Wednesday, July 17, 2019

Model for the Good Store

"And here is where we thought about putting in a cafe."

This business is one of constant brainstorming for the successful. For most stores, which I will maintain are not very good (fight me), the answer to all questions is often doing the thing you're doing now, but better. More inventory, better trained staff, better events, an improvement process and an upgraded look. Most stores don't need a cafe to be relevant.

They should know by looking around where they could spend the time or money. You could expand and upgrade for quite some time, really, but most stores struggle on a daily basis and never get the chance. It's the curse of under capitalization in a low barrier to entry market. Often it's not even about money.

Visit enough stores and there are simple improvements that just take elbow grease. For many it's as simple as picking up the trash you can see when you look in the window, or re-arranging the product on the damn shelves. Basic retail. Problems I saw throughout Pennsylvania and New York this month. One or two of those stores ran a super tight operation on what you could tell was a low budget operation. One was scrappy and organized and had family and part time staff stocking shelves on a Sunday. That made me happy.

The idea we need to diversify into some new business model is compelling, mostly because successful business owners look for trouble. We want new problems to solve, not the same old problems. I preach how a Unique Value Proposition, over time, eventually becomes only a Useful Value Proposition and then No Value Proposition.

The next thing is a real struggle. But I'm also thinking now that running a really, really good retail model that focuses on serving the community can be Unique. I'm loathe to say this, really, because most of my peers think very highly of themselves. Most store owners think their stores are much better than they actually are. This is often because we don't know how to measure. We don't know how to look at our stores with clear eyes. Most store owners often don't get outside of their local bubble (why I like to visit stores). We also can't even decide what good is.

Get a dozen game store owners together (if you can decide what that means) and they'll argue, Clintonesque style, about the meaning of the word good. Good for one is the most profitable, while other owners will argue that stores aesthetic hold it back from that desired profitability. Some will claim they only meant to serve a small market when they made their polarizing choices. Good to you may just mean a steady paycheck.

The debate about Wizards of the Coast Premium stores elucidated much of this. Other people, not even store owners, are telling you what they believe is good, with rewards attached. Store owners hate this. Try to help one of these store owners with their problems and they will quickly produce reasons for why they do a thing badly. Alright, alright. Maybe you need a cafe after all. I should mention Premium rewards a type of existing store and there are plenty of good stores that don't meet that criteria. It doesn't make them less good.  All Premium stores should be good (a debate in itself), but not all good stores are Premium.

This leads up to my visit with Millennium Games in Rochester New York this week. It's an example of doing the standard model, for a long time, really, really, well. It's notable to me because it's a large store that clearly engages in best practices and a constant improvement process, rather than some unique, large store model. Also, when I say standard model, I'm talking about a basket of game retail best practices, since baseline game stores, as I've postulated, kind of suck.

Millennium is unique as a large store because most large stores appear to have teleported from the past, their inventory, and unique practices, not particularly replicable intact. Other stores appear to have been built from whole cloth with buckets full of money. Millennium is a best practices store, only much, much bigger. As I can't time travel and I don't have buckets of money, this is compelling as a model.

As you walk in, it looks brand new, because they have a process and budget for constant improvement. The retail space is vast and the game space comfortable. There are about 100 photos on my Facebook author page (please subscribe). If I sound like I'm heaping on praise, it's because it's a model for the future, unlike other big stores which are great, but mostly as interesting anomalies. Millennium got there by doing the thing, year after year, only better each time. It's the same thing I do at a smaller scale, and you might be doing. That gives me hope both for myself and for retailers in this trade.

Suck Less

Thursday, July 4, 2019

Independence

I saw this today. I can't authenticate if this actually exists or if it's just a clever meme, but it struck me as important for a couple reasons.

As a lesser reason, I'm running a D&D campaign where the characters seek independence from a powerful empire. The stone reminded me there is a price to pay for such a lofty goal, and being a role playing gaming, that price needs be paid to accentuate the degree of risk and reward. Empires don't go softly into the night.

The main reason  is this struck me as something understood by small business owners. Declaring your independence from working for others is a glorious thing. However, the price to be paid for such a decision can be high. I know many who lost homes, spouses, or eventually declared bankruptcy. Many forgo higher income levels, shifting down in socioeconomic class, often at the expense of their family. Education for your kids will suffer if you live in a highly unequal state like California, where you home value is dramatically linked to education opportunities. An early death is not unlikely, if you look around, as the hours and the gamer lifestyle is not exactly healthy. We lose them young all the time.

Going back to the stone, I wonder how many founding fathers owned small businesses? It seemed like the kind of risk a small business owner would undertake, and of course be criticized later for being an elite who owned a business. That data is thankfully available. Merchant comes right after lawyer if you look at the list, with 30% of the 56 signers being sellers of stuff. These were men accustomed to taking risks. Some eventually paid the ultimate price, but as a small business owner, I understand the rather unique live free or die mindset. I'm thankful for these 56 who gave me the opportunity.

Tuesday, June 25, 2019

Board Game Support Group


Carl: Hello everyone, please welcome Gary to the group. He could use our support.

Group: Hi Gary!

Gary: Like all of you, I buy too many board games. They’re sitting in shrink wrap on shelves.

Group: Nodding approval.

Gary: But I’m mostly trying to sell them to you folks, as a retailer.

Group: Disapproving grumbling.

Gary: But often at a discount, because they sell like crap.

Group: Murmuring with approval.

Gary: You see, as someone whose mostly a role player, I tend to buy board games that interest me. Really complex stuff that makes my brain tingle. But I don’t play them. As my friend Jay says, a good day board gaming is still not as good as a bad day role playing. You know, like the sex and pizza metaphor.

Group: Angry grumbling. Several female hands go up.

Vijay: They can’t all sell badly, what about Terraforming Mars with its eight point four on bee gee gee?

Gary: Yes, Vijay, even Terraforming Mars with its eight point four. Where did you buy your copy Vijay?

Vijay? (Sheepish) Amazon.

Gary: Yes, Amazon. You don’t need me and I shouldn’t be catering to you.

Carl: I bought my Terraforming Mars at your store!

Gary: Oh, when was that Carl?

Carl: At your Black Friday Sale.

Gary: Right, on clearance. *cough* vulture *cough*

Carl: What was that?

Gary: Anyway, this is my first day vowing to order games only for our casual customers, the ones who actually buy from us. People who allow us to sell them games through our demos and our enthusiasm.

Carl: So no more high concept bee gee gee picks?

Gary: No Carl, no more complex board games. Which even at their best, aren’t as good as a bad night of D&D. Or you know, sex and pizza.

Friday, June 14, 2019

The Talk

If I had to give a presentation to a class about my job, my profession, my possibly foolish choice of becoming a small business owner, my main concern is this: I really don't want to sound like an asshole. I say this because I didn't use to be a small business owner, so I know how I sound when I talk about state mandated wage inflation, reckless politicians in Sacramento, and our incoming tariffs from our learning disabled president. I've got enough opinions about politics and policy to really sound like an asshole, to everyone! It crosses political boundaries. I'm that good.

Maybe I am an asshole. It's always a consideration. Maybe I should consider the advice of Raylan Givens: If you meet an asshole in the morning, you've met an asshole. But if you meet assholes all day, you're the asshole.

Or maybe Master Zhuangzi. To paraphrase:

Once upon a time, I, Chuang Chou, dreamt I was an asshole, pontificating hither and thither, to all intents and purposes an asshole. I was conscious only of my irritation as an asshole, unaware that I was Chou. Soon I awaked, and there I was, veritably myself again. Now I do not know whether I was then a man dreaming I was an asshole, or whether I am now an asshole, dreaming I am a man. 

The distant memory of the man I once was, before I became an asshole, sometimes haunts me. Spending Other Peoples Money (amusingly referred to as OPM), flitting from job to job, voting based on lofty principles with no consideration of financial responsibility. Oh to be a man again.

