their cars to the most common denominator, abandoning niche vehicles, and interesting features. Disgruntled Wal-Mart customers flee to Target to find themselves treated just as poorly there, failing to realize their embrace of discount stores comes with a hit to service. Business books suggest getting your business "good enough" so you can lie on the beach for the remaining 36 hours of your work week.

Good small business owners will tell you "good enough" is the enemy. Good enough is not good enough. It might work for your entrepreneurial MBA run business, whose goal is to be acquired or strike it rich with Other People's Money, usually within a strict time limit, but small business is about filling in that last couple percent of efficiency, of striving for perfection, of dazzling your customers. The Law of Diminishing Returns is our constant companion, not a fools errand.

I'm mostly referring to process. For example, special orders are really hard. There's a Reddit discussion about a local game store that flunked their special orders. The thing about special orders is they should be invisible to customers. We spent about $7,000 upgrading our IT infrastructure a couple years ago, primarily to address special orders. Good process and good IT should function below the surface, with no drama.

We often have 20-30 special orders in our system at any given time. Our success rate with this new system went from 95% to 98%. 95% might sound good enough, but it meant we disappointed 1 in 20 customers who placed a special order, as opposed to now, where it's 1 in 50. 1 in 50 is still unacceptable.

Today we got our new sticky notes from the printer to help with that last 2%, a process issue where we either fail to pull an incoming game, fail to notify the customer, or put aside too many games that then sit in a bin for months before they're noticed. A game that sits in a bin is lost opportunity, which costs us money.

This last, analog part of a sophisticated ordering system, a simple sticky note, addresses the last 2% of our problem. It was the end result of a lengthy discussion with other game store owners who had the same problem.

As I've stated many times, we're not special. We're not geniuses because we have a sticky note. We're just one of those game store owners in pursuit of the last 2%. We may fail on occasion and we certainly have our shortcomings, but nobody can accuse us of not trying to improve our process.

Being a store owner then is being the kind of person who wants to embrace this last 2%. You have to be bothered by that final bit of inefficiency, rather than having that "good enough" entrepreneurial mindset.

Thursday, March 5, 2015

Trade Show Fu (tradecraft)

I'm going to the Gama Trade Show this month. Looking at my open-to-buy worksheet, I have around $4,000 to spend. Would you like some of that? It's burning a hole in my pocket. I'm losing money by not spending it. So will I spent it all at the show? Probably not.

If you're going to the show as a publisher, please follow rule zero: Take their money. Is the guy manning your booth there because he's your second cousin's boyfriend's brother who has a strong back, or is this a key man in your operation? Can he answer question? Can he take orders? Most importantly, can he take my money right now?

There are well known publishers that have a terrible time of this. There are several levels of ineptitude when it comes to not taking my money. The worst is when they hand you a catalog, a thing that will sit at the bottom of my backpack and may get perused by staff in a month or two.

The next is the guy who takes my order and promises to hand it to the people who can actually take my money back home. There's a 50% chance this ever happens. If they take my credit card (some don't wanna), the chances go up a little.

Finally, there's the smart guy, the one who has Square attached to his bank account with a free smart phone reader. That guy takes my money right now. That means I know my remaining budget. It means I can generally plan without having to pretend to spend $8,000 because half the vendors flake. Please take my money.

If you're at the Gama Trade Show and you can't take my money right now, you have no right to complain about retailers or distribution or the foibles of the game trade. You are the barrier.