Accounting & Bookkeeping

Accounting and bookkeeping are two different subjects.  Accountancy defined:

Accounting, or accountancy, is the measurement, processing and communication of financial information about economic entities.[1][2] Accounting, which has been called the “language of business”,[3] measures the results of an organization’s economic activities and conveys this information to a variety of users including investors, creditors, management, and regulators.[4]

Now, bookkeeping on the other hand is the:

Bookkeeping, in business, is the recording of financial transactions, and is part of the process of accounting.[1] Transactions include purchases, sales, receipts and payments by an individual or organization.

 

Accounting for all that it seems dry is vital for a business to be run well – bookkeeping is what you need to do to get the data in the first place.   Once you enter the data, it’s figuring out how to make it work for you that makes a business work.

Management Accounting

Talk to an accountant and they differentiate between financial accounting and management accounting.  Financial accounting reports on what has happened, management accounting is based on figuring out how to use the data that you have to tell you how to run your business.

Over a decade ago, when I was doing my dissertation I decided to focus on the connection between the accountants and the marketers.  The results were appalling – at least for someone who ‘knew’ what should be done.  These days, things have gotten a lot better – with bigger companies.  Smaller companies though still struggle to get the data in the right place at the right time.  Unfortunately, the information is still just not there.

In the Business

So let’s talk about the kind of reporting you want / need.  At the most basic level, you have sales and the cost of goods sold and the inventory you carry.  Then you have your various expenses that you’d want to track.  Assuming you are all tracking the same information (in the same way), the first step is to benchmark your data as best you can – if your expenses are significantly out of line with your peers, you know what to tackle.

Sometimes, that just means making a few phone calls.  Your internet bill seem a little high compared to everyone else? Well, perhaps a little Google-fu and a few phone calls can get you a better deal.  It’s amazing the amount of leeway a lot of account representatives have to provide you a better deal, if you push them hard on it.

The other benchmark to track is your expenses against previous years.  Has something gone up or down compared to previous years? Don’t just look as a straight numerical value but as a % of your total expenses – sometimes, a change is just inflation; while other times it’s because it’s of new charges thrown in that you were not aware of.

After that you can start looking at fixed and variable costs.  Realistically, in the long-term everything’s variable (rent changes too, just in bunches of years rather than monthly) but it’s worth tackling your variable cost immediately.  Those are by definition things that are easy to alter – while fixed costs often require significantly larger expenditures of time and sometimes capital.  Breaking up expenses so that you can watch for changes in either is extremely important.

Now, let’s talk reporting.  Sure, you could get reporting at its highest level (and that is useful for a bird’s eye-view); but really you want to break things down a bit more.  You want to break up your sales to what makes sense for your business – sales categories would be things like RPGs, Board Games, Miniatures, CCGs, etc.  Same with Inventory and Cost of Goods Sold.  Once you have reporting by that level, you can judge how you are doing based off the margins and how much of each type of inventory you have.  You can figure out turn rates and revenue per square footage.  Without that information? You’re guessing.

What other reports do you need? Well, for retail:

  • Shrinkage (aka theft / weird ass disappeared items)
  • Shipping charges
  • Interest charges (oooh, these are important if you have loans)
  • Cashflow statements
  • Accounts payable / receivable (who you owe / what is owed to you – great for figuring out cashflow and what’s due!)

I’m sure there’s more that’s skipping my mind but this post is getting long.  Take a course in accounting, take a few.  Understand what the books are meant for and what you can do with them – and then ask yourself the question – what do I want to know? You make the numbers dance, but only if you know the tune.

 

Stocking a Board Game Section

Wrote this answer to a question by a redditor, thought I might as well C&P it here.  He did answer some other questions (it’s a comic / hobby store re-opening, with a competing MtG centered-store) so hopefully that provides some context.

Okay, I’ll give this a shot. OLGS owner here (Starlit Citadel) so recommendations based off our own sell list, our experience at Cons and reading Gary’s blog (read it!!!). A few things to start, there’s some information I’m missing which will affect what you are buying.  This includes:
1) Store size (how much square footage, how much space is dedicated to board games).
2) Location (are you a mall store, strip mall store, stand-alone, in an industrial area of town or smack downtown? All dictate foot traffic and type of customers).
3) Game space (and if so, what kind and size? what events will you run, etc?)

Okay, that being said; I’d actually break your buy list down a bit differently.  My categories are:
– War Games (stock Command & Colors Ancients, Memoir ’44, Battle Line, A&A 1914, 1942 Europe & Pacific, Risk Legacy. Forget all the smaller publishers, just special order them in.)
– Heavy Strategy Games (Agricola, Ora & Labora (if it comes in), Power Grid, Suburbia, Puerto Rico, Caylus)
– Mid-Weight Strategy Games (Small World, Sentinels of the Multiverse, Takenoko, Race for the Galaxy, Lords of Waterdeep, Stone Age)
– Light-Weight “Gateway” Games (Kingsburg, Revolution, Munchkin, Ticket to Ride, Settlers of Catan, Carcassonne, Citadels, Gloom, Lost Cities, Bang!, Castle Panic, all the Fluxes)
– Deck Builders (Dominion, Ascension, and for your comic crowd; maybe Tanto Cuore. DC & Marvel Deck Builders 1 copy each).
– Filler Games (King of Tokyo, Love Letter (in all its versions), Coup,  Smash Up, the Resistance, Hanabi)
– Adventure (or Ameritrash) Games (Arkham Horror, Last Night on Earth, Cutthroat Caverns, Eclipse, Twilight Imperium, Mage Knight, Firefly,  BSG, Eldritch Horror, GoT Board Game, Zombicide)
– Co-Operatives (Forbidden Island, Forbidden Desert, Pandemic, Flash Point, Ghost Stories, Elder Sign, Shadows over Camelot )
– Family / Party Games (7 Wonders, Dixit, Wits & Wagers, Say Anything)
– Classic Games (Monopoly, Clue, Risk: Legacy, etc – decide if you want / need these. It can help with ‘branding’ you a game store, but if you’re a really geeky location due to the comics, it might be wortwhile not bothering and saving up on dollars / space).

