The year in review : 2010

It’s February, so this is a rather late ‘year-in-review’; but between the Con and getting our books in-order, I haven’t had time to really analyse the year.  For obvious reasons, I’m not discussing our actual revenue figures.  However, now that we’re 98% done with the books for 2010; I am able to review how the year went in more detail.

Overall

2010 was a rather disappointing year once we had the numbers down.  While it seemed our cash position was better, it was in large part due to the introduction of the HST.  We collected a lot more taxes this year than we had paid out, which means we were carrying the taxes as a nice ‘loan’ from the government.  We have to pay it back now, though our cash position has plunged back to it’s normal level.

In addition, while our sales had gone up, so had our costs.  In fact, we ended up making $100 more than we in 2009 (excluding salary for myself).

The Finances

There’s a few factor’s playing into our financial results this year.  Firstly, the type of sales we were getting was significantly different – our cost of goods sold had gone up significantly to nearly 70% in some months (and I’m not even talking about our Sale months).  A quick review has shown that our costs of goods for certain products have bee higher than we are comfortable with; specifically two big sellers for us this year – Castle Ravenloft & Heroscape have to be sourced from a very expensive distributor.  In addition, the Rewards Program also chipped away at our margins.

Secondly, we had an increase in our on-going operations fixed cost.  Rent, insurance, heat, hosting  & internet bills all rose between 20 – 200% last year.   Over time, as we grow into our new space, the proportion of these costs should go down; but for now, it’s a significant hit.

Thirdly, and this is a pure accounting issue; but we ‘booked’ a lot more shipping expenses this year than last year.  Normally, we are on terms with Canada Post; but due to some issues with their accounting process; most of our December expenses for this year showed up in December instead of January.  Of course, 2009’s December’s shipping showed up in January 2010; so our  books are reflecting shipping expenses for two XMas’.

Fourthly, outsourcing and hires occurred in 2010 as well.  We had others do our bookkeeping for most of the year and of course, we had a few people in to help with shipping.  Both significantly  increased our expenses here, something which we hadn’t really had to pay for in 2009 compared to 2010.

Lastly, we had a series of one-off charges happen last year as we transferred control / directorships from Alison to myself.  This involved a number of legal fees and filings, which again impacted profits.  Also, the expense of the move has to be factored in including the new shelves and the new warehouse equipment we bought.

 The Silver Lining?

Other than Canada Post & the Cost of Goods Sold, most of those changes and costs were necessary for our next growth phase.  Hiring others to help with the bookkeeping and shipping meant I had time to tackle projects that had been on the plate forever.  The new space was necessary to keep growing, and we’re definitely not going to need to move for at least another year or two.  So if we manage to grow a little this year, we should be able to actually post a higher profit.

The Industry & Gaming in General

I’m always wary of speaking about the gaming industry or the board gaming industry because there is so little data out there.  In addition, we’re in year 3 going on 4; so we’re still in that growth phase.  Each year, our revenue numbers are going to be higher.  Now, when we hit year 5; I’d expect a leveling of – but till then it’s hard to correlate our growth with that of the industry.

However, we’ve seen a lot more games released this year compared to previous years.   A lot of good, strong games were release; some of which just haven’t done the sales that we had expected.  Some of the larger game companies (e.g. Wizards) have re-entered the board game market seriously while a ton of small press publishers have released some solid games (e.g. Summoner Wars, Alien Frontiers & Catacombs).

On the other hand, all these new releases seems to be squeezing the classics even harder.  Sales of some of our classic games have dropped significantly (e.g. Puerto Rico, St. Petersburg, San Juan) especially when you factor in our growth.

Lastly, deck-building games were the major story of this year.  Dominion continues to be a roaring success, outselling the other deck-building games by at least 3 to 1.   I expect we’ll continue to see a flood of deck-builders in the market, and I’ll be interested to see where this category goes.

Last Thoughts?

2010 was a transition year and I expect 2011 to be another one.  We’re going to have to hire again sometime this year, there’s no doubt about that.  For now, the workload is manageable by myself but as sales continue to increase; I’m going to have outsource more and more as the hours needed to manage all the sales continue to increase.  Outsourcing and hiring is going to be another major cost, one that I’ll have to be carefully budget for.

On the other hand, 2010 has  shown that this business is viable.  I’m no longer putting money into the company to keep it floating, and I’m now drawing a regular salary.  I’m not buying a  Yacht yet; but there is no danger of me quitting to pay the bills.

