Monthly Archives: September 2016

I’m working on a post about clubhouse stores, but I’ve decided that it is unfair to identify clubhouses without also talking about how the owners might escape clubhouse status. The problem is that escaping clubhouse status is hard, requiring resources that most clubhouse owners don’t have. Thus, the inevitable second part of that post has to turn to accepting reality and leaving the game trade.

So before I talk about clubhouses I have to talk about means of escape, and that escape might be closing the business. But how does one know when it’s time to get out?

The easier question to start with is, why did you get in?

I was a police officer before I bought my store. The politics of policing in the American South were not quite as complex as they are today, and the economy was worse. There were so many applicants that there was an 18-month wait at my department for jobs that had awful hours in dangerous conditions and paid $26,000 a year. I looked around at my respected peers, and realized that they almost without exception had spouses working as well to make ends meet. The Chief of Police at the time was making $66,000 annually. That wasn’t the future I wanted for my family, so I saw the opportunity to buy a business as a potential escape from a job I loved that didn’t love me back. I defined success at the time as replacing my cop income, while allowing me to have one or two part-time employees for a couple days off a week and the occasional vacation. I was wrong. That is not what success looks like.

I will not claim a perfect understanding of life and business, but that understanding certainly feels more developed after five years in this business. Your view may differ, but here’s what success, survival, failure, and collapse look like to me these days:

Success: The owner makes enough money to pay taxes, drive cars that are not breaking down, live in decent housing, pay off debts, and save for the future. He or she is not a slave to the counter, though working it is an option if the owner finds joy in it. The owner has enough employees that he or she can leave town on short notice for business or pleasure, and those employees are paid enough that they consider themselves lucky to work there. Because of the relatively high wages, the owner is able to be more discerning, and ends up with good people that are well-liked and well-cared-for. There is enough slack in the owner’s resources that he or she can take on extraordinary projects that benefit the business and jump at time-sensitive opportunities. There’s plenty in the budget for new product, so an extra Magic release or hot new limited product is an opportunity, not a financial trial. The owner’s spouse is not required to work, and may find themselves filling the role of administrative assistant or marketing director, allowing the small company to punch above its weight for professional presentation and outreach.

Survival: A store that is surviving pays its owner what would be considered in the area to be a living wage, though the pay comes unevenly throughout the year as the business booms and lags. There’s enough extra to pay for twenty to forty hours a week of part-time help at minimum wage. This allows the business to be open for predictable hours while allowing the owner a day or two off and gives them permission to do things like catch the flu. The bills are almost always paid on time, though careful planning goes into the timing of the outgoing payments to ensure there are dollars in the account to cover them. The owner drives an older but reliable car. There’s no extra to invest into marketing or R&D, and trying new things frequently has to be done in a way that can most charitably be described as “plucky.” If a new Magic set and a new Pokemon set come out at the same time, there might not be enough Pokemon product on hand because of cash flow difficulties. The owner’s spouse probably works a full-time job. Rob’s record store in High Fidelity is a survival-mode store.

“I lost it. I lost it all. Faith, dignity, about 15 pounds…”

Failure: A store that is failing is not paying its owner a living wage. In all too many cases, the owner has never received a consistent paycheck from the business. The store is doing enough business to pay the rent and utilities, though it is frequently late making those payments. Employees are a happy fantasy, though the store might have flunkies sorting cards or running events in exchange for product or store credit, all under the table and untaxed. The exact financial status of the business is hard to nail down because the owner frequently buys groceries out of the till. This store will not survive an audit, but isn’t likely to be the subject of one since there’s nothing to take. New Magic releases are ordered in box quantities instead of case quantities, and the phrase “sorry, no cash, only store credit” causes a heartbreaking number of trade-ins to walk back out the door. The owner drives a car that is not long for this world, with breakdowns resulting in “Surprise! We’re closed today.” posts on the store’s Facebook page. The spouse’s full-time job is paying the owner’s living expenses, with early optimism turning to resentment as the years drag on with no change in the financial prospects of the business.

