Wednesday, January 31, 2007

I'll never get used to how fast I can lose money in this business. You're going along, doing just fine, and then the customers disappear for a few days. Never quite know why. The weather? The economy? The stars?

Now something I know, intellectually, is that it all evens out. I've got money set aside for these types of weeks. So don't worry about us, we're doing fine. I was just hoping, I guess, for even more. Over the long run, I know and plan for these weeks. And yet, they still always seems to catch me off guard and unawares.

After all these years, downturns should never surprise me. But they do. That's the Wiley Coyote optimist part of me. Give me three good weeks in a row, and it never occurs to me that the fourth week might suck.

It always seems that when sales are weak, all revenues go toward bills When sales are strong, that means something must be selling well, and I need to take the extra money and re-invest in whatever is selling.

Whenever there is a downturn, my critical, thinking facilities start kicking in. "Oh, yeah," it says, dismissively. "This time of year is ALWAYS slow. Didn't you see that!"

And Coyote answers, "But games and graphic novels were selling so well. I got the right ACME novelty kit this time!"

But, of course, I can look at historical patterns and usually it is pretty easy to see where I went off course.

The problem, of course, is that..... the time I buy .....isn't the time it arrives ..... isn't the time it sells...... isn't the time the bill comes due.

I buy at least half of my material anywhere from 2 months to 6 months in advance; even the other half, which I buy on reorder, isn't going to show up on the same week. And just like the weather, my crystal ball only seems to be accurate for about 3 days.

So a 1000.00 swing can happen in just a couple of days, and it can be compounded every couple of days, and so you finally react, and then by the time that material shows up, sales have rebounded and suddenly you have too little.

Sometimes I envy anyone who gets that regular paycheck. They at least can plan on a certain amount of money coming in every month. I suppose the uncertainty I constantly feel about business is compensated by the fact that I'm making the decisions, good or bad, and that I probably won't get fired.

After all these years, I have trends and patterns to look at. Thing is, the trends and patterns never seem to repeat themselves, except in the most broad strokes (Christmas and Summer sales, higher; spring and fall sales, slower.)

If I was cold-blooded and rational, I'd figure out some kind of formula to follow. Problem is, if I was cold-blooded and rational, I'd run the business straight into the ground. I had one 3 year period where I crunched numbers obsessively, and only reordered what was selling, at just the right times, and in just the right amounts to maximize profit margin and turns.

At the end of that three year period, I was perilously close to my 'break-even' point, another couple hundred dollars and I would have been below. I threw caution to the wind. I had a good feeling about Collector Card Games, even though sales history was terrible. I reinvested. Two months later, Pokemon came along and I rode that fad for all it was worth, and so on.

I've been running this store by the seat of my pants ever since. Of course, as you can tell from this blog; I do analyze things, I'm still pretty obsessive.

I suppose the difference is that I trust my instincts now more than I trust the math.

2 comments:

IHateToBurstYourBubble said...

Never quite know why. The weather? The economy? The stars?

It's the weather.

It ain't the stars... impossible to see them for the past week.

dkgoodman said...

I used to work with an electronics engineer who had been a consultant. His dad had built up this great consulting business and left it to my buddy, who also enjoyed it. But his wife...

His wife couldn't stand how the money came in in chunks. A chunk here, a chunk there, and she never knew if there was gonna be another chunk, or how long until the next chunk. So she made him take a salaried position, which is how he ended up the same place I was. Problem is...

He made less money on salary. Much less. She couldn't stand that he was making less money. So she wanted him to go back to consulting. Problem is, he'd blown away all his clients and it would have taken a long time to go back to the way it was. So he was stuck there with me.

I'm sure there's a moral in there somewhere. :)