Scared Money Makes Plenty of Money


About a year ago, in early 2016, I made a short-notice someone-is-closing-their-store trip about two and a half hours away. These trips happen often enough that I keep a bag packed for them, but they’re rarely successful. Usually by the time an owner has decided to bail, they’ve already gone through a series of clearance sales that cause whatever is left to be garbage. This trip was different: The store was fully stocked and hopping. The owner was behind the counter and drunk.

I asked him for his story and found out that he was being forced to liquidate the store because of his pending divorce. When I asked him for his sales records and an asking price for all of the assets of the business, he produced them, and I liked what I saw. He and I were standing outside while I looked over his numbers, when a passing bird pooped on the paper and my hand. I probably should have taken this as an omen, immediately wished him good luck, and departed.

I asked him on the spot if he would lock the door and sign an asset purchase agreement with me as soon as my attorney could send one over. He said yes, excused himself to the bathroom for twenty minutes, then came back and said maybe.

Things kind of went downhill from there, with three increasingly-desperate trips to see him over the next five days. The final trip involved showing up unannounced with $20,000 in a bag. I finally got a handshake agreement to sell me everything in the store if I could get it all out the next day. I rushed over to a storage unit place five minutes after it closed, plunked $100 down, and got a phone call on my way out of the parking lot: The game store owner couldn’t sell me the stuff because there was a bank lien on it. Of course I’d asked him about this three days prior, but he didn’t think I was talking about THAT kind of bank lien. Yeah, it was that kind of a negotiation.

I was bummed that I hadn’t been able to execute my plan of signing the agreement, locking the door, and reopening the store six weeks later under my own brand. Still, I had seen his numbers, and I had spent some time researching the town. The town was seriously under-served. I kicked myself for not having the resources to immediately act, but gave myself a plan to open a store there in May 2017.

In 2016 I gathered a substantial amount of cash. I hired an additional manager, freeing up one of my existing managers to move to the new town and co-manage the store with me while we built a staff. Hastings’ timely death was the perfect opportunity to get the type of fixtures we use, so I chased Hastings stores all over the state. I put 4,000 miles on my truck in one month. As 2016 drew to a close I poured a few dozen hours into working multi-location awareness into my point of sale software.

I made half a dozen scouting trips with my wife and each of my managers, and we picked some likely locations. Christmas was maybe not quite as profitable as I’d hoped, but we seemed to still be in the safe zone for making the expansion happen. If I wanted everything on track to build out and open a location, I needed to have a signed lease by the end of January at the latest. This week I scheduled meetings with five different commercial real estate agents and left for a three-day trip to make my decision about the location. Yesterday I arrived in town, met with my first agent in the most promising spot, and nailed down enough details that all that remained was putting our lawyers in touch.

It was scary in the way that buying a house or a new car is scary, and I told my wife that all I really wanted to do was get back to my Airbnb condo and punch numbers into spreadsheets to assure myself that it would be okay. I’ve done this about a dozen times in my life when I or my wife lost a job, or had an air conditioner break, or had our insurance premiums triple (cough). Putting the numbers on paper and planning out my cash flow almost always makes me feel better about a major decision. This time it didn’t.

I looked at the number in my spreadsheet representing my startup costs for the new store, plus two months of rent and lights. I looked at my cash flow estimates, subtracted out our typical operating cash buffer for my original store, and compared the numbers. They were nearly equal. I could do it safely, maybe? (If you have to qualify something as “maybe safe” then it’s not safe.) If everything went swimmingly, we didn’t have any unexpected setbacks, we didn’t miss any expenses in our planning, and if the store performed reasonably well right out of the gate, then we could make it through the labor and delivery.

If anything went wrong, I’d be out of cash. I always held in the back of my head that I was willing to borrow a reasonable amount of money if we ran into a cash crunch. If things went a little more than slightly wrong, I might not realize how much trouble I was in until the debt was sufficient to harm my net income in a long-term way. I asked myself how much cash it would take to make these fears go away, and the answer was in the low six figures. I wasn’t going to go deeply into debt for a business model that could expire five to fifteen years from now. It was at that moment I realized that this expansion wasn’t worthwhile at the price that it would cost to do correctly and safely.

In the space of about two hours, I went from normal nervousness, to deep anxiety, to a certainty that it was the wrong move if I wanted to be sure of the future of my first store. I called my wife to let her know what I’d decided, then called the manager who was planning to move to let him know. I sent out emails to cancel my remaining appointments, had an adult beverage, watched an episode of Archer, slept five hours, and came home.

Rationally, I knew that there would come a go/no-go moment and I would have to make a decision. I know that I have too many people counting on me to go with a reckless plan when prudence tells me that it’s a close shave. Our culture values hard-chargers and risk-takers highly, but I value this business and the jobs it provides more highly. Emotionally, it’s a mixed bag. I can relax the tightfisted finances I’ve operated over the last nine months. I can make plans that don’t involve working myself half to death. Still, my gut calls softly to my intellect: Coward.

Whatever. My gut has crap for brains. I’m going to write some bonus checks and then take a week off.

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