The Future of In-Store Gaming

Without in-store gaming, the hobby game store business model is broken. Let's not pretend it's not. If we survive the year, it will be because of charitable customers. A store with game space has a Useful Value Proposition. It's not unique, not special, but it's expected and it's critically important.

Social gaming is something you can't get online. You can't get the breadth of social gaming at home with your friends or family. It's a critical loss leader of a service that defines the hobby game trade. Our stores are designed around it and our staff and hours reflect it. A straight retail store is not a long term viable business, at least not for anyone who has space and staff set up for such a store. It wouldn't surprise me if upwards of 40% of our sales are tied to in store gaming.

Customers ask, when will you have in-store gaming again? I don't know. I can tell you we may have closed our in-store gaming a little late, carefully following bare minimum CDC and county guidelines, but we won't be opening it too early. There's no amount of pressure or economic injury too great to risk what we know is a killer. There are stores planning to open with customers wearing masks, playing in pods. Umm, no. I guarantee you, there will be stores doing this, but it's grossly irresponsible and you shouldn't engage. One of the things I dislike about this community is the inability to hold bad actors accountable.

The key term is social distancing. As long as there is social distancing, meaning you stay six feet from each other in public spaces, there is no in-store gaming. Let's not pretend the 40K crowd can play their game while carefully abiding by the six foot social distancing rule. It's a fantasy. Let it go. As long as social distancing is recommended, there will be no responsible in store gaming.

What happens next?  There are half a dozen studies suggesting we'll have some sort of reverse social gathering recommendations. We'll start with curbside delivery, then no more than five customers in the store, no more than five people gathered for an event, then 50, then 100, then maybe it will be normal again. This could take a year or longer. Some customers will never in-store game again, just as some people will never go to a movie theater again.

What I would like my customers to understand is:

1. I have a strong financial motive to get in-store gaming back up and running as quickly as possible. Don't think I'm dragging my feet. Peoples livelihoods depend on it eventually happening.
2. I know you're young and invulnerable and aren't overly concerned with dying of a virus that mostly harms the old and infirm, but we need to work together to keep our community safe.
3. I won't compromise the health of my staff or my customers, even if staff or customers are willing to take risks. Please don't come to me with justifications or reasonings as to why your event is different. 
4. Likewise, there will be those who think we are reckless for following new opening guidelines. If you can't abide by our painfully difficult decisions, please leave. There were angry people on both sides before and that won't change.

I need to ask customers to support small business during this critical transition period with their money. New games are being released. Buy that friend you haven't seen in a month a gift certificate. Store owners know our value proposition, what we offer, is compromised. We need customers to vote for our survival with their wallets. Please continue buying from us, even though it's scary and we aren't offering your regular event.

Right now, stores doing home or curbside delivery will tell you they're only doing 20% or so of their previous sales. That means 80% of previous customers are not helping. If you want to see your local store continue to exist, we need you to actively spend your money to make this happen, even though we aren't offering the same experience you've grown to love. We'll get through this together.

Treacherous Government Loans and Account Segregation

My small business received both the EIDL and PPP loans. Yes, thank you, it was a bunch of work, but no harder than creating a Pathfinder 2nd Edition character for the first time. I have some unique experience in creative financing my business, so I saw the opportunities and jumped on them. This is my area. However, these loans are treacherous. I'm going to briefly go over why they're treacherous and how you can navigate these waters.

The EIDL loan has approved uses and disapproved uses. A lot of disapproved uses are things you might do all the time, like issuing profit or paying off old debt. This is theoretically a thirty year loan. Are you not going to have profit for 30 years to prove the SBA Gods that you've used the loan for legitimate funds? No, but you need to be able to prove profit taking and debt retirement did not come from this money.

Likewise, the PPP loan, to act like a grant and be forgiven, can only be used for (some) payroll costs, some insurance, rent, utilities (whatever that means) and mortgages from the Before Times. Payroll has to be kept at 75% with the same number of full time employees (30+ hours?) to be forgiven. I am not an authority on this. Nobody is an authority on this. It''s complicated and likely to change, so you need to handle this money in a special way, although it doesn't quite need the same level of segregation as the EIDL money.