To really be an asshole is to be seen as being somewhat greedy of spirit. This is a problem for small business owners. I regularly spend half a million dollars a year on games, and another half a million on labor, utilities, rent and other garbage. I am a rich man by individual standards, while a poor man by business standards. Surely I can be squeezed for a few more dollars, why so much complaining? When I think of putting The Man up against The Wall, I envision a legion of like minded people behind me. What I don't realize, is I am The Man. I will be put against The Wall. Chuang Chou never dreamt of that!

So class, to understand my plight, to understand whether I'm a man or an asshole, I think perhaps you need to grasp the duality of the situation, that both states are potentially true. That my survival depends on stability, that society is increasingly in a state of flux, and that my ability to flit around like a butterfly, hither and thither, is increasingly dependent on the whims of an indifferent populace and their feckless leaders. Also, STEM fields. Business is a good safety.

Monday, June 10, 2019

Goodbye to Chess

Chess was important growing up. When I finally got my own room as a kid, it was the former den, filled with my father's chess trophies and books from his time on the Penn State chess team. I wasn't terribly into chess, but I read all the books in the den, mostly sports novels (ugh), chess strategy and how-to books. For a while in high school, I brought my chess set and played in science class, where the game was socially acceptable. My player's handbook stayed at home. I was a solid, thinking several moves ahead kinda kid, so the chess books were mostly aspirational. I felt like I wasn't quite smart enough to go full chess, like a wannabe wizard with an eight intelligence. Magic missile was just out of my grasp.

When I opened the store in 2004, I had a very respectable collection of chess sets, amazing really, for a 940 square foot store (amazing equals dumb for non retailers). These were all on full display, and about once a week, I would remove the pieces of each set, dust the board, and put them back on. My father was impressed when he visited. When it came to chess, I knew how to represent. This was all incredibly time consuming and eventually I lost several boxes, making selling them pretty difficult. Oh, and then there were the missing pieces. Realizing the queen is missing from a $250 Egyptian chess set will make you seek out boxed chess sets pretty fast.

As the display sets sold, their replacements tended not to get re-opened, and eventually not re-ordered as the plain white box did nothing to help move them. Chess sets sold poorly. They have always sold poorly. They sell poorly now. Stores in the region who do much better with chess, who dominate with chess? They sell poorly there too. It's a legacy item, an item that says "games" to the general public. It's a touchstone for me and my father. But chess, to be honest, is a complete waste of space.

That's not true everywhere. There are stores in the Midwest that do gangbusters with chess. But here? The serious players buy their sets online, often through chess organizations or just Amazon. In the store, I think it's enough to have a tournament size Staunton set and a roll up travel set, but beyond that there are hundreds of themed chess sets that will make you crazy as customer seek them out. Civil War? Simpsons? Harry Potter? You could stock an entire store with what's out there ... and promptly go out of business.

I used to special order sets and it was time consuming and unrewarding, unlike the work with other types of games. Help a board game customer and you may have created a regular board game customer and maybe even a board game hobbyist. Help someone with a chess set and you've sold them a chess set and you'll never seem them again.

I've watched my classic games numbers stagnate, even when I double or triple my selection. I've tried more and less and different and boxes with pictures and on display and nope, none of it works. It's dead here. I've been foolish not to drop it sooner. I would look at the corner where our "classic" games reside and fantasize about what I would put there. Frisbee golf. A coffee kiosk. Anything but chess.

With 25% Chinese tariffs, I'm extremely concerned about board games. But then there's chess. All those classic games come from China, really. I had forgotten. It's not even on my radar anymore. We just didn't re-order classic games after the holidays and nobody seemed to mind, except the occasional random customer who has clearly never been here before. We send them to the regional store that has a better selection and also doesn't make money selling them. Then that classic game space got taken up with profitable stuff. So with tariffs on the way, a better use of that space, and performance numbers that I use an example at trade shows of what you should drop, I think it's time to say goodbye to chess. Sorry dad.


Saturday, June 1, 2019

Tariffs and the Sixty Dollar Board Game

With 25% Chinese tariffs taking effect this month, I'm already seeing solicitations for board games with significantly higher prices. The $60+ board game is likely to be the norm, up from an average of $45-50. I wrote on my Facebook author page I thought my board game sales were likely to drop by 40%. That's a really high number and it's complete speculation, but let's take a look at what we know.

We know very little. If we try to read the tea leaves of market forecasts, they're concerned with publicly traded companies, most of whom can absorb some or all of a 25% tariff. Best Buy sources enough Chinese products with high margins, they may not even raise prices, just take the hit. For us small retailers, sellers of speciality goods without enough margin to absorb tariffs and no cushion to absorb higher costs, they just predict doom and gloom. A 25% tariff is a necessary 25% price increase.

One example of how price increases directly affect sales from comes from the auto industry. When vehicles rise in price, for every dollar of price increase, demand drops by .87%. With a 25% increase in price, we should expect a 22% decrease in sales using the auto industry numbers. That's our baseline though, a starting point. Buying a vehicle is different than a board game.

If you don't like Chevy dealer A, Chevy dealer B isn't going to have a significantly different price. That's because vehicles are sold through a closed dealer network and gross margin on board games is about 45% compared to 8-10% on vehicles. There's no wiggle room to sell you a Chevy Colorado for 25% off, even if dealer B wanted to. And there's no online clearinghouse for a third party to devalue a new Colorado. If you don't want to spend $60 for a board game at my store, there will always be someone selling that game for 20-30% off online, even in the age of MAP price protection. There is someone selling that same game with an MSRP of $45, right now for $30-35, which is probably half the regional sales of that game. It's more complicated than that though.

As the price of an item increases over psychological thresholds, the pressure to buy it online increases dramatically. Most store owners will tell you once a game hits a certain price plateau, sales drop off considerably as customers seek better value. It's why many of us sell so many little card games and so few $100 board games. The impulse purchase, in which calculations don't play much of a role, is probably around $30-40 nowadays. At $40-50, there's some thinking and we lose a lot of sales to discounters, and at over $50, there's a lot of thought into how to acquire that item most efficiently.  We are certainly earning that business in some fashion. And that's where board games will go, breaking that price ceiling (the one I artificially created for this example).


If you think this will be business as usual, we're going from a strong economy to where, "Markets are pricing in rate cuts in September and December." Markets are already signaling they expect pain in the second half of the year with interest rate increases up a quarter percent. My store sales for 2019 are up a staggering 20%, due to a number of factors. I'm predicting I end the year up 4% due to tariffs. It's a complicated bit of bistro math, but I'm expecting a lot of pain. I know I'll be doing a lot of dancing, I just don't know the tune.


Sunday, May 26, 2019

The Experience

I once spent nine days as a guest at a Taiwanese Buddhist nunnery. Their hospitality was incredible and what stuck in my mind was the most amazing food I've ever eaten. They made Chinese meat dishes out of plant protein, most likely because the nuns were brought up on a traditional, Chinese omnivorous diet, and this food met their vegetarian religious restrictions without compromise. It was so good, I questioned it's meatlessness, being a vegetarian at the time.

After a week of this amazing food, I mentioned on the way back from our conference, that I could really go for a pizza, especially because there was a Pizza Hut next to the nunnery in busy downtown Taipei. No matter how good something is, you often long for the tastes of home. You know you'll get that consistent experience, even if it's not great. Consistent beats great sometimes. An older scholar overheard me and slammed me for being so disrespectful as to want pizza when our hosts had been so gracious with their amazing food. When we returned to the nunnery for dinner, awaiting us was glorious Pizza Hut pizza. The heart wants what it wants.

