## Monday, December 26, 2016

It's my day off, what should I work on.... Hmmm....

Oh yeah, that post I wanted to write on GMROI.  I've never done Gross Margin Return on Investment, but someone on Facebook asked me how to fine tune their inventory beyond turn rates, and a more business savvy store owner stepped in with this helpful calculation. It made me want to investigate further.

GMROI means gross margin return on investment. I think inventory turns are good enough for calculating efficiency, if your margins are relatively stable across categories. My average gross margin is close to 45% in nearly every department, so it never occurred to me to want to know more than turns. In fact, when I calculated my GMROI for the first time (a few moments ago), it basically tracked with my turn rates. It can still inform decisions, even in my case, as we'll learn below.

Where GMROI becomes especially helpful is if you're selling a lot of product with a wider variety of margins. If you sell a lot of used games (high margins), Magic singles (could be high, could be low), or you sell a lot of CCGs at a high discount (low margin), GMROI might be an eye opener. It's a measure of inventory productivity, and if you have a choice, you may decide to shift inventory dollars to more productive areas. A lot of store owners, especially Magic shops, have no choice. But you're reading about GMROI, so you're smarter than them.

Using the linked GMROI article from the Retail Owners Institute, which you should read after this post, here is the GMROI formula:

GMROI% = Annual Sales \$ divided by Average Inventory @Cost \$ times Gross Margin %

This number tells you the amount of dollars you're grossing on every dollar you invest in that category. Your gross margin return on investment.

Can I learn anything from GMROI? Even though my turns and my GMROI track closely, lets look at some of my troublesome departments and see if I can draw any new conclusions:

Toys is a troublesome little department, with most of it on perpetual clearance. It has a high turn rate, but I know not to trust that. However, the GMROI is respectable. For every dollar I invested in this troublesome category, I grossed \$2.50. Rather than dump toys, I probably want to continue with them, struggling to dial in the right mix, as long as it's not too time consuming (the sales are hardly worth the effort). Since we sold down most toys in December, perhaps I might consider them seasonal. I wouldn't have considered this without GMROI.

A different example of where GMROI is informative in the other direction is Classic Games. It has a turn rate of around 2, which is not good, but not normally bad enough to dump them (it was as low as one turn in past years). However, my GMROI is .9, meaning for every \$1 I invested in classic games, I grossed \$.90 back. That's terrible. It's a high opportunity cost and a waste of money. It might be time to drop Classic Games entirely. Although there are soft calculations too, such as seeing them as a merchandising expense (yuck).

Since Classic Games don't have a particularly unusual margin, this gives me a more solid cost to my abstract turn rate. Two or less turns is wasting money, rather than just being low. So if I have \$50 to spend on chess sets or \$50 to spend on some Funko vinyl figures, an area that has been nothing but trouble (I thought),  I'll gross \$125 on the Funko versus \$45 on a chess set (losing \$5). Of course, I should really just put that \$50 into Magic, if at all possible, since CCGs (not shown) has an 11 GMROI (\$550 gross).

So GMROI is easy enough to calculate, especially if you're already laying out calculations for turn rates. Give it a shot and see if you learn anything. It might be even more useful at the game category level or individual game level.

## Thursday, December 22, 2016

### Online for Less (Tradecraft)

Occasionally a customer will make a big purchase and mention they could have bought it online for cheaper, but they wanted to support us. I tend to be an analytical person, so a statement like that gets my wheels turning. What is my value proposition? Did they weigh the pros and cons of the purchase and consciously deicide to shop with us? 70% of their purchase stays in the community with a local store, while only 45% circulates otherwise.

Then there's how I'm supposed to feel about such a statement. The only response to something like this is a sincere "thank you," but imagine if you lived your life with such comments. Divorce is more expensive, so I'm spending my life with you. I could send your job to Mexico, but I guess I'll keep paying you. Everybody wants to be judged on their worth, to make their way in the world on their own steam. I mean thanks, really, but how can I do this without you doing me a favor? So this kind of statement tends to undermine your self worth.

