Sunday, July 19, 2009

Borrowing off a doubtful future....

It's all very odd. Mid-afternoon, I looked out my door and saw empty parking spaces extending two spots past the alley west of me. 8 spots in a row empty, in Mid-July on a Saturday.

When I went home last night, the parking garage was sparse. "Oh, Oh," I thought, for the sake of the restaurants.

On the other hand. Get this. I had 146 people in the door, which is a ton of people for a non-special event day. For the first two hours of the day, I had 10 or 15 or 20 people milling about my 1000 sq. ft. store. That's too many for me to be able to deal with effectively. My business depends on being able to talk to interested customers, not being a traffic manager.

The per-customer average was very low, though. Almost record foot-traffic versus average sales. That seems to be my fate this summer. I suppose I should be thankful for the 20 or 30 people a day who buy 2.00 or 3.00 worth of used books. I should be thankful for the average sales.

It's hard to reconcile the two experiences -- tons of foot traffic, empty parking spots.

As I've mentioned, I was having a hard time getting a read on summer, and I waited until this week to come to a conclusion. I think summer is sort of a dud. At least for me. Mostly in terms of expectation.

For me, always, it isn't about the cash coming in the door, it's how much I spend. I've made a couple spending mistakes. I bought 5000.00 worth of novels in January on my credit cards. I've paid that down to 1500.00, and with three more months of 500.00 payments, I'll be back to zero debt.

And at the beginning of summer, I spent 2500.00 on "Sale" items; which didn't pan out, and will cut into about half of what I was hoping to profit in July. But it's not too late to cut my spending for August, and now that I feel I have a good sense of the dynamics, I think I can recoup some or all of that profit.

So, in pretty good shape. really good shape, I just hate to say it out loud. I never thought I'd say this, but I'm glad I went through those tough times in the 1990's, because it's kept me from being tempted to borrow off the doubtful future.


Duncan McGeary said...

I know talking to other business owners, that they don't try to "come to a conclusion" like I do. They play it as it lays.

I don't know how they do that. To me, the uncertainty of not coming to a conclusion and not being able to make decisions based on it, planning based on it, is unsettling.

I mean a conclusion that I'm willing to follow through on for a month, at least.

Because the other thing I don't like, is constantly being whipsawed up or down, or changing my mind.

But....I held off, and held off. Because this is a weird summer. It's the customer counts that kept fogging the mirror.

By mid-July, I'm about 5/6th through the spending period for summer. Waiting another two weeks to see how things will go -- which I would have to do even if I was withholding my guess, would take us to within 10% of the end of summer in terms of spending.

So I'll make the decision now, and if August is better than I expect, it just means I'll have more cash to replace inventory in September.

Duncan McGeary said...

It probably sounds strange to declare summer over, but from a planning standpoint, it effectively is.

This week was so slow, that it forces me to stall this coming week to see if it's an anomaly. If this coming week is a huge upsurge, then yes, it gives me another week to make big reorders for August.

More likely is that it will be inconclusive, so I'll want to wait another week. By then, there is effectively only one week left that would allow me to impact on summer business --

Anything after that, say after the first week of August, wouldn't arrive until close to the middle of August giving me a very short sales period; with the double whammy of having the bills come due in September.

Better to just keep accepting the stuff I've already ordered, reorder the stuff that needs to be reordered.

If I have a bang up first ten days of August, like I did the first ten days of June and July, save up the money, and restock the store in early September when I'll need it.

Summer will sell or not sell based on customers, more than what I order. But the slower months are much more dependent on what I get in. So let summer play out, and then be very proactive in the fall.

So, as far as making any big decisions, summer is over. Lay back and enjoy it.

Duncan McGeary said...

I've had the luxury of the last 8 years or so of looking at what's offered and asking myself, "Would that sell? Would that make a good addition to the store?"

But I spent most of my career asking two other questions, which were a completely different focus.

"If I don't order this, is it likely to disappoint anyone?" (With the understanding that if there turns out to be a demand, I can always order it later.)

And "Is this deal just too good to pass up?" What I mean here, is a huge discount on a product I'm sure I can sell.

Those are too very different emphasis's than asking, "Would I like to buy this because....a. I think it will sell. b. I like it. c. It will add to the overall aura of the store. d. every other reason I can think to buy something.

I'm just having to change my mindset, which is hard to do -- the longer you do it one way, the harder it is to do the other way.

Duncan McGeary said...

After ten years of the '90's, where I had no money, no credit, and had to order the least amount I could get away with, the store did need to be revived.

Which I've done. I took all those horrible lessons, and applied them.

The store is well and truly stocked, and I'm pretty sure I can keep it from being run down again. I have the savings and credit to keep it up during low or high cashflow.

So the trick from here on out, probably to the end of my career, is to maintain the store.

Incremental improvements still will need to be done. Taking advantage of opportunities, changing the mix, all that can be done within cash flow, now.

So, even if business were to start booming again, I'd try to stay with the "If I don't order this, will it disappoint anyone" rather than "Would I like to order this?"

I just need to transition into the new/old mindset, which will take some doing. I'll fall off the wagon occasionally (like ordering the 5k in novels in January on my credit card) but I just need to get up, dust myself off, and get back on the wagon.

blackdog said...

Dunc, you need to get out more. Develop some interests besides the store and writing about the store. Yes, of course a good businessman needs to keep track of his sales numbers ... but doing it week by week, day by day, hour by hour?

Pardon me for saying so, but isn't this getting a little, uh, obsessive?

Duncan McGeary said...

"Pardon me for saying so, but isn't this getting a little, uh, obsessive?"

You think?

Duncan McGeary said...

Obsess, I will, either here or privately.

But I'll believe you that it's getting old for you guys, so I'll try to scale it back.