All Cylinders

Lately I've felt like the store is firing on all cylinders, like we have what I initially envisioned as a successful game store. This took four years and required a near complete collapse of my local competition -- and it could change at any moment. Still, is it a successful business? Are any game stores successful in business terms? Are game stores "lifestyle" businesses? Is there any hope that they could make money in a reasonable fashion?

First, let's look at what's reasonable in the realm of the real world. A reasonable business plan, in which regular people would want to invest money, would show a return on investment in no less than five years, maybe seven if it was more ambitious. For example, if you spent $100,000 building your game store, which I think is a minimum to be taken seriously, you would need to first break even, meaning you stopped hemorrhaging cash, and then payed out $100,000 back to your investors within five to seven years. Most businesses fail in the first year, but survivors generally break even somewhere in the second year, and hopefully get that return on investment by their plan date. By the way, the dirty secret of small business is that the failure rate doesn't improve over time. Year four is just as hard and failure prone as year fourteen.

For a game store, the model would work something like this: Your $100,000 investment would include $60,000 in inventory. The rest went to start up costs and losses. That $60,000 in inventory is likely to turn at best, four times for annual sales of $240,000, which seems to be a realistic average for the industry. You do really, really well and get that turn rate in year three and accrue no debt over this time. Of your gross sales, the rule of thumb is about 8% of that is likely to be profit; lets call it $20,000. So after breaking even, it takes five years to pay back investors, for a total of 7 years. Voila! Then it's just profit and blue skies for years 8 and on. Good plan, right? Business plans are always about blue skies.

If it was that easy, everyone would be doing it and investment in retail stores would be the next bubble. I think most stores struggle to survive and that 8% net profit number is bogus. I think it's more like 1-2%, meaning your return on investment is ridiculously far down the road unless you create revenue streams beyond the brick and mortar store: conventions, online sales, community tie ins, or a side business for your hobby business. A 2% return is a 20 year pay back and any business owner with a functional brain will accept their new lifestyle, close their business or seek out additional revenue streams.

Perhaps the best solution is acceptance. Promote game stores as lifestyle businesses, with current owners being the caretaker of the business until his lifestyle choice changes. Nobody really talks about this when new owners contemplate the numbers. I think they should be told all the likely possibilities, with failure being most likely, and a very slow return as the second most likely outcome. I think a game store is a great retirement business, or business for a couple looking for a second income. It's no way to raise a family as a single income source.

If you had a caretaker model, the game store would be something that was expected to be handed down to the next owner over time, while most stores nowadays simply get liquidated when the owner has had enough. The problem is this would require a kind of franchise plan to standardize such a business, and who wants to buy or create a franchise with a 20 year return on investment? However, the plan is where the value lies, while a store without a plan facing closure is worth maybe 10% of their stock at best. That $100,000 investment is now worth $6,000.

The bottom line is there is no one type of game store or one way of building one. Small business is about the individual and returns on investment are based on many factors and opportunities. A clever owner or one in a unique set of circumstances might make profits far above these projections. At the same time, all the ingenuity in the world can be cut short by an eminent domain plan by the city or a national crisis that kills consumer spending. Brilliant people have failed businesses and complete morons can get lucky. That's part of the excitement!

Forty Two

Yesterday we got in our biggest of our ding & dent auction shipments. It contained 42 boxes. My UPS driver asks that I give him advance notice of these kinds of large deliveries so he can plan his route accordingly. He planned alright; he took the day off, leaving me with a surly driver who was fully aware of his hosing. His annoyance eventually wore off, and after a free Coke and a little banter, he was smiling. We've had a lot of UPS problems on this route, including a driver who refused to pick up packages. After getting him in trouble with his boss (one of my customers), he now drops my packages as he brings them into the store. He doesn't exactly throw them down, but he man handles them in this gray area between inattention and deliberate abuse. Now that I think of it, many of my game industry relationships are like that.

We weren't exactly prepared for the shipment. We were still cleaning the office and building shelves. The hardest part was throwing away perfectly good office stuff. Everything thrown away is an admission of a mistake, a waste of money, a reminder of my lack of past frugality. Some stuff was a sign of progress, like dumping the giant DLT tape drive. Our backups are all copied to Internet servers now. You have to put a positive spin on this, claiming progress and re-distribution of resources, much like all the companies closing down unprofitable divisions and letting go of valuable employees who just aren't part of the new vision. It's a time when it's acceptable to throw some babies out with the bathwater, if it's for the common good and for long term survival. So yeah, I threw away a ton of perfectly good stuff, including office supplies and store fixtures still in the original packaging. It was claim the space and move forward or get buried and distracted in a dozen eBay auctions, Craigslistings, and emails to other stores.