Then my friend Robert Pace brought up a good point. Robert is the kind of friend who likes to poke holes in my narratives. I'll see some data, weave a story, and tell myself the world is a certain way as every small business owner does. Sometimes Robert will walk by and pop my bullshit narrative bubble with a bit of pointed truth or data. This time Robert explained to me that such a statement about buying from me regardless of cheaper options means my value proposition is shaky. I may be satisfying the customer today, but they're letting me know, consciously or unconsciously, we're kind of borderline. Our relationship is not strong.

Instead of questioning what this means to me, with my massive ego involvement and occasional entitlement, the question is more about the customer feeling valued. It sounds like that feeling is waning. It occurred to me this is the perfect opportunity for engagement. You have someone who just handed you money, who accepts your premise, the best type of customer really, but they're wavering and letting you know. A good question might be: What can we do better to continue earning your business?

We're doing some things right, but perhaps not all the things. In the future I'll be sure to ask.

## Friday, December 16, 2016

### Invest in Yourself (Tradecraft)

We borrowed tens of thousands of dollars from individuals to partially finance our new Game Center. One conversation I had several time with other store owners was whether it was worth giving us a loan versus investing in themselves. We offered a pretty good interest rate, but invariably they would go back, crunch some numbers, and realize they could make a lot more money investing in themselves. I wholeheartedly agreed. I didn't get those loans.

How does that work? Your retail operation is an economic engine and increasing the size of that operation naturally increases its performance. In the car world, there's a saying: There's no replacement for displacement. There's no better way to get more power than going bigger, and that's true of inventory as well. More inventory means more profit and it's often just fine tuning to maximize that profit.

Even poor inventory performance has return on investment far greater than most loans. lets run some numbers using a single turn. I drop product at one turn. One turn inventory is dead to me.  However, one turn is only bad relative to higher turns. Here's how that works.

Inventory value: \$10,000
MSRP of \$10,000: \$18,181 (using a 55% cost of goods)
Sales at 1 Turn over a Year: \$18,181 (you sold that inventory an average of once over a year)
Net Profit: \$909-1,818 (5-10% is about average in this trade)

So what annual interest rate would I need to pay a retailer to match the performance of his bad inventory? In other words, you may be out of ideas on what to buy as a retailer, but just plowing that money into junk will get you at least that one turn.

Using an online loan calculator, at the bottom end, a \$909 profit is the interest paid on a \$16.4% loan. Getting to \$1,818, the top end of your inventory net profit, would mean I would have to entice you away with a 32% loan. This is also why small business owners receive offers for insanely high interest loans. You look at a 32% loan and think, well, that's only one turn. I could do far better than that. Sounds like trouble.

So you should definitely plow all your money back into your business. Well, except for the fact that your \$10,000 of inventory is worth somewhere between \$500 and \$1000 when you attempt to get out of your business. Anyone who spends a lot of money on their cars knows it's a one way trip. The money going into a car to customize it, will never be a significant part of the resale value of the car. The same is true with your small business.

Short and mid term thinking means there's really no better return than investing in yourself. Long term thinking? You better have a clear exit strategy, which means diversification into the real world for when you're done with your labor. That's the dilemma for most small business owners, as 40% retire with no savings. Only 10% have a 401K or similar vehicle.  Here is where I would pitch you a loan, but honestly, I want nothing more than to pay off the ones I have now ... using inventory turns.

 Generic inventory graphic to see if Facebook will let me promote this post

## Tuesday, December 13, 2016

### The Plateau and the Profit Cycle (Tradecraft)

This came from an online discussion yesterday about what to do when you plateau in retail. Plateauing is scary because it seems to indicate your business model is exhausted. That leads to risky behavior, like bad purchases or even new stores. Swim or die is comes to mind, and a store that isn't growing is dying.

You can certainly max out a business at a location, but the tendency, my tendency, is to want to throw in the towel long before I'm actually there. Touring the country and seeing successful one location stores in business for decades was an eye opener. You need population density for sure, but it does seem true you can carefully focus on one thing over time and continue to grow and be successful.

The plateau becomes even more pronounced when you seek efficiencies in the business, since we're so often focused on gross rather than net. The same amount of gross with twice the profit feels like you're spinning your wheels on that plateau, even though you have a much fatter bank account. We dropped Yugioh one year, giving up \$100,000 in gross revenue, but not all that much net. That was a plateau year followed by the most profitable year on record. That was a painful but good call.

