Board Game Release Cycle

Or perhaps I should say sales / inventory cycle for board games.  This is roughly an idea about the board game release cycle (and other game products not including CCGs cycle for the most part) in terms of our inventory and sales.


Sales Overview Inventory Focus Inventory Budget Cashflow
January Flowover of Grandmother money means sales stays high Restock month from December. Items that missed December release or ran out of stock often arrive now, some of which are good sellers Great  – lots of money from Boxing Day Sales
February Sales doldrums. Everyone is receiving their credit card bills Keep stock tight, reduce stock levels time. Try to get rid of extra stock Great – so long as you keep a tight hold, you should have extra funds
March Sales picking up a bit, tax refunds coming in Continue trimming ‘extra’ stock.  More Essen releases often arrive around now. Good – might have to reduce available funds a bit to bring in more Essen products.
April Tax refunds for most everyone has come in now  Anniversary Sales generally drives revenue Trim stock further via Anniversary Sale, pick up Essen releases and interesting new items but low level inventory increase. Great – all Anniversary Sale items hopefully increased budget
May Sales lower as purchases ‘pulled’ from this month to April. Not much movement, bring in new items to keep stock fresh but don’t expect many hits. Some reprints of ‘hit’ items start arriving now too. Good generally – again, purchasing for ‘reprint’ hits now.
June Summer doldrums. Lower sales, few  interesting products released generally. Treading water. Just waiting. Good – on downcurve as we restock products and bring in okay sellers.
July Summer doldrums. Lower sales, few  interesting products released generally. Treading water. Just waiting. Good – on downcurve as we restock products and bring in okay sellers.
August Summer doldrums. Lower sales, lots of buzz from GenCon releases though Pre-order time.  Keep track of the buzz, add lots of pre-orders  based off buzz in GenCon. Good – no outlay just yet as only pre-orders.
September GenCon releases begin to hit shelves, sales are ramping up in Fall. Stock starts arriving, shelves start filling up really, really fast. Okay – money is starting to flow out to new stock that is arriving in torrents now, as new stock from GenCon starts arriving
October Lots of hit games start arriving, people are back purchasing. Stock starts arriving, shelves start filling up really, really fast. Okay to Bad – Inventory is piling up in large doses.
November Lots of purchasing.  Early bird XMas shoppers, GenCon hits and Winter game buying is happening now in droves. Add extra stock for XMas, make sure there’s enough for increase in sales. Bad – pre-purchasing extra stock pushes cashflow down before sales starts streaming in.
December XMas is here. 40 – 50% increase in ‘normal’ monthly revenue. Add extra stock in early parts of December, start cutting back and getting ready for sale. Bad to Ok – funds start flowing in, and towards the end of the month we start reducing the amount of stock so cashflow starts getting good

Cashflow, Retail Prices & Kickstarter

I was recently thinking about Kickstarter again, with the number of new and interesting projects popping up on that site for funding.   Now, having helped fund a few games – none of which have arrived; I’ve started trying to figure out at what level (on a purely mathematical basis) a discount would work for us.

The Calculations

The question is ROI here, and to do that, we’d need make a few assumptions on:

  • Timeframe – amount of time from funding to delivery of a project
  • Number of copies purchased
  • Turn rate of inventory
  • Gross Profit Margin Percentage

So, let’s say we invest $100 in a Kickstarter project to purchase 12 copies.  It takes 6 months for a project to be delivered and we have a turn rate of 4 and are using our Gross Profit Margin of 50%.

So for example, if we manage to acquire 12 copies at a turn rate of 4; the $100 investment is actually invested for 3.5 years (delivery time & time to sell all pre-purchased copies).  Invested normally (i.e. into other stock), that’d be a gross profit of $700 on $2,100 of revenue.

Here’s a little chart based on gross margin that we’d receive if the $100 was invested in ‘normal’ stock.

Turn Rate 0.5 1 1.5 2 2.5 3 3.5
4 $100 $200 $300 $400 $500 $600 $700
6 $150 $300 $450 $600 $750
12 $300 $600 $900

So, those 12 game copies would have to make $700 of gross profit, or approximately $58 each. That’d be about a 90% discount on an MSRP of $65.

Let’s say we only get 4 copies on a $100 investment in Kickstarter.  That means it’d sell out in 1.5 years from now.  The Kickstarter-games would then have to generate only $300 in gross profit- which again works out to be about $75 each.


