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Tuesday, January 31, 2017

I Need a Vacation

I need a vacation, and this is not a new idea on my part.
Running a business can be both exhilarating and exhausting, and the problem with that is that both states lead to gradual fatigue.  I have decent stamina for an old-timer, because I live in a generally healthy manner.  I don't drink, I don't smoke, I don't shoot up Krokodil until my body rots away to necrosis.  It's a healthy mindset and it leads to seven-day weeks that seem to fly by.

This is also intentional in a business sense.  I like to compete by exerting gradual pressure.  It conserves my resources and leaves me best able to pivot to serve my customers.  Rather than reacting with whiz-bang impromptu sales and tournaments, I methodically plan and build a framework and then advertise what we've got.  When it's time for a sale I prepare it thoroughly, advance it to nearly an end state, and then I push on it until we get the revenue.  I make it clear from the first Facebook boost that anyone who wants to scoop up the deal should visit as soon as feasible.  Most importantly, I act rather than reacting.  In a local market as cutthroat as this one, that's crucial.  It helps avoid spinning my tires in the mud.

Why does gradual pressure work?  Because any time my competitor is working and I am not, they are gaining on me if they are behind, pulling past me if we are even, and extending their lead if they are ahead.  No good.  Instead, I will work when they are not.  That lets me gain on them if I am behind, or pull past them if we are even, or extend my lead if I am ahead.  I want them to recognize this psychologically.  I want them to see that am willing to outwork them.  I want them to feel a fragment of resentment every time they spend an idle hour, because they realize they just handed me a little bit of market share.

I am willing to run that grind week in and week out.  And then, every now and again, I get to step away and they get to make up a bit of lost materiĆ©l.  In 2014 or 2015, I could not realistically be away very much.  The store was still on life support from the partner splits of 2014.  My trips in 2015 to the GAMA Trade Show and the GTS Distribution Atlanta Open House just about hit my limits, and I had to spend a lot of time during both trips on the phone or computer putting out fires.  By last year things were stable enough that I was able to enjoy GAMA, then later an extended holiday at my parents' place, then a four-day weekend in Flagstaff with my other family members, and a few other impromptu days away besides.  My managers and staff really grew the beard, and took a level in "we got this."  But if things had hit the fan in 2016, I was only ever really a couple of hours away.

This year, 2017, will be different.  This year is the tenth anniversary of my wedding to Stephanie Jarczyk, the love of my life and the mother of my three children, and we will damned well celebrate on a tropical beach of some sort, most likely by means of a large oceangoing vessel.  Steph is a schoolteacher, so she's not free until June anyway, but when the time comes, we are outta here for I don't even care how long.

Oh, and there's GAMA again in March, GTS in Anaheim (I believe) in the fall, and it would sure be nice for this to be the year I make it to Alliance's Open House but my magic 8-ball says all signs point to "2018" on that.  Still, with GAMA, GTS, and some time on a party barge, the Bahr-not-on-the-premises quotient is going to be at its highest ratio ever.  The opportunity to attend GTS and then take my kids to Disneyland is nuclear strong.

For me to be gone, like really gone and unavailable, banking and procurement and HR still have to happen.  And realistically I had nobody else that could accomplish those tasks before now.  With my mergequisition of Tempe Comics into DSG Tempe, and the addition of Mike Griffin to the DSG partnership, it appears that problem may finally be solved as well.  Griffin has been taking care of everything for the Tempe store for over a year already.  I have confidence that if I roll us into June without any serious outstanding unfinished business, he can execute everything for the duration.

There are things I can't control.  Crystal Commerce continues to suffer from repeated outages, functionality breaks, and related problems.  We can still do business with the point-of-sale down, but it adds labor and slows things down and makes things difficult for customers, which we never want to do.  The exacting deliverables demanded by TCGPlayer are something I would confidently leave running if Justin were on the job, but all summer long he will be deep in the forest primeval, hunting wabbits.  I will probably deactivate my TCGPlayer account for the duration of the trip, unless the rest of my crew seems like they're rock sharp at it by then.  And we are already crying out for labor with the hourly cost so much higher due to the minimum wage hike.  And no, the expected spending boost has not happened, to any noticeable extent.  But they promised!

