The thing that has interested me the most about the explosive growth of small business in Bend, is how do these new businesses know how well they'll do? I mean, no one knows knows, but how can they even guess?

It's probably the most important guesstimate they'll make -- as accurate as possible an appraisal of the level of business they are likely to reach, as accurate as possible a guess of their customer base.

When I bought Pegasus in April of 1984, I'd worked here for 4 years, I'd managed the store for about a year. When I took home all the information, overhead costs and loan payments and the cost of goods, and worked out a sales level I would need to get to make even minimum wage, that figure came out at twice the level the store was actually doing.

But because I'd worked and managed the store, I knew that the potential was there. I knew the store had been stripped of inventory several times, and that it would take just the slightest inventory push and show of faith to make it work.

And I was exactly right. In fact, sales doubled overnight.

In opening 3 other locations, I had to make similar guesses, and in each case I slightly underestimated the level of sales.

When Linda and I opened the Bookmark, I had a base figure in mind that I thought we would do, and sure enough, that's what we did.

This wasn't luck, it wasn't wild guesses. It was knowledge of the marketplace, long-time residence in the town, research.

I believe I have a good inner compass on these things. I trust my intuition. But that intuition is based on lots of experience and knowledge in my field.

I can't imagine moving to another town, opening a business where I had no experience. I think the odds of getting it right are pretty small.

That's why I think Bend has lost perspective.

I'll give you an example. When I bought the store, we probably had 50 comic subscribers. Over the next 10 years, this base of support slowly but surely increased to about 100. I would gain a customer, lose a customer, gain two, lose three, gain four, lose two. That kind of growth.

Suddenly, in 1995, I had 250 subscribers. Another store in town started selling comics and he also had subscribers. I figured there were two possibilities -- either that I had the 250 true readers or that the rest of the newcomers were fluff, doing it because their friends were, because it was cool, because they thought they could make money. When it all imploded a year or two later, the base went back to -- you guessed it, 100.

When we opened the Bookmark, I had in mind a base figure, which we immediately achieved, and a pie-in-the-sky figure that 4 years later we are nearly approaching. This kind of estimate takes perspective, intuition, knowledge, and experience. So on a scale of 1 - 10, with 10 being maximum potential, we started at about 3.5, and have reached 8.5 after 4 years.

If I had to make a guess about Bend, I'd say that retail was built to a level of, oh, say, on a scale of 1 - 10, maybe a 25. Yep, about two and a half times the maximum potential. I doubt very much we'll even get to a 10 in real sales. We just lost perspective, all the newcomers brought preconceptions that just weren't realistic. We are going to see a whole bunch of businesses go down the tube.

Why should I not trust my instincts now? I've lived in Bend my whole life, and had a business in downtown Bend for 27 years. I've opened and closed other businesses. I think my perspective is pretty accurate. Compare Bend to towns with twice the population, with industry, with interstate highways, with colleges, and you know Bend has gotten too big for it's britches.

So how do these new businesses know how well they'll do? Since they just moved to Bend, since they've either never run a business before, or haven't had experience in the type of business they open? They don't know. They have no perspective. They don't know the base level of business; all they've seen is the fluff.

I'd bet, right about now, a bunch of new businesses are starting to get a glimmer. There is a chill in the air, and ain't just the temperature.

I need to rent some comedies.

Just finished, the Religion, about the siege of Malta. Goriest book I've ever read. Then, each night, sat down and watched The War, which is the goriest documentary I've ever seen. It was almost too much. I almost skipped the last episode, which I knew would contain the Holocaust and Hiroshima, but I'd already watched 200 hours or so it seemed, so I saw it through.

It will probably sound churlish of me, but I just didn't like The War as much as I thought I would. Burns and Wolfe were on C-Span, and if ever writers were treated like rock stars, it was them.

I'd admired the Civil War greatly, so what happened?

As much as I respect and admire the folk they profiled, I still felt I was getting just snippets of the war. Then huge brush strokes of history from the narrator, of events I already pretty much knew.

