Monday, March 30, 2009
Competitor Bitch Slap
One of our Magic organizers was discovered handing out flyers during Friday Night Magic, advertising his new store. It strikes me as rude, and somewhat hostile, and I'll have none of it, especially after offering to be civil and helpful. So he's banned, which I'm sure is only a minor nuisance for him, at least until his store fails in 9 months and he has to recruit players to draft at the local Taco Bell. I suggest a flyer.
Saturday, March 28, 2009
Speaking of Net
We're having our first profitable March. Yes, it's year five and March has just become a month I no longer dread. That leaves January and April as low points that need filling in. April may always be a bloodbath, thanks to taxes. The concept that you can have periods where you lose money is tough to accept when you get into retail. You become a busy squirrel, saving away during good times because bad times are just around the corner. For example, I envision December and January as one period, since December is a time of plenty and January is dismal. You just hope at the end there's money left over.
Lord of the Rings. Sales of the miniatures in March are neck and neck with Warhammer Fantasy and the War of the Ring book isn't out until Friday. Here's the thing about this game: It's going to get panned by most 40K and fantasy players. I've accepted that now. They have their game; the LOTR game has two strikes against it for them. What surprised me are the number of new people, especially kids, who have expressed interest and bought new models. The multi-genre gamers, those always curious about a new thing, are all over this one. My guess is that these "alpha" gamers will bring more people into the fold when it's seen on the table.
Indie Miniatures. Since there has been interest in the numbers on this, let me say that sales are very good, especially for the first quarter of this year. Like my RPG's, it requires a lot of careful rotation of the stock. About half of what I sell in this category doesn't get re-ordered, but I make a point of trying to figure out what new to buy with that money. We've had some hits too, like cowboys from Artizan and Fenryl multi-stage fanasy models. If I add in games I buy that I consider indie, like Infinity and Uncharted Seas, we're wildly successful. Also, although I don't include them in this category, the Reaper Chronoscope models also sell extremely well. These modern, pulp, and other non fantasy genre miniatures.
Lord of the Rings. Sales of the miniatures in March are neck and neck with Warhammer Fantasy and the War of the Ring book isn't out until Friday. Here's the thing about this game: It's going to get panned by most 40K and fantasy players. I've accepted that now. They have their game; the LOTR game has two strikes against it for them. What surprised me are the number of new people, especially kids, who have expressed interest and bought new models. The multi-genre gamers, those always curious about a new thing, are all over this one. My guess is that these "alpha" gamers will bring more people into the fold when it's seen on the table.
Indie Miniatures. Since there has been interest in the numbers on this, let me say that sales are very good, especially for the first quarter of this year. Like my RPG's, it requires a lot of careful rotation of the stock. About half of what I sell in this category doesn't get re-ordered, but I make a point of trying to figure out what new to buy with that money. We've had some hits too, like cowboys from Artizan and Fenryl multi-stage fanasy models. If I add in games I buy that I consider indie, like Infinity and Uncharted Seas, we're wildly successful. Also, although I don't include them in this category, the Reaper Chronoscope models also sell extremely well. These modern, pulp, and other non fantasy genre miniatures.
Friday, March 27, 2009
Mumaking
With the base finished, I'm declaring this model done. There are probably several things I could do to add more detail, but I'm calling it a day. I took a middle way on the base. I used Vallejo basing paste to cover over some of the details, including burying a couple of the bodies. They made nice grassy knolls. The areas where riders fell were based with a brown sand, while the surrounding area was based with static grass. Some bushes broke up the open spaces.
My next project is the mumak crew of 13, but I've also got my first box of Morgul Knights to work on. Chaos Black and Gunmetal Grey sound like a nice break from detail and color.
I've revised my list a bit:
My next project is the mumak crew of 13, but I've also got my first box of Morgul Knights to work on. Chaos Black and Gunmetal Grey sound like a nice break from detail and color.
