Monday, December 19, 2022

Failing Upward

 If you don't like failing on a continuous basis, small business is probably not right for you. They say an entrepreneur is someone who fails early and often, knowing when to cut their losses and move on. That moving on for an entrepreneur might be realizing they didn't build for scale, so they sell what they've built. For a small business owner, there is no early and often failure. You fail and you might lose your house. Entrepreneurs are all about gambling with Other Peoples Property. Us small business owners fail differently.

Small business failure is calculated. Failure is constant trial and error. The important part of our failure is risk management. For example, there is an amount of product I buy for my store. If I bring in too much, it doesn't matter how many sales I made, I'll lose money. If I bring in too little, I leave money on the table, and I fail to offset my other failures, of which there are many. I have failure all around me, so I need winners to shore up my shortcomings. 

Over time, I fail less. In the aggregate, I'm winning! I never stop failing, I just do a better job with my failures. I assume failure. I create systems to manage failure. I embrace failure as a learning experience and use it as an opportunity for others.

I love this. That's right. My brain is tickled by this entire Rube Goldberg small business machine. I enjoy the learning process. I get caught up in other peoples excitement for new product and opportunities. I  embrace the heartbreak that comes with the inevitable failure of absolutely every product or service. Entropy is not just my friend, she's my lover. If this sounds dark, well yeah, it is! It will crush your idealism and it's often important to keep me away from the young and enthusiastic. I will crush your spirit, purely by accident, whether you're a game designer or new employee. I admit I love the game, not the player. Best to keep that under my hat. Send Gary back home to work.

Back to failure: It is assumed I will be failing daily. However, my failures must be offset by my wins. December is a month that I've often expressed as when sins are forgiven. Strong sales, clearing out dead wood, allows us to overlook our mis-picks and poor forecasting. All this failure leads to profit and I can bask in the glow of a flush bank account. I'll pay some bills, buy some toys, save up for a project, squirrel away money for taxes, and expect a lean first quarter where I'll question my life for the thousandth time. Fail early and often, but make sure your successes outweigh your failures. Retailers are like squirrels, working like mad, collecting nuts for the winter, knowing when to eat them and when to hide them. If I could give one piece of advanced retail advice: Know what to do with your nuts.  

A finance friend recently said that investments are great, but you, the individual, need to build your own returns through effort. You collect the nuts, the finance guy can only tell you which tree to put them in. Everyone needs to be entrepreneurial. I'm not so sure about that. I'll be the first one to read your business plan, but I'll also admit running a business is not right for everyone. It's not right for the vast majority of people. The percentage of adults who own their own businesses is 9%. Of those 9%, willing to risk it all, only 35% manage to stick around by the 10 year mark. That's about 3% of the population that know how to fail upwards. Are you inspired yet?

Saturday, November 12, 2022

Price's Law or Exponential Incompetence

You are probably familiar with the 80/20 rule, or Pareto's Principle. I've written about what I call Altuchers Rule or 80/20/20 (20% of your 20% are your core clients). Now let's look at Price's Law, and how it might be useful in thinking about small business. The law states half of the total contribution is made by the square root of the total number of participants. If the language sounds vague, it's because it was originally about contributions to academic papers. It has been applied to the workplace somewhat successfully though and if you've worked in enough places, it certainly rings true. It's horrifying, but not surprising.

I've had small business colleagues complain about the productivity of their staff, with complaints getting more numerous as their business grows. In small business, the owner is usually a workhorse. Employees are reluctantly hired to carry some of the load. We want to do more and employees allow us do that, sorta kinda. As you grow your staff, you look around, and realize the same people as before are doing most of the work, or perhaps one more of the several you recently hired. Maybe if we hire another couple people, we can break through this? Price's Law says good luck.

To give you an example, if you have a staff of six, under Price's Law, two are workhorses, and four are contributing a minimal amount of work. You tried to hire good workers, but it didn't work out like you expected. Twelve employees and eight are just getting by. Ten thousand? Only 100 performers. We grow into increasing inefficiency. This is not new, but it's shocking if you don't have broad work experience. It's also why very experienced owners are reluctant to grow. They know the inevitable outcome. I can tell you stories of dead wood, both people I worked with and the pain of realizing that I was the deceased wood.

Many successful owners are used to being in the competent category, and probably never had time to look around to see the under performers. Under performers are still contributing, but there's a tendency for them to naturally obfuscate the differences between them and the performers. People are taught that if they can't stay busy, they should at least look busy. "If you can lean, you can clean." Incompetent managers are no different, so there's a lot of smoke in organizations, with new projects and initiatives, but not a lot of fire. Managers are not immune to Price's Law.

So what can we do about this as small business owners? 

First, let's be clear that the so called incompetent still contribute, just no more than is absolutely necessary. There's even a grievance movement afoot to work in this fashion. I would also argue, this is the nature of most people. Most people are working out of necessity, not passion. If you're that individual, find out what you're passionate about and seek out that feeling in a field that works for you. 

When it comes to hiring, you can and should attempt to hire around the incompetent, looking for top performers. We don't owe anyone a job and there is no assumption business is some sort of employment socialist utopia. We don't want these under performers, who need to go find their passion. We just end up with them.

Of course, if the person doing the hiring is incompetent, you'll get more incompetent workers. There is some research indicating that low performers can't even identify top performers and end up hiring people at or below their competency. The competent are so different, that the incompetent not only can't identify them, but are turned off by them. It's important to allow the performers to hire and insist they look for the appropriate signs of competency. As if the performers didn't have enough to do already! In my experience, you're likely to be only 50% successful with your hiring, but that's still better than Price! 

Second, most people just do what they're told at a job. They're afraid. They're unsure of what needs to be done. Some are waiting for you to instill competence into them with training and direction. You can bend the competency curve with some attention to their needs. Unfortunately, I think most of us are crappy managers, also known as being incompetent. 

Most of us started a business because of passion for something, and that something probably wasn't managing people. When it comes to training and experience in America, a good manager or good management training is damn rare. I've had such poor managers in my work experience, that it often came down to meshing with personalities, rather than discovering good leadership. I certainly don't claim to be a great leader myself.

If you have an employee who is not naturally competent, it's awfully hard to turn them. It's what we look for in individuals we want to groom to become managers. Do they identify problems? Do they take the initiative to solve them? Can they perform over time or do they lose interest? Can they work independently or do you constantly need to tell them what to do next?

Third, assuming you are stuck with the square root of your employees being competent, reward competency. Don't lose those people. Most large organizations can't identify them, because, as we now know, they're incompetent (also don't forget Dunning-Kruger). With wages going up dramatically, it's hard to compensate the competent more, when the pool of resources is tapped. 

There is some resistance to increased compensation for performers. I have bumped up against push back against increased compensation for performers, as there's a socialist element in the culture that equates uneven compensation, for whatever reason, as unfair. I've had employees compare paychecks and question why one person was paid a dollar more an hour than another. This is considered normal now. They expect wage transparency, and uneven compensation is an uncomfortable discussion. 

So there you have it. Really this is just a name to describe what you already knew. If you disagree with this, if your experience differs, you are probably a great manager. You can identify and hire talented individuals with skills and ambition like your own. You can encourage, train, and compensate your staff to a high level of performance. You are the function of the square root of the rest of us. I look forward to your book.

Friday, November 4, 2022


We were talking in a mentorship forum yesterday about how we decide what to buy. Of course there are metrics, but then I mentioned witchcraft. We use witchcraft. Another mentor chimed in that he too used witchcraft! What is witchcraft?

It's tradecraft really, but not a skill or metric. Witchcraft in this context are the many subjective elements of any given product, a product we have never seen. Here are some of those elements:

  • Publisher reputation. How do I feel about them? I like making money, but I'll buy more or less depending on how I feel about the publisher. It's sometimes personal. 
  • Safety stock. Is this product likely to run out? Am I being told it will run out? I just placed a top up order of Root, because it was clearly the last shipment for the holidays. Is this a top tier product I don't want to run out of? I don't want to be out of anything D&D, for example, so I don't mind ordering beyond my normal threshold. Nobody with cash reserves loses money on Magic overstock; eventually it sells for more than you bought it for ... if you can wait.
  • Customer Demand. Do I know of a predicted high demand? Is there buzz? Are there known problems? What are my customers saying? How is game room attendance? I look up every Games Workshop release on Reddit to hear the buzz. Is this a re-packaged boring product? Is it a good value? Are the rules good? Are they crying because they want it, but can't afford it? 
  • Frosthaven lands in the US
    Do I Have Room? It was clear in this forum that some of us have reduced our gaming space due to increased inventory. If I order a lot of this product, will I have room? I have a pallet of Frosthaven on the way, but if I had more than one pallet, it would be a space problem.
  • Is the Theme Popular or Not? Cat themed games do well at the moment. Political and sports games always do poorly for me. Games with great miniatures often sell, even if the rules are ho hum. What if I was offered Cathaven, a beautiful miniatures game of cat politicians playing baseball? Oh no!
  • Is it Devalued? Is the publisher known for discounting their product? Is it a commodity product sold like stocks? Most CCGs are known to be hot or cold before they're even released. A devalued product might still get purchased, but as a one shot. It's disposable. A company like Games Workshop is so good at protecting their brand value, I can always clearance their miniatures and make all my money back, unless it's a book, cards or dice. 

