Operations

Top 5 Mistakes Retailers Make When Writing A Business Plan

Posted on by lloydbrown
Entrepreneurs apply for a business loan

Since I’ve been writing plans for others who want to open a store, I’ve read a few business plans that clients have assembled themselves, and I’ve noticed some consistent gaps and omissions. Let’s talk about them so that if you decide to undertake this huge effort yourself, you don’t make the same mistakes.

Mistake #1: Using a Template

A template can have its uses. It’s good for establishing structure. It’s good for reminding you of topics or needs you might not have thought about in your excitement over operations (the fun part of the job for most people). But templates you find online aren’t meant for you and your situation. General business advice might not apply here. Relying on it can lead to inaccurate assumptions about how the industry works or how your store should operate.

For that matter, I’ve seen templates that talk about game stores or game centers, and they’re clearly talking about other industries—like video games or even casinos. They use general jargon that’s meant to sound specific but could apply to any business.

Mistake #2: Insufficient Market Research

Sun Tzu said “If you know the enemy and know yourself, you need not fear the result of a hundred battles.”

I spend quite a bit of time reviewing local competition before writing a plan for my clients. I always ask clients about their local game stores, and they often under-estimate how many game stores are in their area. I use my Store Comparison Checklist as a guide.

You can find these stores with a simple google search of “table game store” and your city’s name. You can sometimes find more through the large retailer locators on the Wizards of the Coast and Games Workshop websites—if they’re not carrying their products, don’t worry about them.

Often, the existing stores are weak and not a worry. While they’re fewer in number and prevalence than they used to be, the Magic “clubhouse” style of store, with minimal inventory, weak branding, partial open hours, and unattractive fixtures still exists (and likely always will because of how cheap they are to open). For one of my recent plans, though, I found a store that was virtually identical to the plan proposed by the client—and they were awesome at it. The only saving grace was that it was almost an hour away.  That brings up a crucial point—if you’re not better than the competition at something, you’ll have a hard time reaching your full sales potential. The last thing I’d want to do, for example, is try to plop a game store in the middle of Gnome Games’ territory.

Competition is okay. Strong competition near your intended location with a great deal of overlap with your business model—the combination of these factors creates a problem.

Mistake #3: Underestimating Operational Costs

You can’t anticipate everything. Most people get the big things: rent, payroll, cost of goods. But they project low on most of these costs and they overlook loss (which includes shoplifting but also damages, distributor errors, POS mistakes, and others), cleaning (you’d be surprised how fast mop-heads, air fresheners, carpet cleaning, Swiffer replacements, etc. add up), maintenance (air filters, light bulbs, ballasts, replacing broken chairs and broken glass), and other minor costs. Payment processing fees are another 2.75% that’s forgotten on most plans. At $300,000/year, that’s an $8,250 oversight! The totality of these oversights could exceed your “fudge factor” and leave you broke.

Mistake #4: Inaccurate Sales Projections

Predicting a store’s sales is extremely difficult—and even moreso if you’re not already involved in game retail. If you’ve worked in a game store before, you have some insight. Otherwise, you might not have any idea where to start.

Let’s look at two scenarios: one where the business owner estimates low, and one in which the estimate is high.

Aaron projects his opening sales at $10,000/month and slashes his planned inventory purchases to adjust. He has one copy of each of the core D&D rulebooks. He starts with two booster boxes of Magic. He doesn’t buy the Asmodee best-sellers rack but does buy a single copy of most titles. Likewise, he cherry-picks titles across the board and puts one of each on the shelves. He opens in a 1,500-sf suite instead of the adjacent 3,000-sf suite he could have chosen.

When he opens, the first day or two is slow but then customers start to come in. They tell their game group about the new store they discovered, and their friends come in. The first groups buy up the best-sellers, leaving nothing on the shelf for the others. So for the other 3-5 friends who come in, the store’s empty. People come in asking for Games Workshop, which Aaron didn’t bring in at the start, planning to bring it in later when he grew. They go home empty-handed, maybe buying a paint jar or two.

Aaron did well than anticipated but he’s created a poor impression on some customers. Certainly good customer service can fix many of these cases, but some damage has been done that will take time to recover. Refilling the shelves immediately can fix some image problems, but there are others.

Magic players fill the game room on Friday night, leaving no room for D&D or board games. So that category grows to its limit while others stagnate. Also, if the game room isn’t large enough to fix everyone who wants to play, some players will go elsewhere. And that’s dangerous. One time at FLGS, I lost one keystone Magic customer, and an entire play group went elsewhere—10-12 weekly, loyal customers who took their spending to another store. Nine years later, they still play Magic, having spent tens of thousands of dollars collectively at other stores. That group often fostered new players, so the total downstream loss of that one player is incalculable.  

This mistake is recoverable, but it does stunt the store’s long-term growth. The important point to note is that Aaron’s not broke. He has a lot of missed sales opportunities (maybe $200,000 worth), but he’ll survive to move into the larger suite at the end of his lease. Let’s go the other way.

Brad is very excited about his game store. He thinks he’ll open to $30,000 his opening month and he’ll reach over $400,000 in his first year. He buys a frame for his first dollar three months before opening.

Brad turns the key and flips open the sign on day one…and crickets.

The marketing machine he put into motion before opening does bring in customers, but the difference between his expectation and actual sales forces a reality check. His first week is $1,800. His first month is $10,000. His rent is due, and he’s crying. He’s committed to a $6,000/month lease (plus 3% annual escalation, plus CAM) for 3 years—he signed as personal guarantor for over $400,000 in commercial rent, and at this rate he’ll be out of money in 4 months. He cannot recover from this.

Mistake #5: Not Identifying a Unique Value Position

Identifying and emphasizing your unique value proposition is crucial in creating a business plan that sets you apart from your competitors and attracts customers. Your UVP is what makes your store the only store in the world (or at least in your market) to provide that service or product to your customers. Ideally, it should be something that a competitor can’t easily shift his business to match. If another store in your city can remove your uniqueness with a new policy or a product display, your UVP isn’t very strong.

Unfortunately, identifying your UVP is the one essential skill that requires real genius. I can’t create that for you. Sometimes it arises organically from your business model. Sometimes it’s a key reason why you’re opening a store and it’s closely tied to your business model. Whatever it is, the sooner you identify it, the more successful you’ll be.