When it comes to hobby game stores, consistency of experience is wickedly hard. You can train your staff to greet customers, provide stellar customer service, create intricate systems to maintain product and service, but in the back room it's another story. In our Game Center, your consistency of experience is kind of in your own hands.

I could pay employees to run games of a particular style and quality, but the games they run would be limited to the customer desire to pay for that experience. Other than convention fees, which they seem to have no problem with, nobody wants to pay $10 cash money for me to run Dungeons & Dragons. $10, times six players, is $60 for a 4-hour session paying someone $15/hour. That's just their labor, not profit or materials, or prep time. This is a traditionally free experience that can cross over into "nominal" fee territory, but a real fee will never really capture the value being provided.  That may change with the mainstreamization of gaming, and someone will certainly point out the "professional" dungeon masters, but it's rare.

So we run the Event Center a bit like a concert hall in which we attempt to host high quality concerts, but with no guarantee the experience will be great. We are concert hall people, not the performers. I've been to great concerts and I've been to concerts where the performers were drunk off their asses, but in neither case did I credit or blame the venue. But in the game trade that's exactly what happens. Sexist comment? Bad DM? Poor hygiene? It will all be a black mark against the store, even though there's not a whole lot we can do about it, other than craft policies, brief organizers, and strictly enforce rules. We are facilitators. We use volunteers. The only other option is the thing doesn't happen.

This chaos is also our strength, our protective armor. The inability to provide a consistent experience, but to only provide a neutral venue is unacceptable to anyone with deep pockets who wants in on this. What happens if something really terrible (actionable by law) occurs? How do we make sure the D&D session doesn't have something inappropriate? How do we actually monetize this space that costs us $6,000 a month? Really, that's what we pay. About $50 a seat per month.

The reality of most D&D sessions is there are a lot of slightly boring ones and then one amazing one, which you tend to remember without remembering the boring ones. D&D especially is a constant playtest, as most people don't run the same adventure twice. Imagine sitting through a bunch of boring movies to get to the great one. That's how it tended to be before the Internet, but people want blockbusters every time nowadays, and they can get them by picking and choosing. All of this inconsistency is why there are no national chains of game stores. Managing the managers and the organizers would be like herding cats. You would have to have a whole department called Program Development to plan and test event structures. Publishers can't even pull this off well with their one game. Plus, as mentioned, the customers would never pay, at least not so far.

Anyway, this is something that keeps me up at night. Labor, as minimum wage here approaches $15 an hour, can no longer be the solution to bespoke experiences. We are fast approaching hard limits that are testing the demands of customers with the reality of what is possible in small business. It may just be the little store, with the passionate owner working for close to zero dollars, will be the one providing the consistently amazing experiences that big stores could only dream of. The rest of us are wondering if we should get a liquor license or hire some circus performers.

Monday, May 13, 2019

Insurance (Tradecraft)

A nuts and bolts post? Sure, why not.

A business requires insurance. At the minimum, you need liability insurance. There are other types of insurance though. I've got liability insurance, workers comp insurance, key man life insurance, and for years we had vehicle insurance on our van. Insurance is one of those things new store owners don't always think about.

My second year in business I went to a seminar where a store owner had someone drive through their front window into their store. Twice. He was the likely guy to give a presentation on business insurance and for many, needing such a thing was an eye opener. When I started I had a home and assets and made sure the store was incorporated and insured and far away from my personal life. For most young people without a pot to relieve themselves, that might not be a consideration. 

So how do you get insurance? Find a human. I'm not sure if you can get business liability insurance online, but if so, it's a bad idea. You want to talk to a human about your particular business needs and exactly what you do and where you do it. For example, my store went from a regular retail environment to an improved, two story monstrosity in need of rebuilding if it burned down. It probably wouldn't be rebuilt there, but they'll pay to rebuild it somewhere.  If I had just gotten regular liability insurance, I would be left with no protection and a ton of outstanding loans for a burnt out shell. 

Other considerations include insuring Magic singles. My policy has a "fine art" clause that includes those. What you don't want are surprises. Insurance companies are all about taking as much money from you as they can and paying out as little as possible. It's better to be up front, find angles to cover everything necessary, and avoid surprises. Look at your lease and see what you're responsible for.  Plate glass insurance is often inexpensive, but if someone breaks all your windows, you could be out thousands of dollars. Over time, revisit your policy and up your limits when you add inventory or fixtures.

Who is that human? I have a customer who jumps from job to job, and one of his latest was insurance agent. He was an agent for about four months before he moved on. Do not use a green agent. Find someone experienced. I had a new agent misclassify my company for my workers comp policy, thinking I didn't need to be covered as an owner, when in fact it was necessary. A company audit revealed the mistake, and rather than admitting their agent error, they charged me $3,500 in back premiums. Insurance companies exist to do two things: take as much money as possible while denying your claims. 

Personal insurance agents tend not to handle commercial insurance, so you probably won't be able to use your Aunt Kathy's agency to handle your commercial needs (my Aunt K does my personal insurance). Attempt to find a well regarded commercial agent who has been doing this for a while and lay all your cards on the table.

Classification is tricky as there is no "game store" category for liability insurance. You might be classified as a toy store, a book store, a hobby store, whatever is close, and the cost between agencies and within each agency could be enormous. As long as you don't get cute, something reasonable should be fine.

Avoid buying a policy based entirely on price. Ask what's not covered in your case. Have a good heart to heart with the agent. These policies are really cheap compared to what could happen. I once transitioned between agencies and in a 30 day overlap period, someone broke into my store, doing a lot of damage and stealing a lot of cash (foolish me).  I talked to my new agent who walked me through my old coverage, which sucked, and my new coverage, which was great. I filed a claim with the better coverage, and yeah, they canceled me exactly a year later, but I saved $900. 

Make sure you have extensive business interruption insurance, which is usually standard. Knowing that my store could burn down and I have months to find a new place while paying employees allows me to sleep at night. When you get bigger, losing all your employees can destroy your business as easily as fire. 

What's a Good Company? I don't know! They're all terrible! I can't even remember who I have now. Let me check: Travelers for liability, State Farm for key man life insurance, and AP Intego for workers compensation insurance (pay as you go). Farmers burned me on that workers comp policy I mentioned, so maybe avoid them. 


Friday, May 3, 2019

100 Item Challenge (Tradecraft)

I recently read the ebook Smarter Inventory Drives Sales. It was a standard inventory approach with a lot of complex terminology to describe simple things, but one thing stood out. Inventory accuracy reality and perception were vastly different. The article quoted an Auburn University study in which back in 2005, before many retailers had an online presence, most thought their inventory accuracy was far higher than it actually was:
Nearly all retailers truly believed that they were at 95% plus Inventory Accuracy, and why wouldn't they? Online customer visibility was in its infancy and the term omnichannel was barely invented.
Why mention online sales? It's a painful process to sell online only to give back money because a product doesn't exist on the shelf. Stores upped their inventory game tremendously when they began selling online. My store is in that situation a little bit with our Magic singles, Our singles inventory is weak, because we have weak tools and weak processes. The metrics associated with failure are hard. We regularly bribe customers when our inventory is off. Although we're at 99.4% positive feedback, we were told we couldn't sell internationally because the standard is 99.5%. Rather than the soft metrics of back peddling with a brick and mortar customer, when you're out online, it results in bad feedback and less sales in a more direct manner.

For those of us, like me, who don't do significant online sales, we're back in that pre 2005 study territory, thinking we have a high degree of accuracy (95%+) when in reality, the study finds, accuracy is much lower:
Accuracy is somewhere in the 65-75% range. A few still cling to the decade old belief that they have 85% or higher exact match Inventory Accuracy.
This means the value of a retail store should be considered lower by at least a third. If you were to buy a store or put yours up for sale, the assumption of inventory value would immediately start at 65% of whatever you think is there. I think adding even a modest online component may increase the value of the business, if for no other reason than it denotes a higher inventory accuracy of around a third. This assumes this is all understood by a buyer or broker. In any case, if I were buying a business, I would assume 35% of the stores stated inventory is smoke and mirrors.

