Saturday, May 24, 2008

Seminar in Madison

I'll be giving a seminar in October for the annual ACD Games Day in Madison, Wisconsin. I was supposed to do one last year, but it was when we were moving, plus problems at home made it impossible. There are half a dozen game store owners giving these talks to other game store owners, a kind of preaching to the choir, or more like the blind leading the blind. Specialty retail is complex and there are many ways to do it, and those ways often don't translate well to other business owners. Plus business owners are a trailblazing, recalcitrant lot who want to do things their own way. Otherwise, why not work for someone else? I'm giving my seminar on technology, attempting to focus on the basics of what's absolutely necessary to run the business.

My audience is diverse, but most won't be planning to spend much money on technology. When I started, only half the industry had point-of-sale systems. I'm told that number is probably up to 75% now. The big issue I've seen, however, is money. The barrier to entry for starting a game store is pretty low, so many begin under-capitalized and without a business plan. This is one reason why so many fail, as they don't take into account such things as losing money at the beginning, aka startup losses. So when you start talking to them about a $7,000 point-of-sale system, their eyes might glaze over.

My approach. I've got an information technology background, ten years as a network engineer, architect and IT project manager. Unlike many IT professionals, my approach towards small business technology is as a minimalist. Information Technology can do wondrous things in a large company with a large staff, but in a small retail business, the job of the owner is to sell things, not rebuild servers and play with gadgets. You should spend close to zero time on maintaining your technology. This doesn't mean you should turn our back on technology, but it does mean you should avoid added complexity and cost. Technology should make you more efficient, simplify your processes, and help you make money. At it's best, technology should allow you to spend less time working in your business.

I'll be going over the bare essentials of what you need.

Point of Sale Machine. You need one. A point of sale machine will process your sales, track your inventory, create purchase orders to buy stuff from ACD and allow you to analyze your sales. You could do the job of a POS machine with a cash register and an index card system, but the POS will allow you to grow faster, manage inventory better, and allow other people to easily take over some of your duties so you can ultimately spend less time in your business. A point of sale machine is like your first employee in many ways. It should increase the speed of your transactions, provide you useful information, and do a lot of the heavy lifting of sales analysis.

What Should You Get? There are many out there, and none solve all our needs. There are Macintosh based systems, free systems, and systems that require professional installation. After a lot of research, my choice was Microsoft Retail Management System (now Microsoft Dynamics). I was looking for something reliable, based on established technology, that could grow beyond one register or one store. It had to have strong support when it all went wrong (which has happened twice). You will want something that can process transactions, including credit cards without a separate terminal, track your inventory, create purchase orders for your distributors, and run reports to analyze your data. If you plan to sell comics or a lot of singles, you might want to investigate other packages that specialize in that.

What Can It Tell You? It will track your inventory and give you some indication of shrinkage (theft). It can help you determine the frequency of your sales, either by item, department or category. You can do fancy sounding things like "turn rate analysis" and "sales per square foot," and you can do them quickly. It will collect your sales tax and pay it at the end of the month. It will track your customers and what they buy. Most importantly, it will help you determine if you should purchase an item again. I would argue that you make your money in saavy purchasing rather than clever sales techniques. A point-of-sale machine can help you pick apart your purchase orders to make sure you're not buying dead or slow moving product.

What It Won't Do. It won't do your physical inventory. It only reports on what you put into it. It won't do your accounting, and often won't interface with your accounting software as you like. It won't tell you how much money you have to spend or give you an accurate sales history. It's just one tool in your arsenal, and the more complex you make it, the more you'll rely on it as a piece of a puzzle instead of the entire picture.


  1. Useful insight as always.

    Might be of interest to know that Diamond have been working on a product called ComicSuite (don't know availability of it yet) which snaps into RMS or Dynamics as it's now known.

    Not much online about is other than the ICV2 info -

  2. Good point. Microsoft RMS uses a recognized purchase order "standard" that suppliers can take advantage of for electronic processing. Unfortunately, the game industry is too small and the distributors too poor to implement a system that takes advantage of this. Add in the fact that most games stores didn't even have a POS system up until a few years ago, and you can see there's not a lot of incentive to implement such a system.

    Diamond, on the other hand, has a comics monopoly and has the power to declare their implementation. Never mind that RMS is probably not the best system for comics, Diamond insists that you use it to get the advantage of electronic processing.