Sunday, September 29, 2013

Gaming Conventions

Local gaming conventions are fun gatherings of gamers for the purpose of getting together and playing games, often those that aren't being played elsewhere, but also the hot game of the moment. Conventions owners run a company, just like a game store, and they have their own objectives. Game store owners are often invited to conventions to sell their wares in a  dealer's room, where the convention owners will rent you tables, usually for a couple hundred dollars each. This is the intersection of game store owner and convention owner, and many game store owners wonder if it's worth it.  First, lets look at the needs of the convention owner.

Understanding the convention owner is important. Most are not aware, nor do they care about the meticulous calculations you may have performed to determine how to make a profit at their convention. In fact, with multiple game stores in attendance, they might even prefer to give your space to someone else, like someone who makes funny hats, or sells ceramic unicorns. Some yearn for respectability and would really like to see publishers and manufacturers in their dealer's room, no matter how small or obscure. Publish a couple PDF's for Pathfinder, and you just might qualify. You are lowest priority in many cases. The convention owners care more about variety than your business needs, although representing the local community is often a priority (and helps with their marketing efforts as they hit up game stores with flyers).

Some convention owners have other objectives as well, like wishing to see their "deep pocket" game store owners provide them prize support, at your expense of course. Or perhaps they want you to run events at their convention. Many times they'll request sponsorship of a type of event by asking you to pay the costs of a guest of honor or advertising on the back of their convention badges. Most of these requests are on the side and are not required, while some convention owners might simply "not have space" if you don't step up and read their minds.

Whether you should engage in any of these side deals is up to you. In the past we've sponsored Dave Arneson, co-creator of Dungeons & Dragons and board game designer Richard Borg. Getting a gaming celebrity to sign product at your table is a nice sales draw and does support the hobby. We've been "major show sponsor" at various events and have done the badge thing. We've provided tournament prize support for games like Flames of War and given out coupons to Pathfinder Society players.

Should you go? If you're running a new store, you should most definitely attempt to go. It's one of the rare cases when I approve of a business activity as a "marketing expense." Certainly sell things, but your main priority should be getting the word out of your existence. That means having a banner, bringing business cards, and putting flyers on your table with your store information and directions, especially directions from the convention to your store. I don't normally approve of coupons, but you might include one, good when presented with a convention badges for a limited amount of time, like a month. Get them at least thinking about coming to your store.

Your table should include a representative selection of what you sell in your store. While our veteran convention efforts are all about what sells at a con, a new store should have a wider variety. You probably won't know what sells anyway. Cutting edge product lines are especially nice to showcase in such a situation, like small press RPGs and niche miniature games. The assumption is if you have the edgier items, you're probably well stocked on the mainstream.

Spending time in the dealer's room is a research opportunity as well. Watch what people are selling and what customers are buying. Talk some shop and compare notes with other store owners. Build bridges with competitors and make friends. Customers in a convention setting are ruthless, generally know and care nothing about your business, and are therefore shockingly honest (some might say rude). Listen to what they're saying, as you might learn more than when you're behind the counter in your ivory tower.

Take some risks, move things around on your table and attempt to see what attracts people. For example, we learned that if you put all of your RPG books spine out in your displays, customers will quickly glance at them and move on. Put the books face out and they have to flip through them, creating an investment of time, which more often results in a sale. Common sense and things you know to be true in your store might not apply at a convention. Conventions make you think differently.

Established stores should carefully consider the numbers. The biggest cost for conventions, after the fees, is travel, especially if it involves lodging or long distances. If it's just you going, heck, call it a vacation. I used to use my frequent flyer miles for convention hotel rooms and not add that into my calculations. If you're new, definitely consider that, but if you're an established store and paying other people, most longer distance conventions are probably not worth the effort.

So how do the numbers break down? Here's an example from Dundracon, one of our favorite conventions and the closest. We're local to it, so it's the lower cost example:

3 Tables ($200 for the first, $250 for two and three. As you can see, they prefer small vendors)

Labor (Two people to set up, break down, after con work for 4 hours, and one person with 18.5 hours of selling time. Rate: $10/hour)

Mileage (back and forth each day, 18 miles @ 56.5 cents a mile using standard reimbursement)

Office Supplies and miscellaneous expenses

Total:  $1,061

So how much do you need to sell for this convention to be profitable? That depends on what you're selling. If you sell standard, new games, right off your store shelf, you're going to have a gross profit margin of around 45%. That means you'll need $2,360 in gross sales to break even. The question then is whether this convention can support that number. Is there enough attendance? Do conventioneers maintain margins or are dealers comprised of (bottom feeder) discounters? How many other game stores are you competing with? When they all have the same product, it's hard to make a sale and even harder to maintain margin.

