Tuesday, December 6, 2016

Your Business Plan (Tradecraft)

So you've written a business plan. If you wrote it strictly for yourself, good for you. The level of planning required to write a legitimate business plan puts you in the highest category of prospective business owner and your likelihood of success is now higher. You can refer back to it when times are tough and know your plan is well researched and solid.

If you wrote your plan for someone else, they're going to be looking for some key components in your plan and will want to know about you as well. Why would you need to share your plan? For one, you may be looking for some premium real estate to lease. If you've been doing this for a while, property managers will court you, but if you're new at retail, they would rather not take the risk. I had to present my business plan to my first property owner and interview to get the space. For my second space, my signature was good enough. If you can't qualify for premium space, you'll end up with a crummy, month to month location in the wrong part of town. Nobody wants that.

The other reason is you may want investors, and nobody should give you money without a solid plan. In fact, even if it's a relative or a close friend, you owe it to them to do the work to develop your business plan. It's an exploratory process that familiarizes yourself with the industry, demographics and competition, and your plan on how you'll make money, including crafting financial statements and marketing plans (an education in itself). Business plans make you lucky, which is the word dumb people use to explain why you did something they could have done, if they had felt like it (you'll hear this a lot).

So what would I be looking for in your business plan?

  • Skin in the game. Nobody is going to write you a blank check unless you've got a significant amount of your own money invested. You can forget about "sweat equity" right now. Your sweat doesn't pay my bills, it just makes them mildly damp.  A small amount of money invested will probably not be worth my time. I'll want to total capitalization upwards of six figures.
  • Passion. Do you need passion for games?  Not necessarily, but you need curiosity. Better would be passion for the big game, that of running your small business. If you get excited about cost savings and making signs, you are kind of a weirdo, but you're my kind of weirdo. There are people who do this because their dad is buying them a job or they got an insurance settlement or they need a place to go upon retirement. There's probably not much passion there. This is one of those ridiculous professions you do because you simply can't imagine doing anything else.
  • Cost Savings. What are you personally doing to cut the impossible costs of building this business? Are you painting the walls? Building fixtures? Are you doing your own IT, accounting or payroll? Show me you can get your hands dirty and aren't planning to hide in your office. Tell me about the long hours you expect to work for the next few years.
  • Work experience. It would be best if you had experience in game retail, possibly vacuuming your 1,000,000 square feet. If you don't have game retail experience, then perhaps you have general retail. If you have no experience, you better have extremely impressive, extensive research on the game trade from multiple perspectives, with multiple interviews and preferably some professional analysis of your plan. Nobody has the answer in the game trade, but collectively, the game trade has some pretty well established methods. I know people who interviewed me before opening their store who now have world class establishments. I know even more people who talked with me that never opened (also wise).
  • Work history. Have you held a real job? Was it for more than a couple years? Do you hop around a lot? (I did, that's not a good sign). Do you have enough experience to understand baseline normal in the work world? Does your experience show deep focus in a tiny area or do you have a broad spectrum of experience? Are you handy? Were you an Eagle Scout? I want to see flexibility because whatever you think is the biggest part of this job is probably no more than about ten percent. This will take years to develop before it's successful and I don't want you to bail early when it gets hard.
  • Bootstraps. Everything in business is earned. There is no stealing customers or benefiting by being in the orbit of someone more successful. The Internet is not there for easy profits. Business in specialty retail is earned, one customer at a time. I want to see a plan on how you'll attract prospects, turn them into customers with your unique value proposition and retain them with your superior service. If I see shortcuts, I know you're not for real. If I don't see you planning to open in an underserved area, I will be suspicious.
  • Third place. How are you using Third Place Theory? Do you have game space, concessions, or some other service oriented revenue generator? Third Place is likely critical to your Unique Value Proposition. If you have experience in concessions or whatever your UVP happens to be, all the better.
  • Financials. You'll need to make balance sheets and P&L statements and if I'm investing, I expect to see them annually. If you had someone else make these for you, you better understand how they work. I'm going to ask you about gross sales, net profit margins, labor percentages and inventory turnover. I want to see you understand how all the pieces work together.
  • Marketing. I'll be looking for a multi faceted marketing plan that goes beyond social media. "Facebook" is not a marketing plan. "Word of mouth" is not a thing you can count on. Nobody really knows what works for their business until they try, so it doesn't have to be correct, it just has to be part of the plan. It would be great if there was a budgeted amount of money for traditional media marketing as well as some ideas for guerrilla marketing and things like local conventions.
  • Show Me The Money! I want to see a Return on Investment in a reasonable amount of time, with a reasonable growth curve. This should be baked into the business plan at every level. I should be able to point to a month on a calendar and expect my first check, if I'm an investor.  It's easy to forget when you're struggling to break even that all that money needs to be paid back and then some. 

That's it! Also, I'll be the first to point out that many of the things I'm looking for are my own shortcomings. I'm looking for weaknesses and how you'll make up for them. I'm looking to see if you're friendly and personable. We're going to be working together for years.

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