Upcoming Magic: The Brothers' War Set Booster with Commodity Pricing

  • Is It Limited? AEG allows for early retailer release of some of their board games. Some of these games are just alright, but when the Internet is removed from the equation, and I get a true regional demand for a product, I realize that even an alright game will sell very well as an exclusive. A game in which I might normally order two copies, now sees me ordering two cases.  Sometimes premium product is a bit of a downer, like a lot of Wizards of the Coast Premium store exclusives. Just because supply is limited, doesn't mean demand is high.
  • Is It Already Out? Sometimes you'll find the "new release" already being sold on Amazon or it's a Kickstarter left over. Sometimes distributors will sell a game as new that's actually just a reprint. If it wasn't for boardgamegeek, and past experience, I often wouldn't know! We are a front list driven trade, so old stuff is death.
  • Can I Afford It? What does my Open to Buy worksheet say? Some buys, like Kickstarter orders, are only an option when I have disposable income. If you pay in advance, you may not have the cash this week. Q4 doesn't have me backing many Kickstarter projects, as I save to pay off my debt.
  • Does It Solve A Problem? I might be looking for a product line. For example, I would love to find a line of miniatures bags that are well priced, well stocked, and always available from distribution. I don't have the volume to order from a dedicated bag company. On the other hand, I don't need another dice manufacturer.
  • Packaging. Is it difficult to display? Is it in a tube? Does it come in a plain cardboard box (chess sets). Does it need to be put in a display case? Display cases are the kiss of death and there's limited display case space. 
  • Theft! There are product lines we don't carry because they attract professional thieves. We'll no longer carry caps, wallets or purses, for example. If you can imagine it on a blanket in front of a train station, I don't want it. And yes, our stolen goods were being sold on a blanket in front of a train station.
  • Offensive. Will this cause controversy or do I find it personally offensive? Is it racist, sexist, overly sexual, or otherwise out of step? Some games intentionally try to push buttons, and honestly a lot of people love them. Cards Against Humanity was practically demanded by customers, and we sold nearly 2,000 copies of it. Do I feel good about that? Nope. Do I feel bad enough to give back the $90,000 we made with that line? Nope. Do I cary it now that it has cooled off? Nope.
  • End of Life Issues. Can I get rid of it easily at the end of life. If you sell online, are there restrictions on where you can sell it and at what price? Board games are easy to clearance, but Role Playing Games die on the vine. 
There you have it, some witchcraft!

Thursday, November 3, 2022

8 Thoughts on Retail Purchasing

I'm co-hosting an AMA on retail purchasing for new stores today and thought I would summarize my purchasing advice. I've been purchased 14 million dollars of games since 2004, and purchasing is now my main function working from home. Here's some advice:

  1. Focus on What Works. 80% of my sales are from 10% of publishers, roughly 30 of them. Get right with this 80% and you've achieved most of your purchasing objectives. It's not an issue of "if" but "how much."
  2. Pre order Most Things. I pre order everything. You might decide to only pre order from the aforementioned 80%. The primary reason to pre order is: a) I almost always get what I want, b) I almost always hit the street date, and c) It frees up my time. I do not look at "dailies" or pay attention to most marketing communication from distributors. I have instructions to auto-ship orders when they hit "free freight."
  3. Back Order Essentials. I have $62,000 of pre orders, but only $900 of back orders. We are a front list driven trade, so the new is vastly more important than the old. I place my orders online by hand, so I regularly see what's back in stock.
  4. Track Your Purchasing. I use an Open to Buy (OTB) spreadsheet to track every purchase so my purchasing budget is balanced. I know when my inventory is bloated (most of the time) or when it's lean (almost never).
  5. Budget and Cash Reserves. I don't budget, (OTB is not a budget tool, just a tracking tool), but I have a cash reserve. Even if I'm following my Open to Buy spreadsheet, variations in monthly sales can leave me in a hole. Having a $150K sales month followed by a $100K sales month means that even if I kept my inventory stable in month one, I'll still have problems paying bills in slower month two. If my purchases were good, I'll resolve it in the future. In the short term, I probably have about $25K of bills I can't pay without a reserve.
  6. Your Best Hat. Purchasing is just one hat you wear, and it's easy to rush purchasing decisions between other tasks, maybe while standing at your point of sale system. Make purchasing special. Find a quiet place where you won't be interrupted with a stretch of time to contemplate what you want. With more time comes more options. You can go off script and open direct to retailer accounts or back Kickstarter projects. Prioritize purchasing and purchasing will expand and reward you.
  7. Buy For Your Particular Sales Team. You are probably your sales team, but think about the product you're ordering. If you have a mostly passive sales staff, the product you buy will need to sell itself. Product will need to be obvious. If you have a demo program, you'll want games that demo well, meaning you will have to be part of game demos, including attending trade shows, conventions, and local game nights. The more active your sales team, the more you will sell, but know what works for you. Purchasing is not aspirational.
  8. Exhaust Port. You can't get another portion if you haven't finished what's on your place. Have a system for clearancing dead product. There's no shame in an in-store clearance section. Game conventions are great for moving bulk overstock. And of course there's the Internet. The system is in a closed loop and you need to move the dead stock to buy new stock. If you personally move your mistakes, you'll get better at buying decisions.

Tuesday, November 1, 2022

Gaming A Broken System

Out of college I took a job for a short time as an assistant teacher at a school providing therapeutic services to kids. These kids had autism, severe learning disabilities, and most common, trauma that resulted in emotional outbursts. These were kids that were unable to be served in mainstream schools, or so it's said. It would be the most challenging job of my life, which is to say it was awful. I left as soon as I was accepted to graduate school, and I still remember the look of disappointment on those little terrors. It haunts me.

Kids were expected to improve and be mainstreamed back to regular schools, age out, or for many, end up in a group home when their behavior devolved. Most had messed up home lives or in utero drug addiction. My job was to try to get these kids to learn anything, while not hurting anyone. Some kids were super bright, and I was able to teach a unit on The Hobbit and some elementary Japanese.

Some kids were not so gifted. We had one kid, Tom, who was completely unable to focus. Tom was rewarded with a piece of candy for every math problem he attempted. Eventually I developed a reward system using trading cards, and we got rid of the candy. For now though, Tom would sit at his desk, do a problem every ten minutes and eat his candy. He would laugh at the other kids, "Suckers!" Tom was gaming the system. He was clearly in it for the candy rather than the education. I never forgot Tom.

Sometimes I feel like Tom. I'm a store owner crushing it right now. The system is broken. Suppliers are in disarray. Most of my suppliers cannot properly send me an invoice, provide tracking numbers, or cash my checks in a reasonable fashion. These would seem like core competencies, no? 

I regularly find myself dividing up pre orders in fear that a distributor can't deliver. Often they can't, because of logistics, lost orders, or they didn't pay their bill and got cut off. Focusing my job as a buyer and finance, has hyper focused me on these two areas. I get the impression that a metaphorical Harry was keeping their systems together, and everyone has lost their Harry. One does not simply replace their Harry. And nobody really understands what their Harry does until he's gone.

Meanwhile publishers are moving to Amazon in droves to avoid the bottlenecks. I am the little boy eating his candy and calling everyone sucker. I am master of a broken system, not just due for replacement, but actively being replaced while I'm blissfully unaware, crowing about my success while on a massive sugar high. This is where it becomes imperative to have good publisher relations, direct accounts, Kickstarter orders in the pipeline, and an ear to the ground. I am Tom, but I am also Harry. 

I would mention how unstable the game trade seems right now, but has it ever been stable?  That's the one certainty in all this. Time can be defined as just one damn thing after another. Such is the game trade.

Sunday, September 11, 2022

Game Store Investing

The feeling of long term store ownership might be described as failing upwards. There are regular setbacks, characterized by the phrase, two steps forward, one step back. The saddest thing ever, I think, would be to look up after ten or twenty years, and see things exactly the same. You are the same. The store is the same. The money is the same. You are the victim of a Buy-A-Job. Top stores, those failing upwards, are run by owners who believe they are heading in a positive direction and they work towards that progress. How do you work towards progress?