With there continuing to be a constant flow of games via publishes in the ‘normal’ channel; I just can’t see a reason to invest in Kickstarter anymore as a retailer.  The time delay between purchasing a game and having them come out is a significant opportunity cost – at a turn rate of 4; we forego $100 in gross profit.  As such, a game has to ‘make’ back that amount in discount for us immediately; which seems almost impossible and still be profitable for the publisher.

Funding a store

I’ve recently been thinking a lot about different funding models, after a huge dose of the Dragon’s Den.  By the way, for all of you wannabe entrepreneurs, that’s a great show to watch.  Lots of good wisdom thrown around, with some really hard questions asked.  Questions that any entrepreneur should have to answer at some point.

It takes about $100,000 to start and run a store from my view point.  Figure about $30-40,000 in stock including a ‘slush’ fund for unexpected demand for games.  About 2 years operating expenses and $40,000 or so for 2 years worth of salary.  That should see you through the bad times and the unexpected costs till you see some good growth.

That being said, very few people have that amount on-hand.  There’s a variety of funding sources available, and I’ll list them here with my comments.

Government Loans & Grants – there are a few grants out there; mostly for women, visible minorities (generally First Nations) and those under 30.  Ditto with loans.  If you fall  outside of those categories, it’s difficult to get your loan or grant; but the amounts and the interest rates makes it quite worthwhile to look into.  Your Small Business Centre in your city will be able to help.

Employment Insurance – here’s an interesting fact.  If you are fired (or otherwise end up on EI); you can apply for a business development program.  They put you through a course that helps you develop your business plan while you are on EI and you have up to 52 weeks I believe to develop the plan & start the business.  However, if you already have an existing business, you are ineligible for this plan.

Bank Loans & Lines of Credit – at the very least, you should get a Line of Credit.  Cashflow is often uneven; so having the ability to quickly dip into the LOC to cover bills is really useful.   Just realise that with bank loans & LOCs, you require a good credit report and the willingness to sign your life away.  And even if you do, you might be required to put up further collateral (e.g. a GIC deposited with the bank, your house, etc.) before they will extend a loan to you.

Visa & Mastercard – I’m not joking.  They are often your best supporters.  Sure you sign away your life as well, but they don’t ask for collateral and can loan you even more than your bank would be willing to.  In Canada, a business credit card generally sucks.  Your rates are often higher as are your yearly fees and you get less cashback / reward points.  However, the side benefits can make it worthwhile for some people (car rental insurance, specific bonuses for traveling, etc).    If you intend to use your personal credit cards, definitely look into increasing your credit limit at least a year beforehand.  That allows you to go through 2 cycles of increase requests, which gives you a good bump.

Self-funding: What it says.  The money you take out from  your personal savings.  My only comment here is that it’s worth deciding how much you’re willing to invest and what the limit is.  A spouse is very useful for setting limits here.  On a secondary note – consider making a formal agreement with the company (if you incorporate) indicating the loan amount(s) and the interest rate you charge.  While you might get taxed on this ‘income’; it also increases your company’s expenses.

Friends & Family: How friends & family help fund the business depends on the organisational structure chosen – if it’s an incorporated business, a partnership, etc.  In an incorporated business, you can issue shares (voting or non-voting) for the amount invested.   You then have to decide how they will get their money back (e.g. buyout clauses and dividends).  If you’re going down this route, talk to the professionals.  There’s quite a few options, and shareholder agreements are very important at this stage.

Direct loans on the other hand are simpler.  I’m not sure how it works if you’re self-employed; but with a corporation;  they get inputted like any other loan.  You’ll want to formalise the loan again (loan amounts, the loan term and interest rate paid – generally comparable to 3rd party loans) both to make it official as well as to reduce anxiety and confusion.  It’s worth noting that in the event of a bankruptcy, lendees will always be paid first before shareholders.

My personal take on loans from friends & family is to tread very carefully.  The fastest way to poison relations is over money.  Unless all parties understand that there is a HIGH risk of failure, things will likely end badly.

Angel Investors: True Angel Investors generally look for a higher return on their investments.  However, random acquaintances who are willing to invest could be considered ‘Angel’ investors, and these are potentially the best kind.  They don’t have an emotional stake in you; so they are viewing the business through a more clinical eye.  The actual method of investment (equity or loans) depends again on company structure and your deal with them.