In the case of Dundracon, yes, we will make that $2,360 in gross sales, with the added "marketing" benefits of being there. But what if we didn't? Conventions before the recession were far more profitable than they are today. Sales have probably dropped 30-40%. So if a convention is kind of on the edge of profitability, one option, other than not going, is to sell higher margin items, the best example being used games. We regularly sell ding & dent and used product at conventions because it has a margin of around 65%. So now we only have to sell $1,630 before we drift into profitability. The reality is more a hybrid of the two.

I won't break down the higher cost example, but imagine a convention that's 60 miles away. Suddenly my costs go way up. Mileage goes up a couple hundred dollars or you may consider rooms. If you have rooms, you probably have meal expenses. That $1061 starts looking more like $1300-$1500 and your sales nut to crack jumps to over $3,300. Some conventions can get that number, but most can't, at least not without those higher margin items.

There may be other costs to going to conventions. If you have to close your store to go, a really dumb idea in most cases, factor that in. If you're taking all the product in your store to sell at the convention, you're not only going to lose sales, but you'll alienate customers. In rare cases, we've done well with consignment product, but that was in the pre-recession convention heydays.  With a more profitable store with deeper stock and business intelligence on what sells at a convention, we tend to order stock specifically for convention and just put it on the shelf if it doesn't sell.

Finally, as much as a pain in the ass they can all be, I want to thank the convention organizers. It's a brutally difficult job, one that encompasses everything I'm bad at, and I'm guessing it's rather thankless. Thank you. I've said it many times, but during the first few years of business, conventions were sometimes the difference between profit and loss. They literally kept me afloat during some rough times. I recall several months looking at the current state of the books and the upcoming rent expense and breathing a sigh of relief that a game convention stood between them. Now they're just nice to go to, with some added income and an outlet for many products at the end of our inventory cycle, but back in the day.... Thank you.

Thursday, September 26, 2013


I hate the term Obamacare, since reference to Obama is mostly used by the right as a panic word. People have asked how I feel about The Affordable Care Act  as a small business owner, so I thought I would give my thoughts. Really they ask me about Obamacare, which is kind of a tell, like asking, "How do you feel about that Exclusivegate?" when referring to Alliance exclusives.

Lets ignore the fact that it was a Republican plan co-opted by Democrats and protested like it's the end of the world by Republicans. It's no public option for sure, despite moans about socialism. It was crafted with a nod of approval by the insurance companies. I think it's stupid, but from a more left perspective. But it's what we can get in this country.

But how does it effect me? With less than 25 employees, it has little effect. There are no forms, fees or penalties. I'm not required to do anything. The government is not up in my bidness. There is also zero incentive for me to offer new health insurance to my employees. There will be plans to give me tax credits that cover 35% of the cost of the company's insurance, if I pay 50% of it, but it doesn't even cover me, the primary employee.

What it does do, however, is give a very big benefit to the people I tend to hire, which is young people, over 18, but usually under 25. Those people may stay on their parents health plans, provided their parents have health insurance. That's a system right there that helps my business. When I asked employees about offering coverage, most were happy to stay on their parents plans (I didn't ask the parents).

For me personally,  it does little, other than slightly simplify the ridiculously complicated plans that exist now, along with offering a modicum of consumer protection. My personal premiums are going up 20% starting in December, because, you know, costs. Not that I ever used it. Yesterday when I was comparison shopping, I honestly couldn't tell you what my plan covered and didn't cover.

It was so worked over by insurance actuaries, with co-insurance and out of pocket maximums and various deductibles that I yearned for a simple IRS tax form. The California exchange is partially up, offering simplification under the ACA, but no cost savings that I can see. The California exchange rates conveniently reflect my 20% December increase, although I have so little comprehension of how my current plan works, it probably offers a few hidden protections.

