Wednesday, January 3, 2007

Pouring rain outside. Weather like this just makes me want to hibernate. It's the perfect time to catch up on work, but the less work I do, the less I want to do.

Every year I spend spring waiting anxiously for summer business, and all fall preparing for Christmas. And every year, I'm just as glad when it's all over. It is actually almost easier to make real profits during the slow months, because they are more predictable --(always slow)-- and less risky. You cut back your orders to the miniimums, and then reorder as needed.


One of the first little business saying I heard when I started: " Too much success can be as bad as too much failure." Things get out of control, spending becomes more and more a risk, customer service suffers. We need these lull times to absorb and consolidate the changes.

I brought in sports cards in my second year of business, and they were an immediate success. Think of it this way. If you start out with 1000.00 in inventory, and you sell out, you are likely to buy 2000.00 in inventory the next time, and if you sell out, you are likely to buy 4000.00 in inventory, and so on right up the ladder.

How much money have you made? You haven't even made a 'gross' profit, much less an earned profit. You've plowed it all back into the inventory. Meanwhile, your overhead is probably going up, buying fixtures, bringing in employees, getting the support systems on line. The cashflow strain is enormous. Very dangerous place to be. The worst month I ever had in profits, was the best month I ever had in sales. I liken it to all or nothing pots in poker. You can win hand after hand, but if you lose that last hand, you've lost it all.

You can't really cut back, because if you disappoint too many customers, they'll just go somewhere else.

So slow times are necessary to the health of a business. As long as you know they're coming.

I was watching the former editor of the LA Times, (I can't remember his name) on C-Span, the other day. He made the case that a mediocre newspaper can actually make more money than a good newspaper. (Hiring more and better reporters, having them report from more and exotic locations, costs alot of money.) I've always thought this about business, too.

It is probably short term thinking, but I think many years could go by before the consequences come home to roost. When you own your own business, there is much more incentive to keep the quality up, because eventually you will be the one who suffer.


The Bulletin had an article about how we American's like to think we root for the underdog. They used the example of how we root for small business vs. big business (Walmart). The kicker was, we still buy mostly from Walmart, and if you show the slightest weakness, they dump you like yesterday's news.

I can tell you that if everyone who ever expressed a dislike of Walmart in my store didn't actually shop at Walmart, Walmart wouldn't exist. Just saying......

I've made my peace with Walmart and Target. I personally have never spent a dime in either store -- really haven't -- but I understand why other people do. I just try to have everything quirky and interesting and individualistic they don't have.


Second entry on my list of changes over the last 26 years: The Triumph of the Nerds!

It was already starting, Star Wars for instance had come out 5 years before I started. Slowly but surely all the nerdy things I've loved have moved front and center in pop culture. I can even see comics making that slow transition; I expect by the time I retire, graphic novels will be accepted by the mainstream.

I told this to someone the other day, and he laughed and said, "Isaac Newton and Leibnitz were the nerds of their day. It happens every generation."

And I thought of how Einstein became a pop culture phenom, even in his lifetime. All nerds should remember, the things they make fun of you for today, will be the things everyone is doing in the future.

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