As for the shipment itself, we'll post a list later. It's clearly more than we can sell at the auction, but that's alright. We've got Dundracon in February, Conquest Sac in March and the rest can eventually go online. These additional venues, along with the permanent storage takes the pressure off us to dump this stuff for the sake of space, which is what often happens after an auction. It's also a mental "open for business" sign when it comes to acquiring more stuff.

End of the Office

This week we've been transforming the office. The office was once envisioned as a game empire command center, the ultimate place to sit back and plan retail conquests and do the back office stuff associated with the store. Mostly it was where I paid the bills. As I've mentioned before, the epiphany struck me one day that offices were big, evil, time sucks that placed a barrier between me and the customers. They divided my time and location. I could either run the store or conduct store business, when both of those things are more efficient intertwined. When you have an office, paying bills, talking to vendors, filing papers are things you do on your time, rather than while on the clock, running the store. Going paperless and moving that part of the operation to the cash wrap area saves me many hours a month.

So what happens when you abandon an office? It becomes a garage. Nobody spends time there, so nobody is invested in making it look nice. Stuff piles up and you start pointing fingers until you realize that nobody is responsible for it. We even noticed rat droppings when we started cleaning, at which time I made the no food in the office pronouncement. We took on the office this week because we wanted to transform it into a more efficient storage center for taking in more liquidation product. This included buying a lot of new shelving, but it was mostly getting rid of stuff, especially the giant desk that had long been in the way.

The desk concept is obsolete for me. It includes things like drawers for collecting clutter and a flat surface to attract piles of junk. When we went to move it out, it wouldn't fit through the door. In our rush to get the store built, we had moved the desk in before we had fully built the walls and doorways. Now there was no way to remove it. A helpful customers went out to his truck and came bag with a grin on his face. He took out his aggressions on the hapless desk with a sledgehammer, reducing it to kindling in a just a few minutes. It was a final, symbolic end to the office concept.

The Roller Coaster

January is always a quiet, end of the party kind of month. Sales for me are generally around half of busy December, and below break even. Worse, I've noticed that the better my December, the more returns that show up and erode my January. It's probably just a percentage of sales, but it seemed higher this year. What I've been learning to do is see this period as a unit: December-January.

This way I don't feel as down that I'm losing money. As a unit, it means I'm saving from earlier in the two month unit to pay for the latter. It's mostly psychological though, if you're an "even keel" kind of person, roller coaster retail can mess with your head. It's like a crazy girlfriend with bi-polar disorder. In one month you're on top of the world, while in others, you talk in a near whisper and remember back on better days. They key is to sense these "moods" coming on and plan accordingly.

February is ironically our second best month of the year, and we were joking yesterday about not making any decisions in a foul January mood, just wait a couple weeks until February. February is when post holiday releases finally show up, like the new Magic set and the beginning of convention season for us, with Dundracon. Add our Ding & Dent auction and February becomes a feast month, albeit one that has to get us through the dark times of March through May. These cold months are the "real" game store months, if you ask me. They're not part of Summer or the holidays, there aren't any crutches, like hot conventions to keep us going, just bread and butter times.

We usually break even or lose a little money during this period, making it up with Summer sales. Summer is a quirky time. It's a little like the dark side of Christmas. Kids are out of school, people are looking for things to do, but the sales are only a slight bump above normal, while the labor seems twice as intensive to keep everyone satisfied. Summer is where gamer cred comes into play, as customers want what's new, what's hot, what was or is going to be released at GenCon. It's where game demos are important, where you set the seeds for what will get played for the next year. Summer is an awful lot of work for us, yet without the high holiday rewards. On the positive side, it's your people coming in, not a lot of grumpy strangers who don't know you. It's a little like a family reunion at times and the mood is happy. You're doing the thing and there's a participatory mood.

Fall is like the air slowly coming out of the party balloon. Sales begin to falter, and it's almost like you don't want to tell customers that the party is over. "No, have one more drink. Don't worry about those people heading for the exits. Let me tell you about my character." Customers are back to their usual responsibilities, and with the holidays on the distant horizon, they may have been told to stop spending on themselves. Last Fall was a mini retail Armageddon that I hope not to ever see again. You just never know in retail.

Of course the post-Thanksgiving holiday season is a time of relative plenty, even measured against dismal January. For us this is where any real profit for the store is eeked out, something left over from January losses and hopefully not squandered on some capital expense that seemed relevant when I was selling three thousand dollars a day in in December, compared to the five hundred from yesterday. There is no money in retail, and that should be the December mantra when the money is flowing in as if your friends, family and accountant were all wrong about what a big mistake it is to run a game store.

Check Fraud

I'm playing catch up from my week of vacation. My current project is tracking down my bad check scammer. Talking with the local police, we were able to determine that she used her real name and address, which is good for catching her and why she got away with it in the first place. Everything checked out at the time of purchase, but she just seemed a little too loopy. Sure enough, the check was drawn on a closed account and she and an accomplice came back to return items for cash. I think these hard times make people a little desperate, as does drug addiction.

