Wednesday, April 10, 2019

Finance and the Great Unknown (Tradecraft)

As my book was hitting the shelves, I had this sinking feeling as the store struggled. This would be my comeuppance, the game store owner who wrote a book and promptly went out of business. 2018 was the year we had an honest conversation about debt and finances and the various tricks used to get through a month. Cash flow in the beginning of 2018 was usually enough to cover a handful of days. Being a week behind on bills was normal. Worst of all, I didn't want to acknowledge it.

When our construction project was underway and the months slowly ticked by with its business disruption, I borrowed money to pay for the work, and the decline in business. Then I borrowed a little more. Then ... a little more. All in, it was over $100,000. Could I pay it back? There were no bank loan actuaries to put on the brakes and say I had enough debt. There was me, with a modest income projection, with a make or break project. If I stopped borrowing now, I would fail. There's not really a choice here. So I kept looking at the numbers I needed to achieve while in the back of my mind, laughing hysterically. Because I have a bit of imposter syndrome and part of that is never believing my own bullshit.

So in 2018, just a year ago, I took matters into my own hands and did what I said I would never do again, and took out a home equity loan. It's amazing anyone would give me one after flipping Citimortgage the bird, and re-negotiating my mortgage on my own terms, but it had been enough years, and all was forgiven. I refinanced one of my loans and infused extra cash into the business. The problems were finally acknowledged and as nobody else wanted to loan me money to do this thing, I did it myself, paying myself a reasonable interest rate, much to the chagrin of my investors.

I paid off a loan that had the most stringent terms, a security interest on my furniture, fixtures and equipment (which I am grateful for), with a loan from me, with the least stringent terms. Legally, as an owner, if the business fails, I am last in line to be paid. That's why my investors were reluctant to loan money. It's a crap position, as opposed to other personal lenders who took on senior positions, or security interests, or whatever made them comfortable.

The ironic thing is I get mail every day offering to loan me hundreds of thousands of dollars. None of my loans are on a credit report, they're all private. Sometimes I take the time to talk to lenders on the phone explaining, "Look, I don't need any more money. Money is cheap. I need revenue. Call me when you have a plan to increase my revenue." It amuses me because it's a large corporate position. Sears doesn't need another hundred million dollars, it needs a plan to be a better Sears. If you come up with one of those, well, you've got something they want to buy.

Coming up with a better Black Diamond Games is at the end of the day, my job. But for a while in 2018, I was looking around, hoping to maybe find someone who could take me up on that offer. The guy who wrote a book on starting a game store, looking for someone to do his job. That was 2018 in a nutshell. Thankfully, we're in much better shape in 2019, in all the ways possible. It's chaotic and stressful. Good material for a second book.

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