I've revised my list a bit:
- Wringraith: Dark Marshal (125 points)
- Morgul Knight Regiments - 12 companies (570 points)
- Haradrim Raider Warband - 10 companies (420 points)
- Khandish Charioteer - 2 (200 points)
- War Mumak of Harad (250 points)
Thursday, March 26, 2009
Thinking Net
I had dinner with an old friend and business partner last night and we discussed our businesses. We both own our own businesses, and we've both been smacked around pretty good by the faltering economy. As we got talking, we had similar stories about how we recently changed our thinking about our businesses. We both have growing businesses, but that's kind of a misnomer. I think that most successful businesses see themselves as growing, because the alternative is running a dying business. That's how we've been taught to think. It's a grow or die mentality, but that's changing.
We both came to the conclusion that our growth spurts are over. There is no longer easy money from our modern financing sources, home equity and credit cards. I was not surprised to learn recently that 50% of small businesses (500 employee or less) rely heavily on credit cards for financing. The banks, which used to provide business financing in the past through lines of credit, SBA loans and the like, are atrophied from disuse. Why fill out a metric buttload of paperwork for an SBA loan when in the end it's secured by your house? Just get a home equity loan. Why get a line of credit from a bank when credit card rates are half the cost? Just fill out the short form online or one of the dozens send to you each month. Credit in the future will be harder to get and more expensive and the credit we have now is on shaky ground.
The days of easy credit are over and eventually we'll see a shift towards traditional small business financing, but until that happens, there is little money for small business investing, and what lines of credit we have are drying up or are at risk. The advice I'm reading from the credit blog I read is to avoid talking to your credit card company at all cost. My goal for this year is to pay off debt as quickly as possible and preserve my lines of credit. I also want to do more community banking, starting with a credit card from my local, responsible, business oriented bank (Mechanics Bank).
The bad economy has also spurred us to save money and has challenged traditional ideas about expenses. For example, I've always advertised based on a rule of thumb, about 2-3% of gross sales. I read it in a book and other retailers have nodded their approval, so that's how I've done it, and for the most part it has worked ... I think. While focusing on the bottom line, advertising seems like a big discretionary expense. The new question: What if I don't do this? What if I don't spend this money? What's the worst that can happen?
It's always been a balancing act between rent and advertising. If you pay low rent for an obscure location, offset it with advertising. What's low rent? There's no such thing in California. I've slashed my advertising budget and my new thinking is that I'm more willing to be reactive to slowing sales by advertising than pro-active by throwing money at questionable marketing. All advertising is questionable, by the way. Advertising rarely gives you the feedback that it works, so it seems ripe for the cutting.
Even the way we talk about our businesses is different. I've always reported sales numbers and increases using gross sales. I no longer care about gross. I care about net. A net profit of one dollar is far better than gross sales of $60,000. The gross is smoke, while the net is fire. I'm finding tools I've created for reporting are too gross focused, with net rarely playing a role other than to calculate cost of goods, the only nod that the net is in there somewhere. Large activities like game conventions suddenly become folly when you actively focus on net. The days of saying "It's a marketing expense" or "It's a merchandising expense" to justify unprofitable activities that seem vaguely relevant are over. That thinking is so 2007.
Now I know what you're thinking: Yes, but are you being penny wise, pound foolish? Are you throwing the baby out with the bathwater? Are you losing some quality wheat with your chaff? First, sometimes you need to lose a little wheat when you're learning how to identify chaff. Second, there are areas that we are spending more money on. For example, although we're both cutting expenses, we both just hired a new employee.
When you start cutting expenses, you're looking closely at your core operation and noticing shortcomings. I think if you're being honest with yourself, and not being a knee jerk employer, like large companies we all know, you end up seeing there are needs going unfilled. Needs that would improve your bottom line. For us it was about things like cleaning, organizing and fill in hours. Our labor schedule was too brittle and too dependent on down time to get things done. Our fill in guy was under trained and improperly compensated. It's like planning to fail. When will these core activities get accomplished? How can you maintain a quality business when you essentially have an untrained person working your store on a random basis? It's Russian roulette. When you think that you're growing, these problems are growing pains. When you're focused on the bottom line, they become unacceptable inefficiencies.
Advertising isn't getting entirely dumped either. We're both focusing on advertising opportunities. For example, my friend just took advantage of a free print ad, while I just booked a years worth of cheap TV spots. At $1 per spot (one showing of our commercial), it's hard to turn down. In comparison, one spot on Battlestar Galactica is $8. The $1 spots are fairly random, and at 150 spots a month it's a shotgun approach, but shotguns have a reputation for a reason.