So there you have it. The sky, in fact, did not fall, and the cost curve, in fact, did not bend (at least not yet). Business as usual.

Friday, September 20, 2013


Tonight at midnight is the pre-release for Theros, the new Magic set. For our store, this is welcome relief. Why? Magic has grown from this top game that accounted for 10% of our sales a few years ago to a juggernaut. It now accounts for about 35% of our sales, which we like to call in these parts, pure profit.

The last set, which framed the entire Summer sales, was M14. It was a dud Not kind of a dud, but by all definitions, a thing that did not go off as expected. It's alright, it's a core set, but compared to M13? Truly underwhelming.* So what happens when a product that  distorts your business to the point that it's over a third of your business activity has a stumble? Just wow is what happens.

My navel gazing and Chicken Little antics have been internal for the last few months, contemplating the Magic bubble bursting, among other things. In past years, I might have been a little panicky, but honestly, after nearly nine years in the game trade, "the sky is falling" is standard operating procedure. Yawn. Where's my umbrella?

I am, unfortunately, the type of person who will raise their fist to the sky to curse it for raining down money at a slower rate. It honestly comes from all the various balls in the air it takes to run a retail store. It's the endless march of increased costs that will trample you underfoot if you don't somehow come up with increased sales. Increased costs is a certainty, while increased sales requires some sort of retail witchcraft. When a third of your business is one thing, that's a heck of a lot of sorcery one needs to be throwing around. In this case, thankfully, it's a delayed blast fireball. Hopefully maximized.

* The thing about the game trade is my experience might be completely different than another store owner'sexperience, although Magic single prices for M14 show lack of interest.

Wednesday, September 18, 2013

My Gaming: Sandbox Update

My last update on my Pathfinder sandbox game was a year ago.  We're still playing, with the characters having hit 10th level recently. I'm running a lightly Celtic themed campaign, so we allow reincarnation but no resurrection, so we have a menagerie of races: Catfolk, Vanara, Verrick, and a few others who have come and gone. With so much information on their region prepared, I've got a custom reincarnation table drawn from the various races living locally. Occasionally a resurrected comrade will provide a clue that an undiscovered race may be close by.

The Heroes of Tara, as they're known, take many forms. They are always nearby, you just don't know what they'll look like. You can read some of my campaign blog entries here.

Prep time. Running an on-the-fly sandbox campaign was fairly easy for low level characters, but higher level play has taken more planning. Random encounters can take half an evening of play, so I've become more deliberate in my planning. Although I still avoid long dungeon crawls, the occasional underground foray is a welcome break to plan for the next thing.

Higher level play also means more complex challenges, including more varieties of creatures, such as flying encounters, incorporeal encounters, and lots of oddball constructs and undead. Thinking in only a couple dimensions can be a serious handicap for the monsters. Of course, all of these creatures now have entries that are a couple pages long. I'll admit I've skipped an encounter or two, just because it sounded exhausting late into a session. 

Having created regions of certain level ranges, high level PCs roaming around can be hit or miss. On the coasts, they dominate. Deeper into the mountains, they still need to watch themselves. I often scale existing content up (rarely down) to keep the game interesting. They say they would prefer some easier encounters, but when they get them, they feel disappointed.

Mapping has gone digital, with the campaign map created in Hexographer and the hex paper map abandoned. I keep two copies, a master that I refer to and the player copy that I edit and post to our Facebook page. One challenge was keeping the PCs from just flying over everything without exploring it. That was solved with some very powerful flying creatures that had a taste for wizard flesh. Our latest was Old Ragna, a fiendish, advanced, giant, Roc, the size of a house.

Story arc. The party has explored an area the size of Sonoma County on their island the size of California. Still, they've uncovered a massive, worldwide conspiracy, and have been attacked and nearly slain by their demigod (Tuatha) protagonist, saved only through divine intervention when the goddess, The Morrigan, took umbrage when fate was nearly subverted. Now the party is beginning a quest for The Rod of Arges, a kind of Rod of Seven Parts race to gather and put together an artifact before their enemy.

The quest will lead them into the ruins of the ancient cyclops civilizations, along with war remnants where their ancestors fought The Old Ones, the Cthulhu inspired bad guys that humans unlocked in their petty wars for power. The theme of humans needing to be held in check because of past deeds is a major story element.

