Mr. Know-it-All.

I decided for my last two years of owning Pegasus Books that I'd stick to a strict budget per week for product. It occurred to me the other day that there should be a way to keep track of this. The term "running average" came to mind and out of curiosity, I looked it up.  

Turns out, there's something called a "rolling average," exactly what I was looking for. 

Now I've tried to stick to budget for 40 years and never really succeeded. The way I did it was set the budget, write it down, and subtract until it was gone. But that only accounted for that week. Any time I spent less or more, slid under the radar. 

And of course, I often spent more (and sometimes less) so that way of accounting didn't really work.

The rolling average is such a simple concept, I'm stunned that I didn't think of it years ago. (I realize how stupid this makes me sound...)

My point is: how much don't I know? What simple formulas am I missing? 

For instance, would I have ever figured out the Break-Even point equation on my own? (Fixed overhead divided by profit margin. duh.) I was sort of doing this crudely when I was handed the equation by the guy up at COCC. I've used that equation ever since. 

So I'm sure there are plenty of useful business tricks that I simply don't understand. It took me years to figure out how to measure cash-flow for instance. I mean, I sort of understood it instinctively, but never really put all the parts together. Basically, you can say this about everything I know about business. I understand a hazy intuitive version of the truth which is enough to help me survive, but not the precise mechanisms to make it easy. At least, not at first.

Such stuff seems utterly obvious in hindsight, but I have had to figure them out all by myself. (One of the first things I had to learn was that just because everyone else seemed to be doing something didn't mean it would work for me.)

Would taking business classes or reading business books have helped? Based on my experience with business books, I doubt it. Sure, every 100th idea would be applicable to what I do, but I wouldn't know which idea works until I've already experienced it.

I had that experience with the only business book I ever felt helped me: "Growing a Business," by Paul Hawken. But even then, I only understood the book's value because I'd already experienced many of the pitfalls he was pointing out. 

The business guy up at COCC said I had a "primitive sophistication." I think this figuring stuff out on my own stuff is exactly that. But I don't know what I don't know.

My basic approach has been to to simplify everything as much as possible. When I look out at the world of bookstores, it seems like everyone else is taking the opposite approach. I'm comfortable with what I'm doing and it's working well--the last five years have been the best years by far. 

I'm an old dog, and I'm not really looking for new tricks now. But I really wish someone out there could cut through all the BS that business books and classes put out and give newcomers the simple equations and procedures that would help them survive. 

My guess is that not enough small business owners would buy such a book. 

Because we're all "Mr. Know-it-Alls."

My reservoir of back issue comics; and organized mess.

Strangest thing. The basement at my store is full of stuff again.

A few years ago I set out to empty the basement, even if it meant giving things away. First thing I did was sell all the sports cards for fractions of a penny to someone who so loaded up a U-Haul, that it was nearly dragging on the ground. Half a million cards? Supposedly, he was going to use the cards to paper the walls of a restaurant. (Crazy idea--the thought of applying each card to the wall gave me shudders. Besides which, all those cards were "commons" which I warned him about.

Then I sold all the comics in the basement to another dealer. Tens of thousands of comics for pennies on the dollar. There was some value there, but I simply didn't have the time or space to deal with them.

Finally, I sold all the non-sports cards I had. I'm willing to bet that I probably had more of these cards than anyone in the country. Tens of thousands? Incomplete sets and boxes and boxes of individual cards.

And so, I had a basement that was cleared out. I didn't miss any of it. In all three cases, the cream had already been taken and it would have required time, space, and effort to sell any of the rest.

 

So I'm feeling proud of myself. But then back issues started selling again.

You see, when I started 41 years ago, back issues were a major part of my business. The crash of the comics bubble in the mid-90s pretty put an end to that. I kept the readers as customers but lost the so-called "collectors." Of course everyone buying comics were also collectors, but unless you had something truly extraordinary, they didn't want back issues.

But over the last decade, collecting has become more of a thing again. And I simply didn't have enough of the strong titles or "key" issues to do much about it.