We both came to the conclusion that our growth spurts are over. There is no longer easy money from our modern financing sources, home equity and credit cards. I was not surprised to learn recently that 50% of small businesses (500 employee or less) rely heavily on credit cards for financing. The banks, which used to provide business financing in the past through lines of credit, SBA loans and the like, are atrophied from disuse. Why fill out a metric buttload of paperwork for an SBA loan when in the end it's secured by your house? Just get a home equity loan. Why get a line of credit from a bank when credit card rates are half the cost? Just fill out the short form online or one of the dozens send to you each month. Credit in the future will be harder to get and more expensive and the credit we have now is on shaky ground.
The days of easy credit are over and eventually we'll see a shift towards traditional small business financing, but until that happens, there is little money for small business investing, and what lines of credit we have are drying up or are at risk. The advice I'm reading from the credit blog I read is to avoid talking to your credit card company at all cost. My goal for this year is to pay off debt as quickly as possible and preserve my lines of credit. I also want to do more community banking, starting with a credit card from my local, responsible, business oriented bank (Mechanics Bank).
The bad economy has also spurred us to save money and has challenged traditional ideas about expenses. For example, I've always advertised based on a rule of thumb, about 2-3% of gross sales. I read it in a book and other retailers have nodded their approval, so that's how I've done it, and for the most part it has worked ... I think. While focusing on the bottom line, advertising seems like a big discretionary expense. The new question: What if I don't do this? What if I don't spend this money? What's the worst that can happen?
It's always been a balancing act between rent and advertising. If you pay low rent for an obscure location, offset it with advertising. What's low rent? There's no such thing in California. I've slashed my advertising budget and my new thinking is that I'm more willing to be reactive to slowing sales by advertising than pro-active by throwing money at questionable marketing. All advertising is questionable, by the way. Advertising rarely gives you the feedback that it works, so it seems ripe for the cutting.
Even the way we talk about our businesses is different. I've always reported sales numbers and increases using gross sales. I no longer care about gross. I care about net. A net profit of one dollar is far better than gross sales of $60,000. The gross is smoke, while the net is fire. I'm finding tools I've created for reporting are too gross focused, with net rarely playing a role other than to calculate cost of goods, the only nod that the net is in there somewhere. Large activities like game conventions suddenly become folly when you actively focus on net. The days of saying "It's a marketing expense" or "It's a merchandising expense" to justify unprofitable activities that seem vaguely relevant are over. That thinking is so 2007.
Now I know what you're thinking: Yes, but are you being penny wise, pound foolish? Are you throwing the baby out with the bathwater? Are you losing some quality wheat with your chaff? First, sometimes you need to lose a little wheat when you're learning how to identify chaff. Second, there are areas that we are spending more money on. For example, although we're both cutting expenses, we both just hired a new employee.
When you start cutting expenses, you're looking closely at your core operation and noticing shortcomings. I think if you're being honest with yourself, and not being a knee jerk employer, like large companies we all know, you end up seeing there are needs going unfilled. Needs that would improve your bottom line. For us it was about things like cleaning, organizing and fill in hours. Our labor schedule was too brittle and too dependent on down time to get things done. Our fill in guy was under trained and improperly compensated. It's like planning to fail. When will these core activities get accomplished? How can you maintain a quality business when you essentially have an untrained person working your store on a random basis? It's Russian roulette. When you think that you're growing, these problems are growing pains. When you're focused on the bottom line, they become unacceptable inefficiencies.
Advertising isn't getting entirely dumped either. We're both focusing on advertising opportunities. For example, my friend just took advantage of a free print ad, while I just booked a years worth of cheap TV spots. At $1 per spot (one showing of our commercial), it's hard to turn down. In comparison, one spot on Battlestar Galactica is $8. The $1 spots are fairly random, and at 150 spots a month it's a shotgun approach, but shotguns have a reputation for a reason.
