Friday, October 1, 2010

The framework is in place.

I wrote the following a couple of weeks ago, and proceeded with the plan:

So now that I have the framework in place at the store -- enough shelves to do the job on boardgames and new books -- I need to decide on a budget for next year.

I mulled it over all weekend, going back and forth on whether I wanted to be aggressive or careful.

After sleeping on it, I came to the conclusion that I want to try for a growth budget. What I mean by this, is a budget that fully stocks the store for current sales level and also gives me enough material for growth.

This is fairly aggressive, but it doesn't require that I bring in entirely new product lines, which is even more dangerous. In fact, a growth budget can mean that I'm just buying the best stuff I can get within current product lines.

It means ordering proven sellers and making sure they are in stock at all times. Possibly even getting extra copies; possibly even buying product that is similar, or an offshoot of something that is already selling.

Mostly, though, it means buying at my current average sales -- . Simple enough, right? Except my average sales over the course of a year are probably not met 4 months out of the year. Maybe another 4 months of the year they are barely reached. The big four months -- June, July, August and December -- pull the average up.

So if I try to spend the AVERAGE SALES level throughout the year, I'm going to fall behind or barely meet my expenses for much of the year.

The alternative is to play it careful, order much less in the off months. Which is what I've been doing.

I don't think the more careful strategy is working very well. I'm breaking even, all right, but at a lower sales level.

What I've noticed over and over again over the years is that my growth budget almost always create larger sales and is usually not out of bounds. It just means that I'm shooting more for breaking even on a higher sales level, than trying to make an extra profit on a lower sales level.

As I said above, the real challenging budget is trying to bring in new product lines -- which is what I've been doing since just before the Great Recession started and throughout most of it's duration. Because I could see that current product lines weren't going to be sufficient to feel comfortable with enough of a cushion in the profit margin.

So I've been increasing my inventory in boardgames and new books, which is a very costly proposition. But I've pretty much accomplished this, without going into debt.

Over the weekend, I looked at my order forms, and realized that a growth budget would pretty much match getting all the proven sellers back in stock and keeping them there.

At first, I was thinking I'd start the new budget on January 1, 2011. But then, I realized there wasn't a good reason not to start with October and November, especially with Christmas coming to back it up. In effect, getting much of my Christmas product early enough to make a difference in the fall.

Yesterday, I wrote down all the boardgames and dice and card game material that I was low on but that I new were proven sellers, and decided to see how much it cost to get them all back in stock.

As it turned out, getting 2500.00 worth of games, would only be a couple hundred dollars above the average monthly budget -- and this after months and months of stocking with the more careful budget.

I think new books are going to probably be similar in range. I'll probably do those next week.

Thing is, none of this product is risky as far as sales are concern. They are only risky in the sense that it is a more aggressive budget with possible ramifications for cash flow and credit.

I'm comfortable that I can manage those -- so I'm going forward with it.

One last thing, it gives me three months as a test case, with December as a backup retreat position. If it turns out that my growth budget is a little too much, I'll know by January 1, and be able to do something about it.


As I said, I did the above orders. I now have a couple of fill-in-the-hole orders to do, one for games and one for books, and I'll feel like I have what I need in place.

From then on, whether I go with a growth budget of getting all the evergreens in stock AND attempting new and experimental; or whether I just keep the good stuff in stock with the occasional new thing; either way, the framework is in place to accomplish it, and most of the major spending has been done.

I'll need to make up some ground at Christmas to have a clean slate for next year, but that shouldn't be a problem.

All I can say, is I like the way the store is stocked and arranged right now, and it's a pleasure to come to the store and see it.


Leitmotiv said...

To add to my previous comment from a few days ago...

You mention that books, board games, and comics make up most of your business now. While books and comics have noticeable footprints in the store, you're board games remain hidden up above on the shelves. Certainly not easily viewable to the public. To the average non-collector, they'll miss this, since you store is brimming. It's a sensory overload to the casual customer.

It's different for the hardcore person who knows what they're looking for, but for the person who doesn't... you're current setup leaves a little to be desired. Personally, I think the board games need to drop down to eye level somewhere, and something else should go up in their current place.

Easier said than done, I know. Those board games are big. But it would make sense that if they are a healthy chunk of your sales, they should be a main part of your store and down on ground level.

Duncan McGeary said...

I don't know if you've been in the store in the last month or so, but I've got a bookshelf right at the door where I've put Settlers, Ticket, Carcassonne, Munckin, and other games.

I hear you.

But what's to be done? Cut product?

I was joking to Jasper yesterday, that I need everything to be at floor level, and not only that, I'd like to have it all at 'eye-level' -- you know, a strip of wall space from about 4' to 7' high, all the way around.

Jasper said, Nah, that would require too much walking.

I have to try to catch people eyeballing that first shelf and point out the games higher up the wall.

It's a catch-22: if everything is highlighted, nothing is highlighted. Not everything can occupy the prime locations, so you have to mix it up, which then makes it visually overwhelming.

What I REALLY need is a bigger store.

Leitmotiv said...

Definitely hear you. I have been in to the store last Saturday. I've noticed that small little table right in front that has Settles and Castle Ravenloft (debating getting that). But there have been many times when I've wanted to view the boxes up above.

Is it possible to swap something? Like those leftover card packs?