As much as I can batten down the hatches, I will, and leave ongoing operations to the people who are already capably doing them every day.  And then I will sit on a beach with Steph.  And we will do nothing.  And it will be everything I hoped for.  And then I'm sure she and I will think of something fun to do.

Tuesday, January 24, 2017

Do You Need a Lawyer?

I am joined today by Paul Simer, owner and proprietor of Nerdvana in Jackson, Tennessee.  This is the first of what I hope will be a great series of interview-style articles here on The Backstage Pass.  The next one is already in development with a retailer who is a member of the GAMA Retail Division Board.  But that is then, this is now.

I also opted out of my MTG Aether Revolt post-mortem, as I realized after revisiting my last several entries that there is nothing new to say in the immediate aftermath of yet another release.  I have a rather math-y article about the Magic card business due up in the near future that I think will scratch that reader itch.  Besides, Paul himself posted a great article today about the situation in the Magic category, in which he says much of what I would want to have said.

Paul and I have gathered today to discuss a matter of great importance that many retailers seem unwilling to address: How can you (a store owner) tell whether you need a lawyer?
Paul Simer, as seen on TV

BAHR: Hey, Paul, you're a fellow retailer.  What do you think I should do about my landlord not fixing our mold problem?

SIMER: You need a lawyer.  Hey Mike, you're a fellow retailer.  What do you think I should do about my employee embezzling from me?

BAHR: You need a lawyer.  Hey Paul, what do you think I should do about the state Department of Revenue imposing a tax lien on my inventory?

SIMER: You need a lawyer.   Hey Mike, what do you think I should do about the store two states over that's using almost the same name and trade dress as mine?

BAHR: You need a lawyer.  Hey Paul, what do you think I should do about this guy who slipped and fell and broke his leg in my comic aisle?

SIMER: You need a lawyer.  Hey Mike, what should I do to make sure my sales tax collection on tournaments is legal?

BAHR: You need a lawyer.

SIMER: What if I check with my accountant?

BAHR: Do that too.  But still, Lawyer.

SIMER: What if I check with my brother who is in law school?

BAHR: Lawyer.

SIMER: What if I check with these smart customers I have?

BAHR: Lawyer.

SIMER: What if I crowdsource an answer from other retailers on Facebook?

BAHR: You need a lawyer.  But what should I do about the co-tenant in my building flooding my storage room?

SIMER: You need a lawyer.

BAHR: What if I check with my landlord?

SIMER: Do that too.  But still, lawyer.

BAHR: What if I check with my parents?

SIMER: Lawyer.

BAHR: What if I make up a plan as I go along?

SIMER: Lawyer.

BAHR: What if I hope the problem will go away?

SIMER: You need a lawyer.  You need one really, really badly.

BAHR: Okay, tongue-in-cheek aside, a lawyer isn't always necessary, and they don't work cheap.  Are there times when it's safe to go without?

SIMER: You should always at least consider hiring professional legal help.  But basic problems ought to be within your realm of business acumen to solve.  If there are transients congregating in front of the smoke shop next door and scaring off your customers, that's not really a lawyer issue -- yet.

BAHR: Right.  That's an issue for you to discuss with the shop owner, then with your landlord, then with the local constabulary, and then, if nothing else works, then you have your attorney fire off a cease-and-desist and threaten to go further.

SIMER: I've approached my lawyer about doing a C&D three times.  One time he's done it, and the other two times he's talked me out of it, and that was just as valuable.

BAHR: What about the ill fortune that brought a smoke shop to your proximity? Lawyer?

SIMER: One would hope you communicate with the landlord.  But my lawyer has been wonderful for me for general business stuff.  Stuff like, "I'm about to move, what does 'broom-clean' mean in my lease?  Do I have to prime the walls, or can I just putty/sand and leave them?"  My lawyer has seen it all and that really helps.

BAHR: Similar for me.  My current landlord has been great about playing ball with me and mostly solving things that have come up.  But we also pressed to get lease exclusives and exclusions.  Nobody needs a neighbor that will poison the plaza.  That's where a lawyer came in.

SIMER: Exactly.  And if the landlord is more adversarial, or even just uninformed, there is danger.