Here's what I've done. The first thing I did was create money market accounts at my local bank. This earns something like zero point zero nothing percent interest, but the account segregates the money from my general funds. Now I can transfer money from loan accounts to the general fund for specific uses with specific notations. I can use my own money without bumping into loan money restrictions. I created these entries in my Chart of Accounts:

I am not an accountant, but my accountant approves of what I'm doing. Step two is to create Long Term Liability accounts for these debts, which is nothing special, just how you would track a loan. 

Finally, how do you actually track expenses? I was discussing this with friends and the issue of Class came up. I've never used this before now. Setting up Class, an option in Quickbooks, allows you to note each expense line with a Class notation. So most of my Payroll taxes are allowed to be paid with PPP money, except federal taxes. I can line item each tax type as PPP approved using Class, except federal taxes. This allows me to track my usual expenses without too much interruption in work flow. When it comes time to prove how I spent the money,  I can run a report using the Class and it takes me minutes instead of it being nearly impossible.

Yes, you do need to be this detailed, and no, you probably don't need an accountant. You do need to be very clear on what is allowed and what is not for each loan. Getting your PPP money deployed in approved usages in the short period required is going to be a chore and will take creativity. My 15 year old is suddenly back on payroll. My old manager is back. Employees are being tapped to work from home on projects that don't exist yet that I'm scrambling to create (online store). Once the PPP money hits my account, the race is on to spend it properly and quickly.

The EIDL money is a little easier. I'l be paying my vendors with a big chunk and mostly leaving that money in its account for the duration. Its segregation is the most important thing, so as not to run afoul of the government.

Good luck! I know getting this stuff is hard. If you haven't gotten the PPP yet, keep trying. It's to your advantage to get it as late as possible in this crisis, when your people are going to be able to work doing something useful. Stop lamenting about large corporations getting unfair shares and start working on this. You will be far ahead of me if you get it later.

Rescue and Recovery

I own a hobby game store but one of my other hobbies, the one that takes all my meager disposable income, is overlanding and off roading. I have been stuck many times in my Jeep. For a while, it seemed like that's what you did, drive until you got stuck. I learned a lot during this time, both about preparation and technique as well as wisdom in avoiding mistakes.

Once I tried to get up a muddy hill and slid back down sideways, nearly over an embankment. I tried several more times and slid into the exact same nook on the hill, a little closer to the edge each time. Eventually I got half way up, avoided the slide, and winched my way over the top. My friend who didn't get stuck was focused on getting me to learn how to navigate the vehicle up the hill. I just wanted to get to the top. My installer thought I was foolish to buy a winch, "I've been off-roading for 20 years and never used my winch." Well, he never went with us. I ended up using the winch several more times that year. There are some fundamentals to off-roading that apply to business.

Be prepared. In my Jeep sliding situation, I had the original, street tires on the vehicle. I had no business being in mud. A wiser me would have looked at that hill and said "Nope! We go around." In business this means having some form of reserve. A cash reserve is the most obvious. Before we had our large construction project, with tremendous debt, I had cash reserves. We would look around and try to solve problems with money, rather than seeing problems and putting them on my white board of shame, a list to be solved another day.

Being prepared also means having a plan. What would you do if you were forced to shut down for a long period of time? Would you continue the business at all? That's the first question. Is it worth it? If so, how? Having checked your resolve ahead of time means you are acting on your plan while others are searching their hearts. This is a discussion I've had with friends and family many times, and the weekend before I was shut down, we revisited this. Is it worth continuing if they shut you down?

Self rescue. Rule zero of survival is nobody is coming. Be self reliant. With rule zero in mind, how are you going to self rescue in a time of crisis? You should certainly call for help, but remember, nobody is coming. Hope they come, expect they won't. My solution was to set up an online store and do no-contact home delivery. The best time to have set up an online store was a year ago, but you do what you can in the time of crisis. In coming days, I will change that to far less profitable, but safer, shipping of all orders. Nobody is coming. I'll believe there is an outside solution when the money hits my bank account.

Call for help. Nobody is coming, but they might. I've got a ham in the Jeep, but I really want a satellite communicator. The price tag and subscription throws me off, but before every big trip, I consider it again. How remote is this trip? Who am I going with?