So what do you do next? Properly invest and start the cycle over. Make sure you pay yourself back as part of this. I keep saying this. Get your money out, repay your investors, prove your business isn't a hobby with cash payments. Investment in people is your best bet, properly managed. That does require a skill set few people possess, but you've gotten this far. Learn it!

So here's the theory of this particular profit cycle:

Grow
Grow your store organically, listening to customers, running events, throwing marketing ideas against the wall and seeing what sticks. Go to conventions, sell online, do all the revenue generating activities. Hire people to make money in innovative ways.

Analyze
Analyze what works and what doesn't. Drop lines that are unprofitable (like comics), even if it means seeing your gross fall. Focus advertising on only what works. Gain efficiencies seen on your bottom line. Drop sales channels that are ineffective or divert resources to ones that are. The "analyze" portion of this is the main focus of my usual posts.

Invest
Your gross may not be larger, but your profits are. Invest your money where it matters, most likely people. Added staff increases sales, provided they're being managed to sell or do things that result in sales. Now repeat the process.

This requires a certain business savvy, primarily the ability to pull back from what doesn't work. Pulling back is scary and dangerous because we're customer focused and this says no to customers.

## Friday, December 9, 2016

### Holiday Board Game Picks 2016 (Tradecraft)

This post is marked Tradecraft because I wanted to go over how we did our holiday board game pick, as if you were a beginner at this. Ha! Did I mention we're beginners at this? For many years, we relied on the board game recommendations from the San Francisco Chronicle. They went from pretty good, to just ok, to OMG and other acronyms to describe some really bad picks.

We would have these games on display, often ordered in deep quantities, because Chronicle readers would insist on just these games. It went from selling all the games on the list, to selling just the top two in each category, then just the top family game and finally ... meh. We would stand by for conversation, so that if there was any sort of hesitation whatsoever, we could swoop in with our own recommendation, usually a tried and true classic. I often bristled at the insistence of how this newspaper game was superior to what we were selling, you know, the other 364 days of the year.

We were informed this year there would no longer be a SF Chronicle list, information met with some rejoicing and a bit of dread, as this was a part (once a large part) of our holiday sales. Rather than sulking, we made our own list. It was last minute, but we had data, resources, and staff to make it happen. How did we do that?

First, we worked on selectionThe game needed to be published in 2016, or at least late 2015, if we really wanted it on the list. We looked at sales patterns going back about six months, which excluded last years boondoggles and holiday hits. We looked at games that were solid sellers with good reviews. It had to have normal margins and normal sourcing. Basically games we could stand behind. If nothing else, the list is of games people in our area found good enough to buy from us.

I then bounced these games off our Black Diamond Games Board Game Facebook group.  These kind folks helped add a game or two, but mostly worked to move games around in their categories. Family and Strategy have some interchangeability. They have far more board gaming experience than me, for sure, so throwing myself at their feet and begging for mercy was my strategy.

Second, I looked at availability. Some top games were no longer in print or were temporarily out of stock. This year has been terrible for stock outages, so several games immediately got canned from the list. If I couldn't order the games I wanted immediately, since I only had a month before Christmas, that game was off the list. I can't sell what I don't have.

Third, we looked at games we could demo or at least explain easily. An abstract game or two was dropped. If we had planned this ahead of time, rather than last minute, the staff would have started learning these games around September. Instead, we're still cramming to get knowledge.

I'll mention staff are teaching each other full versions of this game, but that's not really necessary for a taste, and in fact, doesn't include how to demo the game as a skill. Personally, I like a full play through to get familiar. Ideally we would demo these games. Having a demo has been shown to increase sales upwards of 400%. We are not demoing games this season. Demo the game.

When it comes to sales staff, this is the only time of the year where I say these are the games you're selling; learn these games. Most other times employees have their go-to games, and by all means, go to them if you're not satisfying customer needs with our selection. But I was insistent they learn these games regardless. The criteria was good, the stock was there, and the opportunity was about to present itself. This is not high pressure sales, just helpful recommendations from a stock of over 1,000 board and card games.

Next year we'll plan ahead of time and prepare, but for this year, below is our list of what we (backed by our community) recommend:

(Also, thanks to my manager Charlotte for laying out the list and obtaining the blurbs and info).