BAHR: Gordon Lugauer, a practicing attorney and owner of The Board Game Barrister in Milwaukee, did a GAMA talk about that, where he gave great detail on issues of subrogation, subordination, and liability in a lease.

SIMER: I remember.  I think a lot of people may get tripped up by subordination and estoppel stuff.  A landlord may present a seemingly boilerplate amendment that their bank wants all tenants to sign before they'll loan the landlord money.  It looks fine, but then your lawyer may spot that it significantly changes your responsibilities and protections in the event the landlord defaults and the bank takes ownership of the premises.  Not cool.

BAHR: Gordon isn't on the schedule for GAMA 2017 but hopefully he will make a return down the road because the immense value of an attorney's guidance is something too many retailers go without.

SIMER: Speaking of attorneys who own game stores, what about you?

BAHR: I don't count.  I am not licensed to practice, and even in my legal career such as it was, I was an administrator and analyst, not a litigator.  As I tell people who ask me, my opinions are not legal advice, and I am nobody's lawyer, not even my own.

SIMER: Would you say a legal education like yours informs your business judgment?

BAHR: Sure.  It's nice to know some of the minutiae, and it saves me money to do my own payroll and such.  I still have a certified accountant do my taxes and those of the business.  But it's no substitute for a real lawyer, and yet fewer businesses are turning to professional legal assistance today than in years past.  I graduated from ASU Law at the end of 2006, and then got my job in government administration in 2007, then around 2008 there was the Great Recession, as you know.  Law graduates couldn't find or keep a job for love or money, because of the tightening of liquidity across all of business and commerce.  Primarily this meant much less demand for lawyer services as transaction volume in high finance plummeted.  But more than that, companies decided they didn't want to pay to be litigious anymore.  They decided a certain amount of loss due to bad actions of competitors, customers, or elsewhere in the market would ultimately be a small price to pay compared to the cost to continue to litigate everything.

SIMER: They accepted a dirtbag dividend, if you will.

BAHR: Exactly.  And it changed the entire mindset of the legal industry.  Business changed processes so as to minimize exposure to the risk of litigation itself.  Not just changing business processes to make them less prone to losing a lawsuit, but changing to make legal action less likely in the first place.

SIMER: Best way to avoid the punch, don't be there.

BAHR: This was the mindset in late 2011 when I started planning Desert Sky Games.  I wanted to set things up so that no right-minded person would ever sue us.  You can't really stop the fools, but I'll take my chances against them.  And we had an attorney who reviewed my initial lease and formative business documents to protect me from defects in my own work.  I used to hate my lease due to its cost, and resent all the burdens it imposed on me, but time has proven the value of the legal work we purchased.  Changes he made have benefited me greatly as circumstances came up, and my lease is sufficiently tenant-leaning that my landlord insists on removing several clauses if and when we renew.  When our lawyer got picked up by the County Attorney's office, he had to leave private practice, and I've been able to put off fully engaging an attorney ever since.  I've gone too far the other way now, and I need to follow my own advice here and get back on the professional services plan.

SIMER: The time to engage an attorney is early, when it's just small stuff, so they know you and your store and don't have to start from ground zero when you need something big.

BAHR: Indeed.  It's going to be this spring.  I have a lot going on right now and I'll need the execution of documents and cleanup on some litigation I should have done long ago, so I need to get that done.  I've been passing up money and letting problems sit unaddressed.

SIMER: You need a lawyer.

BAHR: I could just crowdsource an answer on Facebook, though.

SIMER: Don't make me come down there.

That wraps up this week's edition of The Backstage Pass.  I hope you'll trust in the earnest advice of Paul Simer and myself and get thee to a law office before it becomes critical.  You don't have to go to Biglaw or a plaintiff's firm; in fact, you're probably best off in bang for your buck with a local general practice attorney, considering that most legal issues a comic or hobby game store encounters are going to be pretty mundane, legally speaking.  Beyond general practice, other specialty areas that might be relevant to you include commercial real estate, labor law, consumer law, landlord/tenant law, trademarks, and resort/leisure business law.  The best place to start your search is networking in your community, but if you come up with no leads there, the Martindale-Hubbell Lawyer Directory is a great online resource.

Thank you Paul for your time and insight!