First, invest in yourself. Besides paying yourself from day one, which means having a larger startup budget, you want to invest a percentage of your income for retirement. This might seem extravagant, but honestly, when else will you do it? Retirement savings can also be used for buying a home, college, or a number of other investments in yourself. Starting younger means you won't have to scramble when you've finally "made it" in this trade.

Investing in yourself also means learning new skills. This is going to happen anyway when you first start a business, but regular personal development of your skillset is harder over time. I'm currently paying someone for graphic design work and I'm about to hand over my website to an employee. This is mostly because I've lost interest. I'm instead working on learning Spanish and RV repair. My eye is not on the ball.

Second, invest in your store. Avoid purchases that don't add value. My investors describe this as "pimp value," or what today we might call flexing. Buying a van and wrapping it as a billboard, a vintage pinball machine, or yet another rubber statue is pimp value. Now that we've tripled our inventory and seen what true investment can do for us, pimp value is clearly seen as net profit deferral. Avoid pimp value. Flex with profit.

The most solid store investment you can make is more inventory. Even bad inventory that underperforms is better than pimp value. Avoid spending money on Other Peoples Property. We spent $160K expanding our game space to a second floor, just in time for the Magic boom to end. We paid it off during COVID, and event attendance may never fully recover. When we one day move out of our space, our landlord will likely tear down our second floor. It's that idiosyncratic to our operation. 

Third, use systems to invest. Give yourself a salary based on a dynamic number. My salary is based on the low end of the average range of a retail store manager. This lets me increase it over time without feeling like I'm taking too much. This is not all of my take home pay, but it's the baseline I can take, even during hard times. After you have a salary, take a percentage of your income and invest it in a 401K or IRA. The ideal number is supposedly 15-20%. If you can't possibly imagine doing that right now, try 1%. Then increase it slowly. Anything is good.

After you've paid yourself, repeat this process with your business. Take another percentage for operational improvements and inventory increases. This is easy to do during your windfall months, like the summer or after the holidays. A 10% inventory increase has been my guideline for a while. I'm always progressing if my inventory is increasing. This also lets me play with inventory performance metrics as a means to increase profit. It's not just more stuff, it's an engine for profitability and a way to keep me engaged.

Pro Tip: Take 10% of your net profit and put it aside for improvements and repairs. Early on when profits are thin, it might seem all your profit goes to improvements and repairs. Eventually you'll get a handle on entropy. The goal is to find yourself sitting around a table with staff and scratching your heads because you don't know how to improve the store further. You've done all the projects on your white board so you'll need to get creative. This is where you want to be! Watch your store become a leader in the field, rather than worrying about a broken toilet.

These might seem like small things, but that's the point. You sacrifice a small amount here and there for big results later. Finally, don't be afraid to take home your net profit. Remember that the R in ROI is Return. If you aren't taking money out in the form of profit, I think you're doing it wrong. Enjoy your life. Develop hobbies outside of gaming. Take care of your health. Plan a vacation that's not to a trade show. You don't need to take pride in your success, but you certainly don't owe anyone an explanation.

Wednesday, September 7, 2022

The Best of Times

After 18 years of running a small business, there hasn't been one "best" time, but instead a series of them. Of course, my best of times, might be hell for you. My wife used to take math classes for fun, case in point. So what are my best of times?

Figuring It Out. Learning the trade from scratch was a glorious time, breaking the code of my trade. I'm still doing it. In retrospect, I paid about as much for that education as my parents paid for my college education. My startup loss budget, AKA my informal education, was over $50,000. Figuring out the trade also included understanding customers. Some of those early customers are still with me. Some have loaned me large sums of money. One is a long time investor. Learning games was also part of figuring it out. I learned about 100 board games, several miniature games, and half a dozen role playing games. I don't do that anymore, nor do I want to, but I look back fondly on this time.

Survival. Squeaking by with a few days of cash flow made me feel lean and mean. Extra money tended to be more liability than opportunity. I remember being on vacation in Mexico and essentially bouncing a Friday payroll, rolling it over until Monday. Business as usual. We had super thin labor. We relied on December to get us out of debt nearly every year. I did this for so long, I would have told you "this" is what owning a small business is about. It is for most. It taught me discipline, but if I analyze it clearly, there's also some psychological trauma. There was a baseline of constant pressure to perform. It can be addictive.

Just a Taste. I overbuilt, over-invested, and there was a potential energy built into my business, like a large rubber band being slowly twisted. In year eight it unwound and after years of just getting by, we finally cracked the expense nut and saw net profit soar. It continued to soar for years to come. Scraping by for eight years and finally having some extra cash was glorious. It didn't feel like a reward for hard work though, it felt unearned. I did enjoy the vacations and outside hobbies this provided. It was a nice distraction from imposter syndrome. 

Break Out. COVID saw my return as the sole proprietor for several months, building a new POS on my dining room table, delivering games to customers, creating an online store, and re-hiring staff to take it all over. Imposter syndrome was cured when it was just me again and I didn't fall on my face after a lot of years away from the counter. I can still do this! It gave me the confidence to work from home, plan my long term working road trips, and believe that what I built had a strong foundation. We had strong policies and an equally strong business culture embodied by wonderful employees.

The Last Day. One day I will sell the business, hand it off to my son, leave it to employees, or liquidate at a tremendous profit. They say the two happiest days of owning a boat is the day you buy it, and the day you sell it. I imagine a small business is no different. I'm another 18 years away from that day, if I'm lucky, but I imagine it will feel like victory.

Sunday, August 14, 2022

Frosthaven: A Retailer Kickstarter Analysis

Frosthaven is the largest Kickstarter I've supported. It's also the most transparent. You can tell what retailers have paid for it, and thus it's an interesting public case study of my costs, both what I paid and the lost opportunity, related to retailers backing Kickstarters. 

I have a modest amount of Frosthaven on order compared to my peers, a shipping pallet worth. I have 30 games coming, along with a small number of add ons, which we will ignore for this exercise. The cost per game is $80, which is pretty good for a game I'm selling at the market price of $250 (market price is now more like $275). However, my shipping costs for this pallet is $480. I've never paid this much for shipping. I can divide that shipping by 30, the number of games coming, bringing it to $16 per game, or a total cost per Frosthaven copy of $96.

Selling a $96 game for $250 is the occasional win we get with Kickstarter. A 62% margin is very good and a definite outlier. You might be thinking, will I actually sell any games at that $250 price point? 13 copies of Frosthaven, or nearly half are pre sold with cash up front, which is a good strategy for mitigating the opportunity cost. It's also important in the calculations to come.

What is opportunity cost? This is where we see this game isn't so great for retailers, not that Cephalofair is to blame. Every inventory dollar I spend has to perform, measured by my turn rate. My overall turn rate is a strong 4.6 per year. It's generally agreed that healthy stores should be in the 3-5 range. An example of turn rate is if I have a $100 game, on average, that game will sell 4.6 times, providing me gross sales of $460 over a years. This is using the price of the game, not the cost, but we'll get to that later.

If I pay for a game up front, like with Frosthaven, I lock in my money for a period of time, and thus lose the opportunity to turn it with other inventory purchases. This loses me money with hopes of offsetting it with sales of that game when it eventually shows up. The goal then is to pay for the project as close to the shipping date as possible, AND to pre-sell as many copies as possible, to shift that opportunity cost to consumers. It's less of an opportunity cost to an end user, since they only lose out on the fun for that period of time, and not money.

My Frosthaven order was $2,880. I placed the order April 1st, 2021 and expect to receive it by the end of December, 2022. That's 21 months without having $2,880 to invest in my business with a pretty sure thing investment in inventory. However, I pre-sold 13 copies, reducing that amount by $1,248, leaving my an opportunity cost of $1,632. 

That $1,632, locked in for 21 months, would have grossed $13,138 at cost. To get the actual money lost, we can assume that $13,138 bought other averagely successful product at a 45% margin. We need to calculate this because I want to get a net profit amount, which I generally, back of the napkin know from gross sales, not gross costs. $13,138 would buy me, on average $23,888 in product over the life of Frosthaven production and shipping. The ghost of what coulda been.

From $23,888, I can calculate a net profit percentage. For retailers it's generally in the 5-11% range. Let's assume a normal period with an 8% net profit range. $23,888 x 8% = $1,911 in profit. The opportunity cost for backing Frosthaven is $1,911, more or less. How does that compare to the profit I'll make from Frosthaven? 

