With a couple of months of 2009 behind us and the scope of the nations economic problems just beginning to come into focus, I'm solidifying the store's business strategy for the next year. I hate to use buzz words like "paradigm shift," but there does seem to be a fundamental change brewing for small business. The most obvious change is that credit is harder to obtain and maintain. As credit begins to shrink, what debt we have begins to loom larger, which also effects our credit worthiness as it becomes a bigger percentage of our available credit balance.
Unemployment in California is over 10%, an important number for me, since it was a high water point I set for what would still be manageable. It's what we've seen in past recessions, so it's predictable. Up to 10% and things are fine, while over 10% and we're into uncharted waters. That's the macro view of unemployment, while the micro view is many of my customers are unemployed or, like the national surveys say, strongly concerned that they may become unemployed in the next year. A few are underemployed, like the state employees who now take a 20% pay cut with their mandatory Friday's off.
On top of this is the fundamental credit shift and massive lost of wealth among us Northern Californian home owners. Some have just lost a lot of paper profits, while many of us are suddenly a decade or more from breaking even. Those who lost their homes early are starting to look like the lucky ones. Cutting back on D&D books or Warhammer armies is not going to erase that, but there is likely to be further retail fallout as those underwater realize how very screwed they are.
Although this sounds all doom and gloom, sales at the store are up modestly. They should be up a lot, and the difference between modest and a lot is the economy. I'm a near freakin' prodigy at predicting sales increases; if only I had a better grasp of expenses. So the store is doing fine, and will likely continue to do fine if things don't get drastically worse, both with the credit markets (which we could survive without, if necessary) and unemployment.
This reality check means we'll have a year of retrenchment, of focusing on "fundamentals" of running a brick and mortar store, and most importantly, of cutting costs and paying down debt. Debt has now become a looming giant with a big club, threatening to scoop us up and shove us screaming into it's leather bag to be devoured later. For regular customers, it shouldn't much change. We'll still have money budgeted for new games and we'll certainly keep our stock levels up. Where most stores cut their inventory budget first when things get tough, I'm more inclined to cut it last. It's the economic engine for the business. It would be like driving up to a scary big hill and making the decision to let off the gas. It's bewildering that people do that.
I want to call this a "null" year, but it's because of my IT background. I was a guy you could hire to come in and clean house, install new systems and fix all the mistakes the previous guy left, leaving a conservative, bulletproof infrastructure in my wake. That is a lot of fun and exciting. It was year two of those jobs that had me gnawing my arm off, trying to be relevant, maintaining order. I felt like a gunslinger sheriff brought into town to take care of the outlaws. You don't really want that guy around once the outlaws are gone. Being a gunslinger is easy, it's the tedium of day to day life that's hard. Every other year at the store seems to be like that, a boring odd numbered year that requires hard, somewhat invisible work to be done to lay ground work or smooth out rough spots. 2009 is one of those years, but if we do the hard work, it should leave us stronger for the coming recovery.