Tuesday, January 17, 2017

Two

What a week we just had.  To say nothing of the Aether Revolt prerelease, which went great, and which I will discuss next week after the regular release weekend.  But more than that, we finally had some completion on the business side of things.

"Keep on pressing through the changes.  The momentum that moved you will not stop now." - The Neal Morse Band, 2012

DSG shocked the region back in November with a massive merger-expansion announcement, one that would add three existing stores to our repertoire and set the table for the opening of three more in the next two years.

That ambitious plan sounded gargantuan, which of course is an impression we were happy to cultivate.  In reality it was very reachable by means of incorporating existing, operating stores into the DSG business entity, and then proceeding with a capital-infused plan to add locations to that structure at roughly six-month intervals.  It was going to be a lot of work, of course, but we were not having to reinvent the wheel to achieve it.

Then, the other shoes dropped, and we found ourselves with an inbound store dying on the operating table before we could acquire, and also in a questionable position with comics, a product category so primary it's right there in the store name.  Our option on the Chandler lease expired.  Our venture capital did not come in as promised -- though that didn't have as huge an impact on our plans because I held off on committing to spending for funds that were not yet received.  But the bottom line was, the great seven-store ambition was clearly not going to take place.

Fortunately, we did not sit down and stop, nor did we give up.  Behind the scenes, I continued working with the various ownerships involved.  Some of the business plan did not work out, and that is disappointing, but it happens.  But some very big parts of the plan did work out.
That brings us to today.  Last week we finally completed the incorporation of Tempe Comics into the Desert Sky Games LLC business entity.  Thus, Tempe Comics LLC is no more and the store at 1523 E. Apache Blvd is truly Desert Sky Games and Comics - Tempe.  Proprietor Mike Griffin has fully joined the ownership group of DSG and is an LLC partner, and we have already begun the process of adding massive resources in equipment, fixtures, and inventory to the Tempe location.  

Once fully catalogued and racked, the DSG Tempe library of comic books will be among the biggest and best around, as it will contain everything Tempe Comics had plus everything DSG Gilbert had no room to exhibit... plus even more comics we had in storage.  There are some really great comic mainstay stores in town and we aspire to build toward the level of their impressive offerings.

I have taken two moving trucks full of material from Gilbert (and my garage in Chandler) to Tempe thus far, in addition to many, many minivan loads of merchandise.  And we're not even close to finished; there is so much more still to go.  DSG Tempe has a lot of space we can leverage to make up for lack of space elsewhere until more locations can open.

And when will that be?  Soon, but not as soon as we thought.  As I mentioned before, we have our leisure to build at Superstition Springs, and the plan right now is to spend the bulk of the spring and summer saving up to have a better resource base to do it.  And as I also mentioned, Payson is on deck and will still be there when we are ready to move, likely next year.  This does not prevent us from exploring other options, including bringing in more capital and/or finding another way into Chandler. But after pushing a little at the edges to make the seven-store blowout happen, and having that not work out, we are content to move forward at a more deliberate pace now.

I am basically a walking bruise at this point; all that moving things around was as much as my aged and infirm body can withstand.  I could probably sleep through a day, but no time for that as Business is Happening right now at Gilbert and Tempe alike!  I hope your 2017 has been healthy and prosperous as well.

Tuesday, January 10, 2017

Thoughts, Part 6

I have a few beefier articles in the writing process right now and I don't want to rush them to print undercooked, so I figured I would riff on some tradecraft other than the big items (the mergexpansioner and the 20% minimum wage hike).

I go through a lot of white plastic card dividers.  The little tabs you see separating every card in the TCG inventory racks.  You have to separate every card with a labeled tab at our volume level, there's just no other feasible way to have staff pick and pull orders with any semblance of speed.  We consolidate foil and regular versions of the same card into the same tab, because it's not that hard for a staffer to tell them apart.  We further expect the staffers to learn distinctions of variant versions, special printings, and so on, and generally they do a good job of this.  But without a place for everything and everything in its place, you simply can't functionally sell at scale.  So with Aether Revolt, Mind vs Might, Modern Masters 2017, Amonkhet, Commander Anthology, and Archenemy Nicol Bolas on deck, we're talking about a thousand dividers or so for just the first half of this year.  And that's just for Magic.  We also use them for Pokemon, Star Wars Destiny, Android Netrunner, and so on.  And we use them in the back room for various intermediate sorting and triage stages for collections.  Oh, and customers buy them sometimes for their own use.  Ultra-Pro is going to be resting on a huge pile of money when the industry growth finally tapers off.