That's far easier, since we have actual numbers, assuming I don't have to clearance Frosthaven later at a discount. $250 minus $80 cost equals $170 per game x 30 copies = $5,100 gross sales, times 8% net profit percentage = $408 of net profit. As we can see, the $1,911 of lost opportunity cost is not offset by $408 of net profit from Frosthaven. We have a net loss, assuming opportunity costs, of $1,503. I will be really happy to see my $2,890 of (additional) gross sales in December, but if you missed out on Frosthaven, you're probably ahead as a retailer. You might have a lower turn rate, or lower profit margin, in which case you might actually make money? I'll let you do your own math.

Edit: Should I consider the pre sale of 13 copies of vapor ($2,210), and the 4.6 turns of that money, to offset this cost?  

This assumes you have opportunity costs. This assumes you have other product you could have bought instead that would have performed at an average rate. A lot of us are increasingly not able to identify average performing game trade inventory, as we have all the good stuff in our trade. This also assume money has value, which at the time of placing this order, it honestly didn't. Rolling in government money I didn't want to give back, locking in a sure thing for a 21 month return was like buying a game trade bond, when you're used to playing the stock market. 

I think the best way for a retailer to handle Kickstarters is first, try to back projects where you pay upon shipping, and second, consider this money to be separate from your purchasing budget, which removes it from thoughts of opportunity cost. Perhaps call it marketing, where good money goes to die. Backing Kickstarter projects makes my store stand out from competition. It's a flex, a power play, because who has $1,503 to lose on one game?

Tuesday, August 9, 2022


My first year in graduate school, a young, newly minted professor, fresh out of Stanford, pulled me aside. The conversation went something like this, "Look, you can clearly write well enough to weave your bullshit into a compelling narrative, but this isn't college anymore. Writing in academia requires more rigor. Let's work on that." 

I graduated a few years later. My bullshit now backed up with solid evidence and a deadpan, third person voice. It ended up an honors thesis after I applied marketing principles to Japanese concepts of enlightenment. I really couldn't come up with a fifth chapter, so I weaved one last spell of bullshit. I expected to be disciplined, but they totally dug it. The first chapter had been written in that young professors class, re-worked a million times, compared to my rushed final chapter. That first semester I also took a course on Saint Francis, and learned the term hagiography, the opposite of everything I was taught.

Hagiography is the acceptance of bullshit as a legitimate academic category. It's a biographical style in which we have an agenda of depicting the individual in a positive light. In the case of the saints, it's to show how amazingly saintly they are, of course. The purpose is to enhance the faith of worshippers, as the actual lives of saints are thought to be of little significance. 

Academics will still try to tease out truth from hagiography, but it's mostly because they need something to do. The question of truth or academic rigor wasn't questioned at the time of these writings. In fact, the idea of academic rigor, the value of truthful reporting, is so modern, there's often no evidence left in the past to tell a competing narrative. Why would you want to keep that around? The dude is a saint, let it go.

I bring this up because I find it interesting that we're in this period when our hobby founders are dying. This is a hobby that's perhaps 50 years old, give or take, and our founders are aging out. Their stories have been told at conventions, in game stores, around gaming tables. They are spoken of as gods among men. Their writings have been analyzed and scrutinized. Gary said this before he said that, obscuring himself behind a filing cabinet while he said it, or written in a Dragon magazine column. The hagiography is strong, especially when we have aggrieved parties and those around them attempting to cement their legacies. There's a tendency to exaggerate to make a point.

Lately we've had a series of books attempting to tell the true history, back and forth we go. Truth is relative. Hagiography is rampant. What we can see clearly is our heroes are flawed. Villains can sometimes save the town. I think we need to avoid making oversized heroes out of our founders. What they intended the game to be is less important than how you took it, synthesized new information, and made it your own. It's a bit like academia that way. What have you contributed? 

They gave us a gift, sold it to us really, over and over again, a product to do with as we please. It belongs to the world now. We owe them thanks, but I think that's enough. They weren't saints. Neither were they villains.

Thursday, August 4, 2022

The Pilgrimage

It is Gencon week, the national game convention created by the venerable elder of our hobby, Gary Gygax himself. I was one year old when the Lake Geneva Wargames Convention was created, later to become Gencon. I have never been. It is a black mark on my gaming credibility. Gencon is a little like the Muslim hajj, a pilgrimage you should attempt to engage at least once in your life. In that respect, I can say I haven't been to Gencon yet.

We can look at the pilgrimage example and see why you might find something like Gencon relevant to you. A pilgrimage is necessarily foreign and a bit dangerous. You hope to grow by overcoming your fears. There is real danger, emotional and physical. Failure is on the table. When I was 16, after going to just one local game convention, I decided to run a series of public D&D game at a local convention, Strategicon. I needed to see if I could do it. I also needed to break out of the orbit of my local gaming group, where I was mostly just a player.

Did I have the rules mastery, the table charisma, to run a very subjective AD&D game for a bunch of strangers of all ages? It was a harrowing test in a foreign environment. I passed the test. I was a dungeon master, and I've played that role in my gaming groups since. It's odd, but that's an important part of my identity, since age 16. It was a pilgrimage, an initiation, and a kind of self ordination. I put that experience away until a friend found his Strategicon schedule while we were hanging out recently, 38 years later. Oh right, that's how I got here.

Gaming for you might be a touchstone, a life line, a reason for being. A comfort in a cruel world. I know that's how I felt at 16. A pilgrimage might be a communion with the hive mind. You might hope for personal transformation, confirmation of identity, even if it's just boosting the confidence of a teenager. I see people try to parse complex metaphysical topics, normally the purvue of religion, using the wisdom of Yoda and Gandalf.  For many, geek culture is their source of meaning and wisdom. Of course you'll consider a pilgrimage.

A pilgrimage is an inherently solitary activity, even when surrounded by thousands of people. Everyone attends for their own reasons. My friends did not join me in those Strategicon games. It was a thing I had to do by myself, as a budding master of dungeons. If you think you may never go, consider this: Because it is inherently solo, you can always plan to go next year. Those who wish to accompany you on this pilgrimage will appear in your life, once you've established the intention. Or not, the solo trip itself being an important part of your experience. I wish you a safe and fulfilling journey.

Sunday, July 31, 2022

How 40K Works (Tradecraft)

From a store stocking perspective, the rapid advance of new products from Games Workshop is untenable. Thankfully, Games Workshop understands its own efficiency requires models to be regularly discontinued, much to the dismay of fans. New products theoretically release at roughly the same pace as we should be discontinuing old product, in a zero sum game. Figuring out what to discontinue is the trick.

Figuring out what to order is also a trick, a combination of skill and intuition. We have weekly releases, combined with a forced blackout pre-order period until the models are already on the train across the country. We generally fly blind, relying on past sales patterns to predict future results. Or we cheat a little and find a way to get informal or even formal pre orders from customers. This results in overstock as a way of life, or lately, ignoring releases if customers are indifferent, or sales patterns show no interest at all (Warcry this week). So how do we decide what in our 40K line stays and what goes once it's here?

Every store stocks differently. Also, every store stocks differently in their stocking lifetime. If you have a store now and you have a rigid idea of how you stock a line, just give it some time. When I first started, I carried a minimum range of GW stock. Three years later, with a huge store, with our local GW store closed and my main competitor retiring, I carried every Games Workshop model produced. A couple years after that I added Forge World from England, marking it up 10%, just to satisfy hungry customers. I was selling resin parts in display cases. At one point a competitor popped up specializing in 40K at a discount, and I pulled way back on my inventory as sales flagged (they're gone now). Lately I'm somewhere in the middle. There is no one answer or strategy. Local supply and demand drive my stocking strategy.

As a stockist store, I carry every required model. Are there ones that perform so poorly I would like to drop them? Sure, I've got five model kits I would like to dump, but I can't (three are Warhammer Underworlds). This is fantastic. It's $135 worth of product, which is a small opportunity cost for the benefits of the various GW programs. This wasn't always the case. 

Sometimes this dead stock number can be thousands of dollars. The stockist benefit to customers is you can always find a core group of models at a store like mine. Does GW define that core well? It can be hit or miss, but it's mostly a hit. Companies can define their core on what they wish to sell, as opposed to what actually sells (Privateer Press). GW, in its current incarnation, is good with defining a strong core. It works for both of us.

All the other stock must serve the local community. This is a hard pill to swallow. I would like all the Orks or Tau on the shelf at all times, but once my customers have had a chance to buy what they need, it's increasingly difficult to stock for the casual who buys from us irregularly. Keeping a "coherent collection" of models of a particular army often falls apart, if you don't have new customers, with new needs, constantly visiting. With events functioning, but the public still wary of gathering, my sales are great, but new customers are harder to acquire. This is a game that for a good percentage of customers, requires new opponents on large tables in public spaces. 

