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Tuesday, June 21, 2016

FATCQ: Fast Answers to Customer Questions Volume 1

I enjoy fielding customer questions because they are ultimately windows into how someone sees my business from a variety of different vantage points.  Kevin Saffles of the Derium's CCGs Card Shop Life video series has a running theme called "Let's Talk" in which he fields some of the more common questions we as store owners receive.  Derium's ran a Let's Talk this month and I was excited to make a video for it.  I imagine he will incorporate that into some upcoming episode.

I saw that these customer questions would make good material for blog articles here, but not if I got bogged down explaining the depths of every single one.  So, I am challenging myself to answer all these questions that I can find or field within no more than five sentences and five lines of text (in the Google composer tool; mobile and web formatting may affect how many lines are displayed in the final article).

By the way, absolutely feel free to submit questions for this.  I will keep doing these as long as I have questions to answer.  I will try to answer any question that isn't disingenuous and doesn't ask for confidential information.

Here we go!

Q: How did you start your business?
A: After the mighty Atomic Comics closed its entire chain, DSG's founding partners, myself and Mike Girard, exchanged emails about opening a branch location for an out-of-state game store chain.  This evolved into discussions about opening our own store.  We wrote a business plan.  I did the paperwork to create the business entity DSG LLC.  We staged an investor dinner and pitched the plan to our friends.  Several of them bought in.  Resources in hand, we moved forward finding a lease.

Q: How did you come up with your projected sales figures?
A: Surprisingly not rectally, which is the norm in our industry.  I took the money I had been making running my eBay store Auction Trade Arizona and ran some Excel calculations multiplying that out for our projected ability to source products and expected growth in sales.  Despite this seemingly credible approach, our projected revenues were multiples higher than what actually occurred.

Q: Did you have money saved up for personal bills or did the store support you from the beginning?
A: I remained with my day job in state government until the store was about two years old.

Q: What are your thoughts on running Pauper events?  Are they worthwhile?
A: No.  I have no problem with Pauper as a format, it's a way for players to get some more enjoyment out of their cards.  But it's just too marginal to make the calendar in a room where Standard, Modern, Legacy, Draft, Sealed, etc, all have substantial audiences.

Q: What are the first stepping stones to owning your own card shop?
A: Write a business plan, contact an attorney, and gather a bunch of money.

Q: Do you have a personal collection of any product that you also sell in your store?  Or is it purely business?
A: I still enjoy this stuff even though it's also work.  I have only one Magic deck, a Progenitus Commander deck, mostly blinged out.  I have a complete collection of Android Netrunner and enough ships to play casual X-Wing.  I have a lot of rare video games.  I own several full-size arcade games and various RGB-modded and/or rare consoles: Neo Geo, Vectrex, Super Famicom Jr, NES Playchoice, Skeleton Saturn, Component GCN, and a PVM RGB monitor.  ZERO lag, baby!

Q: What is the most expensive card you have ever sold?
A: An autographed 2003 LeBron James rookie card.  It went to an eBay high bidder.

Q: No, I mean the most expensive Magic card.
A: Several Beta Black Lotuses.  None of them worth nearly as much as that LeBron.  I don't even deal in sports cards regularly (yet) but a friend of a friend needed it sold, so.

Q: When starting a new store in an untapped market, how do you study demographics?
A: Start with Google, then proceed to area municipal, county, and state web resources.  You can generally then move to real estate and commercial leasing websites.  Nothing replaces being from the area, though.  I know stores that are suffering because their location is worse than they realized, because the area carries a stigma of being bad or on a downtrend.  I've lived here 42 years, I can tell you for almost any intersection in metro Phoenix whether it would be wise to locate there.

Q: How much of your revenue comes from snacks and drinks?
A: Less than 5%.  A negligible amount.

Q: How much capital did you start with?
A: $100,000.  Half in cash, the rest in product from my eBay store and physical resources (fixtures, equipment, computers, etc).  It was not nearly enough for the scale of store we wanted to build.  You can start a corner Magic clubhouse store for far less, of course, but you're vulnerable to everything and are facing long odds to survive to become something more scalable.

Q: What did you think of Goblin Guide not appearing in the Battle for Zendikar block and Snapcaster Mage and Liliana of the Veil not appearing in Shadows Over Innistrad?
A: I was surprised at the first, because it seemed ideal for the Guide.  I did not expect Snap or Lily in Shadows.  However, I thought we would get something -- Cavern of Souls, Craterhoof, or perhaps even Sigarda.  Instead we got a big donut, and none of the above in Eternal Masters.  I speculate that Lily might appear in Eldritch Moon.  Mark Rosewater said the two-set blocks would bring more aggressive reprints.  Thus far, that has not occurred except for the Onslaught/Khans fetchlands.

Q: Would it make sense to expand, having one set of inventory split between multiple stores?
A: Expansion is its own equation.  It is correct to expand when you have a good candidate location with a worthwhile lease offer, a good management team in place, solid processes because you can't be in two places at once, and enough money for buildout.  You can split inventory from the current store, but you diminish that store's revenue base.  A partial split is generally going to make the most sense, supplementing with cash.  Running two locations is more than twice as hard as running one.

Q: How often do you consider burning your store down for the insurance money?  Serious question.
A: Stupid question, actually.  Insurance doesn't cover the cost or time of the labor it took to deploy and organize it all.  Even a 100% claim payout that included business interruption coverage would not nearly make the business whole for the full loss sustained.  Nobody with any remote amount of intelligence would sabotage their business intentionally in such a way.

Q: Do you enjoy playing games even though you spend all your time also working with them?
A: Absolutely!  Though I don't get to play nearly as often as customers think.  It is extremely rare for me to play games I sell at the store, because when I am at the store, I am usually playing the game of "Make DSG the best it can be."  It's an extremely immersive game.  :)  I play at home fairly often and at friends' homes.  If I don't find a game appealing, though, I bail on it hard.  Working with that game becomes like handling fruit or something.  I stop even seeing it as a game, it's just product.

Q: What comics sell the best?  Big names or independent?
A: Marvel accounts for more than 70% of all our comic sales, though DC Rebirth has been a huge hit.

Q: If there are other stores in your city or town, should you try to open your new store there, or move to a different town with no stores?
A: I would never open within the orbit of an existing store.  Even if you think they are poorly run, and even if they in fact are poorly run, incumbency is a crushing advantage.  You will most likely fail.  Open where there is no store.  Then you become the incumbent.

Q: What was the worst thing you experienced after opening your business?
A: Having to separate from a deeply-vested partner.  Costly, stressful, and did tremendous damage to multiple relationships.  Business partners are a necessity now if you want your store to be able to compete by multiplication of effort, but the fewer the better because the more people arguing over which direction to go, the greater the odds of a crash.

Q: What is your exit strategy for your store?
A: There are only three ways that you can end your business.  You can shut it down, you can sell it, or it outlives you.  No matter what, one of those three things will happen to any business you ever start.  Selling a game store for real cash is not unheard of but it is rare.  I would prefer that, but I expect to have to close at some point instead.  The industry will have moved on.  By then I should have a very profitable liquidation sale.

Q: Any advice for those who would like to start a business in this industry?
A: You can make more money doing almost anything else.  Then you will have money for games and more time to spend playing them.  Don't turn your recreation into work.

That's it for now!  Send your questions too.  E-Mail, Facebook, or comment.

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