Family Games

Dastardly Dirigibles - 2 to 5 Players

Professor Phineas Edmund Hornswoggle, famed airship builder, is retiring and you are an engineer competing to inherit the Hornswoggle factory! Build your airship from different parts of nine beautiful suits, while also using special cards to your advantage or to thwart your opponents. The round ends when the first airship is complete — but you score only the suit used most in your airship. The player with the highest score after three rounds wins!

Karuba - 2 to 4 Players
Many moons have come and gone since your boats departed on the journey to Karuba. Once you arrive on the island, each player will lead an expedition team of four adventurers. Now you just have to navigate your way through the dense jungle to make it to the temples.
This is a tile-laying race game with players starting with boards that are identical, and one player drawing tiles that they all will use. They race to get their explorers to temples first and earn points. Along the way they can collect additional points by collecting items off the paths they create.

In Adventure Land, King Agamis rules from his castle. Rich cities, vast forests and rugged mountain ranges dominate the country. The large river is known to be lined with gold and the forests filled with medicinal herbs, but dangers lurk beneath the fog! Only the bravest adventurers dare to face the challenges. When you move your adventurers tactically and bravely fight the fog creatures, you'll win the favor of the king. Each time you play will be a completely different adventure!

World’s Fair 1893 - 2 to 4 Players
The World's Fair of 1893 in Chicago was a spectacular international exhibition that showcased many great achievements in science, technology, culture, and entertainment. Acting as organizers of the fair, players work diligently to increase their influence throughout the fair and obtain the grand exhibits that will be put on display. The organizer who has earned the best reputation when the fair begins will emerge the victor! On each turn of World's Fair 1893, the active player sends a supporter to one of the five areas and gather all of the cards by it. New cards are then added to some of the areas, and the next player takes a turn. The five areas represent sections of exhibits, like Fine Arts and Electricity. Some cards represent exhibit proposals in one of those five areas, others represent influential people who give you bonus supporters, and other cards represent tickets for attractions and concessions along the Midway.

Fuji Flush - 3 to 8 Players
Be the first player to get rid of all of your cards!
Fuji Flush is a card game, which consists of cards numbered 2 through 20, with higher numbers being rarer. Each player holds six cards at the beginning. In clockwise order, players play one card each. If it is higher than another card currently on the table, the lower card or cards are discarded and the players who had played the lower cards must draw a new card. However, if two or more players play the same number, the card values are added together. When it is a player's turn and their card is still in front of them, they can discard it without redrawing. First player to get rid of their cards wins!

Party Games

Codenames & Codenames Pictures - 2 to 8 Players
The winner of over 5 international board game awards, Codenames features two rival spymasters that know the secret identities of 25 agents. Their teammates know the agents only by their CODENAMES.
In Codenames, two teams compete to see who can make contact with all of their agents first. Spymasters give one-word clues that can point to multiple words on the board. Their teammates try to guess words of the right color while avoiding those that belong to the opposing team. And everyone wants to avoid the assassin.
Codenames: Pictures differs from the original Codenames in that the agents are no longer represented by a single word, but by an image that contains multiple elements.
Both games are a blast at parties. Guessing what your spymaster is trying to convey can be tricky, but taking a spin in the spymaster’s seat provides its own fun challenges.
Codenames: Win or lose, it's fun to figure out the clues.

One Night Ultimate Werewolf - 3 to 10 Players
No moderator, no elimination, ten-minute games.
One Night Ultimate Werewolf is a fast game for 3-10 players in which everyone gets a role: One of the dastardly Werewolves, the tricky Troublemaker, the helpful Seer, or one of a dozen different characters, each with a special ability. In the course of a single morning, your village will decide who is a werewolf...because all it takes is lynching one werewolf to win!
Because One Night Ultimate Werewolf is so fast, fun, and engaging, you'll want to play it again and again, and no two games are ever the same.

