RETAILING 101

When you winnow it down to essentials, there are 4 numbers I need to pay attention to. The last 3 numbers are predicated on the first number, which is the most unknowable. Thus making the whole enterprise informed guesswork and luck.

1). Sales. I can make a reasonable guess, and then plan, but ultimately I can be surprised by better sales than normal, or worse. I just constantly monitor them on a 3 month trend basis.

2). Fixed Expenses. These are the expenses that I simply can't change, such as rent, utilities, wages, etc. My overhead, essentially, and for me my fixed expenses ARE my overhead.

3.) Profit margin. Also something that I can only slightly change. These are fixed by the wholesalers, and I can influence them only by tiny fractions.

4.) Product purchases.

Sounds simple, doesn't it? Well, it only took 27 years for me to simplify it.

So really, out of the 4 numbers, I really only have total control over the last one.

Let's look more closely at how I buy. If I ascertain my profit margin, (I try for 50%), then I have roughly half of my sales total to spend on product. I split that in two processes; Pre-orders and re-orders.

Pre-orders. Frankly, these are pretty much fixed to within 10%. That is, 90% of what I order on a pre-order basis is stuff I simply must order. Either product that I have made a good faith bargain with my regulars that I will get for them, or product than any and every shop simply must carry. I can't shave Civil War comics too much without breaking that contract with my customers. So, at the end of every months orders, I really only have that 10% to try something new or to order something whimsical that I like.

I reserve 60% of the product budget for re-orders. Probably 10% of that turns out to be stuff I simply can't avoid ordering.

So in the end, the only number that is flexible is the re-order number. This where I either make money or I don't. 30% of my total sales.

I've gotten pretty good at the first number, my estimate. The second number doesn't change very much, because I gotten pretty good at controlling overhead. The third number, I've manipulated my profit margin to as low as I can get it, and it stays pretty consistent. My fourth number, 40% is pretty much fixed.

So it is only in the reorders that I have any real ability to influence things; and it is in this number that I consistently fail. I am always going over budget. I'm always getting the bright idea to bring in a new product line, or increase an old product line. I'm almost incapable of letting a product drop away once I start carrying it, which means that every new product is in addition to what I'm already carrying, which compounds the problem.

If I could ever fix on an amount for reorders -- that 30% of sales figure, and STICK TO IT for a consistent length of time, I'd probably make a decent profit.

I'd planned to do that on July 1, of 2006. Then I added new books. Then I added more games.

I'm ready to start over this March, which means that THIS WEEK's reorders are the first week to impact.

How am I doing? Well, I spent the number I have planned on, and also half of next week's budget.

And so it goes.....