Tuesday, February 3, 2009

Opposite direction.


I really do seem to go in the opposite direction as everyone else. I'm really feeling like Pegasus is in a very good place right now. I'm trying not to be smug.

When sales dropped so drastically in Sept.-Dec. '08, I was sort of expecting it. My budget handled it, but I wasn't able to much more than that as long as I had a full-time employee.

Still, when I looked at this January, I thought it possible we would drop even more, and started to prepare.

So imagine my surprise when I ended up the month with more cash profits than normal.

As it turned out, my sales matched those Sept., Oct., Nov. numbers, but since I planned for worse, it felt like there was a very comfortable margin.


So why does this always seem to happen?

I think it's because I'm always planning for this kind of economic atmosphere -- not because I'm naturally pessimistic, but because I've had my sales fall off the table -- dropping a third or more -- about 8 times in my career; which is probably about 8 times more often than any other business I know of.


Usually, it only takes one incident to put a business down permanently. But after the biggest and most painful drop (sports cards), I got pretty good at survival mechanisms. Comics were almost as bad, but I managed that, too, barely.

Then, I basically broke even on magic, non-sports.

The last three times it happened (pogs, beanie babies and Pokemon) I wasn't hurt in the slightest. But I was still paying off the huge debts from the previous bubbles (card and comic bubbles), so I didn't exactly prosper, either.


The first growth period, I was mostly just trying to catch up (starting with a very low level) and then I capped it by expanding and opening 3 more stores. Huge mistake. The second growth period I was just trying to dig my way out of the hole.

But this third growth period was all about fully stocking the store, paying off debt, and trying to get a bit of cash in the bank.


Here's what I think happens, which makes me feel like I'm doing well in bad times, and makes me feel stressed and threatened in good times.

In good times I'm constantly experimenting, trying new products, moving the merchandise around, changing policies. I'm usually attempting to diversify, or bringing in a new line of inventory, and seeing what works. I'm constantly making bad decisions, or ordering mistakes, in the attempt to identify new things. I make a conscious effort to support the slower lines of products with the profits from the hot products.

After all, if I'm going to take damage, it makes sense to take it when sales are good and mistakes can be covered.


Then, when business slows down, I'm pretty aware of what is working and what isn't working, and I start flowing in the other direction. Supporting the product lines that have proven out, letting the slower lines fade a bit. Being much more efficient and effective, making fewer product mistakes, watching the budget.

And strangely, I'm finding myself with enough cash to actually start to support the lower selling product.

In other words, when everyone else is retreating, I think it's the moment to show your strength, to really make the store seem strong and well stocked.


You know what? I don't believe I'm being smug at all. I'm certainly aware that things could get worse -- I'm knocking wood between paragraphs as I write this -- but I still have a bit of margin to give, I still have some of that 'velvet.'

I think it's more a matter of personality. While I may not have enjoyed the cash and comfort of a growth business on the way up, I've very purposely traded that for a more secure feeling in a down market. In other words, that feeling of hopelessly drowning when times are bad is much worse to me than that little glow I get when things are good.

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