Bang! The Dice Game - 3 to 8 Players
At the start of this old western-themed game, players each take a role card that secretly places them on a team: the Sheriff and deputies, outlaws, and renegades. The Sheriff and deputies need to kill the outlaws, the outlaws win by killing the Sheriff, and the renegades want to be the last players alive in the game.
Each player also receives a character card which grants him a special power in the game. The Sheriff reveals his role card and takes the first turn of the game. On a turn, a player can roll the five dice up to three times, using the results of the dice to shoot neighboring players, increase the range of his shots, heal his (or anyone else's) life points, or put him in range of the Indians, which are represented by nine tokens in the center of the table. Each time a player rolls an arrow, he takes one of these tokens; when the final token is taken, each player loses one life point for each token he holds, then the tokens are returned to the center of the table. Play continues until one team meets its winning condition – and death won't necessarily keep you from winning as long as your teammates pull through!

Card Games

7 Wonders Duel - 2 Players
In many ways 7 Wonders Duel resembles its parent game 7 Wonders as over three ages players acquire cards that provide resources or advance their military or scientific development in order to develop a civilization and complete wonders.
What's different about 7 Wonders Duel is that, as the title suggests, the game is solely for two players, with the players not drafting card simultaneously from hands of cards, but from a display of face-down and face-up cards arranged at the start of a round. A player can take a card only if it's not covered by any others, so timing comes into play as well as bonus moves that allow you to take a second card immediately. As in the original game, each card that you acquire can be built, discarded for coins, or used to construct a wonder.
Firefly Fluxx - 2 to 6 Players
Join Mal, Wash, ZoÃ«, Inara, Kaylee, Jayne, Simon, River, Book, and more as Fluxx enters the 'Verse at full speed. With the rules constantly changing, Firefly Fluxx is just as unpredictable as misbehaving in space!
Fluxx is a card game in which the cards themselves determine the current rules of the game. By playing cards, you change numerous aspects of the game: how to draw cards, how to play cards, and even how to win.

Mystic Vale - 2 to 4 Players
A curse has been placed on the Valley of Life. Hearing the spirits of nature cry out for aid, clans of druids have arrived, determined to use their blessings to heal the land and rescue the spirits. It will require courage and also caution, as the curse can overwhelm the careless who wield too much power.
In Mystic Vale, 2 to 4 players take on the role of druidic clans trying to cleanse the curse upon the land. Each turn, you play cards into your field to gain powerful advancements and useful vale cards. Use your power wisely, or decay will end your turn prematurely. Score the most victory points to win the game!
Mystic Vale uses the innovative "Card Crafting System", which lets you not only build your deck, but build the individual cards in your deck, customizing each card's abilities to exactly the strategy you want to follow.

Welcome Back to the Dungeon - 2 to 4 Players
The sun is shining in the Abysmal Woods where you’re strolling without a care in the world, your weapon at your belt, dreams of adventure in your head. On your path, you stop before a damaged dungeon door. It seems that great battles took place here, a sure sign of coveted treasure inside.
You recognize this dungeon from the ballads sung in your village! However, you’re not the only one who wants to enter, despite the warnings left around the entrance by the previous adventurers. Will you muster your courage to break open the door or will you let your opponents brave the monsters found inside? Let the adventure begin!
Welcome Back to the Dungeon is a simple and subtle push-your-luck game in which you’ll need to adopt a show of bravado or outwit your opponents!

Strategy Games

T.I.M.E. Stories - 2 to 4 Players
The T.I.M.E Agency protects humanity by preventing temporal faults and paradoxes from threatening the fabric of our universe. As temporal agents, you and your team will be sent into the bodies of beings from different worlds or realities to successfully complete the missions given to you. Failure is impossible, as you will be able to go back in time as many times as required.
T.I.M.E Stories is a narrative game, a game of "decksploration". Each player is free to give their character as deep a "role" as they want, in order to live through a story, as much in the game as around the table. But it's also a board game with rules which allow for reflection and optimization.
In the box, an insert allows players to "save" the game at any point, to play over multiple sessions, just like in a video game. This way, it's possible to pause your ongoing game by preserving the state of the receptacles, the remaining TU, the discovered clues, etc.
T.I.M.E Stories is a decksploring game in which each deck makes anything possible!