Rather than claim high accuracy, test this yourself. Do an actual inventory with no excuses. Don't do a regular inventory, do a random check. There are a lot of excuses when you get down to business on why things are wrong. You may have known they were wrong in the back of your mind, like many things in a store that are out of place. It's just a database after all, why sweat accuracy? But remember, you pay taxes based on the accuracy of that data and customer satisfaction is tied to product availability.

Inventory 100 random items. Do a spot inventory. The way I did this was dumping my inventory from my POS to an Excel spreadsheet. In the column next to each item, generate a random number and copy that cell down through your entire inventory. This is the only way to really check, as a standard inventory process is too subjective. Here's an article on how to generate that random number. Now sort your inventory based on the random number column and inventory the first 100 items.



What did I get? Well, how do we measure? If we measure missing items, it's one number. If we measure incorrect entries, it's another. Both were pretty close for me at 85%. I was certainly in the camp claiming 95%+ accuracy before doing this. I already had what I thought was a robust inventory process in place, but I reiterated the need to get this work done to managers and staff and put a monthly 100 random item check reminder on my personal calendar.

This measurement of progress should help improve performance. Doing a regular inventory is clearly not good enough. Give it a try and let us know what you found. There's no shame in admitting you have a problem if you're going to fix it.

Sunday, April 21, 2019

The Nocturnal Financier

I may be a lot of things, but I'm essentially a Capitalist. A Capitalist believes in nocturnal finance. The way you retire is to have your money work for you while you sleep. For many, that's a 401K, but for the small business owner, it's the exploitation of labor, to quote Marx. Most small business owners have little in savings, and I'm ashamed to say, I'm not an exception.

To be a Capitalist is to put your eggs in the nest of others, hoping they'll warm and nurture them in exchange for payment. It's also to accept the rightness of your willingness to work for others back in your day as a nest warmer. That's the main difference between my nest egg and the nest egg of an employee. Rather than relying on the numerical supremacy of an index fund, I let some kid in their 20's, with little nest sitting experience, sit on my valuable eggs. Hopefully you discover the cracks early enough.

This Capitalist egg sitting may seem to fly in the face of the general social welfare, but I believe we can work towards a more equitable society while insisting people take the initiative to improve their individual situation. Only a cretin truly believes there's a level playing field. The game is rigged. Sometimes it's rigged in my favor but most of the time, not so much. I like the game, but it is a system designed by the winners to keep them winning. I know we can fix the game with a well thought out expansion (with a lot more players), rather than tossing the game (an egg toss).

I vacuumed my million square feet to get to my exalted seat known as "the middle." If I can keep the balls in the air long enough, I may slowly recede from my business while others do the heavy lifting. Because I have a bad back from that heavy lifting and no workers comp insurance. If I can raise up, mentor, or at least pay well my employees along the way, I consider that a double victory. One manages a game store now. Another is head buyer at a major distributor. I am a stepping stone, so I can't take credit for their victories, but I hope we came together to build something wonderful that positively impacted their future.

All of this could come crashing down with a couple bad months. Perhaps I injure myself. I have key man business insurance if I die, but a good maiming? Not covered. Perhaps a national tragedy keeps people at home. A major Bay Area earthquake, long overdue, could eliminate my entire community in a moment. There is no backup plan, no unemployment, no explaining the situation to the boss. The vast majority of my nocturnal capital is tied up in worthless cardboard. Does this instability and painful chance of failure make the true socialist feel any better about my exploitation? Doubtful, but there it is.

The restless sleep of the nocturnal financier means you're never quite rested. I taught my young nephew the phrase, "I'll sleep when I'm dead!" It angered his mother, but it should be the mantra of the small business owner. No safety net. No rest. No real time away. The boss is a jerk. The customers are unreasonable. The employees are stealing. Your partners carry knives for the inevitable stab to the back. I can't imagine life any other way, and if I had to have my labor exploited again, if I had to mind someone else's eggs, I would be longing for the sleepless nights of the nocturnal financier.

Monday, April 15, 2019

Game Store Tech


When I started in 2004, I was coming off an  IT career, so I wanted to be up to speed on retail tech. It was really the only useful skill I brought to the new business, that and the ability to research any project. 

I bought a new PC clone point of sale machine, custom made to handle the various peripherals. It was so complex, consultants were hired to work their black magic to get it all working. Could I have figured it out? Sure, but I respect expertise in IT and wanted to start out right. 

Setting up the POS required the consultants go through complex processes, hand written in notebooks. They were like a cabal of wizards, summoning profit into existence. While on vacation in France a year later (frequent flyer miles), the consultants came and fixed it when it corrupted itself during a power outage. I was troubleshooting the best I could from an Internet cafe in Paris. IT was inescapable.

In the back office, I had a Windows server running tape backups. I used a complex, Grandfather-Father-Son (GFS) tape rotation and took tapes home each night in a briefcase like some sort of spy. My laptop was a bulletproof IBM Thinkpad T30 from my days in IT. In the new store, I learned a lesson in security when a gold toothed homeless man walked into our Game Center and immediately went into the unlocked door to my office. I caught up with him as he was zipping up his jacket to leave, with my Thinkpad hidden within. I already had a new laptop on order that week, but it was still a painful lesson.

I should mention that before I started the business, I was running multiple Red Hat Linux servers at home. When the store opening became inevitable, I wiped them clean and installed Windows servers. Nobody has time for that crap.

15 years later, and a lot of things have changed, but a lot has stayed the same. Our POS is an iMac, not that different from my first computer, although most of my peers are moving to the cloud. I can’t imagine changing POS systems now and not moving to something cloud based. The innovation is happening with cloud based services, plus I can sleep at night knowing it’s all backed up offsite. The backup server in the office has been replaced by a (terrible) dinky Apple time capsule backup device and cloud streaming.

On the sales floor are four iPads. One iPad plays music through our Sonos system. Two iPads play board game demos which drives sales. The fourth iPad is locked down to allow customers to sign up for WPN events (a weird Premium store requirement). Nine staff members use smartphones capable of running transactions using either a plug in card reader or a new Bluetooth unit we just got in. I’m a bit uncomfortable expecting staff to use their personal phones to ring up sales in an emergency, but there’s always the junky iPad nearby as an alternative.

My goal is safe and ubiquitous computing. The thought of spending time fixing or upgrading a machine is irritating. We have a Windows laptop for events that reminds me of my old life, with its constant updates and problems finding printers. I'm not quite an Apple fan boy, but I appreciate the strong, Unix based underpinnings of their hardware and the extremely long product life cycle. My first laptop went six years before I replaced it, and we just resurrected it for my new manager. 

I can’t imagine spending time with some clunky tape rotation scheme. Still, when I go on vacation, I wonder if the consultants will come if the POS goes down in a power outage. They tend not to answer their phones. We spend a lot of time preparing for the reality the POS could fail at any moment. The cloud is definitely my future and I certainly don’t miss the chilly server rooms of IT.

Sunday, April 14, 2019

The Shiny Trashcan Effect

Greetings from debt purgatory!

We are half way through paying off our construction debt for our expansion project started in 2014. Do you remember 2014? Fantasy Flight Games was still an independent company, Magic was going strong and the big news story was the outbreak of Ebola. Good times. Our Kickstarter did fund successfully that year. We did complete the project, albeit two years late. We did send out all the rewards, and one refund to that jackass who likes to leave me (hidden) blog comments. That saga is a whole other story (it's in the book).