Mythic. Finally, we've started this great quest using the new Mythic Adventures rules. They're first tier after our last session, the moment in time when history will remember their acquisition of an item to find the first part of the rod. Mythic is not only fitting for this group of renowned heroes, but it should make higher level play more interesting. I personally find high level Pathfinder play slow and dull, so anything to jazz it up will keep me happy, and the campaign alive.

Friday, September 13, 2013

Game Store on a Budget (Tradecraft)

I've got a friend whose investing in another game store and we've been brainstorming. It's interesting to get a different perspective on the same type of business. Here's how I would do it, based on my own experience. This is very idiosyncratic and I would love to hear other store owners chime in.

If I were to start a game store now (and we consider a second store all the time), I would put an extraordinary amount of time into picking the exact right location. It's going to be my life for years, even if it fails. It takes time to fail if you're doing it right. Many people put their store by their homes, because that's where they live, but that's not always the best location. Location is key. If you don't live in an area that will support a store, move, or don't open a store.

The "right" location is about population density, assisted by things like universities and military bases, prime buyers of gaming materials. It's also about the Gamer Goldilocks Demographic (GGD). Yeah, I just made that up. You don't want your demographic to be too poor, since it means not only do they not have money to buy your things, but they probably don't have the education level to think outside (inside) the box. Gamers are a geeky crowd. At the same time, a high income area tends to follow popular trends, and gaming is somewhat retro. The high income areas near my store tend not to be where my customers live, according to my demographic studies. Not too poor, not too rich, juuuuuust right. Location is at least half the battle.

The right location is also about how much money you personally want to make. If you figure a 5-7% net profit margin on top of a small managers salary, you'll get an idea of how much money you'll need to make to be happy. With the average store probably in the $200,000 in annual sales range, decide if average is good enough for you. If not, you'll need stronger demographics. Build your salary into your business plan. Then find a location that will satisfy those numbers.

The next thing to consider is your FFE's, furniture, fixtures and equipment. I usually buy high end, matching fixtures, designed to last a decade or more. That's not what I would do on a budget. I would shop around for closing businesses (Borders was great for us) or if I had skills (I don't), I would build fixtures myself. The priority is you keep your store spotless and well lit. Fixtures are something you can buy over time and as long as you're meticulously clean and neat, customers will respect what you're trying to do.

As for a point-of-sale machine, hold off. Track your inventory on a spreadsheet or some other low cost option, but don't blow your budget right now.  If you don't have much inventory, that state of the art POS doesn't have a lot to track. Save it for later, but know you'll need it. For right now, I would focus funds on inventory. Coming from IT, the POS was my first project. On a tight budget; wait.

Next is inventory. If you listen to your community, my guess is you'll be having a lot of CCG events, like Magic, Yugioh and Vanguard. I would never be out of anything that's in print for those games and I would sell Magic singles on day one. I would have all the supplies you can find. We carry nine brands of card sleeves. With CCGs in a bubble, you want to capture this income now to expand your business later.

On day one, you want to represent the rest of the game trade, as feeble as this effort might be. For example, you want a dozen of the hottest board games, all the core books for Pathfinder and D&D, and a representative sample of 40K and Warmachine. This doesn't need to be a comprehensive collection, although if you have the cash, you might jump on that soon after sales pick up. The key is to represent to customers that you are a full spectrum game store, even if your selection is anemic to start.

Talk to your customers and be receptive to them, even if you know nothing about their game. Learn their names (I'm horrible at this). Let them educate you. Encourage them to volunteer to run an event in your game space. Assure them that if sales pick up in that department, you will bring more of those types of games into your store. Be wary of their recommendations, but respectful of their opinions. And when sales pick up, follow through on your promise to expand inventory.

Gamers love to be the authority on their game. Let them. Make sure they aren't feeling marginalized, as in don't put board game night squeezed into Fridays with the Magic players. Give them a discount for their efforts or a free Mexican Coke. Treat everyone with respect. These people will tell others of your endeavors and will be your best sales people. They might even become future investors (this has happened twice to me). Make the time to sit in on their games so you know them, or paint an army or run an RPG campaign. You don't need to run games yourself or put 20 hours a week in the back room, but you should be well versed on the top games.