New & Restocked Board Games – February 25, 2011

New Board Games:
A Game of Thrones : Wildling Horde Chapter Pack
Age of Steam: Time Traveller Expansion
BattleLore! Code of Chivalry Expansion
Battle of Westeros : Banner Replacement Pack
Call of Cthulhu LCG Perilous Trials Asylum Pack
Thunderstone Doomgate Dragonspire
Tide of Iron: Fury of the Bear Expansion
Trollhalla
Warhammer: Invasion LCG Omens of Ruin

Restocked Board Games:

Axis & Allies 1942
Call of Cthulhu LCG Horror beneath the Surface
Call of Cthulhu LCG Spawn of the Sleeper
Catan: Portable Edition
Cluzzle (2nd Edition)
The Conquest of Planet Earth
Defenders of the Realm
Koplow Dice Tray
DUST Tactics
Earth Reborn
Gosu
A Game of Thrones : Princes of the Sun Expansion
Kids of Carcassonne
Killer Bunnies: Red Booster
KinderBunnies
Lost Cities
Magic Labyrinth
Malta
Munchkin 6 Demented Dungeons
Munchkin Card Game
Munchkin Cthulhu
Munchkin Cthulhu 3 Unspkeable Vaults
Pillars of the Earth
Railways of the World
Snow Tails
Space Alert
Summoner Wars: Premium Board
Twilight Imperium 3E Shattered Empires
Twilight Imperium 3rd Edition
Ubongo Duel
Zombie Dice
Zooloretto

Works Hours & Tasks – a breakdown

Recently, I’ve been surprised by how many seem surprised by the hours I work.  I guess most people don’t realise how many hours go into keeping the bare minimum of the site running. So I thought I’d do a breakdown:

Logistics

Logistics includes purchasing (i.e. placing the order with distributors and sorting out issues) – about 4 hours a week; the pick-up & receiving of the products including adding them to the site – about 10 hours and shipping – about say 15 hours (3 hours each day including staying late for customers).  Total time spent on logistics : 29 hours.

Customer Service

This includes answering e-mails and phone calls each day, so figure about an hour a day.  Total : 5 hours.

Accounting

Yeah, our greatest joy. I love Accounting – about 4 hours a week is what we need to do just to stay on-hand.

Marketing

Among other things we need to do here include updating our advertising including creating the newsletter (say an hour a wee)k and adding new games to the site (roughly an hour a week). The blog takes about an hour to update (various blog posts & the new games).  So figure minimum 3 hours.

Total: 41 hours a week

The above total is just to keep the site running, orders flowing out and customers answered.  It doesn’t include any improvements to the site or additional administrative tasks that occur like :

  • Paying suppliers
  • Cashing checks & cash from orders
  • Buying office supplies
  • Cleaning & sorting the office
  • Researching & playing new games
  • Coding new functionality for the site / working with the developers on new modules
  • Finding / researching new advertising opportunities
  • Conventions
  • etc.

My work hours generally trend to the 60’s a week (not including lunch hours or the like) once we get around to adding the assorted tasks above that need to be done.

New & Restocked Board Games : February 17, 2011

New Board Games

Automobile
Cosmic Encounter – Cosmic Conflict
Cutthroat Caverns Adventure Modules B1/ B2
DUST Tactics: BBQ Squad
DUST Tactics: Laser Grenadiers
Munchkin Santa’s Revenge Pack
Munchkinomicon
Train of Thought
Wrath of Ashardalon

Restocked Board Games
Battlestar Galactica the Board Game
Battlestar Galactica: Pegasus Expansion
Cutthroat Caverns
Elfenland
Give Me The Brain
Gosu
High Frontier Expansion
Last Night on Earth : Growing Hunger Expansion
Munchkin 2: Unnatural Axe
Munchkin 3: Clerical Errors
Munchkin 4: The Need for Steed
Munchkin 5: De-Ranged
Shogun
Summoner Wars: Fallen Kingdom
Summoner Wars: Vanguards
Taboo (refresh)
Talisman Revised 4th Edition
Telestrations
Wealth of Nations
Wealth of Nations War Clouds
Zombies!!! (Second Edition)

Payment Processing

On our site, we have 3 major methods of payment.  Each of them is actually quite different, with different costs and requirements.  I thought it’d be interesting to discuss them in detail:

Visa / Mastercard

This is our basic payment processing method; which most of our customers use.  It runs through our merchant gateway and payment processor where we authorise the customers credit card and then invoice them for final payment.  Charges come in two forms here – a fixed transaction charge of $0.15 and a % charge on the amount processed (approx 2.3% of the entire charge including taxes).