Customers occasionally come in, tell us how they're great supporters of ours, how they buy all their games from us and ... holy hell, you built a second floor!!! Yes, thank you, thank you. Mmm hmmm. I stopped mentioning it was years ago. Snark is not appreciated and we need all the customers we can get. Got debt to pay down.

So how are we doing? It's a bit of a struggle making loan payments and trying to grow during a period of industry transition. There are projects I would like to do. There's a white board in my office with $20,000 worth of stuff. Yet, we just improved the store in our bid to obtain Wizards of the Coast "premium" status, and we somehow came up with the thousands to do that.

Yes, thousands of dollars for a nebulous status. However, this is exactly what I had been asking for. Recognition of hard work and capital spent to improve a venue rather than shoeboxes of cardboard (even though the cardboard is more in line with success with the WOTC model). How could I not pursue this? When motivated, we can make things happen. In the future we shall refer to this as the Shiny Trashcan Effect.





Our sales necessary for growth, the needed engine to pay off our debt, have exceeded expectations. We saw a large jump when the space was complete, but it was a one time thing (about three times bigger than projected). We immediately went back to the grind. It brought home the fact that the space is really important to a small subset of customers (20%). That money spent on doubling inventory would have seen growth over years, but probably slower growth, rather than all at once. There's also the question of whether doing nothing at all would have led to the same growth rate, considering we struggled to focus the business in the Kickstarter and construction year. No, no, this will have longer term benefits, if we can leverage them.


Anyway, we're up 25% this year, due to a number of factors, so I'll continue to fantasize about that white board and work on projects that don't require intensive capital. And maybe we'll hit Premium status with WOTC and see some benefit there.

Wednesday, April 10, 2019

Finance and the Great Unknown (Tradecraft)

As my book was hitting the shelves, I had this sinking feeling as the store struggled. This would be my comeuppance, the game store owner who wrote a book and promptly went out of business. 2018 was the year we had an honest conversation about debt and finances and the various tricks used to get through a month. Cash flow in the beginning of 2018 was usually enough to cover a handful of days. Being a week behind on bills was normal. Worst of all, I didn't want to acknowledge it.

When our construction project was underway and the months slowly ticked by with its business disruption, I borrowed money to pay for the work, and the decline in business. Then I borrowed a little more. Then ... a little more. All in, it was over $100,000. Could I pay it back? There were no bank loan actuaries to put on the brakes and say I had enough debt. There was me, with a modest income projection, with a make or break project. If I stopped borrowing now, I would fail. There's not really a choice here. So I kept looking at the numbers I needed to achieve while in the back of my mind, laughing hysterically. Because I have a bit of imposter syndrome and part of that is never believing my own bullshit.

So in 2018, just a year ago, I took matters into my own hands and did what I said I would never do again, and took out a home equity loan. It's amazing anyone would give me one after flipping Citimortgage the bird, and re-negotiating my mortgage on my own terms, but it had been enough years, and all was forgiven. I refinanced one of my loans and infused extra cash into the business. The problems were finally acknowledged and as nobody else wanted to loan me money to do this thing, I did it myself, paying myself a reasonable interest rate, much to the chagrin of my investors.

I paid off a loan that had the most stringent terms, a security interest on my furniture, fixtures and equipment (which I am grateful for), with a loan from me, with the least stringent terms. Legally, as an owner, if the business fails, I am last in line to be paid. That's why my investors were reluctant to loan money. It's a crap position, as opposed to other personal lenders who took on senior positions, or security interests, or whatever made them comfortable.

The ironic thing is I get mail every day offering to loan me hundreds of thousands of dollars. None of my loans are on a credit report, they're all private. Sometimes I take the time to talk to lenders on the phone explaining, "Look, I don't need any more money. Money is cheap. I need revenue. Call me when you have a plan to increase my revenue." It amuses me because it's a large corporate position. Sears doesn't need another hundred million dollars, it needs a plan to be a better Sears. If you come up with one of those, well, you've got something they want to buy.

Coming up with a better Black Diamond Games is at the end of the day, my job. But for a while in 2018, I was looking around, hoping to maybe find someone who could take me up on that offer. The guy who wrote a book on starting a game store, looking for someone to do his job. That was 2018 in a nutshell. Thankfully, we're in much better shape in 2019, in all the ways possible. It's chaotic and stressful. Good material for a second book.



Thursday, March 28, 2019

Inclusivity and the Blue Hair (Tradecraft)

My store has a reputation for being an inclusive environment.

Much to my surprise.

You see, I haven't put up signs saying we're against hate or networked with the community to be more inclusive. I haven't sought out a more diverse staff or advertised in the Pink Pages. I don't have a particular store policy on inclusivity and I don't have any rules in my Game Center, as I think rules postings are only necessary when they're really, really necessary. History has shown only crazy people post rules (or make laws) when it's not necessary.

The reason why we have a reputation for inclusivity is we try really hard, now get your notebook out so you don't miss this, we try really hard not to be a dick.

When other people show intolerance, it's not a "he said, she said" issue. The intolerant person is shown the door. Because they're being a dick, not because of some political stance, rule or policy. Most of the time I'm not even there, as this activity happens in the evening hours during events. It's ingrained in the store culture, and staff are part of that culture. There's usually one trouble maker in every group (two in Magic).

As for hiring, I've realized inclusivity provides me a great opportunity to hire excellent people overlooked in a more conservative environment. I don't care about the color of your hair, your gender, your orientation, your identity, your race or even your politics, provided you can do the job well. I do want you to be clever, knowledgeable and customer service oriented. Because other hiring managers do care about all the superficial things, I often find diamonds in the rough. Note how selfish I am. Note that I am finding a competitive advantage and not making a political statement. I am not hiring lesser people to make a greater point. I am not being a good person, I'm just being self serving. Most importantly, I'm not being a dick. As with everything in the game trade, the bar is low.

I want to mention when I was doing research for my store in 2004, I visited the local comic shop, Flying Colors, with a friend. As we were leaving I mentioned, "Do I really want a life managing young people with blue hair?" That was what I saw at Flying Colors and being in the professional world, you would never see that. I had no experience with blue hair (my son later had blue hair for years) or really anyone who didn't file down their personality to fit into a corporate culture. I assumed blue hair meant trouble and weird problems and unpredictability, when in fact, blue hair meant opportunity. I really do want a life managing young people with blue hair.

This diversity grows the store and brings in a diverse crowd like I could not have imagined five to ten years ago. It's a hiring dividend, not the core value of the hire. The hobby has become mainstream. If you would have looked at my store a decade ago, it would have been the stereotypical "sausage fest" of all males, acting male, smelling male, being their stereotypical male selves and expressing their dumb ass stereotypical male opinions. I get it. You become so blinded by testosterone that you can't even smell the sweat or notice the pee on the seat. Testosterone in the air blurs the senses. That was the community, whether you liked the smell or not. For some stores that haven't adapted, this is still the community.

There was good and bad in that group, like any group, but it was an insular community, that repelled others, especially women. That is gone for the most part, or at least lessened. The hobby has spread rapidly and the customer base has expanded to all types of people and most importantly, we have been there with open arms. We didn't change, we just provided the open environment that allowed diversity to stream in, and the understanding that there will be no hostility or intolerance allowed.

Not everyone agreed. Not everyone went quietly. One edge lord threatened violence against me. As someone who's not a squishy liberal, and more libertarian (a liberal who returns fire), this had me a bit fired up. I will go down with the ship and take you with me. I bought a couple Louisville Sluggers, in case we wanted a little spontaneous staff batting practice. But like most cowards, they made a lot of threats, trolled me on the Internet for a while, and eventually disappeared.

In any case, there was no change needed for this transition, no Sluggers wielded, just an understanding we would make hard decisions to defend people who chose us as their home. If you're not a dick, how could you not? Embrace the blue hair. Blue hair is here to stay. If you really are a dick, embrace it anyway, for your bottom line. Fake it for the money.