Conclusion

Reading a few articles won’t keep you from making mistakes. I can help you avoid the business-destroying ones. Forgetting to buy a scale for buying used Legos can be fixed with a $30 order on Amazon. Be thorough, and be careful.  

Human Resources

Safety First: Protect Your Investment With Iron-clad Liability Policies

Posted on by lloydbrown

Liability can kill a thriving, successful business. It’s a menace to businesses struggling to pay their bills. I don’t normally cover topics universally appropriate to all retail like this. You can google that stuff, and there is plenty of discussion about it.

What is it?

Liability is your openness to legal action—lawsuits or action by government agencies. It threatens you in a lot of ways. I’m going to deal with some here; I might leave some issues for later articles.

General Rule

Always have policies in place. You can’t help but tailor a situation from a person to person, but do that as little as possible. That guy who sells like crazy but is late on time. Write him up. That woman who’s been your best friend since 3rd grade but can’t understand why it’s wrong to utter ethnic slurs in the store. Document it.

Have your policies written. Have employees sign off on them. FLGS has a web form where employees must electronically initial each individual policy when they’re hired. It gives me a permanent record of acknowledgement of those policies.

It is never too early to adopt policies. If you think it feels silly to establish a policy when you only have one employee and they’re your best friend, you’re wrong. It’s good business, and it can protect you.

Old-school Dungeons & Dragons has a lot of monsters that seem to be harmless until they attack you. A chest might be a mimic. The floor might be a trapper. The ceiling might be a lurker above. Your best friend of 10 years might be a doppelganger. The money on the floor might have contact poison. The door could be a mimic, too. Or it might have ear seekers. Or traps. Or both. Anything could kill you.

The paranoia your characters need to survive in that environment is the kind of paranoia you need to bring to your policy handbook.

Repercussions for Policy Violations

What happens if somebody violates a policy? Each policy should have a repercussion listed. What happens when an employee is late, for example? What if they’re late twice?

For light offenses, verbal warnings might suffice. For moderate offenses, use written warnings. For certain select categories, it’s acceptable to terminate someone for a single offense. At FLGS, for example, the list of things that warrant automatic termination include violence, threats, and theft.

Unemployment

I’ve been hiring people since 1988 or so. I’ve never had an unemployment claim filed against me. Presumably people have reached out to the Department of Labor, but when they report that I have provided documentation and they share that documentation, the process ends there.

Details vary from state to state, but these guidelines will get you started on a good path. As with all my advice, check your local and state laws. Your state might be more or less restrictive than mine. Ask your lawyer.

What’s the company policy regarding tardiness?

What’s the company policy regarding call-outs?

What’s the company policy regarding uniform use?

What’s the accepted dress code for employees?

What’s the policy regarding weapons in the store? Alcohol? Dogs?

What language use policies do you have in place?

For comparison, here’s the FLGS Operations Manual section dealing with employee theft.

Half of all retail theft comes from employees.

Taking anything that isn’t yours or isn’t due to you is theft. That includes taking cash, goods, wages, and other benefits. Some examples of employee theft include (but aren’t limited to)

  • Taking money from the cash register
  • Taking product from the store without paying for it
  • Misapplying your employee discount to buy something at discount when you shouldn’t
  • Giving your friends your employee discount
  • Assigning yourself or somebody else rewards points that person didn’t earn
  • Taking property that belongs to a customer
  • Taking supplies or equipment from the store
  • Taking things lost by customers instead of placing them in the lost and found bin
  • Misreporting your hours

Company policy requires termination for any incidence of theft. We will also prosecute for theft in the store and may make a small claims case if restitution is not part of a legal judgment.

Termination

If you must terminate someone, have documentation on hand, and have the employee sign it. If they refuse to sign it, have a witness make a statement to that effect. On January 3rd, “Mr. Brown arrived at work at 9:50 for his shift that was scheduled to begin at 9:30.” In Florida, having three forms of documentation for any variety of offenses all but guarantees winning an unemployment claim.

Customer Behavior

Post rules in the store, and don’t be afraid to state the obvious: no violence, no cheating, no stealing, no threatening, no discriminatory comments. Yes, you have to have policies against these obvious things. Lawsuits aren’t about making sense; it’s about defending against laws as written (or interpreted by someone with a large financial stake in the outcome). Write it down.

You can’t ban a Magic player for cheating for life and ban a Pokemon player for cheating for 3 days. The policy must be consistent (it can change over time, but the important part is that it needs to be established ahead of time; it can’t change back and forth between individuals).

Obviously, you can’t meaningfully write up customers. Your tools for monitoring customer behavior include verbal warnings and then escalate to restriction of privileges, like not competing in tournaments, not using the game room, and banning from the store. For offenses that amount to crimes, of course, you call the police.

Returns, Refunds, Exchanges

Post your return/refund/exchange policies. Returns are not a major source of liability, but they can create problems. Consider things like collectibles (“No, man, you can’t return an open pack of collector boosters because you weren’t happy with your cards.”). At FLGS, the policy is “No returns on Magic singles or items considered collectible.”

Customer Safety

What happens when a gamer spills a drink on the floor? Do you have a “wet floor” sign? Who puts it up? Who cleans it? How? How soon?

Do you have policies in place for dealing with the arguments that arise from rules interpretations or intense role-playing sessions? If not, go write them. De-escalating conflicts can reduce headaches.

How do you handle shoplifting? One of the reasons why large companies like Wal-Mart are so “permissive” with handling shoplifting is that the damage from lawsuits can outweigh the damage from shoplifting. They literally have accountants calculate how much it costs to accidentally kill someone while detaining them and weigh that against the cost of allowing the shoplifting.

Accessibility

I discussed the ADA in detail in the Game Retailer Guide. One key thing to remember is that you and your landlord are both responsible for making your space accessible. Make sure everything outside the suite is accessible before you move in.

One aspect I didn’t discuss in the book is employee accessibility as well as customer accessibility. In short, if an employee has a disability, you have the obligation to make reasonable accommodations. You do NOT have to make the job requirements easier. If employees have to make 50 widgets an hour an employee with a disability does not get to make 40.

General Liability Insurance

It should go without saying, but you should have general liability insurance to protect your business. Depending on a lot of things, it might cost $100 to $200/month for most stores. You should also get some of the cheap riders, like hired or non-owned auto coverage (which covers employees while running store errands, like picking up a Sam’s order or taking a deposit to the bank).