Wednesday, March 25, 2009
The Other Stuff
I placed our first Mattel order today. Before you blast me for more toys, note that Mattel has been gobbling up hot hobby store hits over the last couple of years. Games like Blokus and Apples to Apples are now Mattel products, along with classics like Balderdash and Uno. About half of the order is toys, however, especially the cars from the movie Cars, which have already proven to sell well (plus there's another movie on the horizon). We also picked up Cars jigsaw puzzles, and a bunch of Hot Wheels stuff.
I've noticed that ordering in game stores tends to evolve over time. Most stores start out with one supplier, a main game distributor. Many will also open a Games Workshop account or perhaps a Wizards of the Coast account if they're event driven. I don't open either until a couple of years in, but most stores will try to get them early on. Many stores stop there, while a good percentage will open a secondary account with a distributor, just in case. Over the years, successful stores will source product from a variety of suppliers.
The key is to listen to customers and not accept a product is unavailable when a distributor says no. For example, after lots of searching, I found bingo sets from Schylling, mostly known for their toys for young children. ACD and Alliance have both given up on bingo and the classic game distributors are always out. I'm finding there's a certain base inventory that always seems to be game distributor centric. Sales in that base rise as we build the business, but where I see most of my growth is with "everything else," the other stuff. Most stuff classified as "other" rarely makes a top ten list, but it quietly accounts for a growing percentage of our sales.
What is other? It might be stuff you already see, but sourced from a better source at an improved margin. It might be just one game that's hot but independent. It includes novelty items like our pirate band aids, indie miniatures from small suppliers, jigsaw puzzles from Germany and Spain, classic games from specialty suppliers, one off orphan games that distributors have dropped, hobby supplies, toys, and educational products.
I've noticed that ordering in game stores tends to evolve over time. Most stores start out with one supplier, a main game distributor. Many will also open a Games Workshop account or perhaps a Wizards of the Coast account if they're event driven. I don't open either until a couple of years in, but most stores will try to get them early on. Many stores stop there, while a good percentage will open a secondary account with a distributor, just in case. Over the years, successful stores will source product from a variety of suppliers.
The key is to listen to customers and not accept a product is unavailable when a distributor says no. For example, after lots of searching, I found bingo sets from Schylling, mostly known for their toys for young children. ACD and Alliance have both given up on bingo and the classic game distributors are always out. I'm finding there's a certain base inventory that always seems to be game distributor centric. Sales in that base rise as we build the business, but where I see most of my growth is with "everything else," the other stuff. Most stuff classified as "other" rarely makes a top ten list, but it quietly accounts for a growing percentage of our sales.
What is other? It might be stuff you already see, but sourced from a better source at an improved margin. It might be just one game that's hot but independent. It includes novelty items like our pirate band aids, indie miniatures from small suppliers, jigsaw puzzles from Germany and Spain, classic games from specialty suppliers, one off orphan games that distributors have dropped, hobby supplies, toys, and educational products.
Tuesday, March 24, 2009
Various Stuffola
Holding Pattern. I've been in this strange holding pattern since opening the store. My house, which financed most of the store, has a mortgage that resets in October. A lot of energy has been spent attempting to make enough money for both the store to survive and for the larger mortgage payment. The housing market crash has had a huge effect on this. The value of the house has tanked, but the economy has actually dropped down to my game store owner level. That's really bad. I ran the numbers this evening, and interest rates are now actually affordable for me, without a significant income jump. It's a sad feeling when you realize that success required a near economic collapse. It's not exactly time to pop the cork on a new bottle of champagne, since I'm screwed on the decreased value, but it means I'll avoid some hard decisions this Fall. Deal breaking economic crisis avoided.
Painting by the Sea. Next week I'll be going on one of my painting weekends. The family is out of town, so I'll be checking into a nice hotel in Santa Cruz to do some War of the Rings painting. I love Santa Cruz downtown, the .... scenery ... is so ... stimulating. Ok, it's the hot college girls. I can look, right? No, sadly it's the great bookstores. One of the fringe benefits of the store is oodles of frequent flyer miles, which pay for more rooms and trips than I could possibly take in a year. I would love to translate that into cash, but I blogged about what happened when I contacted Capital One, my points for cash credit card company. If you can avoid talking to a bank right now, you're far better off.