As for space, beware locking yourself into a small location based on CCG sales. A "casino" store that focuses on CCG sales can be mostly tables with product behind the counter, but a full spectrum game store, which you want to become to be successful, will need at least half the square footage to sell product. If you pick a tiny location, this won't work and you'll need to move eventually, which is very costly and dangerous. I recommend at least 1,500 square feet and probably no more than 2,000. I think the perfect game space for the average store is about 1,000 square feet. An "alpha" store, one that's top tier in the industry, needs more, but that's not you (us) yet.

As business grows, bring in inventory first and keep an "open to buy" worksheet so you track your inventory budget. This means you're capitalized properly and have startup losses set aside for your expenses until you break even. It means you budget money for new releases when they come out, not the week after. You don't want to end up in an inventory death spiral (I didn't make that one up), where you're taking your purchasing money to pay your expenses. You also don't want to discourage your alpha customers by being late on releases. Buy a bit more product here, another used fixture there, and maybe after a profitable holiday season you spring for a POS system.

I did some of this when I started. A lot of what I did when I started was wrong and I tell other game store owners that I only know how to open a store the wrong way. If you don't have the experience, you're going to waste a lot of time and money. The key is to learn from your mistakes. All successful game store owners have.

Sunday, September 1, 2013

Three Start-Up Misconceptions (Tradecraft)

I occasionally get a link back in various gaming forums for people who want to start game stores. Here are a few misconceptions I want to knock down:

Your Role. The idea of running a small business with a single digit net profit number (all retail) via proxy, while you have another job, is nearly impossible. You could do it with a good manager, but you probably won't know what a good manager looks like until you've been doing that job for a couple years. You won't recognize you're being ripped off until you have a baseline experience of normal revenue and activity.

You also won't get to sit in your office and orchestrate the business from afar. I had that idea one time as I was planning my second location and a veteran owner told me to kill my office. No office. Or at least a tiny office for bare minimum functions. Your time in the office is generally wasted time and if you aren't running the business, you should be off doing some other revenue generating task, like running another business. I moved my office to the cash wrap, so I'm always in a position to help customers and do my real job of selling/protecting/cleaning games. Which leads to....

Focusing on The Big Picture. The idea here is you will be the strategy guy while your minions will deal with tactics in the trenches. Well, actually, you'll be doing both. You'll need to focus on strategy while cleaning the store, selling to customers, researching and purchasing new product, and paying the bills and other administrative work. Strategy is but one task, and most categories of tasks are no more than 10% of what you do. Generally, I'm uncomfortable asking my staff to do anything I haven't already mastered (it happens, but I'm uncomfortable). The best delegation is giving away tasks that you simply don't have time to do. You have to know all the things.

A good friend of mine told me his plan to buy a bar in Costa Rica. He had a business background, so he figured it should work. I informed him his background was probably good for about 10% of what he would be doing, and without a bar background or at least a small business background, the other 90% of needed skills would be hard earned. His employees, who neither knew him nor spoke his language, were likely to rip him off if he didn't get up to speed really quick. I advised him against it. He lasted 18 months before the business failed. He blamed employee theft, but he really wasn't prepared going in.

Your Gaming Focus. Most hobbyists start out thinking they'll start a game store focused fairly exclusively on things that interest them. Unfortunately, the game trade is not only diverse, but highly competitive, especially online. Your community might have supported a Magic store or a board game store at certain times, but a lot of customers are shopping online and don't need you or care about your existence. It's not insurmountable, but although there probably are enough customers in your area to support that game, they just won't be getting it from you.

My local community had six stores when I opened eight years ago. Now there is me, a fly-by-night Magic store and a niche store that does most of its business online, supplementing that with discount special orders. The game trade is booming, yet the brick and mortar footprint seems to have shrunk. That means I sell whatever my customers want. My Little Pony, board games, card games, whatever they demand. I don't get to choose if I want to make money.

Also, snacks and drinks are a diversion. Forums will argue all day about the merits of selling them, the hassle of cleaning carpets, and how they'll keep your business afloat. That's just crap. They're an add on purchase, like dice or card sleeves. Sell them like anything else, but stop obsessing over carbonated beverages.