In the case of the business, I'm refinancing my house to acquire cash out and tapping investors for a "cash call." This alone is probably enough to self-rescue, assuming things go back to normal. They'll never be normal again. When I went to initiate a refinance, the first several days the banks were swamped and stopped publishing rates. The next week, my mortgage broker added me to her schedule. It has been three weeks and she hasn't called me back. I'm half way through a refinance with a second broker. Is it possible this falls through? Absolutely. Should I have relied on the first broker? Nobody is coming.

I'm also applying for an SBA economic injury disaster loan, and was recently approved for one. Next is the PPP payroll protection plan, which really will employ my staff for more hours than I would give them otherwise, probably building a new online store I should have created a year ago.

One of these things needs to happen. I need the mortgage refi or the SBA loan and gravy if I get both. Let's turn failure into an embarrassment of riches. Since nobody is coming, sending out a request for help on every frequency might increase my chances somebody comes. If nobody comes, the online store becomes an even hotter priority. Everyone is screwed. It is to everyones interest to be patient and allow self recovery. It's the best option since nobody is coming.

The time to be prepared with a strong resolve and resources in place, was before this happened. The time to begin the self rescue and call for help was last week. The time to accept nobody is coming and figure this out on your own is now.

The Storm is Everywhere

Stewards is how I describe our relationship to the gaming subculture. The days of stores as taste makers are long behind us, although you can leverage and channel interest through events and demos. I felt this strongly selling role playing game during the holidays.

We certainly sold our share of gaming books, but with the slower, wiser, release cycle of 5E, there are a tremendous number of players who just don't need any books, most of the time. The sheer number of these new customers and the slow book release schedule meant dice and miniature sales have been stratospheric in the trade. You couldn't have enough of either in 2019. Customers have money and they want to spend it and it will be with you, or increasingly, elsewhere. This season I could feel the Etsyfication of the hobby.

There have always been low volume makers of stuff for gaming, but players are now tied into an omnichannel environment, where games are bought and played and talked about virtually everywhere. We are just one channel and perhaps not their primary. I know game trade buyers at distribution and they do their best to follow trends, but there are just too many makers and Kickstarter projects to keep up with and not enough budget to follow every line. 

We have customers that have gravitated away from our sales channel nearly entirely, as well as those who live and play the games we sell without knowing or caring we exist. It's not that they have better options (selection and price), like in the past, but they have different options. Their experiences and purchased products only have vague overlap. My store is full of customers three nights a week, and if I could just read their mind, tap into their other channels. 

I had holiday customers arrive with a list of titles with little resemblance to my reality, as if they were stringing random words together. There is not a strong understanding amongst casual consumers that these channels don't merge at the end point of brick and mortar retail. When that light bulb goes off, we'll find ourselves marginalized, if we haven't been already. Who wants to shop where they sell half of what you're interested in, when there's a source with 100%? If you have the budget and the knowledge, attempting to get in on the action of another channel is a wise move, although you'll never really tap the potential of the other channels. You don't need to be all channels but you don't want to be the worst channel. You don't need to outrun the bear, just outrun your buddy.

Breaking out of our channel requires budget, insight and being on trend. As I get older, I am often not on trend, such as my mystification as to why people watch hours of gaming when they can just do it. I understand why people watch professional sports, but gaming seems more accessible, especially when there's always hours of research and prep for a D&D game. I mentioned this on my personal page and have been educated, so you don't need to explain it to me. I get that there's evolved mastery of the game on display, rather than a scripted farce, which is what I see because I'm so very far from personal mastery of the game. I'm more in the Colvillian camp of slight deviations from the baseline.

The new D&D book, Explorer’s Guide to Wildemount, is a web series tie in by Matt Mercer, of Critical Roll. Even Wizards of the Coast has no choice but to get on trend, to figure out what players want, and of course, they are omnichannel oriented, including deep discounting on Amazon. The grognards like me shake our fists, demanding a reboot of Planescape, much like how the grognard retailer in me shakes my first about those deep discount Amazon D&D sales. 

But Wizard's knows to follow the trends, to tie into the energy in the room, to play the channels. My employees weren't even alive when Planescape was published, which is true of most customers. Maybe ride the channel while the riding is good? Critical Role is right now, at the subcultural forefront, with 758K subscribers with dozens of videos with over a million views. 