I also knew about as much of the Civil War history, so why didn't it work this time?

I think it was because it was missing the eloquence of the historians. I can listen to Shelby Foote for hours....I know they were trying to get away from the talking heads, but its hard to beat the pure presence and gravitas of some of those guys. And the scratchy jazzy background just didn't have the same resonance to me as the fiddle music in the Civil War.

As profound as the witnesses were, as important as the events, The War just didn't have the impact on me that the Civil War did. Except to realize that we've probably never shown the respect to these men and women they deserve -- my generation, the baby boomers, especially must have seemed like spoiled brats. And to be reminded that we also didn't give up the respect the Korean and Vietnam veterans deserved either, until much later. I hope we've learned from that.

I want to make it clear, I thought The War was a hugely important event, and better than anything else on T.V. It just didn't floor me, the way the Civil War did.

Except for the violence, which I believe needs to be shown. War needs to be shown for the senseless horror it is. My generation grew up watching John Wayne heroically charging the sands of Iwo Jima; if this generations sees the mangled, gory mess, maybe we'll think twice before we throw our young men and women into the fray. If it is necessary, at least we should be aware of the cost. Not the neat, tidy John Wayne movies of my youth. Let us be aware from the start of what we're asking.

I was impressed that Burns and Wolfe were willing to show the true horror of war, or at least give a glimpse of it. I felt I had to honor that by watching it all the way through.

For someone who rarely manages to leave his own store., I sure talk an awful lot about commercial real estate.

Yesterday, after picking up my car from Les Schwab (I had nails in both back tires, a real accomplishment), I decided to take a little driving tour.

First, I noticed that the space that I was going to rent on November 1, didn't look even close to ready. I'm going to be watching to see how long it takes for someone to fill the spot I was looking at.

Then I drove south on 3rd. Fred Meyer always seems busy, and the satellite stores are amazingly steady. There seems to be a fair number of vacant lots for sale on 3rd, both north and south, and signs mentioning retail. But none of them seem to be actually being built.

I came in from behind Cascade Village, and noticed that almost all the back and middle retail slots were empty. I took a look at the 'available' slots on the sign, and counted 13 spots open out of 43, with 3 more not yet open. Out of the 43, 10 were massive big stores like Best Buy which are a different case, so by my count 13 out of 33 spots where a small business could come in were empty.

What begins to sink in is that are plenty of retail spaces available, all over town, even in the downtown area. When you look out the windows of Pegasus and you see tenants who are actually being evicted even though they're willing to pay the rent, when you see cranes on every corner, and cars and passersby, and so on, you begin to think that everyone is just jostling for space. But there are plenty of spots open to rent.

But almost none of them are appropriate for walk-by traffic, which is kind of sad. Really, the big box centers are destination stores. The strip malls are destination stores. Both malls, which were once pedestrian friendly, have turned into big box centers.

I drove over to the west side, drove through N.W. Crossing, was again unimpressed by the traffic.

The car traffic is really bad on the west side, folks. And I saw 2 pedestrians in the entire west side; actually saw way more pedestrians on 3rd (though half of them looked homeless.) I actually saw more pedestrians on the east side. So I call B.S. to the pedestrian thing.

The trees on the west side are nice, though.

Still, there is a sort of unattractive hodgepodge to it all. As if grafting completely different styles to each other. Grafting in the word that came to mind. Old next to new, in a chaotic way. Sorry, not that great looking. And all the unfinished lots need to be filled in and cleaned up to reach any kind of potential attractiveness.

I poked my head into an office, and started talking to a long-time commercial real estate manager. About half way through the conversation, when I realized she was being amazingly candid, I informed her I had a blog where I talked about these things, but I could tell she didn't really get what I was saying, so I feel compelled to stay vague about her identity.

Suffice to say, that just about everything I had been assuming from the outside, she pretty much confirmed. And she had nearly identical views on many of the subjects -- so even though she had different experiences, she had reached many of the same conclusions.

