It seems like the store always does well when the outside world is doing poorly. The Great Recession, the Plague, and so on.
I think it's because all my planning is for those black swan moments, which I expect to occur on a regular basis. As my friend, Wes, put it: "It's not a bug, it's a feature."
When things are going along normally, I'm usually pressing it to the limit. But when I see danger ahead, I start to moderate. I prepare. I cut down on debt and expenses.
If, after all that, sales don't drop as much as I expect, then I start earning unexpected profits.
With the Plague, I planned for a 60% drop in sales. Since I generally pre-order most our product by at least a month, this means that when sales didn't drop that much, we started to benefit. Thereafter, we went into the summer months which are our best months anyway. Product still came in slowly, not so much because I ordered less, but because it hasn't been available.
Meanwhile, it turns out the tourists not only didn't stay away, they seem to be coming in greater numbers than ever.
This, at the same time that I've boosted the inventory on the product they are most likely to buy--books. Not only that, but I believe that books are considered the right thing to buy during a quarantine, especially for children. We just happen to be in a Golden Age of young adult graphic novels.
The confluence was just right.
I also think people are more willing to spend in my store because I'm steadfastly open and have the inventory they want and...I do believe they have more money in their pockets because they aren't spending it on other entertainment--movies, plays, concerts, and such.
I think we're going to be able to compensate for the months we were closed--if we haven't already.
I'm not taking any of this for granted. I think this Fall could be pretty bad when the tourists stop coming. I also believe that at some point this country will have to take the bull by the horn and close up for a couple of weeks.
At least, that's what I'm preparing for. If not, well, once again I will have prepared for the worse.
Subscribe to:
Post Comments (Atom)
2 comments:
Another reason that bad times don't hurt as bad as they should. When things are going normally, I'm always pushing for higher sales--which is inevitably at the cost of making profits. That is, I accept lower profits in order to push sales.
So when there is a big drop, we are dropping from a higher level, which if we are lucky, will still be above our break-even point. (Fixed expenses divided by profit margin.) It's a matter of living modestly even when growing.
In a way, planning for "a" Black Swan event is an oxymoron. But I'm not trying to predict a specific Black Swan event, just the likelihood that there will be "some kind" of Black Swan event on a regular basis.
Post a Comment