Friday, June 23, 2017

New Facebook Page

I have a new "Gary Ray" Facebook page for posting my videos, blog posts, and writing updates. There's a book coming at the end of the year and I've agreed to write a column for Wizards of the Coast. The first article is already done. I've got a lot going on and it makes sense to separate this stuff from my regular posts about my wonderful son and my beautiful Jeep. Or is it beautiful son and wonderful Jeep?

Why a Facebook page? I don't do Twitter, which is the best method for communicating with a vast number of people, so that means folks default to finding me on my personal Facebook page, a very limiting thing. I've got a couple hundred followers and about 450 friends, most of whom are game trade acquaintances. I know my content is extremely niche and I'm not pretending to be some sort of rock star, but this should help sort my electronic life.

The down side to a page versus a group, is Facebook monetizes pages. That means you'll want to set it for See First in your news feed.

As I don't make squat writing or making videos, there's no ad budget to promote this page. So, something I almost never ask, please tell your friends!

Thanks!


Thursday, June 1, 2017

Protecting Brand Value (Tradecraft)

The game trade eats its young. It's a painful realization that the mechanisms of the trade are designed around the pump and dump, the acquisition of new product dumped out as quickly as possibly to anyone who cares, so the lever can arc upwards once again for the next pump. Publishers are impeded from building long term businesses as their product life cycle is measured in months rather than years. They can have good intentions, solid sales policies, but there are bad actors at both the retail and distribution tiers that undermine their efforts.

So today Asmodee exerted control over the process by consolidating with Alliance, the biggest game distributor. When your product is devalued in the marketplace, it loses long term viability and sales begin to fall. When you try to maintain that value through policy yet you still see your suppliers selling to companies that devalue product on release, be it to Amazon or Cool Stuff, it's reasonable to consolidate suppliers to a single, capable, trusted agent, ensuring long term viability. 

Will they sell less product? Probably in the short run. They know that. Will it maintain long term profitability for the company? Absolutely, as the brand value is retained and the product life cycle preserved. Will it hurt game stores? The inefficiency and slop in the system benefits retailers, no doubt. We have multiple suppliers sitting on stockpiles of multiple products allowing us to pick and choose our just-in-time inventory at our whim. Without slop, product will be harder to acquire and possibly at a lower margin. So yes, it's not good for retailers who think short term, but what about long term?

Maintaining strict control of supply maintains brand value and increases long term viability. This rewards stores that build community around these games. It rewards stores who forecast sales and order accordingly, a skill made even more complex without the exhaust valve of the Internet (because of publisher policies). This all works to maintain brand value and increase sales for everyone, provided you have skills. If you don't have skills, if you don't pre order, if you don't forecast and budget, if you don't build community, if you can't dial in your purchasing without dumping on the Internet, well you're kinda screwed. But I'm alright with that. This trade has a barrier to entry lower than a snake full of buckshot. That low barrier to entry allowed bad actors to get us to where we are today.

This is the point where customers bemoan their inability to purchase deeply discounted games. I have to ask, could this possibly benefit you as well? Is it not possible that you too are the victim of the pump and dump? Are your X-Wing ships collecting dust? Does your game store shy away from running all but cardboard related events?  Do you have games still in the shrink wrap on the shelf because you've been convinced to hold a giant bucket for the pump and dump? Perhaps your so-called "investment," is actually more valuable when the pump is given a rest.

Wednesday, May 31, 2017

Dialed In (Tradecraft)

When I first started the store in 2004, I recall some odd conversations with friends. One friend, an executive at an Internet start up asked me:

"So you're going to sell video games?"

"No, it's hobby games."

"You're going to sell hobby games online?"

"No, just brick and mortar."

"And you've written some sort of system to optimize that?"

"No, customers come in, I tell them about a game, and they buy it."

(Blank stare)

Why anyone with an education and an IT background would want to engage in old fashioned brick and mortar was beyond his understanding. I get it. I was looking for a slower lifestyle. I expected to be like Mr. Olsen of Olsen's Mercantile on Little House on the Prairie. A slower life. I was so wrong about that, but that's another story. Bottom line though: The Internet and technology of the 21st Century would never allow a Mr. Olsen to exist without it.

The Internet and online sales existed before I had a store. I don't get to complain about the ecosystem that existed before me. I chose to exist in that reality. Still, there was constant tension and the worst was the inability to communicate with customers unless they were right in front of me.

My first couple of years, I created a mailing list and sent post cards of new releases to every customer. I spent about $500 a month on printing and postage. I had to pick which items would most likely appeal to my customers, even harder because there was one list and gamers are fragmented into at least four departments with limited and unpredictable cross over. I would create posters printed on an 11x17 color printer that would get updated weekly; high tech.