Friday, March 8, 2019

The Game Trade Pivot

When a game hits peak popularity, it's not uncommon for it to be taken away from independent retailers in some form or another. It might be a retailer exclusive, or a publisher's attempt to spread the wealth (and power). If Target came to you after publishing a hot board game and offered you a bazillion dollars for an exclusive to the expansion, what would you say? It might kill your company, but you would have a bazillion dollars.


This morning I had two examples of pivot math, in which I needed to adjust expectations based on publisher removal of market demand. One is for Wizards of the Coast and the other for Ravensburger:

How many should I buy?
  • Saltmarsh: 30 days of Tomb of Annihilation sales (because those are my terms), with a 10% bump for growth, with this total divided in half because of removal of early release (it will be sold on Amazon the same day by idiot retailers).  I suspect Amazon gets half the D&D market. 
  • Villainous Expansion: Total sales of Villainous base game, divided by three, because it's an expansion, divided in half because of early Target release by months. Everyone who cares will already have it and coming out three quarters after our huge sales push means it will be cold.
A younger me might have decided to drop Villainous entirely and avoid it, especially after we sold 50 or so copies over the holidays as one of our top picks. That's a really small number for some larger stores, but out here in the burbs, we run shallow and wide. As for Saltmarsh, I might begin slimming down my D&D overall and start banging the drum for Pathfinder 2.0, which is coming soon. That's all counter productive though, so I just pivot and move on. I certainly won't push Villainous again or most Ravensburger games, nor will I be looking to invest time in jump starting Adventurer's League, which can't seem to gain a footing. I will cultivate my indifference. 

This gets to the problem of the game trade in general, without allies we have cold war enemies. Publishers want retailers to do some lifting for their product, but we have product PTSD. We're not willing to enter into new co-dependent relationship in which we're beaten in response to our love. So most retailers put minimum effort into promoting products and instead focus on well established events and reliable staples. It takes a tremendous amount of effort and tremendous love for these games to do otherwise. The key to success is a series of co-dependent relationships in which we don't get angry, we quietly pivot. But it wears you down, let me tell you.

Thursday, February 28, 2019

GMROI Application (Tradecraft)

This is a couple of posts from my Gary Ray, Author page on Facebook.  I've had this page for a couple years now and despite only a couple hundred people on it, there's far more engagement than this creaky old blog. I encourage you to follow me there, because there will come I time I give up on this medium.

Here are my posts, which I'll certainly use in inventory management or buying presentations in the future. It takes a rather arcane concept, Gross Margin Return on Investment, something I've talked about before, and uses it as a tool for ordering. Applying a tool, what a concept!




I don't want to spend much money this week on restocks. How many times have you been in that position, but you're not sure how to proceed?
I was in a seminar once and they suggested you work with your restock list with your distributor, going by code down the list, until you hit your purchasing budget. I found that astonishing.
Say you have $2,000 for purchasing and you really aren't sure where to spend it. This is where I was this morning and remembered GMROI, which I had just calculated for the store the day before. GMROI is Gross Margin Return on Investment.

For every dollar you spend, GMROI measures how much money you'll get back. Would you rather get $2 for your $1 investment or $1.50? You want the $2 of course, although you might decide you want to focus on short term velocity (turns) rather than long term return (GMROI). We have multiple tools in the tool box.
In my example below, I could spend my money on high turning card games for a short term gain, but the GMROI is just average. It's an average investment. If I need a snack run, I should probably do that order first, with its $2.06 return on every dollar I spend. Costco is my most profitable distributor, dollar for dollar.
What I used to do is place my Games Workshop order first, but now I see with GMROI that tactical miniature games are my lowest return. That's the last place I should spend my money, return wise. It also has a below average turn rate. It's marginal, but still worthwhile. It's certainly not my top priority.
So when I went through my orders this morning, I de-emphasized GW ($1.58 GMROI), made sure to re-stock every card supply option ($1.91 GMROI), and made sure my snacks were stocked (which I did on Friday), since it has the best GMROI of the bunch.
My store is healthy, but where you really see GMROI shine is with troubled stores or troubled departments. There have been departments where I've calculated sub $1 returns on my investment. In the GMROI example I'll link to, I was making 90 cents for every dollar invested in classic games. We shored that up, mostly by carrying far fewer of them.

---

I know from GMROI what department comprises my worst investment, but why is it my worst investment? Why are tactical miniature games my worst performing department when it comes to investing money?
The vast majority of that department is comprised of Games Workshop. I can see my COGS percentage number is far too high, 63%, when my average is 57%. What makes my margin so poor with GW? It turns out to be a lot of factors:

1. The base margin for most GW products is 45%, which is lower than many lines. 

2. Direct order products from GW are 35%, even worse.

3. My store offers a 10% discount for pre-orders, which brings a lot of product down to that 35%.

4. The splash nature of GW releases means I attempt to funnel as many sales through special orders as possible, at 35%, hurting my margin.

5. The splash nature of GW means I order heavily in hopes to avoid outages. This results in overstock, which is then clearanced at a discount.

6. The enforced once a work ordering AND the one week ship time for us means I can't rely on just-in-time ordering, like I do with the rest of the store, so I order deeper, taking more risks.

7. My 45 day terms with GW means I push my luck even further, which means when I lose, I lose bigger. 

8. My prize support tends to exceed my allowance of free product, to some extent, which is really a marketing expense, but it increases cost of goods.


So for that reason, tactical miniature games are my worst performing department. However, there are other considerations:

1. 4.1 turns is nothing to sneeze at. This is solid inventory performance, and if there was a worse performing department (there isn't), it might make sense to take advantage of this.

2. Metrics don't measure volume or profit, so Magazines might have better metrics, but I sell 30 times more miniatures making a much larger profit.

3. Tactical Miniature Games drives sales of paint and miniature cases, which are also weaker departments, but together make up even more sales.

4. Pre-orders and low margin special orders are risk free. It's low performing money, but it's free money.

5. The clearancing of product is painful, but GW products have brand value protection, so you'll always sell all of it, over cost, eventually, without a lot of work.
So what we see is tactical miniature games for my store should be of least priority, but they're a big enough draw to maintain, provided they're propped up by more profitable departments. It's not an area in which I should look to expand, unless I've exhausted all other options.
That's why when I had a little extra money from clearancing my last miniature game, I did the wise thing. I invested in ice cream.

Wednesday, February 27, 2019

Diversifying When the Show is S&#$ (Tradecraft)

The game trade has recently become, what's the technical term? Right, a shit show. So you naturally want to diversify into new product lines. I highly recommend this, provided you can find the right mix. Most veteran store owners will tell you, that mix is a struggle. It's not that we can't sell comics, toys, pop culture, or pop tarts, it's that getting those new lines to reasonable performance levels can be difficult.

Diversification depends on the kind of store you run. If the word "gamer" appears in your store title, we can assume you're likely to run a business that appeals primarily to hardcore hobbyists. However, if you've spent the extra money to build a store that appeals to the general public, you've got more options.

Even with a family friendly specialty shop, there is still the issue of location. My store is family friendly, but I have close to zero foot traffic. There are reasons to go there, as in it's a destination store with geeky stuff nearby, but there's nobody walking by.

I spent $20,000 on toys when I moved to my larger location because my competitor had a lot of toys and I needed new, diversified inventory when I doubled my retail space. Toys seemed safe. Boy was I wrong. This was a disaster, not because toys were bad, but because I had no foot traffic. My selection was just alright, not enough for my business to become a toy destination, especially when there were plenty of better options. I also misunderstood the nature of the toy market, which relies on a lot of volume to move low cost items, often stocked in depth. I would have a wall of board games in single quantities next to a wall of toys that only made sense stocked six deep. Toys were not for my store. Neither were comics, and a bunch of other things I tried.