Our fulfillment specialist, Justin, has become an inventory specialist almost exclusively now.  We simply get the most bang for our buck from his labor by having him do nothing but grade and enter cards into Crystal Commerce all day.  The rest of the staff spends a lot of time grading and entering cards also, and so do I for that matter.  But the process of scaling up, and seeing our online singles sales continue to ramp higher and higher, and seeing Justin's speed continue to increase and his error rate remain at practically zero, made it clear to us that it was inefficient to waste his payroll hours assigning him to do anything else.  Every now and then we break the monotony by bringing him in on some other project or some ad-hoc work, but mostly his daily itinerary is pretty much set at this point.  Best of all, he spots inefficiencies in the processes he is working on.  That sort of meta-thinking is rare in any profession, but all the more so in small specialty retail.  Most people aren't capable of objective analysis of their functions in a business.  Either they don't know enough, or don't grasp the significance of what they do know.  I won't get to keep Justin because he is a forest ranger during the warmer months and eventually he will advance to year-round wildlife management work.  But while he is here, I am diligently learning all I can from his trial-and-error so I can develop that expertise in my management team.

Rebecca Clark, Travis Parry, Gary Sproul, and John Stephens, in no particular order, run stores in Colorado, generally in metro Denver or northward.  They are among my friends and colleagues in the online brain trust, but more than that, they are the stores in the area where my sister's family and several of my friends have relocated.  In regular contact with this assortment of people through social media, I can experience something I don't think would have been possible even ten years ago: the perspective of my professional and personal life extended into an entirely different place.  I'm probably not doing the best job of articulating this, but it's a profoundly interesting and enjoyable thing and I think it's just going to get better as communication becomes more pervasive and also farther-reaching.  Yeah, the internet has been around for a while, and we've kept up with family by various means for ages.  But it has never been like this, and I think the immediacy and vividness is what makes the difference.  I get the impression I could walk right into one of their stores and function coherently in a matter of minutes.  (Well, after Gary teaches me how to make the coffee.)

Paul Simer, owner and proprietor of Nerdvana in Jackson, Tennessee, frequently chides me for thinking too far outside the mainstream when it comes to product focus for video games.  He is right, of course: the bread-and-butter products are the most popular consoles.  Playstations, Xboxes, Nintendo handhelds, and the common retro stuff like NES, SNES, and Genesis.  These systems were the best sellers in their time and they remain the best sellers today in the used video game trade, and software follows suit every time.  Meanwhile I get my endorphin rush from the Neo Geo, the Saturn, the Vectrex, arcade gear, and so on, even though those systems represent a minuscule amount of sales volume.  But in this industry we do reap some amount of what we sow.  Among other items in stock right now at DSG are an original 1972 Magnavox Odyssey complete and mint in box with accessories; a 1987 Atari XEGS complete without box, which I just finished refurbishing the other day and works beautifully; a 1998 Super Famicom Junior that is going to go under the knife for an RGB video modification; and an SNK MVS-1C system that begs to be console-ized.  These things are the spice of life for me in this business.  But I'll still buy your used copy of Call of Duty Blackest Ops IV.
DSG is located in a part of town that houses a substantial Latter-Day Saint (Mormon) population.  Growing up in Phoenix, this was something I always took as a matter of course: while your typical midwestern, Atlantic, or southeastern state is predominantly Protestant, in this market the two big demographic pie pieces are Catholic and LDS.  There are marketing particulars that apply to the LDS community, not the least of which is maintaining a family-friendly environment.  I know many stores emphasize family-friendliness, but it's a bit of a more exacting degree here.  If you're going to have R-rated content in your business, you're going to face a greater burden if you want to become known as a "friend of the Saints," and they take that relationship seriously, so I do too.  I am regularly in touch with store owners in the Utah Corridor and other LDS strongholds, and we share observations and outcomes to gain a better understanding of what we are doing.  If you don't understand the community norms where you've located your business, you are going to struggle to reach your audience.

That's all I have for this week, like and subscribe and leave a comment on this web zone why not.