The Internet was essentially the enemy, with some unknown amount of sales eroding and seemingly growing over time. Discussions and activity happened amongst customers that I wasn't tuned into. They would go to conventions and I would pump them for their interests and inclinations. At one point, I was privy to some online sales data when I started advertising online and was told the hottest online seller in my zip code was GURPS. I couldn't sell a GURPS book to save my life, yet GURPS was the hot seller. The disconnect was astounding.

That was over a decade ago, and I'm happy to report the Internet and I are now getting along swimmingly. Social media, namely Facebook in Group format, has allowed a level of communications I could have only dreamed of before. I can not only mention every new release, but I can gauge demand, tweak policy on the fly, and create opportunities in real time, rather than waiting weeks for customers to arrive with wrinkled post cards.

The store is fine tuned with social media, the Internet finally assisting rather than impeding our progress. I'm not sure what I would do without it. Even the boogeyman of Kickstarter is becoming a bit more fine tuned, with retailer programs available to let us participate in cost effective ways. We generally pay at the time of shipment, stretch goals are included in projects, and we've got enough time to collect pre orders from customers. That's a win-win for everyone.

It's amazing we survived as long as we did, deaf, dumb and blind to the demands and needs of our customers. Even GURPS is selling well after some discussions about what customers were looking for.

Tuesday, May 23, 2017

Now with Video (Tradecraft)

In the past, I would have never considered creating a video for anything other than something dire. You know, like a plea for cancer treatment money for my dog or a Kickstarter video. I am not at all comfortable in front of the camera, but my views have changed. This is mostly because my viewing habits have shifted towards YouTube for many of my hobbies. Anything technical, for example, is much easier to understand with a solid YouTube video.

One of my favorite video series is Oh Hey There! with Jeff. I'm sure Jeff and crew does a lot of work to set up and plan his videos, but the core of this series is a basic topic, demonstrated in a straightforward manner, without the usual endless futzing around you find on YouTube videos. Jeff has my undivided attention for the 2-4 minutes his videos usually play. So Jeff is my inspiration for making my own videos. If I had to plan them any more than what was in my head, If I had to buy equipment, if I had to script them out, I honestly wouldn't do them, which means I need to make these crude productions quick, useful and to the point.

I've done three so far, posted publicly to my Facebook page, but I just uploaded them to YouTube so you can watch them here. I think the best topics are areas where we've managed to do something clever, but where there's also room for improvement. I can talk about great store fixtures, because I'm also stuck with some crappy fixtures. I have a great setup for CCG play mats, but my set up for miniature mats is abysmal. My card dispensers look great on the wall, but they probably lose me sales and I don't recommend them. I could do this all day, as most of retail is a compromise. How you compromise sets your tone and your style.

Anyway, here they are! They're in order, and I know the first one is probably the weakest:


Choosing Slatwall Gondolas

How to Display Mats

Pros and Cons of Booster Displays


Friday, May 19, 2017

Narrow Windows (Tradecraft)



There's an interesting article here that talks about the aspirations of employers and what they actually get. It's exemplified with the chart above, which I would much rather riff off than the actual article. I've managed people as a line manager in large companies and it's significantly different in a small business. There is the obvious difference between skill sets in say, an IT department, than your typical minimum wage job, but the basic issues remain.

To start, as a general rule in this country, just about everyone without a severe cognitive disability, is employable somewhere. This is important, because as a small business owner, I regularly employ across the spectrum we see above. My problem, the problem most small business owners have, is we have a much narrower window of compatibility compared to big business. We have fewer positions and they're not fillable by most people.

I need an employee to master half a dozen important skillsets while showing competence in customer service. A bigger business can always shoehorn in an employee into a narrower slot. I did a lot of those jobs in my life, from word processing specialist, to chauffeur to car washer. Those jobs required you do one thing, and had little customer facing interaction and a low bar for competence.

My business tries hard to find the right fit, like every other business, but inevitably we hire employees outside the upper right box. We need competent and outstanding nice guys. If you're incompetent and nice, there's no car wash position to shunt you off to. If you're an asshole but great technically, there's no back office word processing job to keep you away from customers.

Parents regularly suggest their children apply for positions with us, but the reality is our needs and requirements are far narrower than larger employers. In fact, we never hire someone as their first job. There's too much baseline employment training we don't have time to teach.

We can train people for the job, but there are those for whom competence will be elusive, even as they master some skills. We might love that a person is great on the computer and is great working on technical tasks, but if they can't smile and develop customer service skills, or if they can't put their ego down long enough to let those skills shine through, there's not much we can do with them.

While a larger business will employ the entire spectrum, we essentially have only two viable categories: nice and competent (line employees), and nice and outstanding (managers who will eventually shine elsewhere). All others need not apply, or if they're already hired, they're usually on their way out or we're exasperated they're still around. There's exasperation with the large employer too, but in our case, we're far more likely to fire the assholes and we're always looking for an excuse with nice incompetent guy. Large employers will always keep the assholes if they're competent, while the incompetent ones can often outlive their managers.