Training, Training, Training

It’s one thing to have a policy in place, but a policy nobody knows about is pointless. Review policies with your crew during down-time. Ask them what clothes are allowed, how to handle a shoplifter, what counts as cheating in a Magic game, and anything else you have written down. This exercise not only reinforces the policy awareness with your crew—it exposes additional needs in your policy manual.

Human Resources

Empower Your Team: Techniques and Store Training Handbook

Posted on by lloydbrown

One of your business goals should be to make yourself redundant. When your store works just fine without you, you’re free to focus your time and effort on growing the business, take vacations, expand to multiple locations if you want, or otherwise have options that you don’t have when the business depends on you for daily needs.

An early step in this process is training employees. We’ll skip choosing what you need, the hiring process, the review process, and all that for now and go straight to the process of training a new hire.

Written Procedures

Write down all your procedures and employees can refer to these procedures as needed. A written guide isn’t a substitute for real training; it’s a crutch that employees can refer to for a quick reference. It’s also a means of standardization that can ensure that everyone is being taught the same thing. You can produce it on demand if there’s ever a question.

Duration of Training

I was spending four days at FLGS training a new hire, but I was about to increase the time to five days.  In my experience, training for 4 days allowed time to teach all of the procedures, but it didn’t allow enough time to practice those techniques under supervision, and the common exceptions to the rules didn’t always show up. You might spend more time training if you have multiple departments or categories to your business; FLGS didn’t sell comics, for example, so my operations might be simpler than yours.

You might spend less time if you schedule multiple employees together. Mine generally worked solo, so they had to have a full skills set before they were allowed to “fly solo.” In this case, you’re still training; you’re just shortening the full-time training period.

Training the Trainers

When you’re ready, train a permanent staff member to train new hires the way you want. Monitor their progress and check up on employees. Constantly fine-tune the process for regular improvement. My trainers used a training checklist. I am certain that operations require material not listed on the checklist.

I’m giving you my actual training checklist that my trainers use. Some of it might be particular to FLGS and meaningless to use. Some items might refer to specific brands or software, but you can figure out which items those are.

If you see missing components, feel free to mention it to me. That sort of information is useful for my ongoing attempts at educating store owners.

Training-Reference-GuideDownload
Marketing & Advertising

Competitive Analysis: Local Market Store Comparison Guide

Posted on by lloydbrown

It’s important to conduct an objective, honest analysis of where you stand in your local market. It tells you where you need to improve. It shows you what angles to promote in your local marketing and advertising.

For this comparison, you might feel a natural inclination to share only the areas in which you excel. I recommend that you favor your own store in your public comparison, but don’t make it all one-sided in your personal notes. Be honest, because you’re using this information to make business decisions. Lying to yourself will guide your store in the wrong direction.

Some of these metrics should not be yes/no. For example, with Games Workshop’s products, there’s a big difference between a store that splashes new releases, a stockist store, and a store that meets all of GW’s metrics for the different modules.  Some stores might offer special-ordering services but handle them poorly, so a check-mark does not accurately indicate the customer experience. A better metric would have a percentage of special orders filled, which is difficult or impossible to gauge at another store.

For this article, I removed the specific names of the local stores, and I made up some entries to avoid identifying who’s who. Since I started this comparison, other stores have opened, also. The local market is even more crowded than this comparison indicates. I’ve opined that the Jacksonville market could handle up to 10 game stores, and we’re over that in number and they’re more crowded than in the geography I envisioned. It’s a lot of stores right now. Of the ones listed here, I know one will be closing soon, and at least one more has unsustainable sales, so I expect the market will correct itself somewhat in the next year or so.

The comparison groups the elements into three categories: service, merchandise, and a physical comparison. I’ll explain some of the line items. Open the PDF linked below to follow along.

Services

Loyalty plan: It can be a simple punchcard, a feature of your POS, or a flexible 3rd-party system. The best comparison would be to describe each store’s plan in some way.

D&D Campaign Badges: My store made buttons that the crew were supposed to give to DMs who completed a D&D adventure, like campaign badges soldiers could earn for completing a tour of duty. It never really caught on, but I still think it’s a solid idea. A better implementation would be selling a set of 4 buttons or giving them away as an incentive for making the adventure purchase.

Magic Singles Kiosk. The kiosk is a customer convenience and a requirement for Wizards Premium (which should be a line item on the comparison in its own right).

GM Incentives. This program was later integrated into our regular loyalty plan, but it’s based on the need to recruit DMs for RPGs in the store. You can have 100 players, but if you have no DMs, you have no games. We made regular efforts to encourage players to take up the DM’s seat in the store, from offering bonus points to DM workshops.

FNM. I would  have thought everyone did this, but apparently not.

Introductory D&D games. With D&D at a peak in popularity, people call the store regularly asking about intro games. It’s an easy way to welcome new players into the store.

Café. Some game stores focus on the café model, and it really affects the overall atmosphere in the store.

Free open play. If one store in the local market charges to play, it makes every store that doesn’t seem more attractive.

Lockers. When I sold my first store, the employee who bought it made lockers for the store. He sized them around monster boxes for the card gamers (each locker was as wide as a monster box, plus a pair of hands). They were always full. These custom-made lockers generated more dollars per square foot than any other space in the store, and they have a psychological side effect. Many gamers play at multiple stores. But if one store has their stuff, that’s where they’re going to spend most of their time.

Total Open Hours. This figure is important, but the total is just one factor. Whichever store opens earliest has certain advantages for big product launches and people with busy weekends. Opening late allows role-players to bring their game there. Game stores that close at 7 or 8 pm leave  no opportunity for a role-playing game after work.  In my notes, I recorded the exact hours of each store.

TCGPlayer store. Does the store have enough singles activity to support a tcgplayer store? And do they use that sales channel? This sometimes goes along with the kiosk (and should be moved to be adjacent to that heading now that I think about it), although they’re not the same thing.

Merchandise

With most of these categories, a brief narrative would be better than a checkmark. One store might “carry” D&D, by which they mean one copy each of the core books and the newest adventure. Another store might have every single Wizards book, plus the most popular 3rd-party books. That’s a big difference in customer experience. Obviously by pointing out all of the used categories I was showing off my store’s superior selection. Nobody else in town carried used D&D, while I had (at one point), a 4’ slatwall section for *each edition* of D&D, with room for 16 titles face-out and well over 100 spine out. Nobody else carried used minis or used board games.