Collapse: The owner is probably benefiting more from the business than he or she ever has, but it’s done by shuffling goods and fixtures out the back door to sell before creditors can change the locks on the store. The store has completely abandoned any attempt at regular hours, and posts on Facebook are the best way to determine when they’ll be open this week. Everything is late. There is no new product because last month’s product was never paid for. This is usually the time when a hastily-composed GoFundMe or Kickstarter campaign will be launched. The owner doesn’t understand that even $10,000 of free money will not save his or her business. Nobody donates, anyway. Depending on how the owner is handling things, their spouse is either relieved that it will soon be over, or is moving back in with Mom for a while.

This is what the various states look like, but the definitions should be more personal and concrete for each owner. When I say concrete, I mean that you should determine what the operating profit (which will determine things like number of employees) and net income (which will determine which car you drive) numbers are for success, survival, and failure. Write these numbers down under each heading, then figure out where your store’s state falls in that list. Nobody is looking over your shoulder, so you can, and must, be brutally honest with yourself.

If your store is succeeding, then there’s more to be done than ever. You thought that you would have it made, but now you’ve got something to lose, so in a lot of ways it’s even worse. The days of your friends and customers seeing and appreciating your hard work are over, because most of it is now behind the scenes. You just traded all your small business glory for a little more money. Tough. There’s people counting on you to feed their kids. Get back to work.

If your store is surviving, then you’re not alone. Most game stores that make it exist at this level. You certainly shouldn’t give up, but you should definitely examine your options. If you’ve got an education and career prospects that will lead to a better financial future for your family, you should consider a graceful end to the business. Or you could find some poor sucker with an inheritance to buy it from you, I suppose.

If your store is failing, then you have hard decisions to make, but it’s not a disaster unless you wallow in mediocrity for years or allow it to collapse. Most stores that didn’t start with plentiful capital were in this state, at least at first. If you just started, you may be able to doggedly ride the momentum up into survival, and then possibly into success. If you’ve been stuck here for a while, though, the prudent thing is to arrange for a timely, dignified closure. If you met your obligations to your creditors, and didn’t leave your building in shambles on your way out, then there is nothing wrong with closing a business because it didn’t work out. You can shake everyone’s hand and still be an adult when you lock the door for the last time.

If your store is collapsing, then now is not the time to try to execute a Hail Mary play for success. If small business success is in your future, it’s not in this iteration of your business. Do your best to close without hosing anyone, then rebuild your personal and financial life and decide what’s best for the future of your family. This is your opportunity to do the right thing. Don’t miss it.

Let’s talk about independent retailers and Cards Against Humanity. I’m not here to discuss the merits of the game, because the market doesn’t care about whether you or I think it’s a good game, or a sophisticated game, or whatever. It’s a game that people want to buy, and that’s what should be important to retailers.

Cards Against Humanity does not sell their game through distributors like Alliance and GTS. They sell direct to a very few brick-and-mortar stores, but the vast majority of their product is sold direct through Amazon. It has been so hot that I and many other independent retailers buy the game on Amazon, mark it up above MSRP, and sell it in our stores. It sells anyway. Recently they’ve made waves on my side of the industry by bypassing independents almost entirely and partnering with Target. In so doing they’ve probably killed the side-channel cash-cow of the marked-up copies sold at your local game store.

There’s a lot of hate among independent retailers for Cards Against Humanity, but the discussion of it is frequently disingenuous. Apparently they showed up at GAMA in 2014 and announced that they would be taking applications from stores to sell their game. They started small, signing with just a few retailers seemingly at random, and then suddenly started telling retailers that they were not approving any further applications for the indefinite future.

And why would they? We are, on the whole, awful. The barriers to entry on the retail side of our industry are essentially nothing, and some among us are pleased to sell games for 15% over wholesale online. Trying to enforce Minimum Advertised Price is like herding cats, with recent ongoing attempts requiring the clout of some of the largest publishers in our industry, who surely can’t be certain yet of the outcome. Some retailers wail bitterly about what lying, dishonest jerks CAH are for taking clean, indisputably legal steps to protect the value of their product, and that evening will post about how awful it is that other publishers allow scumbag online discounters to drive margins down to nothing.

Cards Against Humanity is the Soup Nazi of the tabletop gaming industry. They have a product that is so in-demand that they can decide exactly what stores get to do business with them. They have learned their lesson about independent retailers from their final trade show appearance and the backlash that continues in retailer forums to this day. If I were in their position, with a product so popular that I could freely choose my partners, I wouldn’t want to do business with us either.