How do we know what 40K stock to drop? This is where sales performance metrics come in. Once a week I'll get a report of inventory that has stopped performing and I have to decide what stays and what goes. This report is overly generous, and if a title shows up, it's truly deceased. Those five core stockist items must stay, obviously, but 20 other items were deemed unworthy this morning, that should have gone. Five of those 20 were added to our online clearance section with some regret. 15 were given a pass, because I deemed them relevant ... for now.

So my store, and likely most stores, are going to have a core collection you can count on, new releases that are still fresh (this trade is "front list driven") and a collection that represents the current needs of their local 40K community. If as a customer, you shop irregularly, or you cross shop, don't be surprised if you find what's available makes no sense. We're using your sales patterns to predict the future, and with unpredictable sales patterns comes a mismatch of inventory to customer needs. I'm not placing blame, but this is what you get and I can't do anything about it. This is all we can do and it's why multiple stores exist, surviving on imperfect information (mine and yours). It's how I pay my mortgage, so certainly don't feel bad for me.

Friday, July 29, 2022

5 Responsibility Holes

 When it comes to remotely managing a business, there are likely some responsibility holes you may have overlooked. These are areas of responsibility that require, you the owner, and only you, to properly manage. We want to eliminate these as much as possible, to maintain independence. Here are a few:

1. Hiring a Manager. If you have staff and you're remote, it likely means there is a middle layer of management. Ideally this person will stay for years and give you plenty of notice before they leave. However, they could notify you of their two weeks notice at any moment or worse, get hit by a bus. You will need to come back from wherever you are to resolve this.

Resolution. Ideally you have someone being groomed as an assistant manager at all times. I say ideally, because it's common not to have anyone in line. Second choice would be someone who could manage operations while you return to hire your next manager. We have a relatively flat organization chart to where almost anyone can do anything, provided they had a little more access.

2. Security. The day after Christmas, I got a call at 5am from the alarm company. Someone broke into my store. Would I like them to call the police? Duh. I was 400 miles away. My manager didn't answer their phone and I put out an all hands request for anyone to meet the police at the store. Thankfully a junior employee stepped up. What if they didn't? 

Resolution. Ideally the manager would be a secondary or even primary contact with the alarm company and perhaps with property management. Keeping cell phone numbers handy of all your employees as an owner, even though you probably can't imagine ever calling them, could be critical in an emergency. From 400 miles away, I was able to arrange for a board up service to get us through the holiday weekend and eventually new glass. 

3. Final Paycheck. In some states, including mine, an employee is required to get their final paycheck their last day of work. No waiting for direct deposit; pay me now or may me my daily pay for every day you're late What if you, the owner and probably only person authorized to sign checks, is out of town? This happened yesterday.

Resolution. If you know an employee is leaving, proper planning can arrange an electronic rushed payroll on their last day. This doesn't work for someone fired on the spot, who again, needs to be paid right this moment. You could authorize a manager as a check signer. You could provide some check to the manager for this purpose, either blank or signed, or perhaps you could provide a cash reserve with a receipt showing final payment. I don't have a great solution to this. Thanks California.

4. Your Mail. It took me a couple years to start changing addresses so mail was sent to me house instead of the business.  There is still time sensitive mail that's important someone is authorized to open, notably your manager. For example: Letters from your landlord, government correspondence and unemployment audits, and one that haunted me for a week, potential lawsuits that require a quick response. 

Resolution. Teach your manager to triage mail, scan and email important documents, and generally take responsibility for your physical in-box. 

5. Supplier Invoices. During my first long trip of several months, the manager would take in orders, create a spreadsheet of invoices that we shared, and I would pay invoices remotely. Some were inevitably missed. How do you avoid invoice mistakes?

Resolution. Moving entirely away from paper, I now track every order in a POS database with a shipping tracking number. Generally, that tracking number is part of an invoice. When there is no tracking number, it means there is no invoice, and it triggers me to query vendors. Taking complete ownership of orders means fewer steps, fewer mistakes. It's also more work. This is great until a random order shows up with no tracking or invoice, which triggers alarms from staff, at which time an exception occurs, and we resolve it. 


6. Oh F#&* Budget. What happens when you need to fly home to hire a new manager, you have a minor disaster, or Wizards of the Coast decides they don't like your furniture?

Resolution. Money in the bank. Plan to have a few thousand dollars or more to cover your return flight, emergency glass replacement at holiday rates, or other eventualities. Maybe you can even bribe your manager to stay another month. Money will buy your way out of a lot of problems. 

Anyway, those are my big holes after two years of working from home. I plan to take my first long, international trip in 2023 and I am fully aware I may need to take a flight home at any moment. 

Sunday, July 24, 2022

Agreeableness and Why We Won't Hire You

I am far enough removed from day to day operations to finally say this without anyone thinking I'm referring to them. The biggest reason a game store doesn't hire you (after repeated attempts), or let you run your volunteer event, is we simply don't want to work with you. 

A great number of our customers, more than the average business I would wager, are people with difficult personalities. They are disagreeable. Some will argue otherwise (they love to argue), but I do believe this trade brings in the more socially awkward and difficult folks. That's fine. We love all the misfit toys, being misfit toys ourselves. 

Game store employees are weird and awkward as well, but they have the added trait of being agreeable. When I hire an employee who is not agreeable, I always regret it. Being agreeable is an important personal trait for retail, just as much as being geeky and knowledgable about games. From Psychology Today:

Agreeableness is a personality trait that can be described as cooperative, polite, kind, and friendly. People high in agreeableness are more trusting, affectionate, altruistic, and generally displaying more prosocial behaviors than others. People high in this prosocial trait are particularly empathetic, showing great concern for the welfare of others, they are the first to help those in need. Agreeableness is one of five dimensions of personality described as the Big Five. The other traits are openness to experienceconscientiousnessextraversion, and neuroticism.

A good percentage of our customers, sometimes our best customers, are not agreeable. Being agreeable ourselves, we do what we can with disagreeable customers. We bend quite a bit in this trade dealing with them and their often difficult behavior. They say an employee doesn't quit their job, they quit their manager. In a hobby game store, if you ask former employees, they'll tell you they really quit the customers.

Something else to consider is perhaps 70% of our customers are male, and women consistently score higher in agreeableness than men. We have more men on staff than women, but this does mean that the average customer is probably not what we would look for in an employee, statistically.

"What about neurodiversity?" you might ask. People don't submit job applications like character sheets, so we generally don't know if someone is on the spectrum or otherwise neuro divergent. We can only go with our social interactions with them, and as everyone has to do every job, we envision them in customer service, often dealing with difficult customers. 

I want to be clear that some customers I really like. The thing I miss most about daily operations is the customers. There are a good number of customers I consider friends. Would I game with them? That's my barometer of friendship. Probably a dozen at least. I miss them dearly. 

There are other customers that are prickly, but I enjoy the sparring, the back and forth give and take. I wouldn't game with them, but I would gofundme a fifty for their cancer treatment. I appreciate their existence beyond monetary gain. There are some customers whom I feel I've barely survived their presence, that I've earned their business through painful social interaction. When I worked in the store, some of these customers would only want to talk to me. We had an understanding. Being an agreeable introvert, this is exhausting. Again, I still miss them. However, I wouldn't hire them.

I'll also mention that I personally like customers and even employees, that my manager at any given time, definitely does not appreciate. I see one side of people. Being a male store owner, I tend not to see unpleasant sexist or class based interactions. I have close friends who some staff feel look down on them, while seeing me as an owner, worthy of respect. That's troubling and I try to confront that. I am not the arbiter of cool, but as an employer, I can choose who I will work with. It's a small group of agreeable people.

I don't always hire agreeable people, but when they're not agreeable, they have a strong skillset I need. That's my advice to you, disagreeable one. Find a field that values you well beyond this one personality trait. I came from IT, a field populated quite often with disagreeable people. It was some good training for owning a game store.

Tuesday, July 19, 2022

New Adventures

It is time I've made some changes. Since July, 2007, I've been writing blog posts about gaming and the game trade. It started as a place to share thoughts, but it turned into a book and so much more. 

 I have learned a tremendous amount through the give and take this dialogue has provided. Certainly I am not the best game store owner, but I'm probably the best person to report on the topic. I want to continue that in a new way. 

For four years, we've been planning a return to Mexico. We spent several months on the road through Mexico, Guatemala and Honduras in 2018 and we've been yearning to return. I'm on day 1,022 of online Spanish lessons. This will be a five year mission to explore Mexico. To seek a new life in a new civilization. 

For me this is remote work, managing the store while on the road. This is going to be exciting! It would take very little for me to have to drop everything and fly home. The plan has a lot of inherent failure points, the biggest being "rigs" big enough to live in are also too big for a lot of Mexico. It's going to be tight! 