Sending back a pallet of Melissa and Doug
What worked for me was gradually trying new lines, more in the category of gamer adjacent. What do my existing customers want to buy? What do they already buy from other people? What adds value to their lives rather than just idiotic add on purchases like wax candy lips? We dabbled a bit with Funko Pops. We tried pop culture items from distributors with limited success. We tried novelty candy and glow in the dark pirate figures. Eventually we found a few companies that made pop culture items, often things I would never have considered. For example, as our store has become more diverse, we've found success selling pop culture purses, scarves, jewelry and the like. Women were rare in the store, ten years ago, but the hobby has changed as has our store. I delegate these new categories to younger managers who know what's going on.

You want to ease into new waters, testing them out, learning what people want and adjusting to new problems, like loss control. We had homeless people who would wander into the store and flat out steal things, just walking away with pop culture wallets and hats. A lot of things we've learned need to go in display cases, for example. Suddenly we have things everyone wants, stuff that will sell on a blanket in front of a train station. It's a weird feeling.

The easiest form of diversification by far, is diversification of supplier. We make a point of backing a variety of Kickstarter games with retailer tiers. These games differentiate the store and although it took years to dial in what works and what doesn't, they've tended to be profitable. Likewise, there are many direct only publishers and suppliers that are worth pursuing, many of whom will be at the GAMA Trade Show in a couple weeks. We order direct for dice, dice bags, classic games, jigsaw puzzles, marbles, and even ice cream.  Hasbro mass market games sell well when we can get them. They didn't sell ten years ago, but with the demise of Toys R Us and a larger segment of the population playing games, there's newfound crossover back to the games of our youth.

Some diversification advice:
  1. Examine your specific set of circumstances rather than following what others do.
  2. Avoid declining markets (comics, Funko POPs, for example).
  3. Find things that add value for your existing customers.
  4. Ask around to see what people are interested in. Frisbee golf? Airsoft? 
  5. Look for gamer adjacent products before striking out into new areas.
  6. Find publishers who don't directly compete with you. I backed a Kickstarter today that offered me exclusive sale of their game!*  *except at conventions, on their website, in contests, at the BGG store...
  7. Look for favorable terms, margins, or net priced items with flexibility.
  8. Test the waters with minimum orders but remember to follow up quickly so you don't lose momentum.
  9. Test the limits of your concessions with additional snacks, coolers full of drinks, and potentially hot food options.
  10. Consider a long term investment, like diversifying into a coffee bar or real estate or anything else. 


Saturday, February 23, 2019

SNAFU

SNAFU: Situation Normal, All Fucked Up

I just wrote about having time away from the business. There are various approaches to freeing up time, and I wanted to mention what I think is the wrong way and of course, what I think is the right way.

The wrong way is streamlining. The book The 4-Hour Work Week sounds an awful lot like how I described my extended vacations. It's a New York Times bestseller that my own book will certainly never live up to. I can take months at a time off with 3-4 hours a week of actual work, but it has nothing to do with streamlining. I tried streamlining after reading this book and it was a short lived disaster. This book is about creating a turn key business, a machine really, that shaves off all the hard edges so you can spend as little time as possible running your business. I've mentioned it before, but this is not a hobby game store road map for more time. We thrive on exceptions and hard edges.

There is a lot to learn from business process books about creating processes and procedures, but in general, more and better customer service, more and better options, are the answer, rather than streamlining and offering less. I think doing one thing well is the key, but offering everything possible within that one thing with stellar service is why customers choose you. It's your Unique Value Proposition. Once a framework of processes and procedures was in place, I then empowered managers to create their own policies and procedures, sometimes with a few tweaks from me. It requires they understand the philosophy of the company. Overall though, it's not unusual for me to stumble on a new policy or procedure in my own business that I've never heard of. That's exactly what I want.

Policies and procedures to me are about how we can regularly hit high performance goals doing our one thing. If I can't do something repeatedly with high levels of success, I don't want to do it at all. For example, people ask me occasionally to ship them a game. We don't ship. If I made an exception, we would be in new territory and we would most certainly screw it up. If I'm going to ship, I'm going to ship a lot and I'm going to do it right, with a plan. Policies and procedures created by staff are often ones I might have shaved off, 4-Hour Work Week style, but their desire to serve the customer has lead them to create new systems to make customers happy.

What you won't find in a 4-Hour Work Week scenario is the huge amount of variability and passion required to run a store like this. It's complete, but bounded, chaos. A primary goal for us is to create a wide range of possibilities with policies and procedures addressing each, along with boundaries that limit customer demands. There is always that guy (or girl), who wants it one way, but it's the other. That's unfortunate for them.

We saw this with our recent ding & dent sale, amazing deals with long lines. There was the person who complained bitterly about waiting outside, even though we had little control or ability to let hundreds of people in early. There was the customer who wanted an even larger discount because the box was damaged! People will always want more and ironically, the closer you get to free, the more of your time people will consume. Post a photo of free stuff on a table to your Facebook page and watch your time evaporate as you answer endless questions.

There's a Zen saying, "If you want to control your cow, give it a wide pasture." This is a reference to your mind. If you want to control chaos, give it wide boundaries. Let chaos roam about and eventually it will get tired and take a nap. Some employees will not like this, as the chaos is hard to wrap their head around. It's why it takes six weeks for new employees to gain basic competence. Some customers will attempt to game the system or call out inconsistencies in the chaos. That's all part of roaming the pasture. Bounded chaos is the strategy.

With our wide boundaries, we can have strong customer service ... with hard limits. It's a chaotic environment with many variables, but employees are empowered to make important decisions, with leadership being fairly flat so most everyone is empowered. Leadership has to back employees for this to work, so rather than the customer is always right, the philosophy is employees first. It's common with some big businesses like the Virgin company. Am I the best boss? Heck no, but I'll always back an employee if they're following policies and delivering great service.

Do I fire customers? Yes, but very, very rarely. We have half a dozen permanently banned individuals in year 15: the double dealer, the white supremacist, the homophobe, the serial shoplifter; you get the picture. I recently fielded the question, "Where in your book does it say I should go fuck myself?" Grab me a pen, my friend. There's always room for another chapter.

This all works because I have really, really good staff, especially managers. I support them and let them run with the vision. All the credit goes to them.

Friday, February 22, 2019

A Week In The Life

My weekly scheduled as a hobby game store owner is based on the needs of my business, my personal needs and desires, along with financial considerations. I could afford right now to not work at all, to not go into the store. However, I have the same problem as every semi-retired person. If you don't go to work, then what?

That does not mean I'm financially independent, only that I've created a system that works independent of my continual input. As I don't have a better use of my time, it is best spent maximizing the value of the business until I have my 'then what" answer. That answer might be a second business, a second location, or who knows, I might buy a boat and sail off into the sunset and work remotely. I spent a bunch of time writing a book in 2017, so there are answers to these "then what" questions.

Do you dread going to work on Mondays? So do I! So I don't go. I work from home Mondays, placing orders online from about 7am to 1pm. That's a decent day of work for me, but to be entirely honest, I could send off this entire workload to distributors to do this job. Many store owners do this, and when I'm on vacation, I do it as well. However, I think manually ordering every single item ties me into the store "hive mind." I may not play as many games as I would like, but I know what's hot, what's available, what isn't and why. I know things.


Tuesday is shipment and meeting day. The vast majority of the stuff I ordered on Monday shows up on Tuesday. Having next day arrival means we can rely on just-in-time delivery -- probably a little too heavily. I would like to have about 20% more inventory in the store and we could probably double the inventory, if we had the money. As we're paying down debt, we run lean. We only stock best sellers and we drop the bottom 20% to make room for what's hot. There is always a bottom 20%. The store makes over seven figures in revenue, despite only stocking the best of the best.