Since we authorise cards here, we actually get charged the transaction charge twice – firstly for authorising the card, secondly when we invoice the card.   The reason we do this is to allow us to charge cards later if any product is on pre-order.

Orders charged here have the funds deposited into our account on a daily basis, providing us access to the funds almost immediately.

PayPal

PayPal makes up the next most used payment method.  In PayPal, customers can use their remaining PayPal balance or any credit card that they currently hold or even their bank account as an eCheck.   Generally speaking, we are charged $0.30 +  2.8% on each transaction.

Unlike our Payment Processor, PayPal doesn’t have an authorise function- so transactions are all charged and deposited in our PayPal account immediately.  Funds are ‘cleared’ in our PayPal account whenever we reach the minimum $150 free deposit limit, but it still takes between 3 – 4 business days for the funds to arrive in our account.  So most times, we are looking at least a week difference between charging and shipping orders and receiving the funds for it.  It is also, as you might have noticed, more expensive for us.

In addition, PayPal’s eCheck function only ‘clears’ funds between 5 – 7 business days after they withdraw the funds from our customer accounts.  On occasion, this has resulted in ‘bounced’ checks, which is why we generally try not to ship these orders till the funds have cleared.

Check / Money Order / Cash

We receive very little of these payments, mostly as customers prefer paying with the other methods.  It’s slow since customers have to mail the checks/money orders to us and then we have to cash them and wait for them to clear.

Cash on the other hand we do receive for Local Pickup orders (and conventions of course) and it’s nice.  On a $100 order, that’s the equivalent of a cup of coffee saved.  On the other hand, there is a cost in the time it takes for us to actually go to a bank to deposit the checks / cash.

Other payment methods

There are of course other payment methods available online.  The US has a number of new methods available, but none of them have really crossed into Canada as yet.  The major other form of payment is Interac who have an online feature.  However, they charge a monthly fee, their usage charges are a higher % than the credit cards and it only works for a very few banks (the 4 major Canadian banks to be exact).  For those reasons, we’ve decided to avoid installing Interac till they come to their senses.

So why so many payment methods?

It’s all about choice.  Some customers don’t have Visa / Mastercard.  Some prefer (or have funds in) PayPal, so not offering that payment method is a major deterrent.  Some even believe PayPal has better refund / consumer protection policies (they don’t, your credit card does).

Whatever the case, while we might have preferences for how we are paid, it’s the customer’s choice.

Best Practices : Negotiate, Negotiate, Negotiate (7)

When you are running a business, always be looking to negotiate with your various suppliers.   There’s a lot of expenses involved in running the business – insurance, distributor discounts, rent, salaries, etc- and nearly all can be negotiated upon. As we know, reducing costs is extremely important to running a profitable business.

I’m not going to write a long post on negotiations – there’s a ton of well written books & posts out there about negotiating.   Here’s the basics though:

  • Do your research and make sure to know the general prices & terms involved
  • Talk to multiple suppliers
  • Think in multiple dimensions; not just price
  • Be willing to walk
  • Don’t rush your decision
  • Always review the final contract
  • Leave something on the table

Here’s a quick example drawn from the business – negotiating with distributors.  Now, we have a ton of distributor accounts.   Most we don’t use or rarely use, but overall it’s 7 or 8. When talking to distributors, there’s a few areas to look at : price of the games (and price on specific publishers); selection (i.e. which publishers they carry), shipping costs (free shipping threshold), return policies, number of days to arrive & terms.

So when negotiating, the areas that can be adjusted include the price of the games, shipping costs & threshold and the terms.  The other areas are unlikely to adjust much (other than perhaps selection if you’re big enough to ‘request’ sourcing from a desired publisher), but if you know what you’re willing to give-up; you can potentially negotiate better areas within any of the above.  So, for example we have great terms with one distributor but a lower free shipping limit on another.

One thing though – I always try to ‘leave something on the table’.  I always think in terms of relationships – i.e. long term so I rarely ‘push’ a single negotiation to the limit.  I’d rather come back in six months to a year, with new growth numbers and re-negotiate than to push the limits and potentially set-up an adversarial relationship.  In the long-term, the benefits of a good relationship plays out better I believe.