Properly identified, comics should be broken out to include new and back issues and graphic novels, but since I stopped carrying comics around 2017, I wanted that section simplified.

Physical Comparison

Size. It matters. The bigger the store, the more merchandise you can fit, and the more gamers you can fit for events. Naturally, the bigger the store, the more it costs in most places, but customers don’t care about that. They want to be impressed.

Maximum seating. This figure can be deceiving. Packing card gamers in like sardines doesn’t necessarily create the best gamer experience. On the other hand, miniatures tables take a lot of room for only 2-4 gamers per table. If your store focuses on Games Workshop, you’ll necessarily need more game space than the store that lives off of its Magic community.

Exterior signage. As you can see from my notes, this isn’t a checklist; it’s a description. Channel letters are the most expensive option and are considered “the best”, but box signs allow for more customization. Wooden signs look cheap in most circumstances.

Not included: it’s a good idea to also compare fixtures: slatwall, gridwall, pegboard, etc. Do they match in color? Do the chairs match? Are they comfortable for a 4-hour gaming session? I did not include restrooms—number and location.

How does your store stack up? Do gamers have a reason to choose your store instead of another store to which they are already loyal?

Local-Game-Stores-Comparison-templateDownload
Meta

How Game Stores Empower Local Economies and Build Communities

Posted on by lloydbrown

What do we mean to the community?

I want to assess my company’s value to the local community: how much of my revenue is spent locally, and can I do anything to improve it?

Rent

Obviously, all our employees live in town. You can’t do brick and mortar retail remotely. That’s about 11% of our expenses. Also, wages are reinvested in the community. None of my employees are billionaires. People who earn normal, people-level amounts of money spend all of it. None of it is removed from the economy through hoarding. These salaries are spent on local rents, local utilities, local car purchases, clothes, medicine, and other vendors.

I’m at 100% here. I can’t improve this figure.

Rent

The owner of our shopping center lives in town and occasionally visits the store. The property manager lives in town. The property is not part of a major chain. All the properties they represent are in Jacksonville.

Rent is about 12% of our expenses.

I can’t improve this figure.

Service and Maintenance

Our HVAC person is a local independent technician.

I’ve had to shop around for plumbers, because I haven’t been happy with any of them. Sometimes I use a chain.

My light guy is a local independent.

I could improve this figure by a small amount if I could find a plumber who a) fixes plumbing, and b) doesn’t charge 3 times as much as other plumbers. I’m astonished and dismayed at how hard that is.

Merchandise

Our largest supplier has multiple warehouses, but they are based in Florida, and we order from their Florida warehouse. One of our secondaries has a Jacksonville location, but they are not based in Jacksonville. Of course, we have multiples sources of merchandise to get stuff that’s out of stock at our primary or exclusive to that vendor (like Games Workshop). We also stock nearly any game-related products we can source locally.

We have a display of locally designed games that I gathered from their sorted-by-category placement throughout the rest of the store and now merchandise below a sign displaying their local status. It’s intended to be a focal point for customers who are eager to support the community and an enticement to any local game or game accessory producers who haven’t already reached out to us.

Our Jacksonville-based merchandise purchases are only about 1% of our expenses, but if we extend our definition of local by about 100 miles, I can add another 35%. Peach State Hobby is our primary distributor, providing us with all of our role-playing games, Magic, the Nolzur’s miniatures line, almost all of our non-GW hobby supplies, and a large minority of our board games.

I am working on creating more merchandise so that we can improve this figure.

Utilities

Electricity is a local expense, and—this being Florida—it’s a lot of money. It’s not cheap to cool a 5,100-square foot building filled with gamers. Phone and internet expense goes to the necessary giant mega-corporations. Insurance is underwritten by a large corporation through an agent in our shopping center.

At one point, Jacksonville was the insurance capital of the world. During the 90s, a lot of those companies moved their corporate headquarters out of town. Back then, I could have claimed my liability insurance premium stayed local, but that’s not the case anymore.  

I don’t think I have any Jacksonville-based options for insurance carriers or Internet carriers that have a reputation I trust. I tried a local phone carrier once, and it caused my business almost terminal damage.

The local portion of our utility expense is about 3.5%.

I can’t do anything to improve this figure.

Taxes

I pay the Florida sale tax, of course, on monies collected in the store. Without providing detail to give, let’s just say that it’s…enough. I owe various small fees to the city of Jacksonville and the state of Florida. Payroll taxes are federal, so that’s a zero.

When I talk about sales, I always talk about net sales (and so should you). That’s the amount of sales you conduct not counting sales tax. I ever make a statement here about seeing $10,000 in sales, that figure doesn’t include the $750 I collected and turned over to the state of Florida. However, the aggregated smaller, fixed figures fees might be another .5% (it’s not, but I’m rounding it up because my running total isn’t even, and I want it to be).

Summary

If we include our nearby inventory purchases, 63% of our expenses stay in the community or the state. That’s a larger impact than I expected, and it demonstrates how important small business are to a community’s financial health.

Compare that to an Amazon purchase, in which 0% of the money goes to the community. Buying local matters.

Meta

Unlock Prestige: How to Earn Wizards Premium Retailer Status

Posted on by lloydbrown

One of the key questions you must ask yourself when you plan your store is the question of whether to build for the Premium store designation from Wizards of the Coast.

I recommend pursuing the Premium status for (nearly) every store owner. The requirements run parallel to your larger goals of building a great store, while the benefits increase sales for one of your largest game categories. It’s a no-brainer for 99% of stores.

Wizards provides a checklist for pursuing premium status at https://media.wizards.com/2019/wpn/new_wpn/premium_quality_checklist.pdf. It’s broken into several categories: design, housekeeping, accessibility, and information all fall under the larger header of aesthetics. The sister category, customer service, includes staff, customer interaction, play experience, and amenities.

Let’s look at a couple of representative items from each category.

Design

The design standards require a visible, permanent sign. Isn’t that the kind of sign you’d want if you want to attract customers? At no point outside of the shoestring model (which I don’t recommend) would I ever suggest having an invisible or temporary sign.

Signs are your most cost-effective method of advertisement: their number of impressions divided by their cost is good, but when you stretch out the number of impressions over the sign’s lifetime, you reach an impressive efficiency. A good sign pays for itself.