There a lot of games here.  There probably are more I’ve missed, but these cover most of the evergreens we see with a few ‘hot’ items right now.  You’ll want to rotate the hot stuff in / out.

Some things to consider:
1) Board games take up a lot of space. Look at your own collection, count the number of games. Do a rough calculation of their value (50% of MSRP for your sales budget).  Now consider that you have to actually merchandise these games properly (i.e. they must be easy for customers to grab, hold and browse).  At a con, we easily bring about $8,000 worth of games and maybe have space to show 2/3 of it in a 10″ by 10″ booth.

2) You have to decide if you want to go full-line or just hit the highlights of some of these popular games.  Dominion by itself with just 2 copies of each game can take up 2 shelves. Ticket to Ride, Settlers of Catan, Carcassonne will do the same if you go full-line.  That’s an entire bookshelf (probably shelf and a half) filled with just the ‘mainstay’s.  Munchkin can easily take up 2 – 3 shelves, probably more if you really go full-line.

3) Tabletop is fine; but demand can vary significantly. Example – Dragon Age RPG – we sold 2 copies last year.  Ticket to Ride has always sold like hotcakes (easily over 20 turns) while Get Bit went up from 0 turns to 8 or 9 a year after the show.

4) Seriously, seriously consider bringing in the X-Wing Mini’s game. It sells insanely well for us and is so pretty.

5) Think about LCGs – specifically, Game of Thrones & Android.  Bring in ONLY the Core Sets, see if there are special orders.  There are way too many chapter packs to stock for most FLGs these days, so make sure there’s a demand first, then bring in the latest set in small numbers to sell to your current customers.

6)  Do NOT think you need to spend your full budget immediately.  Keep at least 20% (30% is better I’d say) unspent for upcoming products and to ‘fill-in’ sections as you see customers show interest.

7)  Decide how ‘deep’ (how many copies) you need based off how often you (or the owner) orders and how long it takes to arrive / stock the shelf.  E.g. if he only makes orders once a week and it takes 3 days to arrive, you need at least 2 weeks worth of product on the shelf.  So if you sell 2 copies of Settlers of Catan a week, you need 4 copies on the shelves (3 copies will ‘on average’ sell before the restock arrives, with 1 copy left for sudden fluctuations).

Negotiating : Understanding Incentives

This is a ‘best practice’ article in many ways, but delves into something I’ve discussed before – negotiating.  One of the most important aspcets of negotiating is understanding the motivations & incentives of the parties involved.  As an example, let’s talk about leasing & the commercial real estate market.  There are basically 3 parties (sometimes 4); involved in negotiating a lease.

The Landlords

The landlord’s motivation is simple – he’s there to rent his space for the most amount possible.  Now, depending on the landlord; he might value this amount in the short-term (i.e. the most money he can get per month) or long-term (taking into account ‘down-time’ when the space is empty and the most over the terms of the lease).  He might also value his time and peace-of-mind (i.e. long term tenants who are quiet) quite highly.

So, time, money & peace-of-mind are his 3 major motivations.

The Lessee

The Lessee wants a good space, he wants a location that he can likely grow into (if they’re thinking of growth) and the least onerous terms possible including the lowest rent.   Depending on the lessee; they might also value peace-of-mind and certainly want to mitigate potential risk factors as much as possible.

His incentive is his bottom-line and any risk mitigation possible

The Realtor’s

The realtor works for the landlord generally, posting his listing in an attempt to find a lessee for the landlord.  His motivation is the sale.  There’s also a secondary motivation – a desire for continuing business from the landlord and to a much lesser extent, the lessee.  How much they value each of the above is dependent on the realtor obviously; but here’s where incentives come into play in a large part.

The realtor is paid by the landlord as a percentage (%) of the final lease.  As such, he is incentivised is to get the highest possible lease rate for the landlord; especially when you consider that the landlord likely has multiple locations to lease.

At the Table

At the table, as a lessee you need to realise that while the Realtor might sound like he’s working for you; his greatest incentive is to get the highest lease amount possible.  Close behind that is keeping the landlord happy (not necessarily the same thing).  He is not greatly incentivised to make you happy . Understanding these motivations allow you to approach the negotiation in the right frame of mind, allowing you to get a better deal.

This is true in any negotiation of course, especially when there are multiple parties involved and there often are.  It’s also why creating the proper incentives for salespeople is important.