It makes me wonder about what place the independent retailer has in the tabletop gaming business. Many of my well-respected and successful peers insist that the local game store has an important role as a driver of enthusiasm for new games. We demo and sell games locally which creates community, they say, and drives sales for the new thing across the entire ecosystem.

Whether you think that that’s true or not, and whether or not you believe that publishers will need us in ten years, you can’t deny what Cards Against Humanity has demonstrated: If your product is good enough, you can make lots of money while cutting out the petulant middle-man. Then, when you’re ready to try something bigger, there are mass-market retailers who are willing to sit down with you and do business like professionals.

Publishers, perforce, will continue to say reassuring things to us at trade shows. All we have to know is that Walgreens is getting their own Munchkin exclusive to understand that, right or wrong, we may not be considered indispensable forever. I can’t blame them, either way. Walk circumspectly, retailers.

Today I was at the store, sitting in our closet-sized office, doing end-of-the-month admin stuff, when I heard what sounded like happy noises from the front counter, including one of my managers saying, “That’s great! We can ALWAYS use more of those!” I asked what we bought, and she answered that we had just bought basically the entire set of GBA Pokemon games.

My stomach sank. I’m always scouring eBay, looking for big lots of video games that I can part out and sell at retail for a profit. I remembered seeing lots of these:

Don’t Do It

Let’s get this out of the way first: Selling counterfeit goods is illegal. Yes, it’s even illegal if you tell the buyer that they’re counterfeit. At the very least, the code running these games is owned by someone who is not getting paid for the counterfeit games, so at the very least “repro” carts are copyright and trademark infringement. If you are a store owner, do not mess with this. It’s morally wrong, legally prohibited, and practically it’s not a great idea to bet your business on selling black market goods. I want to feed my family and provide jobs for my employees with the knowledge that I didn’t have to cheat to do so.

Spotting Counterfeits

The above are all counterfeit games. Pokemon and Fire Emblem games are ridiculously hot right now so I’m sold out, but I do have a legitimate copy of Pokemon Sapphire in my workshop that is waiting for a battery replacement, so we can do a comparison.

Some things to notice: The battery on legitimate games is there to run a clock, rather than to keep memory intact. When the battery dies on these games, you are given a warning that the game will still work, but that time-related functions will not work. These functions include berry growth, which is helpful and fun but not required for the main part of the game. When starting the bootleg game, which has no battery and thus can’t keep time without being powered by the Game Boy, no warning is given. It is my expectation that the code has been hacked to circumvent the clock-check at the start of the game, and that berries do not grow. I don’t have a ROM dumper to check the former and can’t really be bothered to check the latter, but there is no reasonable way to implement time-based functions without, you know, a way to track time.

The backs of these games are clearly different when you have them side-by-side, but I’d have trouble telling if you just handed me one. The screw on the bootleg was silver-colored instead of gold-colored, but my experience with Chinese manufacturers indicates that this is not going to be consistent enough to be an easy tell.

The easiest way to tell the difference without taking the games apart is to look at the top-right corner of the blessedly-transparent cases. On the legitimate games you’ll see the edge of the battery. On bootleg carts you will see a chip on the top-right corner.

One final tell: There’s usually some letters and numbers physically imprinted on legitimate games near the Nintendo Seal of Quality. It’s too subtle to capture with my camera, but you can easily see it in good light. If there’s no imprinting, I would immediately be suspicious.

Take a look at the Pokemon Emerald cart above. Even in the seller’s photo you can see the chip in the upper-right corner where the battery should be. The legitimate card DOES have a chip near that location, but it’s not all the way up in the corner, and it’s mostly obscured by the battery.

Both of the above are counterfeit Fire Emblem games. These could be MUCH harder to spot since the cases aren’t transparent, but frequently the details are wrong on the labels since the games aren’t popular enough to get the same scrutiny. This Fire Emblem game is missing the Nintendo Seal of Quality altogether. Of course, if you open up the cases, the poor-quality boards and cheap blob-chip (these are chips printed directly onto the board and then covered with black epoxy to save cost) are giveaways. These particular copies don’t even make an attempt at having the Nintendo model numbers printed on board or using the “correct” chip model numbers, though of course that could change in later revisions.

What Now?