Merchandising standards state that your departments should be clearly defined. That’s a good idea in retail anyway. I recommend identifying each department with internal signage and further recommend that you brand each unique department with its own color scheme or graphic design. Customers should know if they’re in the board game section or the role-playing section.

Lighting should be “excellent overall,” which is good advice. There’s a mathematical formula in retail that can be broken down to “lighting equals sales.” The better the lighting in your store, the more sales you’ll have. Replace blown bulbs immediately. Add spot lighting where necessary to highlight key displays.

Tables and chairs should match. Tip: Advantage Church Chairs offers fantastic, long-lasting, attractive chairs at a great price. I no longer recommend Lifetime chairs after many attempts to exercise their warranty have been denied.

Likewise, you could go down the rest of their list, and all of their requirements are simply good retail decisions. Still, familiarize yourself with the checklist before you plan and build your store, and it’s easier to meet those metrics when you apply.

Housekeeping

The next section on the Premium checklist regards what they call “housekeeping.”

At the top of this list is a general “clean environment.” By that, they mean that the store in general should be free of clutter and trash. The area behind the counter, which is a common work station, should be uncluttered. Ideally, as much work as possible is done away from this station and out of the public view. If it must be done there, it should be minimally obtrusive and put away when it’s done.  

Likewise, the windows, shelves, game tables, floor—anything the public can see—should be neat and clean. Have a schedule for cleaning each place on this list and an oversight system to ensure it’s being done.

Your restrooms should be clean and supplied. Well…yes. They should. Making sure that restrooms available to the public are clean and stocked should be a priority for anyone who welcomes the public into his or her business.

Accessibility

The checklist has a section ensuring accessibility. You can use the Americans with Disabilities Act  as a guideline for the retail section of the store, but you must also take into consideration traffic flow in the game play area and the ability to reach the store.

Information

Policies and information should be posted where customers can see it. This information includes things like return policies, a code of conduct for using the game room, prizes given for events, and anything customers are likely to need to know. Posted signs should be printed (not hand-written), multi-colored, branded, framed and affixed to the walls or in freestanding acrylic signs on the tables.

You must have a posted event calendar with upcoming events posted.

Staff

Staff should have a “positive and professional manner.” That’s not exactly a discrete and measurable metric, but it’s like the judge famously said—“I know it when I see it.” Common courtesy is a good starting point, but policies regarding suitable subjects for dialogue and topics to avoid keep employees on the right path.

For example, at FLGS, employees are not allowed to discuss politics or religion, and they are not allowed to malign any customers, employees, other stores, or any of our business partners (including manufacturers and distributors).

Staff should be wearing company-branded materials: uniforms, lanyards, or however you distinguish your crew to customers. FLGS uses polos or t-shirts, plus branded badges. Each badge has the employee’s name and two to three areas of expertise about which they bring extensive knowledge.

Customer Interaction

All customers should be welcomed. Employees should not be dismissive of anyone for age, gender identity, ethnicity, or whatever personal issues they might have. If they walk in the door, they should feel welcome.

Customers should be greeted upon entry. At the risk of sounding like a broken record, this should be your policy anyway. Crew should be greeted at entry, approached a second time to offer to help, and thanked as they leave.

Wizards requires a high-quality online sales platform. Using any of the standard sites like tcgplayer or Amazon meets this metric. They don’t have standards regarding how much merchandise you need on these sites, so don’t worry if you only have a few hundred dollars’ worth listed; they want to make sure the presentation is professional.

Play Experience

Professionalism and consistency are the keywords for running a great event. Run events on time, every time. If people show up late and you’ve already started, they’ll be on time next week. That one player you wait for is inconveniencing ten or 20 or 50 others. It’s not worth it. Start on time, even if you only have 3 players.

The checklist asks you to have pre-registration available. A perfect medium already exists for that—the Magic Companion app. You don’t have to do any work. Just have the link available in store and on social media. Having pre-registration helps your operations tremendously; it lets you staff appropriately, and it alleviates the mad rush at event start time.

Amenities

Wizards wants you to have food and drink available. I don’t believe they require you to sell it, but you should anyway in nearly all circumstances. Again, they’re asking you to make decisions that benefit the business.

One requirement you might not have considered is having a tablet or desktop available for customer use. It allows customers to sign up for an account or whatever else they might need for the event. It can double as your sales kiosk.

Having a screen or TV for event management is a top-tier idea. During events you can displaying pairings and standings.  When you’re not running events, it can rotate among different demos, promotions, and other customer messages.

Good Ideas Are Good Ideas

I told you the requirements are things you want to do anyway. If you’re still planning out your store, integrate this checklist into your plans and you’ll have the hardest part of the job done when you turn the keys and start letting people in.

Meta

Transform Your FLGS: Domino’s Pizza Delivered My Retail Success

Posted on by lloydbrown

I’ve told the story before of how Domino’s prepared me for my own business. Let me provide a little more detail.

Background

When I joined the company in 1987, Domino’s Pizza was opening a thousand stores a year. The company was growing insanely. I saw a survey that claimed that their mascot, the Noid, was the second-most recognized figure in pop culture—right below Santa Clause. They were exploding. With this growth came a giant push from the company to train managers for all those stores. We didn’t have assistant managers or shift managers. We had MITs (managers-in-training). If you didn’t promote, they pushed you out of the training program.

Each manager-in-training received a workbook that schedule training over several months. MITs had a heavy work schedule to train through immersion (and earn pay). Each region had a regimen of in-person training courses. MITs also had regular job performance reviews. These components were part of a goal of teaching an employee how to run a $500,000/year business within six months of their hire.

I learned more in those few months in a corporate environment than I did in almost two decades at franchisees. Managers I met years later couldn’t tell me what was in the dough, much less do the advanced math. Not that they were necessarily bad managers—they just weren’t trained to become business owners.

For example, Domino’s divided their fiscal year into 13 4-week periods. This gave us several advantages—one of which was that when we compared sales to last year (which we did daily, weekly, and periodically), we were comparing the same day of the week for a more accurate comparison. Our paperwork each period included

1st week—a profit projection for the period

2nd week—a “mid-month”, which was short for “mid-month profit projection”

4th week—a profit and loss statement, using actual figures for rent and utilities sent us by corporate

This was before stores had computers, so we learned how to calculate these things by hand. I could turn over a sheet of paper, figure my contribution margin, and scratch out a break-even analysis (and therefore a profit calculation) by hand. Thirty-nine times a year—more if your trainer insisted you do the work more than once, which mine did.