If this all sounds arrogant and demeaning, let me tell you, nobody recognizes they're an asshole more often than store owners. Amongst my peers, it's pretty much a given you self identify if you've survived more than a few years. You've had to make hard decisions, often because people try to regularly take advantage of you.

Myself? I needed to step away from daily work at the counter because I was most definitely becoming an asshole. Just ask my manager. Don't be so surprised. To stay in the same exact job for nine years, you've either found your true calling or you've reached your level of incompetence, which for me was competent asshole in need of something else to do. I was lucky as owner to be able to carve out a new job that fit my skillset, but others aren't so lucky. It's a good enough reason as any to close your store.

Tuesday, May 16, 2017

So, You Need Some Money (Tradecraft)

One of my minor claims to fame is I'm one of the few store owners who has succeeded in leveraging the hell out of my store, while still surviving to profit from it. This is what happens when your Intelligence stat exceeds that of your Wisdom. So let's talk about the need for cash and how to go about getting it.

The worst way to acquire cash is an equity stake. This is when you seek investors to take a permanent chunk of your business in exchange for operating capital. Why is this bad? Wherever you are right now, you're betting your business will be more valuable in the future. In fact, that's what those investors are expecting. Once you take them on, they will be there until you buy them out or you close your doors. Every month I send checks to these guys. It took a lot to get them on board, and a longer than reasonable time for them to see their ROI, but you would have a hard time dislodging them now.

Ironically, equity investors are often the easiest people to convince to give you money when you're starting, since you've got little to offer other types of lenders. If you're just starting out, most will be wanting this to be a professionally structured investment, but in the back of their minds they're probably thinking this is more charity than an investment. It's a great way to get your friends wives to dislike you.

It's your job to prove them all wrong. If you do decide to take them on, spend the first grand of their money to hire a lawyer to craft a shareholder agreement (I waited ten years to do this). This document will explain how to (dynamically) value the business, how to buy out partners, and what happens to shares in cases of divorce and death of investors. You don't want their angry ex wife as your new business partner, she already hates you.

Also, the best investors are silent investors, meaning you own 51%+ of the business and they don't work in it under any circumstances. Keep them away, as it ruins relationships, pierces the corporate veil that protects them and generally leads to arguments and dissolution. Form an LLC or corporation and buy them lunch once a year at your annual shareholder meeting. That's a good degree of contact.

Although I say you should own 51% of the business, consider your business plan to determine if that level of income is enough for you, assuming profits down the road will make up a big chunk of your income. What I see out there are successful businesses with near equal partners, where none of them are capable of earning an income because of how value is divided. They rely on the SWGJ (Spouse With a Good Job) to make ends meet. I'm at 75% and I think that's about as low as I would want to ever go.

The next best way to generate some cash are private lenders. This works best if you're already profitable but have a great plan to generate more income with minimal risk to the business. We did this with our mezzanine expansion project. If you can show you can currently make the loan payments without your plan succeeding, you'll have a much easier time convincing private lenders. Honestly, if you need your plan to succeed to survive, you're better off saving up some additional capital before taking on lenders.

Private lenders will want a Promissory Note and perhaps an additional agreement they'll get their money back. They are high up when it comes to dissolution payments, so they're not in a bad position to start. Some of ours wanted security agreements, with liens on our furniture, fixtures, equipment and inventory. One was crafted as "senior debt" which put it before other loans. Some loans were reduced in interest by offering games at cost for the loan term. All of these loans have me as a personal guarantor of the loan. The goal for us was to take out these loans for a five year term, but pay them off early at our convenience. We're in our second year of loan payments without any missed payments and our sales are up 15%, so it has paid off so far.

Make sure your investors are aware of their new position with any new loan you take out. They are generally last in line when it comes to winding down a business. In the event your business closes, the required order of payouts goes like this:

  1. Employees (wages, sick and vacation time)
  2. Government taxes
  3. Lenders with Senior/Secured Debt
  4. Other Lenders
  5. Shareholder loans (something to consider when a shareholder is a lender)
  6. Shareholders (including you)

Crowd Funding is a way to generate some cash, but it's a poor option for store owners. You can read about my successful Kickstarter in this blog (and in the upcoming book), but it only succeeded because I leveraged industry contacts. In general, a new store has nothing to offer a non existent community of backers. An existing store can sometimes succeed with a Kickstarter with a promise of future services, recognition of goodwill,  and various tchotchkes. Our $26K Kickstarter generated about $15K of cash and a whole lot of entitlement for a project that ended up costing $133K. On the plus side, we met most of our private lenders from the Kickstarter project.

There are other methods I write about in the upcoming book, such as community lenders (we got a loan through one, but paid it off before construction began), SBA loans (available to existing businesses or new store owners who own a home), and traditional tricks of the trade, like credit card cash advance checks and the now nearly unobtainable HELOC (Home Equity Line of Credit). The best way, by far, is to be smart and stockpile a bunch of cash.

From Sperennial Financial