This might be a fiasco and if you join me, you'll have a front row seat, including the challenges of true remote business management, where you can't drive 30 minutes to your business to fix a problem. 

The schedule is six months on the road, six months off, so there will be fun travel interspersed with damage control, if any, back home. Where in Mexico? All of it. We have 152 Pueblos Magicos sites we want to visit plus some bonus UNESCO world heritage destinations. I imagine we'll also take suggestions. 

I want to use something like Patreon for subscribers. I'll continue to write regularly for Patreon members, and occasionally still post publicly, so I don't disappear completely, but I'm kinda done with this. Using a somewhat private platform will allow for a lot more detail of the "challenges" of day to day management. 

There will be photos and video, and a Youtube channel would be a natural place to deposit older content after Patreon members get it first. There are thoughts that a book might be be derived from this, although it may not be game trade specific. I could imagine ancient culture interspersed with "store on fire" stories. 

Although money will be tight, I'm not doing it for the money. I'm naturally going to write anyway, either for the book or for Patreons. It's what I do. My financial "offset" for this trip is about $1,000 a month, meaning that's what it costs me to maintain my life back home AND travel. I'm not going to get that in subscriber fees, but it would be nice to offset costs while creating content. It would be even better to use subscriber money to do cooler things or buy things like camera gear or a desperately needed new laptop. 

Thanks for reading this far! Please post your thoughts. I'm not one for "begging" for money, and I haven't set anything up at all. I have no experience in the subscriber model, other than what we did with Kickstarter. If you have suggestions, please leave them in the comments. My Facebook page Owlbear Adventures documents some of the technical elements of the trip since April of last year. We leave the first half of 2023.

Wednesday, June 22, 2022

Hiring and Neurodiversity

If I were to go back in time and do one thing differently when it comes to hiring, I would assume that one in ten people have some form of learning disability. That is the statistic. It's an area that's often overlooked, lumped into overall employee performance. It's often invisible, unaddressed and thus undisclosed.

Under the ADA, employees have the right to choose whether to disclose their disability. I can't accommodate them without disclosure. However, I can create a safe environment, explicitly making it clear we're open to such diversity. Letting your employees know you are open to accommodation, and open to diversity in general, are factors in their decision to disclose.

Even if they don't disclose, we can avoid some biases. I am very much aware of how seemingly simple cognitive tasks for us neurotypicals have inherent bias. It's something to keep in the back of your head when figuring out how to create work. You might find sorting Magic cards mindless grunt work, but a dyslexic employee might find it torture. Don't assume everyone will experience this like you. Don't assume every job can only be done one way.

My blunt instrument hiring modality has been a very cruel, old fashioned view of alpha employees and their lessers. Having a child with learning disabilities, AND having very capable, essential staff with learning disabilities, discovered only after many years, has made me painfully aware of my error in understanding. I would be discounting some very capable, creative people, if I kept my outdated understanding.

As small business owners, we generally feel that we're too small for specialization and thus we don't want to think about accommodation. It's a kind of don't ask, don't tell. I think we're missing out on a lot of very good people who just happen to process the world differently. To be an owner you need to be good at everything (or hire for your shortcomings), but I think it's wrong to expect that from every employee. Also look for areas in which they shine brighter than the average employee. My son has difficulty reading, but he has an iron clad memory and a college level vocabulary.

I have nine people on staff now, which statistically means one probably has a learning disability. Like all staff before them, it is pretty well hidden, since we don't make any effort to discuss learning disabilities with new hires or staff members. Let your employees and potential new hires know you are accepting of diversity of all sorts, including cognitive differences. My bet is like being open with other sorts of diversity, you'll unlock a lot of human potential.

Anyway, I'm no expert on this topic, just a business owner and father.

Sunday, June 19, 2022

Economics of Leisure

I am having a heck of a time shopping for a travel trailer. This is a post about the insanity of that market and the economics involved. I find it fascinating how incredibly screwed up it is, and the danger for me, like with starting a game store, is attempting to crack the code, rather than standing back. A wise person would take a step back. A gamer might try to beat the system.

COVID forced people to seek safe travel locally, and there's hardly a better self contained, safer and cheaper travel option than buying an RV (assuming you use it). Air fares are up 50% in the last year and people are commonly coming back with COVID. Sales of RVs have skyrocketed. They were high before COVID and now they're out of the park.

Buying an RV in normal times is a bit like buying a car. Nobody pays full price. In fact, discounts are even deeper than passenger vehicles. You can normally expect a 30% discount off MSRP. I know some retailers get irritated with me when I talk about haggling for a new vehicle. It seems hypocritical to insist on holding the line and then go off and haggle for a car. However, that's the way of these markets and if you personally want to give a dealer an extra 30%, feel free.  

There are no 30% discounts on RVs right now. In fact, there are mark ups over MSRP in many places (like California), much like with passenger vehicles. The demand far outstrips supply. My first special order for a trailer was for a model that is built two months out of the year. Normally this isn't a problem and they sit on lots for many months. After the manufacturer increased the price by 17%, I dropped my order. I was already stretching and this priced me out of the market for that brand. What I realized after the fact was not only wouldn't I get that trailer, but I would now be competing for a place in line, if I wanted to try somewhere else. Allocations were accounted for and the option disappeared. I dropped that brand, at least as a new option.

My second order had me buying a used RV from a dealer in Arizona. In this case, after taking my deposit and providing me financing (a credit hit) they were unwilling to wait for me to have it inspected. There were people in line and if I couldn't show up within five days (a two day drive away), they would sell it to the next person in line (that was a week ago and it's still listed for sale). Companies will show you their true stripes when they make mistakes, but they'll also show them when they don't need you as a customer.

My third order was for a new, mass market trailer, built continuously in two factories. In this case, I was able to get a 10% discount, but no promise on the eventual pricing. They asked for a huge deposit for a trailer with a theoretical price point. They wouldn't even send me a sell sheet. I accepted. That's how unpredictable prices are and nobody in this space is willing to guarantee anything. If you don't buy it, someone else will.

There is a bit of a race here. Material prices continue to skyrocket with supply shortages, meaning waiting for a trailer means it's going to be more expensive over time. Interest rates are also on the rise and every month I wait to buy a financed trailer, the more expensive it becomes. I'm diverting more money to a down payment, kind of grateful I have more time to save, but my down payment may be offset by higher rates. The wise who can wait understand this can't last forever. Do you buy at the peak or do you wait potentially years for the fall?

There are other headwinds. The price of fuel is ridiculous. My gas truck will get 9 MPG towing a trailer, which the diesel truck folks would laugh at, if they weren't fearful of diesel and DEF shortages. RV park fees are also going up in price, while a lot of BLM land is closing to camping. Wal Marts and other free overnight spots are closing as well. There are too many nomads. 

There's a rise in services like Boondockers Welcome, where you can camp on private land, for an annual fee. The market provides. With all these costs and complications, it is possible you could buy an RV, only for it become a fancy lawn ornament. Also, good luck finding affordable RV storage. Most of my travel will be in Mexico with state controlled fuel prices (but rampant COVID).

There is fear of a travel trailer value collapse. A travel trailer loses 30% of its value the first year. Unless it happens to gain value in our upside down world. People are selling used trailers at their original MSRP of a year or two ago. The second trailer I attempted to buy has a new MSRP of $65K, while it was selling new for $45K about 18 months ago.  I was willing to pay that $45K, if I could find one. There were two in the nation, so I couldn't. But what happens when the market cools?

If you buy a new trailer at full price and it loses 30% of its value the first year, and the new market is back to selling trailers at a 30% discount, well you're seriously upside down, if you want to sell it. What keeps people on track buying a trailer, knowing this, is FOMO. Fear of missing out is real when this is your retirement plan. Now might be your only time. A lot of used trailers for sale are from people who waited too long, usually with a sick or deceased spouse. A lot of these have never been used, sold with knick knacks and new bedding, waiting to leave the driveway on their maiden voyages. A lot of RV buyers, like myself, are under the retirement age and we could theoretically wait, if we were wise. Like buying a boat or a time share, trailer buyers are clearly not paragons of financial wisdom.

2022 (2023?) Keystone Cougar 26RBS I have on order, if I ever get it. My third trailer order.

Wednesday, May 18, 2022

Someone Stole $10,000

Yesterday someone stole $10,000 from my store bank account. I noticed early in the morning that it happened overnight. I spent the day figuring out the details, closing and re-opening new accounts, and to some extend contacting vendors. It occurred to me this could be a real disaster if I were on an extended trip.