So I saw a longterm customer who was going to sell his collection at a garage sale because he was moving. I knew what this customer had been buying, Spider-mans and X-Men and so on and knew the price he was offering was really good.

I called him up and said, "At the price you quoted, I'll buy them all."

It took me nearly a year to go through those 40 boxes. I decided I would extract the titles I knew would sell and bag and board them all. Eventually, I simply replaced the back issues I had upstairs with a fraction of the comics I'd bought. 

So...sales went up. They went up enough to add a button to the register to distinguish back issues from new. Nothing spectacular, but more than enough to pay for the collection I bought and still have most of the comics leftover. 

So I thought to myself, "Don't turn down offers automatically. Inquire about what the seller wants. Or even ask if they want to "contribute" comics to the general cause. So comics started coming back in, a few boxes at a time.

Then I got a call from someone who apparently had a garage full of comics and was willing to give them to me if I would haul them away.

Turns out, these were the comics I left in my mall store back in 1997, which had been stored in someone's back garage. Weird to see my own tags and prices, but there was good stuff in there. I gave the owner a bit of money because I didn't feel great about taking them for free, but the truth was, I wasn't going to be able to get to them for a long time. Another 40 boxes or more.

Then...well, after offering the boxes of used books and fixtures from Linda's bookstore, The Bookmark, someone finally took me up on it. That emptied the basement somewhat, but the comics have continued to flow in the door. We apparently have enough goodwill in the community that people want to leave their comics with us. Got another 2500 comics last week, some decent stuff in there.

 

Here's the problem. There is plenty of salable stuff in the basement, but it's like a reservoir of oil that can't be accessed without extreme effort. I've got enough oil flowing through the pumps that it's worthwhile, but the vast majority of salable comics are out of sight. 

I know people will point out that I could sell them online, but I'm just not set up for that. Frankly, I'm not inclined. One of the reasons I quit pursuing back issues in the first place was the constant need to justify prices, the constant haggling, dealing with difficult customers. The way it's being done now is, I plunk a price on a comic, the customer can see the condition themselves, and all is well. 

The other possibility is letting people down in the basement one by one to check it out, but the problem is, I'm still months if not years away from separating the wheat from the chaff. I know from past experience that people will cherry pick what's there. 

Oh, well. It's a nice problem to have. We have plenty of "key" issues now to put on the wall. We have plenty of good runs on the most important characters, all the Avengers, Batmans, Supermans, Spider-mans, X-men, etc. 

I've taken another step back from the store. Dylan, an employee from a few years ago has come back and I'm giving up most of my hours so he has enough. So I can amuse myself by going through all the rest of the comics, extract the good titles, bag and board and price them, and leave Sabrina with an organized...what should I say? 

An organized mess.

Too soon to react?

Doing this week's orders--and stopped midway. 

I need to think about this.

The stock market is crashing. 

So my dilemma is this: when I order from Ingram, I get books in a very timely manner, in no more than two days, and I know exactly what I've spent. However, the discount I get from them is a full 10% less than what I get directly from the publishers.

However, when I order from the publishers, it can take anywhere from ten days to two weeks to arrive, sometimes even longer. The books also come in piecemeal, and I don't know in advance which books they won't have in stock. 

It's Timeliness vs Discount, simple as that.

Here's what I've learned in the past...

 In an insecure and uncertain market, you need to know exactly what you're spending and when the product will arrive.

In other words, when given the choice, timeliness over discount. 

We've been doing very well up to this moment; a record year so far. So I've been trying to do both. I order extremely hot material from both the distributor and the publishers. 

It's been a record keeping chore and has complicated the cash flow, but when the overall market is functioning, it evens out and we do fine. 

Now?

That's the question. Is it too early to take drastic measures? 

Again, what I've learned in the past is...trust your instincts. When there's a falling market, you almost can't be too quick to take action.  If you're wrong, you can always amp back up again. But if you're wrong about holding course and the market keeps falling, then you can easily start spending more than you're earning.

I think people are under-reacting. Maybe they aren't paying attention. Maybe they're in shock. Maybe they're resigned. Maybe they're afraid of overreacting.

