One of the aspects about any business is that to a certain extent, you are always forced to grow. Standing still (in terms of revenue at the very least) is death. Every year, your costs go up (unless you are lucky / down-sizing for some reason). A real world example – our product shipping cost has grown by a good 4% in the last 2 years due to the fact that we have to buy from Canadian distributors rather than US distributors. As mentioned, our portion of real estate taxes doubled in 3 years. And that’s just the tip of the iceberg. Every year, costs go up.
As a business, you need to grow your revenues at least enough to cover the increase in costs. That means you need to see a 2% increase at the very least (based off CPI)/ Most of the time of course you want to grow even more than that. Unfortunately, for most of us, growth like this requires more than a wish and hope, it also requires spending more for advertising and often, working on new plans and streams.
For us, over the last few years it’s been about growing new product lines outside of board games. Increased competition by gaming stores (both physical and online) means that the pie is being fought over ever more, and exclusives level the playing field in terms of stock availability in many ways. Even with the gaming market growing, it seems that the increase in game stores is on-par and we no longer see the aggressive growth numbers we were used to seeing from our gaming categories.
It’s one reason why we’ve invested so heavily into other items like Pop! figures, geeky clothing and the like. Don’t let that statement fool you though, gaming is by far our biggest category (so big that on our backend we split products up so that we can better track the types of revenue) and even low % growth is still significant. Still, knowing that we have to grow is always on our mind and it’s been something I’ve been pondering more and more recently.
As I’ve mentioned, our lease is coming to an end next year and while we have an extension option, there’s been some significant consideration to opening a physical B&M store. We have had more than a few customers want to browse our inventory and when we ran our Open Houses, we had significant interest. Having a full B&M store opens up the option of doing events as well and snake & drink sales. Presumably, many of our impulse purchase items would also see an increase in revenue, potentially significant enough to recover the difference in cost.
The biggest hurdle is capital. Having invested a significant amount of capital into inventory for our various other categories, we don’t have a lot of left. That means opening the store would be on a shoe-string budget for things like tables, new bookcases, etc. There’s also a chance that sales don’t grow like we expect or at the rate that we expect, burdening us with significant fixed expenses and not enough revenue generated. It’s why I’d love to be able to go into it with a significant capital cushion, which probably means looking at some form of external financing.
Of course, we could just continue doing what we are doing, taking on some additional side projects like the Kickstarter fulfillment; but we risk very slow growth in that case. hat though might not be a bad idea – pay down debt, earn a little bit more money and continue onwards. Unfortunately, it’s also boring…