I won't have online access to my accounts for several more days. Until then, items will bounce off the old account and the bank will call me each morning to verify the days transactions. As my bank manager pointed out, I have a strong cash position, which will help. Imagine losing all your money and not being able to process transactions.  It took an hour sitting with the bank manager to close and re-open the various accounts, but there will be many hours of work to follow.

What Happened?

To be clear, it was not an employee. I think it was professional criminals. Whomever did this had my banking information and was able to log into my online banking or otherwise see my account online. Nobody but me has this. I am assuming my account password was hacked. 

How do I know this? Test transactions from another bank preceded the withdrawal the day before. This is when an institution sends a couple small withdrawals from your account and then sends a total of that amount back as a deposit. If you didn't do this, it's a warning you're about to be in trouble. Contact your bank immediately. You had to be able to see these micro transactions on my account to be verify them with the other institution, and since it happened within a day, it meant they had online banking access, and not a paper copy of my bank statement.

That other institution where the money was sent was Capital One. I happen to have a Capital One credit card, so I called them as a customer and learned more than you probably would otherwise. My money was being transferred to a business checking account that had been opened ten years previously, probably some abandoned account. The name on that account was not mine. When I asked for more information, that's when they informed me I had reached the end of our conversation. How did they know I wasn't trying to hack that account?

Capital One sent me back to my bank, who had me fill out a Written Statement of Unauthorized Debit. All of this, the withdrawal, phone calls, and reporting to my bank, happened within a couple hours on the same day. This morning I noticed the $10,000 withdrawal was temporarily removed while they investigated. I am probably fine. If $10,000 had been shipped to some offshore Nigerian account or business, I assume it would be gone. American bank to American bank? They don't put up with shenanigans.

When my online banking is re-established, I'll have to set up everything again. It turns out of the 50 or so online payees, only 14 need to be re-added.  There's an element of clean up.  

What Could I Have Done Different?

Account information was breached somewhere, but it's clear to me this couldn't have happened without online banking access. Make sure your passwords are extra secure. At this stage, if you can remember a password, it's probably not good enough. Nobody else had access to my account, which was everyones first question. I do not think this was an employee or a vendor, because of the online banking element. 

Thursday, May 12, 2022

Are You A Good Person?

"Are you a good person?"

"Hmm, define good."

(sigh) "It's not hard. You actively do good things for people."

"As opposed to not doing harm, which just makes you average."


"No, I think I'm kind of an asshole. I don't actively do good. I know the difference though. I admire those who do good. I'm stuck in my own nonsense."

"What about the good you do for your community? What about employees you pay and treat well? What about your happy customers who you bring joy through entertainment? What about your family? You have a positive effect on the people around you."

"Well, that gets down to my definition of good, which I think is about intention."

"You don't intend to do good?"

"No, I do what's right. I do what makes me happy, which is what I think is right. I don't tend to think about doing good. I give a small amount to charity and community causes, but not as much as I could. I could do a lot more and I don't. Which is why I'm a bit of an asshole, because again, I know the difference."

"But you're doing good nonetheless."

"It's a Confucian good, as opposed to a Buddhist good."

"I think even the Buddhists would argue with you."

"Buddhists love to argue."

"I've noticed."

Tuesday, May 10, 2022

Nimble Processes

When you first start out, you have things you want to do and you do them. You sell Magic singles with your arcane knowledge. You hire and fire people on your own, using your gut. You buy from suppliers requiring unique product knowledge, like comics or Warhammer. As your operation grows, you hire people, and you begin to be concerned about continuity. Perhaps you want vacations. Perhaps you want to retire one day. Your thought processes change. There are five elements to any new initiative that can result in success or may tank a project before it even starts:

  1. Ubiquity: How can I make this process work for anyone on staff?
  2. Training: How can I create a training regimen to hand off this process for when staff inevitably change roles?
  3. Documentation: How can I document this process in a way that creates institutional knowledge?
  4. Continuity: How can I inject future proofing into my documentation so this process is dynamic?
  5. Validation: How can I create checks and balances to make sure this process is being performed properly and profitably?

These are natural questions, not some clever scheme I've come up with. As you grow, you will want to run every new process through this regimen. If any of these five elements are lacking, you will own this process. You will be needed forever, until you die or resolve the element. If you're a small store owner with few or no staff, you might be laughing right now.

A small store is nimble and quick. You might survive entirely, whether you understand it or not, based on crumbs, working on projects that the big store can't crack with their five elements. I compete with Amazon because I run a successful brick and mortar store and Amazon can't, based on their needs. My competitor competes with me because there are things I won't do because I can't get my five elements in line for an initiative (like running Yugioh events). If my competitor isn't careful, someone might step in and do the same to them. But the reality is, you probably want this.

You want to get to the level in which you are big enough to drop processes that no longer work for you. You want to maintain customer service, for sure, but there are going to be new projects you pass on and small elements of your operation that you cease doing, because you can't crack the code. These failures are elements of success, as well as opportunities for competition against you. I think the only mistake is to stop innovating altogether. 

Thursday, May 5, 2022

Reconciliation Rituals

This is a "day in the life" post. It's what I do between the time the store closes and the time it opens again. Oh, you thought we were done when the store closes? Not even close. Every store owner has their rituals. These are mine, and they've mostly been unchanged for years. Technology has improved them, but I don't take advantage of every technological leap; I don't sync my POS to my accounting software, for example. My rituals represent a tight degree of control of inventory and money. This is by no means the most efficient way of doing things, so as always, it's what I do, not necessarily what I recommend.

We begin (it never really ends) when the store closes at ten o'clock. It may not actually close until later than that, as late as eleven on Fridays. I am getting old and I would prefer to be asleep by then, but I always try to stay up for closing. On weekends we close earlier, but that will probably change soon.

Upon closing, I look at the sales report. I often look at it throughout the day, but if I've been busy, I look at it now. Every sold item has a re-order threshold. That number is dynamic and changes often. Now is when I change it, based on past performance and a bunch of subjective factors. I could change this number when I create purchase orders for restocks, but it's better if I do it now, since it's on my mind. Often there are several hundred lines of sold items in a day, and if I don't have the time, I'll focus on big ticket items. I might say anything over $50 gets a look. A store makes money in the buying, more than the selling, and this activity links directly to buying.

Staff run an end of day report. They cc me a copy, which includes the cash deposits and an explanation for any discrepancies. Sometimes the explanation is "I don't know why we're up $20." My manager then investigates and emails me back with an explanation the next day. I don't ask him to do this, it just happens. This is a clear chain of responsibility and it took years to figure this out. I enter the cash deposit manually into Quickbooks, along with the amount of credit card transactions from an integrated report. I might also need to move money manually from Paypal. Stupid Paypal. Dude can send a car into space, but couldn't code nightly deposits.

If it's a particular day, or if sales are crazy, I might decide to place an order or two at ten or eleven at night. Yes, I'm tired, but I want to get a head start. If I know I'll be busy, because I game every Sunday, for example, I'll start placing orders earlier, like on Saturday. Rushing orders is bad (although being tired is bad too), and it's better to take my time on Saturday and miss some sold Sunday items, rather than feel the stress of the Monday morning rush. Mondays used to be an orders only day, but I now prefer to take Mondays off. Of course, Mondays are when sales reps want to inundate me with stuff, which I'll get to later.

The next morning we open at 11am, but I'm usually up with the sun. I check various POS reports and log into my bank to make sure everything checks out. Usually the cash deposits from the night before aren't recorded yet, but I'll double check the deposit from the day before that. I like to manually reconcile all deposits and all debits at this time. This helps me spot errors, maintain cash flow and reassures me things are fine. I have spent years with a few days of cash flow, so at some times this has been mandatory. Nowadays I like to maintain six figures amongst the accounts, thanks partially to our government loan. Baller.

I am happy when: The money is where it's supposed to be. The stock is set to order the proper amounts. Orders are placed. I can now go out and explore the world, at least until lunch time. What happens next is a chaotic mess. Distributors and suppliers have sent emails, since I won't answer my phone. There are new releases, questions to be answered, pre-orders to be placed. Invoices begin peppering my inbox and don't let up until late at night. Alliance orders notoriously show up around 10pm, and I'll reconcile them upon arrival, because I'm foolish like this. Asmodee orders need to be scraped from their website to obtain tracking numbers. All of these invoices require manual or some sort of automated import of new items. All require me to find photos and descriptions for our online store, that only accounts for 10% of our sales.

My goal of traveling six months out of the year in Mexico is to work from around sunrise to lunch time and have the rest of my day free to explore. Let's call it 20 hours a week, but I bet I can get that number down. This will require me to ignore a lot of nonsense until the following morning. This is an interrupt driven field, and some folks, like ACD and Games Workshop, even send me work to do on Saturdays. The people that set up those Saturday tasks certainly aren't awake when they're assigned. Getting my hours down will require me to streamline my rituals, without sacrificing fidelity. It may require some delegation, but working from home now, I don't see anything in particular that needs delegating. I have traveled for several months with a manager completely in control of the business, spending an hour a day derping around with emails and such. I know that can be done too, but I like the control I have now.