I need to change course and start being more conservative.

OLIVER BOOKS! Somebody finally took me up on it.

Customers in Pegasus Books often say something like, "I'd really like to have a bookstore."

For the past five years of so, I've answered, "If you're serious, I have all the fixings. Tons of used books and fixtures. You can have them for a very low price."

"Oh?" a few people mutter, already backing away. 

"Yeah, my wife and I owned a used bookstore for 15 years, and I've been buying up used books for another five or ten years, with the intention of opening a used bookstore in Redmond when I retire. But I've worked longer than I expected and so it's probably not going to happen. Especially with what the rents in Redmond are like now." (Not all that much cheaper than Bend...at least not cheap enough...)

Well, by that time they've probably scooted out the door. Obviously, they weren't serious, or maybe they didn't believe I was serious, that I really had the fixings, or that it would be cheap enough. But I really wanted to give my 15 to 20K used books stored at home and I couldn't see dumping 35 or 40 perfectly good bookcases, or leaving it for my loved ones to have to deal with when I'm gone. 

In my mind, I could see some young person getting a start in a store for less that I paid for my own store 41 years ago. I was quite serious. I could see someone earning a perhaps small wage at first, but maybe turning it into something, the way I did with Pegasus.  

It would have to happen in some small town, such as Prineville or Madras or Burns or LaPine, someplace like that, but yeah....someone could make an attempt for what would have been peanuts. 

No one bothered to ask the price. 

So I had a young woman in the store a few weeks ago and we went through the conversation and she was still standing there. 

"I'd love to do that," she said. 

"Would you like to see the fixtures?" 

"I really would." 

So I gave her a tour of the basement, and it was about closing time, and I asked her if she wanted to follow me to my home to see the books, and she did. I had a large storage shed and a garage packed with boxes of books. 

She was still interested. 

Long story short, she's opening "Oliver Books" in downtown Prineville on April 1st. (No joke.)

She's gone way beyond the starter kit that I provided. With my advice, she decided to add new books to the mix. Even Prineville isn't terribly cheap anymore and she is renting a space larger than mine, so I told her I thought new books would be necessary to carry the load.

Most gratifying of all, she's seems to be listening to my advice. She's doing it right, not the bare bones effort I originally envisioned but a full-on, quality bookstore, with my contribution being only a foundation to what she's building.

I'm amazed by her energy and her savvy. I think she's got the stuff to do it. 

Prineville is a small but growing town and I suspect they'll welcome her with open arms. It might even be worth a visit from all you folks in Bend and Redmond and LaPine and the rest of eastern Oregon.  

OLIVER BOOKS, Prineville, Oregon. 

It's been fun to see it take shape, and I'm super impressed. Good luck to you, Hannah Oliver!

 

I've been reappraising my books. I'm proud of them, and as strange as it is to say since I wrote them, they're better than I expected.

I came back to writing with doubts. I submerged all doubts and forged ahead. I wrote what I wanted., when I wanted, how I wanted. I got feedback that made me feel like I wasn't wasting my time, but it wouldn't have mattered. I had creative energy to burn.

Eventually, I felt that I had achieved what I set out to achieve.

As time has passed, and interesting thing has happened. I've become more and more proud of my books, not just because I achieved my goal, but because I truly believe that I have writing talent, that the books are well done, original, and diverse. I believe they are satisfying reading experiences. 

All the rest is BS. What others think, what level of sales they achieved, how well known I became or didn't become. BS. 

What counts is that I know I wrote some good stuff. And I'm proud of it. 

Wait just a little before igniting the rocket.

There is a local bookstore I visit who has two large bookcases with the latest week or two releases face out. Whenever I'm there, I count what percent of those books I carry and it is almost always about 1/3rd. 

But just to the right of those two shelves is a shelf that contains the bestsellers from past weeks that have continued to sell. Of this rack, I usually have about 90% of the titles.

Basically, I'm letting all the other stores do the hard work of weeding out the true bestsellers from the aspirational bestsellers. The true bestsellers will pop up on the radar almost immediately, followed quickly by requests and by entry onto the bestseller lists. 