One thing that surprised me was when she mentioned the 'lord of the manor' syndrome. She was talking about owners who felt they could hire managers and employees, and be an absentee owners.

I came up with the same phrase years ago, used to describe my own behavior. I thought, when I had 4 stores, that I could plug a manager in each one, and then float from store to store as needed. I would poke my head in the door and say, "How much money we make today, guys?"

Needless to say, it didn't work that way.

There were a lot of other parallels in our thinking. Not sure if that is just a reflection of long experience, or just a similar way of thinking about things. Always helps to know that I'm not very far off base. In fact, I was making conclusions about some of her businesses which were right on, even though I had very little information. I was just looking at common factors.

Very validating.

There is still plenty of unfinished business to Bend. Still plenty of locations that need to be upgraded. Still plenty of unfilled spots. Still vacant lots.

In a way, I find that comforting.

In the past, I have found the biggest danger to the overall health of my business, is the money I have committed but not yet spent.

There are all kinds of advantages to making bigger preorders, to buying in bulk.

1.) I usually get the best price.

2) I endear myself to my wholesalers, which often pays dividends when I need favors or help: I position my store in their minds as a 'player'.

3.) Sometimes I get a better mix within the bulk, with more flexibility. For instance, the ability to make sets of things. Or to vary pricing, based on quality.

4.) I more or less guarantee myself a supply even if the product runs short.

5.) I get it at the earliest possible shipping date. It is order once and forget about it until it arrives.

And so on.

But I am in such a small industry, that whatever commitments I make in advance I simply must follow through. Once in a while, I can try to beg off, or cut orders. But if I do that, any goodwill I've created disappears, and the wholesaler will be much less likely to extend me credit, or the benefit of the doubt, or make any special effort in my behalf, the next time. I can't just find another wholesaler in comics, for instance, because there really is only the one.

It's usually better to take the damage and try to do better the next time.

Twice I was almost done in, almost destroyed, by huge optimistic orders I made when sales were humming along, but which arrived after a total collapse in business. Both times, I had no choice but to accept the material. Both times I went deep into debt, and was unable to ever sell the excess product for a profit.

The window is shorter, these days. Which helps. But the problem is always lurking.

My usual reaction to doubt is to start cutting the preorders. I don't have to actually cut the amount of overall material much; I just order after it comes out, instead. When I order off the open market I can order what I want when I want. As long as I'm willing to take slightly lower profit margins, and accept sell-outs, and maybe receive the product a week later and so on.

But these are small and very manageable problems, pretty much, and I've found it well worth my while when things look to be tight. I was one of the first sports card dealers I know of that went strictly through a wholesaler instead of ordering in bulk from the publishers, for instance, and I'm one of the few survivors of my era.

It was how I handled the last three bubbles, and it served me very well. I may not have made quite as much money as I would've if I'd been ordering in bulk from the makers, but I escaped with very little damage on the downside.

A fair trade, I think.

The comic industry has changed enough that I am no longer hostage to new hot titles I can't get. I have tons of graphic novels collecting evergreen stories, and usually can get get reorders of monthlies if I need them. And if I can't, so be it. There is always the next week's comics and the next.

I have access to so many toys and cards and games and books and so on, that making large preorders isn't necessary.

So I've decided -- starting this month for November/December preorders -- to cut down to the minimum I can get away with, while keeping my reorders at high levels. If business slows, I can easily adjust the reorders.

Because...well, it just is looking weak out there to me. Has slowed just a little at the cash register, not enough to panic, but enough to concern me.

But, it just seems really clear to me that no one in retail is going to escape the consequences of the bubble bursting.

No one.

I love the idea of a Bust-O-Meter for downtown businesses. If it wasn't so mean-spirited and filled with karmic land-mines, I'd do it. (Yes, I'm superstitious that way. I knock wood whenever I say the wrong thing, or someone near me says the wrong thing....either way too positive or way too negative.) I cringed when Paul-doh cheered the demise of the Shire -- bad karma, man.