Sunday, May 1, 2022

Inventory Sizing

This is a wonky inventory article you should probably skip, unless you're curious how I'm restocking inventory. It's one of those things I'm writing to get processes straight in my own head, more than to instruct others.

I doubled my inventory (and then some) over the last two years. The goal was to both stock up for potential outages and attempt to meet increased demand, which seemed limitless. I had hopes of establishing a baseline for a new normal. I really just wanted normal sales with double the inventory. This worked and our sales were stratospheric in 2021, and up 28% in 2022. This is typical in the trade, I think. The ratios I use for my stable inventory are different now, and that's what I wanted to write about. What did I do then, what do I do now.

Why am I stocking lower? A few reason: 

  • I'm less concerned about outages. Product is certainly late, but it's now a few weeks late rather than a few months. Stock outages, like COVID, have moved to the endemic phase. It's just there all the time. Deal with it.
  • I've learned the limits of demand. I stocked way up on everything as a means of somewhat blind, yet historically informed inventory growth, and have organically drawn inventory down as product sold. My inventory, when I could get it, was functionally limitless in 2021. I got a really good glimpse of demand. That glimpse was invaluable, even if it was a snapshot in time.
  • Dead Stock. I want to emphasize that this method was successful in that it didn't result in huge gluts of dead inventory. 2020 was the year of dead stock, with months of the store being closed, but 2021 was my most efficient year in history. We did not start 2021 with dead 2020 stock. That was gone.
  • Budget. We're no longer swinging for the fence, attempting to survive by pulling the inventory lever as hard as possible. I have enough money in the bank to pay off my EIDL loan, but I'm still using it as a backstop. The goal is to pay that debt next year, and I can't do that by spending the rest of that money. We're back to a sustainable inventory budget.

The ratio! Right, that. The ratio I used to expand inventory rapidly was to divide my annual sales by my turn rate, which was six. The image below is from Top Loader sales. If I were to bump up my inventory for the apocalypse, or simply the need for rapid inventory expansion, I would divide my annual sales of 191 by 6, and set my restock to 32. Now, carrying 32 top loaders is probably not enough for top loaders, which are in short supply, but you get the idea. 

32 top loaders, a somewhat arbitrary number, should satisfy demand for about six weeks. Sometimes this ratio, with other products, satisfied demand for months. This is a very liberal ratio. It worked well with stock in flux, but it left a lot of slack in the system overall. That was fine then. I would only change this restocking ratio as items sold, so slow selling items weren't changed, and eventually the inventory stabilized at around double the previous amount. I was getting worried there for a minute, let me tell you. Will this ever end? If I had an extra $100K or so, perhaps I would stick with the original ratio.

I also clearanced items at a very liberal six months of low activity. Inventory is about opportunity cost. If you have all the money in the world, as in all the inventory I could possibly want to buy, there is no opportunity cost. Clearance sales are then about space and a clear sales channel, rather than recovering inventory dollars. My store is completely full, so space is now an issue.

The new ratio was implemented to "right size" inventory to normal levels. I decided on a 30 day supply. I check every item after a sale and tweak it. That's right, every sale in the store is evaluated. Some might find this tedious, I just consider it part of the job. This 30 day supply is a much smaller number than annual sales divided by turns. It also has the advantage of being in line with distributor terms. 

The goal, not for the first time, is to sell this stuff before the bill is due. The top loader example would have me stock only 23 top loaders at any given time. That's 28% less stock, which might not seem like a huge difference, but this draw down helped "right size" the inventory without resulting in outages. It is also helping me get my budget back on track. 

Exceptions: There are times I know this is going a bit lean, especially with slower selling items. An RPG book might have sold 18 copies in the last year but only 2 copy in the last month. Do you stock 3 copies like the expansion example (18x6) or 2 copies (2 sales in the last month)? If it's D&D and you don't want to ever be out of a title, perhaps 3. If that item is not part of a strategy, perhaps 2. I like to identify leaders in each segment and treat them more liberally than everyone else: D&D, 40K, Magic, and ugh, core Asmodee.

Disclaimer: This is what I do and not what I'm recommending. Inventory is part art and part science, but even the science reeks of art. There are always exceptions with inventory, subjective decisions related to your expectations of future sales and future availability. There are inventory coherency issues to consider. There are times you're actively stocking up or slimming down a line. My formulas are not something you could plug into a spreadsheet, they're a baseline understanding. You wouldn't hand this to a young buyer and say, do this. There's a ton of institutional knowledge behind it, and quite a lot of handwavium.


Saturday, April 30, 2022

My Problem with Ultra Pro

This is a case study of a problem product line from a purchasing perspective. Whether Ultra Pro is a good product or not is irrelevant to me as a buyer, at least until it effects sales. When we have it, we sell it. We've been approached by marketing folks who I believe represent Ultra Pro, trying to figure out the role of the brand in my store. I've been thinking about it ever since. Here are my issues with Ultra Pro:

Market Leader: Ultra Pro is the CCG supply market leader in the game trade, and my top selling brand of CCG supplies at 40% of my sales. It should be higher in a mature market, but I believe they've slipped and allowed others opportunity. This is my single store perspective, of course.

Their position has eroded over time. We've been able to easily source and sell Dragon Shields by Arcane Tinmen. In fact, we've spent thousands of dollars buying pusher shelves for Dragon Shield boxes. We've invested in Dragon Shields because the brand is strong, available and consistently priced. I believe the success of Dragon Shields is primarily availability

Going forward, I wouldn't be surprised if Arcane Tinmen took our top position. This is not to say anything about product quality, customer preference, or other subjective factors. I can get Dragon Shields from everyone, at a consistent price, with consistent availability, even during the supply chain crisis.

Out of Stock. Whatever you want to say about Ultra Pro, I can't sell it if I don't have it. Basic items are regularly out of stock. Most themed items are "splash" on release, meaning it's unlikely I'll ever see them again. This lack of availability wears on you, especially when I can easily get other brands of supplies without the hassle. I have long lists of products I check on regularly, and it drags down the purchasing experience overall for the store. 

Splash Releases. It might just be me, but the number of themed releases, like this quarters Magic themed play mats, sell very thinly. Perhaps other stores can't get enough of this product, but I've done something I swore I would never do, I've stopped inventorying individual items. Ultra Pro Mat: Kandahar: Various, might describe twelve new play mats from a new Magic set. I can't be bothered to create individual items, or find photos -- often on the Ultra Pro site because distribution can't be bothered either. It's a splash item for them too. The indifference comes through the screen. This means they don't appear in my online store, which hurts their sales. They never get re-ordered, even if available. This is a recent thing for me, but while comparing notes, I learned other stores do this too. I should really stop selling them.

Erratic Pricing. Ultra Pro is probably, maybe, sometimes net priced now. Do they have an MSRP? Who knows. Let's look at that for a moment with a ubiquitous item: 

Deck Protector Pack: Green Solid 50ct (82671)

Ultra Pro website to consumers: MSRP: $3.99. This is the de-facto MSRP, since it's on the UP site. 

PHD:  $1.85 with a different MSRP listed of $3.49 (in stock)

Alliance: $1.89 net priced (in stock)

GTS: $2.10 net priced (in stock)

ACD: $2.23 net priced (OOS)

There is price confusion. Normally I like price confusion, but this level of chaos is unusual in the game trade. Are they net priced? Is there an MSRP? What is that MSRP? Why isn't there agreement on this? The most shocking thing about this is three out of four of my distributors have these in stock. It must be Magic release time! Ultra Pro stock might be described as seasonal.

Too Broad a Line: There are simply too many SKUs for too few sales and they're simply not available often enough. If I had to give some advice it would be go back to basics. I can't keep track of the 136 Ultra Pro deck boxes, 228 sleeve packs, 176 play mats, and 148 binders, and Ultra Pro can't product them consistently. 

A CEO once told the game trade if you can't keep it in stock, order deeper. That might be true if you're the only producer of the Arkham Horror board game, but I've got six other viable manufacturers making roughly the same products as you. We've established the licensed stuff is garbage, so that's not your unique value proposition. What is the Ultra Pro Unique Value Proposition? Anyway, if you could actually keep your line in stock, I might carry all that product. Because you can't, I throw up my hands and order from the other six.

Anyway, that's far too much thought for what should be a turn key, easy to understand product line. The bottom line is if enough product is produced, everything else is details.