Venture Funds: Just don’t bother.  The board gaming business is not one their interested in.   We’re too mature, there’s nothing new or exciting or ground-breaking here to provide them a good return.

Okay, that’s all I can think of right now.  Did I miss any?

Best Practices : Cashflow is King (5)

Businesses do not go out of business because they are making a loss – they go out of business because they no longer have the cash to meet their obligations.

The main point about this article is to highlight the various variables that affect the amount of cash you have on-hand.  This is not about mitigating your loss; most businesses will make losses in the first year or three.  That’s not an issue, you can easily run a business with losses if, for example, you have a line of credit or loans or sufficient capital to deal with the losses.  The goal however is to never run out of money such that you can’t pay your bills.

When thinking of cashflow, it’s worth thinking in terms of both your cash-on-hand (your start-up capital & any retained earnings and the like) and the total lines of credit available (e.g. your credit card limits, your LOC limits & your loans).  It’s also worth working out how many (average) months of expenses you have using both those figures.  If you have enough cash on hand to manage 2 to 3 months of expenses, you are quite set.  If you’re dipping into your lines of credit with only a month left; you are in a seriously dangerous zone.

The other area to consider when thinking about cash flow is fixed and variable expenses.  Certain expenses (e.g. rent) are pretty fixed while others (e.g. marketing costs) are highly variable.  It’s worth taking a look at your financial sheets regularly (at least annually) to understand which of those expenses are fixed or variable.  When you are down to a month left of  funds, you’ll seriously need to look at what you can cut.

There are also other factors that affect what your cashflow is like.  Here’s some areas that you might not even have considered:

  • Upfront costs

You are going to have quite a few.  Incorporation costs, interior design costs (shelving, desks, etc.) and office equipment all need to be purchased before you begin pulling in revenue.  In this case, it’s rare that you can do much to reduce the outflow of cash but you need to plan to have sufficient capital to deal with these upfront costs.  In our case, we had 4 months of no revenue while the site was being set-up but we continued to incur expenses during that period.

  • Inventory, Suppliers & terms

Depending on your suppliers, you either pay immediately or receive terms (e.g. 5, 15 or 30 days after the invoice).  If at all possible, you will want to receive terms.  (Side note: to reduce cost, it’s cheaper and better to pay by checks since most companies charge a credit card use rider which can range from 1 – 2%).

Terms give you more time to receive and sell your stock without ‘paying’ for it – which can be useful if you are stocking up for high sales periods (e.g. Christmas).  Quite often, when a new game releases a surge in sales will occur and then sales will peter out.  As such, while you might order 6 copies in the beginning, you might only want to have 1 copy in-stock for the rest of the yea.  Terms allow you to order those 6 copies, keep the revenue for the sale of the copies and re-order your 1 ‘permanent’ copy; without touching your working capital.

  • Gateway Processing Times

This affects us an online business the most; but it is something to watch while you’re running a b&m store.  Most businesses take credit cards, which are processed through a merchant gateway.  These merchant gateways can take between 1 – 2 business days to process your funds and send it to you.

PayPal is notoriously bad for this – they don’t send you your funds until you request it; and also charge a fee for amounts less than $150.  In addition, it can take up to 5 days after your request for the funds to be deposited.  So even if you’ve sold a game, you might not receive the money till a week later.

  • Payment methods

Anything paid via cash or Interact is immediately debited.  Payments by check can take up to a week (especially if you’re paying a US supplier) from the moment the check is cashed by the supplier to it clearing on your side.

Credit cards on the other hand can provide up to 44 days of free credit; depending on the closing date of the statement and the charge.  This is almost ‘free’ money; so long as you pay the credit card off completely.

  • Taxes

Again, this can be quite a boon for businesses as taxes are often remitted quarterly or annually.  Before the switch to the HST, PST was collected on a quarterly basis.  As such, we ‘collected’ the PST charges to customers regularly in our bank account and only had to pay it out 4 times a year.

With taxes, the biggest danger is not setting the appropriate amount aside.  Employee EI & Remuneration is  one of the few things that a director of a corporation is personally responsible for.

Well, outside of sales; but that’s a different article entirely.  The longer (legally) you can keep from paying a charge, the better your cash flow looks.  However, just because you’ve delayed a payment doesn’t mean you don’t have to pay it!