Well, I can’t sell these. I’ll keep them around for training purposes, but I would never sell them to a customer for legal and ethical reasons explained above. The employee who took these in wasn’t to blame, since he’d never been trained on spotting the fakes. I’ll point employees to this post in hopes that we won’t get burned again. I’ll place a note on the customer’s account to double-check the validity of games that he brings in from now on, but I won’t immediately ban him, because it’s very possible that he didn’t know they were fake. The eBay listings that are currently up don’t give any explicit indication that they’re aftermarket, and not everyone is informed enough to be suspicious of games below market prices shipping directly from China.

But now YOU are informed, so you’ve got no excuse. Go, and sin no more.

Update: My friend Michael from Desert Sky Games and Comics sends me an image one of of his copies of Fire Red:

Sure enough, more sleuthing determines that some of these games (which don’t need real-time clocks) don’t have batteries. From elsewhere:

Counterfeit on the left, legitimate game on the right.

If in doubt, it may be worth having known-legitimate games on hand for side-by-side comparison. That extreme-upper-right chip, the blob-on-board IC, and the lack of embossed letters on the Seal of Quality seem to be dead giveaways for fakes.

If you’re standing at your front counter at an empty game store reading my blog, then this one is for you.

You need a lackey. Right now. As in, as soon as you can reasonably do so. Ideally they should start training this afternoon.

You can’t be in two places at once, and you can’t reasonably do more than a couple of things at one time. Employees amplify the will of their employer, requiring only modest pay and humane treatment. An individual without employees is just a guy or gal who has a commercial lease. If you punch them in the nose, the business is probably closed for the rest of the day. An individual with good employees is like a person with a superpower. They’re stoppable, but they are orders of magnitude more capable than the lone guy or gal.

Getting employees is pretty easy, though managing them is a different challenge from the one you’ve traditionally faced. You’ll be pretty bad at it at first. I probably squandered what could have been an excellent first employee by alternately being too generous and too demanding. The second employee stuck around and learned with me.

The first objection is always that the store owner can’t afford an employee. If your goal is to have a profitable business, and you’re netting so little that you can’t afford someone to cover you while you take a day off, then you haven’t bought a business. You haven’t even bought a job. Jobs have days off. It’s a tough reality: There exists a state where the business has entered a death spiral. Without the resources to grow, no growth occurs, and nothing awaits but a miracle, eventual dawning of the realization that it’s a lost cause, or a long, mediocre slog that ends in the welcome release of death. The young man who owned my store before me had a fortune cookie fortune stuck to his monitor that said, “Good things come to those who wait.” It’s not true, so don’t wait for it to come to that. If you’re in this situation, then start making dramatic changes to what you’re doing, or start looking for a way out.

Downsides: Having an employee forces you to articulate to another human being how and why you do the things that you do in your store. This will hurt. It will expose all the lazy things that you allow yourself to get away with when you see an employee doing them and it makes you angry. It will cause you to start seeking easier, simpler ways of doing things, not because you can’t do complex tasks, but because the jobs that need doing must be made teachable. You will have to swallow what pride hasn’t been beaten out of you by the game industry and make the changes. It will be worth it, I promise.

Even at a lower income, your life is almost immeasurably better once you have two or three days off every week. Eventually you’ll pick up a second employee, which will save you from having to work 12 days in a row if someone gets sick. Once you’ve got enough employees that you are liberated from the requirement to be behind the counter, your entire life will change. You get to start doing things like hunting for closeout inventory and fixtures, going to trade shows to learn to build a better store, and maybe seeking opportunities to expand or multiply your business. I have seven employees, I’m sitting at the library typing away in peace, and I’m going to have dinner at home tonight. I’ll be away from the store during Friday Night Magic! It would have been unthinkable four years ago.

When you add employees to the mix, you remove the limits placed on the business by your frail, pathetic meatbag body. The new limits are determined by your ability to create good process, hire excellent people, and keep destructive hubris at bay. Furthermore, there are mental limits that can be circumnavigated with the right employees. If you got good ones, you will start to discover that your lackeys are better than you at all the things you’re bad at. I’m starting to get to the point where even my managers get to work on the business  rather than just in the business some of the time. That is a terrifying development, but if I’ve done my job well, it’ll be amazing for everybody.

You need a lackey. Go get one.