Still, in my head, I keep a running Bust-O-Meter. Scale of 1 - 10.

1.) Are they locals, or have they lived in Bend long enough to get the flavor? Are they from a big city, and thus have over-inflated notions? Are they from a small town, and thus have over-inflated notions? Do they have a notion of the seasonality of Bend? The neighborhood layouts? Do they realize that most longtime Bendites consider downtown Bend overpriced? That they are under the impression there is no parking? That we've gotten houty-touty? Do they have a way to get locals to their store, or are they depending entirely on the rich and the tourists? Are they aware how much turnover we've seen? How many longtime businesses have quit lately? That gauging success on the existence of stores that have been around for only a few years is tricky?

2.) Do they open within a reasonable length of time? Any longer than 3 months, and the Bust-O-Meter starts going up. A real, work-a-day business would probably contrive to open on the same day the first month's rent is due -- or even get that free. I can't imagine paying rent month after month without bringing in income. A sign that the owner has more money than sense.

3.) Are they focused inside or outside? Do they seem to spend all their time and money on fixtures and accouterments? On recipes and systems? On playthings and computers? Do they talk about the interface with the customers? I always have to make it very clear to my employees that while it's important that all the procedures get done, never, ever put the procedures ahead of the customer.

4.) Are they spending too much money in advance? Are they leaving any space, time, money for mid-course corrections? Do they have so much money they just throw money at every problem, instead of looking for a lower-cost solution? Too much money being spent means not many creative solutions are getting done. It's just a big giveaway that the owner is probably not very flexible and adaptive.

5.) Is their product appropriate for the size of the town? Have they done the research? Are they too narrowly focused? Is it all 'high-concept'? Are they realistic about the customer base? Do they have enough diversity and variety to appeal to all the citizens of Bend, or just the 'upper crust?' Are they competing head to head with the chainstores? If not, do they have a niche product that can actually support them? (Niche being something that Target doesn't carry because they calculate there's no money in it.)

6.) Is the owner working the majority of the hours, or have they hired managers and too many employees?

7.) Do they open weird hours and close weird hours?

8.) Location, location, location? Are they a 'drive up' business that opened in downtown Bend, (a 'walk-by' zone) or a 'walk-by' business that opened on Greenwood (a 'drive up zone? Are they a destination store that could get just as many customers in a lower rent area and the only reason they're downtown is because it's 'cool?'

9.) Are they treating it like they know it's a business, or does it seem like a plaything or a hobby? Is it a dream, or a business? Do they have other options? (Like going into a marriage with the thought you can always get a divorce?) Do they give an indication that they understand that it will be hard work?

10.) Is the space they rented too big? Too small? (It's almost always the former, not the latter.)
Did they pay too much? Unfortunately, almost anyone who has opened a business in downtown Bend or the Old Mill is paying too much, currently, and it's beginning to infect places like 3rd Street.

11.) Do they seem to think that advertising and discounting is the answer? Do they talk about 'service' as if it's a magic mantra that will protect them from all harm? Have they built into their business plan so many free services and guerrilla marketing that they face burn-out down the road?

12.) Are they opening the same damn business that five other people are opening within a block or two? Do they think they are so inspired that -- even though plenty of other people are doing the same, they'll be the one's to succeed?

13.) Are they aware that -- it doesn't matter how charming they are, how hard working, how knowledgeable, how great their fixtures, their locations, their merchandise -- that it's day to day sales that count. Money over the counter. And that ain't easy. Do they have realistic expectations of income? I've always thought waiting years for a profit is nuts. So is expecting to take out a lot of money, even over the long run. You've bought a job, probably a job that pays way less than the job you left. Have you invested too much for a 12.00 an hour job to ever get it back? Will you be satisfied making less? If you are planning to get rich, opening a small business in downtown Bend probably isn't the way to go about it.

There are more factors, of course, but those are 13 off the top of my head.