On Tuesday, I help receive all those things I ordered, another way I feel connected to the store when I'm essentially off the sales floor most of the time. I learn what each thing is, get an idea of the value proposition now that it's in my hand, and get a chance to see where it fits in the store. Later on I go to lunch with my manager. We have an agenda of items we go over as part of our process improvement plan. I'm usually responsible for about 20% of those items and the rest go to the manager and staff. My job is to remove obstacles and occasionally take over thorny issues. We make a point of doing this every week and the goal is to constantly "fill the hopper" with new issues. It's a process I learned from Dave Wallace.

Wednesdays and Thursdays are slower days and I'm there with just my assistant manager. The idea is I do mostly office work during these days, along with covering for him and helping customers. As we grow larger, I expect I'll have extra coverage these days, freeing me up to do more officey things, whatever those may be. Thursdays are also order days, but as I may get pulled away from those if it gets busy, I often spend Wednesday night placing my orders for a couple hours. In fact, if I'm home at all, I'm often logged into the point of sale making adjustments and tweaks pretty much all the time.

Fridays are another receiving day, like Tuesdays, but not nearly as heavy. Before construction, I used to take half the day off and go to the gym and the range, but the financial burden after construction meant I dropped those activities. I'll usually do a little office work, help with receiving, work with customers and if it's slow, take off a little early. I'm not really needed, which was great today (Friday), because I'm home sick (I was sick yesterday, but had to go to work anyway).

Saturdays are a big day for the store. In year four, I got weekends off and one of the goals of the manager was to keep me away from weekends. That was by design. Saturday morning I'll get an email from my main distributor of all the new items that week. I'll spend a couple hours researching each one and send that in. I do not look at email solicitations, the "dailies" restock listings, or other day to day buying related communications. I pre order absolutely everything for my store so I can free myself from the daily burden. If I look at a daily, I'll buy stupid crap, guaranteed. If I talk to you on the phone, I will likewise make bad buying decisions. I need to research at home, in a calm manner, with my POS history open, over a long period of time.

Sundays are off, right? It depends. During the holidays, while traveling, of if I know I won't be in any condition to place a Monday order, I might spend my ordering hours on Sunday instead of Monday. I will also be checking the POS constantly to see what's going on, making sure events are firing, items are selling, and checking performance metrics on sold items. I don't really need to do this, but it's part of my taking the pulse of the business.

Could I save money? My manager and I just talked about coming in Mondays to save money, but having that one day off is both a luxury and a bit of a necessity. I get a lot of work done at home that day.

Could I work less? You bet. I went on vacation for two months. I delegated my buying job to my manager and spent about three hours a week managing the business. Most of that included my finance work, making sure we were paying bills and had enough money in the bank.

My time on-site is pretty low, about 20 hours a week, maybe 30 when it gets busy (like last week with our ding & dent sale). My time running the business, if I'm focused on that, is probably a full 40 hours a week, with a lot of time spent on the laptop at home. That's sub optimal work, as I can see when I'm on vacation. While on vacation, a few hours a week course corrects, but it would be foolish to think I could do that all the time. How much time could I spend away before it all began to break down? That's an interesting question I may one day answer. This may all sound rather lazy, but the less reliant the business is on my being there, the more value it possesses. So my goal is to maximize value in a fashion that's independent of me. I wish to be highly effective while also being dispensable.

I've got a job I enjoy with an environment I've crafted, with a management team I've selected. I can take trips when I want of just about any length, provided I can afford them. There's not much better than that when it comes to actual work.

Monday, February 18, 2019

A Tale of Two Publishers (Tradecraft)

When I was building my Jeep, I was pricing bumpers when I noticed some companies, like Smittybilt were priced all over the map. Buying anything from that company made me feel bad. I always felt there was a better deal somewhere out there I wasn't aware of. Their products were middle of the road, with some very good and some very bad. I would buy things from them, use them for a while, and quietly take them off. Their reputation was ... mixed. Their shotgun approach to sales and quality are infamous.

Meanwhile there was AEV, American Expedition Vehicles, a high end company started by Jeep engineers that sold a narrow range of products, all highly engineered, and never more than a dollar or two difference between suppliers. One customer complained in an online review about how retailer prices were so similar. A retailer explained if they were to sell AEV products for a dollar less than their agreement, AEV would cut them off. So at the most competitive level, all product was sold at nearly an identical price. That's the difference between no brand value protection and brand value protection.

The advantage to the retailer is clear. If I'm selling a bumper, I would rather sell the premium product for $1,400 rather than the squirrelly discount product for $700, or $600 or whatever the market will bear that day. The manufacturer of the high end product is partnering with me. The higher priced manufacturer is maintaining value in their supply chain, maintaining a strong reputation, and thus selling to a well heeled clientele rather than a bunch of mud boggers looking for the lowest price. They make more money, which allows them to engineer quality, and the cycle continues. As a retailer I can decide what products to sell based on where I place my store in the marketplace. I can build a high end store and sell high end products at higher prices or I can sell everything, good or bad, and be the Smittybilt of retailers.*

Wizards of the Coast just dropped their MSRP on all their products going forward. If there is no price, there is no need for price protection. Ironically, this is exactly what I've called for many times in this blog, yet I'm disappointed and a little worried. What I was hoping for was possibly a bit utopian. I want to run a retail environment where price is inviolate and off the table, where I can focus on customer service, and events, all the various joy producing activities with the assumption customers will judge me based on my joy production, rather than my prices.

I would rather sell packs of stuff at a price than a shiny piece of card stock of subjective quality at a constantly fluctuating price. Yet the ability to sell the packs has fallen while the sales of the variable shiny has risen. It requires expertise and a fiddly system to sell variable shiny while it's much easier to sell new packs at a set price through my retail operation. And because it's so much easier, absolutely everyone can do it and I'm losing that battle. One reason stores close we don't discuss is they can't run the kind of store they want, and this is one example. They want it one way, but it's the other.

Asmodee has brand value protection as does Games Workshop. They're still competitors with retailers, but there are price floors that help me sell their goods. My initial reaction is to shun Wizards of the Coast and embrace Asmodee and Games Workshop as best I can. Their strategies are retailer friendly, while Wizards of the Coast feels predatory, the game trade equivalent of the soy bean king, selling their products as commodities. I have heard the next step may be dropping pre releases, and that right there is an exit strategy for quite a few stores that aren't Magic centric. We run events to get the cool stuff. Butts in seats! If you're going to drop events, you've removed our golden handcuffs. Don't get me wrong, I like gold, but the disconnect between "go buy on Amazon, but play at your FLGS" really pisses me off. Watching it all burn has great appeal.

This is all overly dramatic. The reality is nothing will really change. The offroad store will happily sell me that $700 low end bumper or the $1,400 high end bumper and they'll happily agree with me when I mention the value of the low end product or the superior engineering of the high end product. There are few retailers who get to truly pick their market position. Likewise, I'm not going to shun Wizards of the Coast any more than I'm going to turn my game store into AsmodeeLand. I will serve up both to the best of my ability. I will do my best to attract the Asmodee customers but I won't turn away Magic money probably ever. Taking stands is for politicians and priests. I have no such requirements for ideological purity.**

In the end, there's a lot more going on than my own needs. These brand value protection schemes are delicate flowers. Hasbro just discovered this when they were sued for instituting brand value protection in Europe. The larger the company, the harder it will be to institute brand value protection policies, as they conflict not only with international law, but laws between states. There is also the problem of brand value protection schemes holding independent retailers to a higher standard than mass market retailers, which is inherently unfair, even if we do cause most of our own problems. It's no surprise the consensus at WOTC was to have a consistent message on pricing. Do what you want.



*This is the same argument I've made for industry wide net pricing, by the way.
**But if you gave me a bucket of money, I would diversify away from the game trade.