Part of the motivation behind this intense training was the idea that each of these corporate managers might one day buy their own store or stores. They weren’t just training potential managers; they were training future franchisees. It was an intense training program with the goal of creating business owners.

Starting Manager Training: John

While I worked for a couple of different managers during that period, I had two primary trainers. The first, John, trained at least 6 people up to their own store. He had a reputation throughout the market for being a strong trainer. People wanted his MITs in their stores.

John ran a highly profitable store, made even more impressive by the fact that he always had rookies running the place, and he paid them well. While I worked for John, I was the highest-paid trainee in the area (wages were standardized, but I got the hours I wanted). In addition to Domino’s-specific stuff that isn’t the point of this discussion, John taught me the fundamentals of employee management, the benefits of ongoing training, and how to best use my time during a shift or a week.

Completing Training: Mike

The second trainer, Mike, had the reputation of running outstanding numbers. He turned a giant profit for the company while ensuring that he earned as much as the system allowed. For example, he discovered an exploit in the system where he and another manager could get paid an additional day by working at each other’s stores one day a week, which gave him and his friend a 20% increase in income for the same number of hours worked.

Later, after his promotion to area supervisor, Mike aimed for a $14,000 profit in his first period, the target assigned by the company. He felt disappointed when he reported a $56,000 profit because his personal goal was to quintuple the company’s target. Under Mike, I learned how to scrutinize costs, maximize the value of labor, and leverage assets for maximum benefit. I really learned how to appreciate the profit benefit of add-on sales.

After Domino’s

John stayed in the franchise system, but this time at Subway. He opened one store while training and bought his own store. John is no longer with us, but his store provided for him well and it currently sees (under his wife’s ownership) over $8,000 a week in sales in a town of 2,900 people.

Mike also bought his own business. He bought a courier service 28 years ago that he still runs. I haven’t spoken to him lately, but revenues were $200,000/year when he bought it, and the last sales report had him at $1.2 million annually. Fascinatingly, he pays his drivers a 60% commission on each delivery but I’ve seen him run over 40% gross profit. I know two factors that contribute to this seeming discrepancy. If you want to take a guess, reach out and I’ll tell you if you’re right.

Lessons From the System

The company system taught me the value of standardized training. When I started FLGS, I didn’t need an operations manual. My partner and I did everything ourselves. We didn’t hire anyone for about 6 months. But I had a table of contents and an outline before we even opened. We had the kernels of our content almost immediately—daily checklists for opening and closing tasks. Then I added things like uniform standards as we added employees.

Now it’s a 56-page document available in print for quick reference at the counter or PDF for latest reference and searching ability. It includes intense detail regarding every operation that happens in the store, from opening the front door on entry to sales, receiving, online sales, pricing policies, and closing up at night. If we ever encountered anything not in there, we added it.

The corporate background also prepared me for operating multiple stores. While my 3 stores were in different markets and had some specific differences because they were bought (as opposed to opened from scratch), my plan for the next year was to homogenize methods 100% so that crew and management were wholly interchangeable. That’s a big help with covering shifts, promoting managers as needed, and improving the customer experience overall.

Differences

Obviously, we don’t make pizzas at FLGS. There are other differences. For one, I don’t have to worry about delivery (I thought about it as an option, but I did not pursue it for reasons I don’t need to go into right now). But less obviously, the number of SKUs I restock on a regular basis is enormously different. Domino’s had 10 toppings when I started, two sizes of dough patties, one sauce, two sizes of boxes…the entire list fit on a single page and could be counted in 15 minutes.

Another obvious difference is that I had to do all this work myself instead of having it done for me. On the other hand, having read the procedures and training manuals at Domino’s gave me a broad template that I could repurpose for my own use.

Clearly, a fully-stocked game store with a broad inventory base needs hours of counting. With practice and refinement of methods, I could count my major general restocks in less than 2 hours, but that still leaves lists of less efficiency for several more hours of counting.

Staffing is much simpler in a game store. In almost all cases, I have one person on duty to cover the counter. For high-traffic times, we double up. Shift transfers take a few minutes. In case of a call-out (which was very rare for the first 20 years, very common in the last 2 years), the salaried manager arranges coverage or works the shift himself. If nobody else does it, I do it.

Customers can steal from a game store. In a delivery-based restaurant, there’s almost no theft. Theft on a delivery was a big deal because it was almost always armed robbery. Theft in the store was all done by employees, and the systems in place made that easy to do but difficult to do undetected. I implemented systems to prevent or detect theft.

Recap

The methods and systems I learned from the management training program at Domino’s absolutely gave me the background I needed to own my own business. Where the skills didn’t transfer, they gave me a comparison that I could adapt to my needs. The opportunity is lost with the changes in Domino’s over the past several decades, but undoubtedly other situations similar to that are out there now. Maybe you’re in one and haven’t assessed it from this point of view.

If you’re looking for a similar opportunity while you plan your store, keep an eye on this list of fastest-growing franchises: https://www.entrepreneur.com/franchises/directory/fastest-growing-ranking.

Meta

Titus Tabletop Games: A New Direction

Posted on by lloydbrown

From before we launched our brick-and-mortar operations in 2013, the plan for Friendly Local Game Store has been the dual development of multiple retail stores supported by our own game and game accessory design. As the retail operations grew in scale and scope, there never seemed to be enough time to devote to the second half of that plan.

Part of this goal came from personal desire, while part of it came about from observations in the industry. Many good gaming products don’t succeed financially because they don’t get game store presence. Having guaranteed presence gives our games an edge. Having energetic store support gives them a big edge. Organized play, premier positioning, social media presence, and the ability to stock the products effortless all promise to give those games a boost.

The store wins by having exclusive or hard-to-find product for its customers. It gives that store a competitive edge against stores that don’t carry that product. If you’re the only store in town with a certain product, that’s where people go for that product. Designing your own games is a win for both sides.

In November, Friendly Local Game Store merged with Coliseum of Comics. Coliseum of Comics took over retail operations for the Friendly Local Game Store locations in Jacksonville and Orlando, plus Gamesville Tabletop in Gainesville. I became head of a new division we are creating for game design. If the cost of seeing this goal come to be is a name change, that’s a cost I’m willing to pay. Having more stores means the games will be more successful, and growing from 3 stores to 12+ stores in one fell swoop gives that division a big step forward.