I've heard all the statistics about business failures, the 2 year, the 5 year. And for Bend, I think it's all Bunk. I think the 'survival' rate is much higher in the short run that most of the statistics, but much lower over the longer run. I think Bend businesses almost always last 2 years and very often last 5 years. But I'll give credit to anyone who last 10 years or longer.

Yesterday, in a toss off line to express my skepticism that a Warhammer dealer could be turning over his inventory more than twice a month, I said that I was lucky to get turnover once a year.

IHTBYB questioned me on this figure, and when I took a moment to think about it, I realized he was right.

While I'm not attempting to be precise, I do want to be accurate.

So, in the interests of accuracy, my store does turnover more than once, more than twice, actually.

Comics and card games especially turnover many times of year.

So why did I say that? Because over the last five years or so, most of the new product lines I've added have fallen more into the once a year category. And that is where my concentration has been. I guess I just started thinking and assuming the whole store was like that. Because it really changed my focus.

It was very freeing to realize that I could add more sports cards or anime or statues, etc. and that I could accept slower turnover as long as the other parts of the store were functional, as long as I was paying within cash flow, and as long as the costs in space and time and energy weren't out of control. The diversity has smoothed out the seasonal and industry peaks and valleys, and has given me a chance to catch passersby with product (instead of just destination regulars.) Bottom line, it works.


Meanwhile, Bilbobend wondered if all the store owners in my industry are somehow duplicitous, because I rarely get a candid and frank discussion out of them. No, I don't think they are any more duplicitous or self-deluded than any other store owners. Store owners as a breed are canny, savvy, and keep their cards close to their chest. I personally don't believe that is necessary, I personally believe that shared information is more valuable in the long run than the occasional competitive nugget the other guy might glean. But I more or less fell into this business, and have a -5- type information gathering personality. (I think like a squirrel, the more info (nuts) I gather, the safer I'll be in the winter.)


Finally, Bilbobend mentioned that he no longer goes to Powell's and wondered why I kept quoting the 'Powell's model' of business.

I had a strange reaction to Powell's. I wasn't impressed. As you might imagine, I read a lot of science fiction. I mean tons of it. Going back to it's very crude beginnings, all the way through the pulp age, on through the 'New Wave' of the sixties, and down the the great fiction of today.
I'd heard about Powell's for years, so when I went to the S.F. section I expected to find:

1). Books I'd never seen, but which grabbed me.

2.) Books I'd been looking for, but couldn't find.

Powell's satisfied me in neither case. They had more books, but even that didn't impress me.
I don't think I was jealous, I just realized that having a block of books doesn't necessarily make you any better than having half a block of books, or even a few thousand square feet. I can only read one book at a time, and I've yet to find a bookstore where I couldn't find a book I wanted to read.

My reaction was, "Big deal." My wife loves the place, and never misses a chance to visit, however.

As to their model. Yuch. Buying books assembly line. Mixing new and used. Neither one turns me on, much. I think the used brings down the quality of the new. Carrying both new and used makes all kinds of sense, in fact, I think that the majority of independent bookstores will eventually go to that. But mixing them together on the same shelf? No thanks.

I think what my wife's bookstore is doing is right on. Her used books look almost new, half the time. We have a straightforward trade policy. And we are getting plenty of books in the door. Powell's is welcome to his multiple operations and employees. Too corporate for me.

But other bookstore owners seemed enamored with the Powell's model.

My Micheal Powell story. He used to come into my store to buy ARCHIE comics for his kids. Now ARCHIE comics sell randomly. They will sit for weeks, and then a whole bunch will go out. So I was selling out occasionally, which he grumbled about.

Finally, he came in one day and basically bawled me out for not having enough ARCHIE. I was embarrassed, and realized he was right.

I've never been out of ARCHIE comics since.

I've never seen Micheal Powell since....

There is one line of product that absolutely confounds me. I've talked about it before; I even carried it for a short time. I thought very seriously about carrying it again. And if I had opened my second store, it would have been a major part of it.

