Saturday, August 16, 2008

100 degrees but Fall billing.

Pegasus Books in that stage of deep summer where anything I order will come due in September. Pretty much no matter what I do, I'll probably see a 20 to 25% drop from the current level of sales come Fall.

Whatever I spend right now will have to come out of the lower cash flow in few weeks, so if I want to earn an August profit instead of letting it get eaten up by a cash flow shortage, I have to cut back. So I have to wrench my thinking away from the summer phase and start thinking fall even though it's a 100 degrees outside.

Dog days of summer, pretty hard to get motivated.

I was going to write an entry called, 'In praise of inefficiency," about how letting things slide can actually work in my favor. I tend to make money by not spending it. Guessing actual sales, or seeing an actual cause and effect to spending, is just too difficult.

Besides, I can always see a million little things that could improve the looks of the store, and a million little things that I could add to the inventory. A million little ways to spend money.

It took me way too long to recognize that having the best possible store is not the same thing as having a profitable store. The goal should be to have the best possible store that still earns a profit.

I've always said, there are three things every store has to do: pay the overhead, keep up the inventory, and hopefully earn a profit.

As anyone who has been in my store can testify, I've always put inventory first. Too me, everything flows from that. Secondly, I make sure that my overhead is paid in full and in a timely manner, and I consider my basic wages (the minimum wage part) as overhead. Only then do I think about profit.

I think the fact that I'm still in business 25 years later testifies that this is the right priority for me. I've seen businesses spend way more on overhead than me -- the best of fixtures, heavy advertising, many employees. I've seen businesses that obviously put the emphasis on profits -- they don't last long. And I've seen businesses that go crazy on the inventory.

While I was gone on vacation, someone came in and bought all the Pokemon packs. I came in on Wednesday, and realized that if I didn't order more, I'd be out for a week. Which has probably never happened since Pokemon came along about 9 years ago. But I also realized that someone else had bought a bunch of the little Pokemon figures I bought too much of, and that we have a whole album of singles we could turn people too, and that selling either would be more profitable.

It's agony for me to not have a product in stock that I think will sell. The final clincher was that a "new" wave of Pokemon is coming out next week anyway, so if I'm going to spend the money it might as well be on the new stuff.

I think I have always been a little too quick on the spending trigger. A little too eager to get the newest thing, to make sure no gaps develop, to be the "go to" outlet.

But by being just a tad bit more slow -- inefficient if you will -- I can actually earn a bit more profit.

I know that isn't true, exactly. I'm probably just messing up the terminology. But I do know that being Johnny on the Spot hasn't always been the right decision. And being "Mr. I'll Get Around to It Soon," sometimes has been.

Don't tell anybody....

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