D&D Followup. I found running my D&D adventure (mostly a Dungeon Delve adventure) highly enjoyable. I'm pretty sure that next time I run a campaign, I'll be making my own adventures, although I'm told later WOTC 4E adventures are far more interesting than earlier ones. The down side was I didn't give the group enough follow-up time to complete what needed doing. I should have just narrated it, something like "You destroy the magic viewing chair and instruct the villagers to seal up the temple, thereby destroying any trace evidence of the magic portal. You safely return to your plane and have a nice apricot ale." Instead, with about ten minutes left, I gave them all the data and looked at them, as if they would somehow come up with the magic formula that would make it alright. Stupid.
Painting by the Sea. Next week I'll be going on one of my painting weekends. The family is out of town, so I'll be checking into a nice hotel in Santa Cruz to do some War of the Rings painting. I love Santa Cruz downtown, the .... scenery ... is so ... stimulating. Ok, it's the hot college girls. I can look, right? No, sadly it's the great bookstores. One of the fringe benefits of the store is oodles of frequent flyer miles, which pay for more rooms and trips than I could possibly take in a year. I would love to translate that into cash, but I blogged about what happened when I contacted Capital One, my points for cash credit card company. If you can avoid talking to a bank right now, you're far better off.
D&D Followup. I found running my D&D adventure (mostly a Dungeon Delve adventure) highly enjoyable. I'm pretty sure that next time I run a campaign, I'll be making my own adventures, although I'm told later WOTC 4E adventures are far more interesting than earlier ones. The down side was I didn't give the group enough follow-up time to complete what needed doing. I should have just narrated it, something like "You destroy the magic viewing chair and instruct the villagers to seal up the temple, thereby destroying any trace evidence of the magic portal. You safely return to your plane and have a nice apricot ale." Instead, with about ten minutes left, I gave them all the data and looked at them, as if they would somehow come up with the magic formula that would make it alright. Stupid.
Monday, March 23, 2009
Not So Great (rant)
Conquest Sac was a bust for us. Michael went. Vendors were scarce and the dealer's room got ghettoized; wished into the corn field. That will be our last one of those. The convention itself sounded like it was hopping, but I don't think Sacramento can support a dealer's room. It's a Sac thing. It sure won't be my thing again.
Surprise Bill. Because I love to talk about how much money I'm saving, let me share my utter disgust with my property management company that sprung a giant maintenance bill costing thousands of dollars. Along with it came a big rent increase, all due immediately, all given without any notice. This is not the annual rent increase that happens later in the year.
Property managers have a great deal of discretion according to most leases. They can charge fees for themselves, for maintenance of any sort they feel is necessary (using a company they own in my case) and for general repairs. Unfortunately, 100% of their expenses are passed through to the tenant, so while the stores that rent from them are cutting expenses, the property managers have no incentive to do so. We're contractually obligated to pay, so why cut costs?
I shouldn't act too surprised. I did my research into this company and I knew they acted this way. Expenses practically doubled each year during the first half of the decade and have only recently slowed to "exorbitant." The offset is in rent, which is fairly low. To me this means they're doing the actual owner of the property a disservice, taking too much for themselves and short changing their client. Shameful, pathetic and a slap in the face every time of their lackey's walks by with a paint brush to "touch up" the building or sweep the sidewalk.
Surprise Bill. Because I love to talk about how much money I'm saving, let me share my utter disgust with my property management company that sprung a giant maintenance bill costing thousands of dollars. Along with it came a big rent increase, all due immediately, all given without any notice. This is not the annual rent increase that happens later in the year.
Property managers have a great deal of discretion according to most leases. They can charge fees for themselves, for maintenance of any sort they feel is necessary (using a company they own in my case) and for general repairs. Unfortunately, 100% of their expenses are passed through to the tenant, so while the stores that rent from them are cutting expenses, the property managers have no incentive to do so. We're contractually obligated to pay, so why cut costs?
I shouldn't act too surprised. I did my research into this company and I knew they acted this way. Expenses practically doubled each year during the first half of the decade and have only recently slowed to "exorbitant." The offset is in rent, which is fairly low. To me this means they're doing the actual owner of the property a disservice, taking too much for themselves and short changing their client. Shameful, pathetic and a slap in the face every time of their lackey's walks by with a paint brush to "touch up" the building or sweep the sidewalk.
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