Pandemic: Reign of Cthulhu - 2 to 4 Players
In Pandemic: Reign of Cthulhu, you'll experience the classic Pandemic gameplay with an horrific twist that'll have you face twelve Old Ones, each threatening the world with their unique powers. As players take on the roles of investigators attempting to seal a series of portals before monsters of unspeakable horror pour into our world there is, of course, a high risk of the investigators losing their own minds.
Instead of curing diseases like in the original Pandemic, players seal portals and shut down cults in the classic New England fictional towns of Arkham, Dunwich, Innsmouth, and Kingsport. Can you and your fellow investigators manage to find and seal every portal in time? Hurry before you lose yourself to insanity and the evil that lurks beneath your feet...

Imhotep - 2 to 4 Players
In Imhotep, the players become builders in Egypt who want to emulate the first and best-known architect there, namely Imhotep.
Over six rounds, they move wooden stones by boat to create five seminal monuments, and on a turn, a player chooses one of four actions: Procure new stones, load stones on a boat, bring a boat to a monument, or play an action card. While this sounds easy, naturally the other players constantly thwart your building plans by carrying out plans of their own. Only those with the best timing — and the stones to back up their plans — will prove to be Egypt's best builder.

Strategy Games

Dead of Winter: A Crossroads Game & Dead of Winter: The Long Night - 2 to 5 Players
Dead of Winter: A Crossroads Game, puts 2-5 players in a small, weakened colony of survivors in a world where most of humanity is either dead or diseased, flesh-craving monsters. Each player leads a faction of survivors with dozens of different characters in the game.
Dead of Winter is a meta-cooperative psychological survival game. This means players are working together toward one common victory condition — but for each individual player to achieve victory, he must also complete his personal secret objective. This secret objective could relate to a psychological tick that's fairly harmless to most others in the colony, a dangerous obsession that could put the main objective at risk, a desire for sabotage of the main mission, or (worst of all) vengeance against the colony! Certain games could end with all players winning, some winning and some losing, or all players losing. Work toward the group's goal, but don't get walked all over by a loudmouth who's looking out only for his own interests!
Dead of Winter has players making frequent, difficult, heavily- thematic, wildly-varying decisions that often have them deciding between what is best for the colony and what is best for themselves.
Dead of Winter: The Long Night is a standalone expansion for Dead of Winter: A Crossroads Game that introduces the Raxxon location where horrible experiments will spill out into the town unless players can contain them.
The game has players at a new colony location trying to survive with new survivors against brand new challenges. Can you handle being raided by members of other colonies? Will you explore more and unravel the mysteries of the Raxxon pharmaceutical location to find powerful items but release stronger enemies? Or will you upgrade your colony to help it better withstand the undead horde? These are all choices you will get to make in this new set, and if you want, you can mix in the survivors and cards from the original set to increase the variety even more.

Quadropolis - 2 to 4 Players
Each player builds their own metropolis in Quadropolis (first announced as City Mania), but they're competing with one another for the shops, parks, public services and other structures to be placed in them.
The game lasts four rounds, and in each round players first lay out tiles for the appropriate round at random on a 5x5 grid. Each player has four architects numbered 1-4 and on a turn, a player places an architect next to a row or column in the grid, claims the tile that's as far in as the number of the architect placed (e.g., the fourth tile in for architect #4), places that tile in the appropriately numbered row or column on the player's 4x4 city board, then claims any resources associated with the tile (inhabitants or energy).

Some buildings are worth victory points (VPs) on their own, and once players sum these values with what they've scored for each type of building in their city, whoever has the highest score wins.

## Thursday, December 8, 2016

### My Top 20 Game Companies 2016 (Tradecraft)

Five years ago I did a top 20 analysis, finding those companies comprised 75% of my sales. My top 20 this year is down to 66%, with hundreds of companies below them on the list. Lets call that a win for diversification.

That said, Wizards of the Coast has grown tremendously in my personal market share, with nearly double the sales of the second company on the list, which is itself double the third, and so on. Dungeons & Dragons is tremendously popular and even with Magic being a bit slow, it's significantly larger than it was in 2011. Things weren't so stark five years ago.

The big industry news since the first chart is Asmodee North America, which now owns the board game segment, having acquired all or most of four companies on my previous top list (five on the list, if you include themselves). I say most, because our Mayfair sales are not on the list without Catan, which is now licensed to Asmodee. The board game market was ripe for the picking, with no market leader, unlike every other game trade segment.

I know you guys like these charts far more than my blabbing on, so here they are:

Chart from 2011:

## Tuesday, December 6, 2016

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.