I've got her captured on video and I've been able to get that video off our recorder, but I'm at a loss on how to play it on anything other than the CCTV system. The video has an ADAT file extensions, in case anyone knows of something that can read that. It turns out I probably won't need the video, since I was able to identify her over the phone to the officer and it matched her drivers license photo. So now some paperwork, a certified threat letter, and maybe results sometime down the line. One thing is for sure, we no longer accept checks.

Gaming Community

I talk a lot about "building community," the "third space," and other sterile retail fuzzy wuzzy terms, but being on vacation and getting some perspective has made me realize what gaming means to me and how the store plays a role in that.

Gaming is something I do with my friends. When I started the store, that meant the nearly exclusive play of Dungeons & Dragons, and in extreme circumstances, gasp, a board game. Most of my original D&D group were not gamers in the broader sense of the term. Most played D&D only, some only with us. One is a part-time RPG writer in the industry, with a broader repertoire, but he's the exception that brought new ideas to the game (the king of improvised fantasy weaponry, for example). We tried one-off games on occasion, like Mutants and Masterminds and Spirit of the Century, but often if it wasn't a D&D game, people wouldn't show up.

As a kid, I played lots of D&D, but also Traveller, Top Secret, Boot Hill, Star Frontiers, and Gamma World. It always came back to D&D, and as I've mentioned before my childhood gaming pre-dated miniature games. All of these games were played with the same group of friends, or various subsets of those friends as factions developed. As for the game, it always came back to D&D.

I had been to a couple of conventions as a kid (yeah OrcCon 83 and 84!), but running the store was my first real experience playing with broad spectrum gamers. That's where the community element came into play. Sure, I continued to play at home with the original group, but my horizons were opened at the store. The friendship and camaraderie were what made games enjoyable for me at the store, and when that was lacking, it just felt like work. Making new friends and connections is when a game is most enjoyable.

For me the "third place" and "community" are about building those friendships where I play, even if they're the shallower gamer friendships that we temporally maintain for the sake of mutual enjoyment. Of course it can often be a little like a soap opera around the store as well, as various cliques, factions and individuals express themselves, often to the annoyance of others. There aren't enough women to make it dorm-like interesting, thank the gods, but I'm often pressed into the bartender-like role of listening while customers tell me about how this guy fudges his dice rolls, or that guy likes to kill off characters when you've upset his plans. Still, there's a sense of community and the complaining is mostly because the game will go on, regardless. People complain because they feel compelled to continue the relationship.

What I have yet to fully grasp is the game convention model, the temporary connections created to allow a game to happen. I can see it as a venue to play games you wouldn't normally get to play elsewhere or see different perspectives, but I wouldn't pre-empt a regularly scheduled game to go to one, and I certainly wouldn't plan a vacation around one when a perfectly good real adventure could be had instead. Running the store has made me yearn for richer gaming experiences than what I get at home. I meet interesting people, great gamers that I want to play with, which grows my disenchantment for the at-home model of static gaming. Perhaps that's what people look for at the conventions, the glimmer of brilliance, breath taking role-playing, the unpredictability that comes from playing with someone new.

The next convention (and best in my opinion) is Dundracon from February 13th-15th.

D&D RPGA

On Thursday we had record turnout for our weekly RPGA event: 25 people at 4 tables.

The new Dungeons & Dragons Forgotten Realms RPGA program has been very successful, as I've mentioned before. They're less restrictive on their format as a way of encouraging people to play D&D on a regular basis.

We used to run Eberron RPGA using 3.5, which was a mess. The adventures were poorly written, character rules were obtuse and the format was rigid. Now adventures are high enough quality to where we're going through lots of toner to print extra copies for the volunteer DMs. Before, we couldn't give away the pre-printed dreck. Also, 4th Edition is better suited for organized play, as there's less ambiguity in how a character is created. I recall downloading a half dozen 3.5 pre-gen characters from the Wizards website and spending an hour correcting them. Looking back, 3.5 almost seems subjective when it comes to character builds, or at least complicated enough to forgive the inevitable errors that would creep onto character sheets.

But do you like 4th Edition?
After six months of playing and running 4th edition, I've become a bit more critical of the system. The best criticism I've heard, which I'm kind of agreeing with, is that it's a fine system, but it's not my D&D. That's just saying it's different really, but there's something to be said for the lost continuity between 4th and previous editions. It still has that 3.x problem of feeling like a role-playing game until combat begins, when it becomes a tactical miniature game. Luckily I like tactical miniature games, but the jarring transition often leaves me cold.

My real problem is it feels a bit sterile for the players, which drains some of their enthusiasm. I'm hoping that aditional accessory books, like Player's Handbook II, will add some variety to their options. But aren't I really just saying I wish it was more like 3.5, with a bigger toolbox?