New & Restocked Board Games – February 10, 2011

New Board Games
Chronicle
Pirate Fluxx
Struggle of Empires
Ticket to Ride Alvin & Dexter Monster Expansion

Restocked Board Games
Apples to Apples Bible Edition
Apples to Apples To Go
Ascension, Chronicle of the Godslayer
Axis & Allies 1942
Bausack
Betrayal At House On The Hill
Botswana
Carcassonne the River 1
Catz, Ratz, & Batz
Chez Geek House Party Edition
Chrononauts
Command & Colors Ancients
Condottiere
Dice Town
Dominion
Dominion: Prosperity
Doom: the Boardgame
Downfall of Pompeii
DungeonQuest
El Presidente – Cuba Expansion
Forbidden Island
Ghost Stories
Gipf
Hansa Teutonica
Innovation
Jewish Fluxx Expansion Pack
SKIP-BO Card Game
Munchkin Booty 2 Jump the Shark
Munchkin Fu 2: Monky Business
Munchkin: Good Bad & the Munchkin
Once Upon A time Card Game
Power Grid
Puzzle Strike
Rattus
Rattus Expansion – Pied Piper
Red Dragon Inn; Gambling? I’m In
Ricochet Robots
Runebound Mists of Zanaga
Small World
Kids of Catan (SA)
Sorry
Space Alert The New Frontier Exp
Star Munchkin
Star Munchkin 2: Clown Wars
Survive: Escape From Atlantis
Talisman Revised 4th Edition
Talisman: Sacred Pool Expansion
Talisman: The Dungeon Expansion
Talisman: The Highland Expansion
The Speicherstadt
ThunderStone
Thunderstone: Wrath of the Elements
Tikal
Triumvirate
Twilight Struggle Mounted Map
Yomi: Complete First Edition
Zombie State: Diplomacy of the Dead
Zombies!!! (Second Edition)
Zombies!!! 2 Zombie Corps(e)

GottaCon 2011 & Conventions

We just finished GottaCon 2011 and it was quite a good convention.  More competition this year, but more customers so it worked out well.  We even managed to cover our costs this year I believe – and of course we met a ton of new and old customers.  I just wish they’d launch a gaming convention like that in Vancouver.

I thought it might be interesting to list out our preparations for a convention.

3-6 months beforehand:

  • pay for convention & book location (if possible)
  • decide on sponsorship & events to be run (if any)
  • book transportation
  • book accommodations (if required)

2 weeks

  • review past sales at convention
  • make order to distributor for additional products required – both past bestsellers & recent bestsellers

1 month before convention

  • Start informing customers of the event via twitter & newsletter

Day before convention

  • Pack games to bring to convention. Worry about over-packing repeatedly
  • Review ‘to-bring’ list of items.  Includes banner, shopping bags, business cards, tape, receipt books & computer
  • Get float for convention from bank

1st day of convention

  • Get transportation, load van & get to vendor room
  • Review location, unload & park van and get ready to sell!
  • Wander the halls, look at competition
  • End of day, if local; review any games that have to be picked-up to bring to convention at customer’s request

After the convention

  • Pack remaining stock & load van
  • Drive back to storage & unload
  • Unpack van.  Generally the next-day or two since by this time we’re exhausted
  • Review sales at convention & costs

And rinse and repeat for all conventions.  Some like GottaCon are more elaborate.  Others like VCon are closer and easier to manage, but we do the same for all of them.

New & Restocked Board Games – February 3, 2011

New Board Games:
Black Friday
Legion – Ascension Sleeves (50)
Puzzle Strike
Summoner Wars: Grungor’s Charge
Summoner Wars: Rukar’s Power
Survive: Escape From Atlantis
Survive: The Giant Squid

Restocked Board Games
Chrononauts The Gore Years
De Vulgari Eloquentia
Descent Journey in the Dark
Elfenland
Glen More
High Frontier
High Frontier Expansion
Invasion From Outer Space: The Martian Game
Labyrinth War on Terror
Mad Scientist University
Shadow Hunters
Shogun
Settlers of Catan : Fishermen of Catan
Talisman Revised 4th Edition
Tien Zi Que
Word on the Street

February 2011 Newsletter

Site Updates

GottaCon 2011 is happening on February 4 – 6, 2011 and we will be there as Vendors. We will also be running a couple of events – a Dominion & Race for the Galaxy Tournament. Make sure to say Hi! to us if you’re in the neighborhood.

In addition, we’ve added some Ziplock bags to the site so check them out. The Ding & Dents section has also some new great deals.

Read more on our blog

Upcoming Games

Puzzle Strike a hot new board game played with poker chips is arriving this Thursday and Yomi: the Complete First Edition restock should arrive next week.

7 Wonders and Dominant Species is expected to re-release in March of this year. The Carcassonne Big Box 3 reprint is arriving February of this year.

The Mansions of Madness has been pushed back to a release in March due to printing problems.

More Pre-orders