These problems are opportunities, don't let me depress you. These are problems you want to have, the catching of raindrops in a thimble during a hurricane. The mass marketization of the game trade is really an omnichannel endeavor, as the mass market is mostly dead. Hobby game stores are closing in droves, as they're unable to catch enough water in their thimbles. The smart ones, the larger ones for the most part, are making larger thimbles, sometimes creating their own literal channels. We saw the clouds and knew the storm was coming, but we were wrong about its origin. The storm is everywhere. 

From Deedle and Thread

The Holidays Were Nice

December was an interesting month for my store, if you think terrifying is interesting. It was a happy, hopeful, cheerful month. There was no sign of impeachment fatigue, as my wife suggested. There wasn't a feeling people were holding back because of a feared recession or tariffs. It was simply ... nice. 

Nice is not what the last two years have been for us, especially the whirlwind holiday season of 2018. Really, I felt like we were hanging on for dear life with stratospheric, never before imagined sales. So, a whirlwind to ... nice. Light drizzle at best.

This is true for perhaps two thirds of retailers, from what I can gather. If you were kicking ass and taking names in November, growing rapidly, fueling your new initiatives, you probably had a great or at least flat December. You are winning. So what happened for the rest of us?

First, as I mentioned, it was nice. It was not a catastrophe, although I've used that word in describing it, mostly because I had mentally already spent the profits.  The season was very 2017 for us, last time I saw nice. 

I should also mention we had a very efficient holiday season, as in nothing was discounted, there was no product in need of liquidation after Black Friday, and although our gross sales were down 15% from last year, our gross profit was only down 7%. We had some unfortunate outages, but I can count them on one hand (I really missed Dixit). We were a well oiled engine, albeit a V6 instead of a V8. 

Second, reasons. There was no big Magic release, which was an oddity last year. WOTC doesn't normally do December releases, so it supercharged our engine. Events were also lackluster for Magic and other games. Events did not drive sales at all. 

So everything else was the same? Mmmm, no. Everything was down for us except accessories like dice, miniatures, and paint. Again, it was nice, but we've been riding high on mass excitement surrounding hobby games and it has died down a bit. But it's still nice!

Third, if I can throw in a third, what should we expect from the first quarter of 2020? This was the question that had me stressed this week. Will I see a 15% decline in January? Will we return to nice? Maybe. Perhaps. I am planning for nice, but hoping for the whirlwind. 

We ended our year 15 up an amazing 12%, despite a "nice" December. Please don't take planning for nice as capitulation, but I expect a flat 2020 with a focus on efficiency. It's recession thinking, but it's really just a return to nice. Again, there will be those with grand initiatives, and I think this is a good time to pursue them. 

Beach Fallacy

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

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

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

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

• Gross versus Net. A bad manager will spend your business into the ground with no apparent benefit. An alright manager will spend your money on long term investments that pay off later, but still leave you in the poor house right now, as they usually don't understand cash flow. A great manager will always spend cautiously and be conscious of the bottom line and the cash needs of the business.

I was not a "great manager" of cash until I had distributions from the net profit. I became incentivized to focus on net. Unless you can incentivize someone with bonuses for producing net profit, you'll always be watching your back (which you will always do regardless). Or you may train someone to be so overly cautious with your money, they take no chances at all.

• Tight Employee Management. A good manager sets employee expectations via an accurate job description and solid training. The manager manages those expectations through the employees tenure by means of additional training and corrective action. Then they reward or penalize employee performance based on how those results are achieved. 

Most managers, most people, can't do this. They simply can't without some very good training, and even then it's not within most peoples personality range. I can tell you from the corporate world that most managers are untrained and awful. Training a manager to master this process will ensure you always have good people, but good luck finding someone skilled at this for what you can afford and good luck developing the skills in yourself when you've probably only had bad managers.

• Inventory Accuracy. Does anyone other than you really care if your POS system is only 90% accurate? Inventory accuracy results in better buying practices, higher sales, lower taxes, and happier customers. Yet, it is very difficult to have a manager who cares about this accuracy as much as you. It is very much tied to net profit. If you find someone outraged at inaccuracy, and they have skill in the other two areas, find a way to groom that employee for manager. 

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

The End of Familiarity (Tradecraft)

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

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

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

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

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

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