Friday, November 8, 2019

Beach Fallacy

This month we celebrate our store's 15th anniversary. I am happy to report in year 15 I learned from failure. Failure means I'm still trying to innovate and change things up. This particular failure was one I recently realized while speaking with a friend who just sold his business. It comes down to this: The idea you can remotely manage your business with an installed manager is temporary at best. The 4-Hour Work Week may work for a turn key business, but most businesses are not even remotely turn key.

You may have a great manager, but they won't be there forever, and the process of getting a new one trained up, will be time consuming and not conducive to lying on a beach. So even if you have the skills to train them, how fast can they reasonably achieve mastery? In general, the concept of remote management for me has gone from something I might be able to do full time to something that may be possible half the time, that half determined by chaos in my business.

So I may be able to live in Mexico, for example, six months out of the year, a random six months at that, but I better have a place to stay when it all falls apart and I have to retrain staff for six months back home. The idea you can do this all remotely, living elsewhere, is a myth.

Here are the three areas that I see, that if I were a better owner or had magic powers, I would be able to solve to extend my six month theory. If you think you have skills in how to quickly train up candidates in these areas, this is where I would pay for a consultant:

  • Gross versus Net. A bad manager will spend your business into the ground with no apparent benefit. An alright manager will spend your money on long term investments that pay off later, but still leave you in the poor house right now, as they usually don't understand cash flow. A great manager will always spend cautiously and be conscious of the bottom line and the cash needs of the business.
I was not a "great manager" of cash until I had distributions from the net profit. I became incentivized to focus on net. Unless you can incentivize someone with bonuses for producing net profit, you'll always be watching your back (which you will always do regardless). Or you may train someone to be so overly cautious with your money, they take no chances at all.
  • Tight Employee Management. A good manager sets employee expectations via an accurate job description and solid training. The manager manages those expectations through the employees tenure by means of additional training and corrective action. Then they reward or penalize employee performance based on how those results are achieved. 
Most managers, most people, can't do this. They simply can't without some very good training, and even then it's not within most peoples personality range. I can tell you from the corporate world that most managers are untrained and awful. Training a manager to master this process will ensure you always have good people, but good luck finding someone skilled at this for what you can afford and good luck developing the skills in yourself when you've probably only had bad managers.
  • Inventory Accuracy. Does anyone other than you really care if your POS system is only 90% accurate? Inventory accuracy results in better buying practices, higher sales, lower taxes, and happier customers. Yet, it is very difficult to have a manager who cares about this accuracy as much as you. It is very much tied to net profit. If you find someone outraged at inaccuracy, and they have skill in the other two areas, find a way to groom that employee for manager. 

So those are the three areas that require an owner to be involved in a store on a near daily basis. This does not mean your store sucks if this is the case. In fact, there's no reason this should harm the value of your business if, say, you wanted to sell it. Someone with these three concerns will always need to have their hand on the wheel, but it's unlikely to be an employee for very long.

Tuesday, November 5, 2019

The End of Familiarity (Tradecraft)

When you walk into my store and look to the right, the designated direction Americans gaze when entering a store, you'll find a plethora of familiar game titles. Monopoly, Yahtzee, Scrabble, all the usual suspects. This is what is known as a "merchandising expense," games I stock that I would rather not, that indicate to the uninitiated that I am a safe place with things they are familiar with. This is a game store with games, you know, game games, as one customer recently described it. This practice is now coming to an end.

Here's how that works. First, hobby games have penetrated the mass market and they've been there now for a good, long time. Unless you're living under a rock, if you've been to Target and WalMart in the last decade and care even an inkling about games, enough to roll your red or blue cart past them, you've seen Settlers of Catan, Ticket to Ride, Carcassonne and other former hobby game store exclusive titles.

These titles have declined for us significantly since their introduction in mass market, with the promise they are gateways to good times for us later. Perhaps this is true, perhaps not, but board games are booming. These titles are now familiar to consumers. They've become evergreens on the shelf of mass market stores. This means hobby game stores don't need to work as hard with our garbage merchandising expenses to show familiarity. Chess sets and Hasborg products can be dropped, if you feel your community have these touchstones in their lives. And what community doesn't?

Second, even if I don't have this market penetration that breeds familiarity, there are now enough regular folks who play hobby games to where I need the space taken up by oversized merchandising inventory. I may lose the completely out of touch customer, but my overall base is so much larger than a decade ago, I can afford it. What I can't afford to do is stock quaint product for muggles when I've got educated consumers flocking to my business and demanding games now. They will just as easily, and without a moment of regret, buy it online, so it better be there now.

In general, if you don't know or are frightened by products like Dungeons & Dragons, Ticket to Ride, Pokemon and Magic: The Gathering, you are simply not worth any of my time whatsoever. Through mass market stores and the Internet, the public has been converted from suspects to prospects. In fact, it has turned many from prospects to customers, bypassing hobby game stores completely. I am at the tail end of this equation, taking in what I can of a cultural shift, in which a hurricane of customers have been created and I'm trying to fill up a thimble, arm outstretched into the clouds, while dying of thirst. As with all revolutions, you never know exactly your place in it until shots are fired.

Games in my parents guest room. One of these things is not like the other.