I always make sure I get these true bestsellers as soon as possible, but I don't order the majority of the new releases just because they're new. I'd rather spend that money on my midlist books, my perennials. 

The danger is that I'll miss a week or possibly two weeks of these books; but the true bestsellers usually have selling spans of many weeks, months, and sometimes even years. 

What I've done is avoided the sunk costs on the aspirational bestsellers; and the job of sending back those that don't sell. The few clunkers I get, I have maybe one copy and generally, eventually, someone will buy it. 

It may be a little lazy on my part to wait for confirmation of whether a book really has legs, but I order books without any intention of returning them. I'm not sure that people come to my store for this week's new books, but come into my store and see the books they've heard about.

I'm not saying these other stores are doing it wrong, only that I'm doing it differently. Most stores can't afford to miss out, but they also return books that don't sell. Because my clientele is so heavily tourists, to them most of my books are new.

Last year I tried for a full six months the method I see other stores take because my publisher promised me full returns. I ordered more of the each week's books and more copies of the books that were earmarked to be bestsellers.

At the end of that period I realized that what I had been doing a pretty good job of ordering the right books in the right numbers before that experiment, but not tying up as much of my money on inventory that didn't sell.

So back to basics. Let the books prove themselves a little bit and then get them. My guesses are usually pretty right.

Timeliness and reliability versus higher discounts.

First, a little orientation for you.

There are basically five major publishers who distribute their own titles today. They're called the Big Five. These publishers have more or less bought up every important imprint there is. 

They are: Penguin Random House, Simon and Shuster, Macmillan, Harper Collins, and Hachette.

Meanwhile, there is one major distributor who handles all the others' books: Ingram. 

I have been ordering the majority of my books from Ingram even though I get up to 13% better discounts by ordering direct from the publishers.

Today, I got in a measly small box of some of the "a" titles from a major publisher/distributor. The fill rate was actually less than I get from Ingram. 90% of what I ordered still hasn't arrived twelve days after I ordered them.

I still haven't heard from the other big publisher/distributor that I applied for. The western rep hasn't bothered to answer my email. (The eastern rep has been very nice and responsive, but she's not MY rep.)

I'm thinking I'll need to keep ordering from Ingram on these titles for the next couple weeks unless things change. Waiting a couple of weeks to get the material and then only getting a 50% fill rate: well, that 13% extra margin looks a lot less appealing.

It seems like I have to learn the same lesson over and over again. Timeliness and reliability outweigh an extra discount every time. Not to mention the extra work it takes to keep cross-checking the different distributors and keeping records of what I have or haven't ordered. Basically, I won't know if these two new publisher/distributors have something in stock until it does or doesn't arrive.

Well, screw that.

Don't get me wrong: getting a higher discount is helpful. It's why I'm constantly tempted by the possibility of it. It's just that almost every time, the lower cost provider is much less helpful, accountable, efficient, timely, and reliable. 

One of the big distributors I ordered from is the actual publisher of the books I ordered and yet they had a lower fill rate than Ingram! How is that possible? How is it possible that these giant corporations are so bad at it? Honestly, I have to resort to Google and Amazon to search for titles because these big publishers and distributors' search engines absolutely suck. 

A bad fill rate is not great, but not knowing what the fill rate is going to be until it actually arrives is intolerable. It basically doubles the shipping time that is already twice as long a time it takes to get the books from Ingram. That 13% better discount doesn't look so good for books that never arrive or arrive two weeks later than they need to. 

So ease of use, taking less than half the time to order; knowing what's in stock; getting the product a minimum of a week, more often two weeks sooner

Versus 13% extra margin.

In the end, I find the former better than the latter. Certainly a lot less aggravating. I chased margins and goals throughout 2024, only to fall an exasperating small margin short. The 13% is still very attractive, so I'm going to continue to tinker with the process, try to make it easier and more reliable. But I'm also going to use Ingram as my bedrock.

So...back to more of the way I was doing in 2022 and 2023. We were doing gangbusters business just by ordering from one wholesaler. Easy-peasy.