The sales and cash flow projection for this operation shows that at the end of two years, the bank account should exceed $90,000, assets on hand exceeds $100,000 (representing games to be sold in the future), and our digital catalog will be growing. We have some promising product lines planned that should make for some interesting analysis afterward.  

Because of the cost associated with collectible card games, we are very unlikely to produce a CCG. Otherwise, we have a variety of board & card games, miniatures, miniatures games, role-playing games, and gaming accessories slated for the next couple of years, including licensing some games already on the market but unavailable in North America. All these products fill a need for the stores. Sometimes it’s just margin. Sometimes it’s exclusivity. Sometimes it’s new customer acquisition. We’ll focus on product lines that produce the most return for the least investment in time and cash.

Featured Articles/Marketing & Advertising

EDDM Marketing

Posted on by lloydbrown

EDDM Marketing

The EDDM (Every Door Direct Mail) program is an offer from the post office that allows you to send low-cost marketing pieces to a very specific part of the map. I want to talk about why you should use such a thing and how you could use it.

The What

EDDM is a new-ish program that allows you to send direct mail for a very low cost. It’s easy to use for them because there’s less sorting. They hand the package off to the carrier and he takes one to each address on his route.

  • You don’t need to know addresses. You choose specific postal routes, most of which are around 400 addresses.
  • You don’t have to deal with a huge minimum; you can do as few as 200 per mailing, or as much as 5,000 per day.
  • You can choose commercial, residential, or both.

The cost: 14.5 cents per piece. With first class postage at $.45 and bulk rates no lower than $.20 per piece, you can see what a deal this is.

The post office site that describes it all in full detail is here.

The Why

Game retailers like to think of their stores as magnet stores that draw people from halfway across the state. They brag about how Bob stops by faithfully every time he’s in town, even though he lives 3 hours away. They point out Dave, who drives an hour once a week to play Warhammer 40k. They haven’t collected the data that shows that most of their customers live within about 5 miles of their store.

Sure, gamers are loyal. But this kind of thinking is an easy trap to fall into. You look at the most visible customers and ignore the 90% of them who, combined, pay your bills.

This area—the map circle from which you get more than half your customers—is called your primary draw. That’s the richest area for you to target with any traditional media (or online media, if you can target that precisely). For most of us, it’s about five miles. For those in more rural areas, it might be larger. For highly-populated metropolitan areas, it could be less. Knowing what this area is can be vital to your advertising, but most store owners don’t spend the time and effort to calculate it.

The How

  1. Sign up. Go to that USPS url above and sign up for an account.
  2. Choose your message. What do you want to promote? A new store opening? Adding Games Workshop? Magic tournaments?
  3. Design your ad. That’s a huge topic and gets a couple of paragraphs in a bit.
  4. Order your printing. Printing prices vary, but I’ve seen as low as $475 for 10,000 full-color UV coated pieces, including design work.
  5. Choose your target. Start anywhere within your primary draw. Target routes that are “downstream” from you first. That is, customers who pass by you on the way home from work (you are on the right side of the road for that, right?).
  6. Take your materials to the post office. Take your pieces, your instructions, your customer ID number that they gave you when you signed up, and cash or a debit card. They don’t take credit cards.

Ad design is everything. I am not a designer. I’m like the anti-designer, apparently. My ad design attempts generate laughter from my designer friends. Therefore, I will not attempt to advise you on ad design except in the most basic of suggestions that even I can’t get wrong.

Include a call to action. A call to action encourages some type of response from the customer. What do you want them to do? Go to your website? Visit the store? Call? In most cases, you want them to go to the store. Use unambiguous language like “Come by the store.”

Include a deadline. That’s the real reason coupons have expiration dates. Make it soon enough so that the customer won’t forget about it, but give enough time for them to plan. Two weeks is fine. A month is probably too long.

Because EDDM is not very common, your local postmaster might not be familiar with it. Plan on taking extra time at the post office the first time. One of the documents that you print when you do the paperwork has complete instructions for the post office employees.

The Math

Here.
is a spreadsheet I created showing some yummy, delicious math.

The first column is the rate of return. I’ve included figures from 1/100 to 10/100, which would be ridiculously high. Given the factors that favor ads of this type (direct mail, large, colorful pieces, mailed near the store, etc.), you can expect to use figures of 2-3/100. This assumes that your ad doesn’t suck. If your ad design is weak, just don’t bother with the math, because your ad will suck money out of your pocket and you will die poor and miserable.

The second column is the number of pieces. I used 10,000 for each case because that’s the buying unit that gets you the best price. Do not send out all 10,000 at once! What happens if you do get 100 customers coming into the store looking for something that you normally stock 5 deep? You anger your potential customers and have done more harm than good. Meter your mailouts according to your ability to handle the expected return, both in terms of inventory on hand and people at the counter.

The third column is the cost. Because I kept the number of pieces the same in each situation, the cost is the same. If you want to experiment with the figures on a smaller scale, say with 5,000 pieces (and an attendant higher per-unit cost), go ahead.

Next is the average sale. This figure is important. They all are, really, but I need to stress this one because it relies on one of your key abilities to translate bodies into sales in the store. If you have poor salespeople working your counter, this figure will be low. If you have great salespeople working your counter, this figure will be higher. Thus, it’s a key variable in this particular table.

Let’s say that you’re advertising that you’re now carrying Games Workshop, and you want to support this merchandising decision by offering a $30 box for $25. If you upsell nothing with your purchases and just sell the offer on the ad, your average ticket should be exactly $25.

If you sell a couple of paints and brushes with the purchase and boost the discounted sale with some full-priced sales, your average ticket might be $40. It really should be much higher, but I’m using very conservative sales figures for the purpose of this discussion. The last part of the table shows a $50 average ticket for comparison.

The last columns are easy. They multiply out the total earnings from the sales your ad achieved, the gross profit after deducting the cost of goods, and then subtract the cost of the ad campaign for a net effectiveness for the campaign. You’ll notice that I used a 43% gross margin for the CoGS instead of the more common figures of 47% to 50% you can get from distribution. I’m assuming that you offered a discounted rate of up to 20% to encourage a response.

Of course, a full ad campaign would also include your social networking, in-store marketing, possibly manufacturer support, etc. This discussion is just measuring the effectiveness of the EDDM.