But the truth is, I can't figure out how what I've experienced, and what I know about business can be so utterly divergent from what others experience and from what others tell me about their business.

Warhammer, by Games Workshop.

This is a British company that creates miniature games. You've seen old movies where some nutty Englishman has a whole room devoted to a landscaped table of a famous battle, and he moves intricate armies around. Well, that's Warhammer, only in the S.F. and Fantasy realm. They have entire stores that sell nothing but their own product -- in metro areas of the U.S. and from what I understand, they completely dominate the gaming landscape in England. In fact, from what I understand, they pretty much crushed the competition partly by finding out which towns sold the most of their product and then opening company stores there.

The product itself is pretty cool. Nicely sculpted and imagined figures, that require painting. Thoroughly imagined worlds and game systems. It's very expensive, but you can almost see why.

But it isn't something you can dabble in. It's more of a lifestyle than a hobby. The fans are...well, fanatic, and they insist that any retailer that carries Warhammer have everything they want.
The company, up until recently, was obnoxiously aggressive.

My experience was: I had customer after customer tell me I should carry the line, and so I went out and bought 2 racks of figures for around 5000.00. And then they sat there. Week after week. The customers would ask, "When are you going to get more?" when I had yet to sell any I had already bought.

I would get a call from my Warhammer rep every few days, hounding me to buy more figures.

"But I haven't sold any!" I'd say.

"What's wrong with you?" the guy would exclaim. "Everyone else is selling them."

I was stunned that a rep of a company who was trying to sell me product would yell at me, hung up, and decided to quit the line.

I just refused. I liquidated the product without a second look back.


A few years pass, and Gambit Games opens and fills a wall with the stuff. By all accounts he's doing great. And then a few more years pass, and Gambit Games is closed. I'd hear constant reports about how the prices would constantly go up, that entire lines would be discontinued, how you had to carry a lot of dead product in order to carry the product that sells. Inventory creep was a huge problem.

I was saved from even thinking about carrying it by the huge expense of money and space and time it would take. On the bulletin boards, some stores would swear by it, and just as many stores would swear off it. Brad at Gambit more or less threatened to destroy me if I dared carry his precious Warhammer, and I just backed away.

When Brad went out, I thought about carrying Warhammer for a few weeks. The company itself seems to have reversed course and is willing to work with you. But I kept getting reports that,
1.) Someone was going to sell in LaPine.

2.) That the hardcore were going to create a buying club, and buy online.

3.) That D's Hobbies was going to buy Brad's stock, and carry the full line.

So I backed off.

A few more months pass. As I'm traveling around the Northwest, I start visiting stores. I go into one store, and the guy tells me he sells 5,000.00 worth of Warhammer a month. I look at his inventory, and he has -- maybe -- 2000.00 worth of product. I've gone back since, the the inventory hasn't increased.

So I'm supposed to believe he is turning his Warhammer over 2.5 times a month? Without him being inspired to buy more? (A turn of 5 or 6 times a year is considered pretty stellar in my business. I turnover my stuff maybe one time a year because I'm following the 'long-tail' model).

So that utterly confounds me.

Then I have a customer who comes in and tells me that a store in a very small town is selling 40,000.00 in Warhammer a month.

"Bullshit," I say.

At the peak of sports cards, I had four stores, and there was a single month where I sold 1000.00 a day among the four stores.

"Total Bullshit," I say. My entire store doesn't even do close to that much, including comics, graphic novels, toys, cards, games, books, and everything else in a downtown Bend store with great foot-traffic and 27 years of experience.

"Complete and utter Bullshit!"

But the guy insisted it was true. Now, I'm utterly confounded. I don't believe it.

What is it about Warhammer that causes everyone to lose perspective?

Warhammer is like a beautiful, alluring woman across the room who you suspect just might make herself available to you if you dropped everything you had and committed everything to her, but who would be high maintenance and would probably cheat on you and after she had emptied your bank accounts, would leave you.

But damn, she's a beautiful woman!

I think it's a really good indication that I should stay far, far away......