As you can see, only in the worst-case scenarios are you losing money on the campaign. In reality, many of these customers will be new customers, and their lifetime expenses will be much higher than the figures generated here (over $2,000 for Magic customers, $1,500 for Games Workshop customers, $2,500 for D&D players, etc.).

Featured Articles

After-Action Report: RapierCon

Posted on by lloydbrown

Introducing FLGS

I’ve learned a lot about game retail since I bought my store. I’ve considered re-entering that arena several times under different circumstances, and I’ve recently come up with a situation that allows me the best of all worlds. I can keep doing what I’m doing and still be a retailer. I’ve started a company called FLGS. If you’re not already familiar with the acronym, it stands for Friendly Local Game Store.

The company includes two partners—me and a friend I’ve known since ’97 or ’98. Phase I of the plan calls for the two of us to work conventions only until we bulk up to a certain amount of inventory on hand. Working only at conventions gives us a few critical advantages. It allows us to work around other obligations. There’s no rent. We don’t need to commit to a $100,000 commercial lease. We have no employees to pay. I’ll share more details about the exact figures later, but let’s just say it’s way cheaper than most of the plans I get paid to write.

The Convention

RapierCon has a decent history—8 years or so. It’s a small con, with between 200 and 300 attendees. The convention sees fairly low turnover. It’s the same faces every year for the most part. The core attendees are members of a miniatures-based game club that sponsors the con. They play Games Workshop games, but historicals are their forte. Old white guys are the norm.

As it turns out, that’s my old customer base. I knew I’d run into a lot of faces I knew. I could even place most of the names. I was not wrong.

I figured it would be small enough and casual enough to make a great shake-down cruise.

The Good

Knowing a lot of the attendees by name (and army in many cases) helped. Many people came over just to say hello. They might not have made a special trip to the table otherwise.

For the opening cash, I opened up my wallet and broke into a change jar. Between the two I had $150, which I figured would be plenty. Most transactions would be electronic, through Square. Of the cash, some would be exact change, some would be with small bills that would provide change for future transactions, and some would be large bills that needed change. A trip to the bank turned it into the denominations I wanted. Now that’s fixed and that money stays with the cash box for re-use. Easy peasy.

The Bad

We set up late at the convention. That was my fault. I made an assumption about what time the event was due to start based on previous events, and I was wrong. So we missed out on a few hours of sales. As it turns out, the convention hall was nearly empty during that time. We probably didn’t miss out on much sales. After all, those people were still around later, and there were no other vendors with our product mix.

We weren’t able to hang our signs. We didn’t have double-sided tape. We had some duct tape, but it was apparently very old. The adhesive simply didn’t hold. The sign fell down several times, and then we gave up. In retrospect, we should have been able to secure them to the front of the tables, but I just thought about that.

We didn’t get as much merchandise as I wanted and so didn’t get the fixtures I wanted to display them the way I had planned. More inventory would have generated more sales. Better display would have generated more sales.

I’d hoped to add some surplus D&D Miniatures from my own collection, but I didn’t find time to sort them before the convention. I have a LOT of minis. I had a decent collection already, and then I bought out the personal collection from the guy who bought my old game store. I think he claimed it was over 2,000 figures. I have many figs set aside now. They fill a medium-sized box. I’m guessing I have 500 or more figs in there for sale. I’ll keep culling my collection for another week or so.

The Lessons

The con kit needs double-sided tape for hanging the sign. And scissors.

My neighbors with the awesome dice game are graphic designers by trade. They had beautiful banner signs that they purchased for cheap. They were full-color and cheaper than our one-color vinyl crap. I’m going to learn where they had those made and improve our image.

We had planned to have extra people available if sales required it. It went smoothly. We did not need them.

We need a price gun and tags. Or dots and a pen.

I intend to run a game next time, if possible. I’ll let players keep the D&D miniatures that I provide for their characters and coupons for free dice with a t-shirt purchase.

Our t-shirt prices were variable based on size. We’re going to average them out (in our favor, of course) and charge a flat fee. I don’t like the idea of charging big people more for their clothes. There’s no point in making them feel self-conscious about their size like that.

The convention host said he preferred cash for the table fees. Not “required” cash. Next time, I plan to offer a mix of product for prizes and some cash. That could save anywhere from $15 to $75.

The Numbers

Our sales goal was an ambitious $1,000. I say ambitious because the convention was going to have 300 people or fewer. Anything more than $1/head is a good convention, and setting a goal of over $3/head would be high for many people. Personally, I was unhappy with anything less than $1,000 after several years at my store before, but this situation was going to face several disadvantages versus that one. For one, we had much less inventory to choose from.

We spent more than I would have liked on books, but it was on short notice and the main point was to bulk up to a “critical mass” of inventory. We spent $600 on the books and $185 on 3 booster boxes of Magic. We had some dice on hand and purchased some dice bags for $200 (it was a bulk buy). The main edge we had was a consignment deal to sell t-shirts from a humorous t-shirt vendor with an established local presence.

We also bought some goods, as we had planned. We bought some Games Workshop and Magic at the convention. Some of the bulk books we picked up had some collector value. We pulled those aside before the con to sell later on eBay.

Fixed Expenses
Fictitious Name Registration: $75
Incorporation: $75
Sign: $45
RPG titles: $600
Dice/bags: $400
Magic boosters: $185
Purchases at the event: $55
Cash box: $0
Opening cash: $150
Total: $1585

Event-specific Expenses
Table fees: $130
CoGS: $465
Travel: $0
Food: $0
Parking: $0
Total: $595

Income
Convention sales $800
eBay sales afterward: $425

Total Income: $1225
Total Expenses this con: $595
Positive cash flow this con: $630

So after one event, we’ve recouped nearly half of our total investment and still have plenty of merchandise to sell. In fact, we’ll have more than we started with, because the entire plan revolves around reinvesting our gains into inventory after paying for our fixed costs. That $630 is going to buy more games. We’ll also have those D&D minis I mentioned.

Our next event is coming up in a month. The convention has a completely different flavor. There will be girls there. There will be young people there. Many of them will be cosplayers. There won’t be a bunch of old grognards. However, there will be more people—around 900 attendees, based on recent trends. We’re counting on less sales per person because of the different flavor. Fortunately, it’s also local, so we won’t have any travel expenses.

Our sales goal is $2,000 for this one. I don’t plan to do a report after each event, but I’ll be glad to let you know how it goes in the forum if anybody’s interested.