How to Open Your Own Comics Retail Store Part II

After I wrote last week's initial column on the perils of opening a comics shop I gave it to Sean Scott, the head of our mail order subscription club, to read over. Sean reads each of my columns in advance of submission, and helps me catch many errors. In this instance, Sean didn't see any problem with the factual content of my column, but made the comment "The cynic in me knows that half the people reading this column will simply believe that you wrote it in order to scare off potential competition."

Sean's observation rather stunned me, as nothing could be further from the truth. During the 1980's, I saw the emergence of the comics retailing community as the answer to the decline of newsstand sales throughout America. I absolutely believed that the Direct Market was the panacea for all the ills of getting comics into the hands of collectors. Simply put, I believed that if there were just enough comics shops, then the comics industry would inevitably prosper. I wrote this opinion in numerous columns during that period, and went out of my way to try and help prospective retailers get started.

What has happened in the interim is that I have witnessed the effects of uncontrolled growth within the comics retailing community. In my role as a bulk buyer of back issue comics, I am frequently witness to the sadness and despair that accompany the disintegration of personal dreams. No matter how well intended these sellers of comics once were, the end result is that they were unable to keep their dream of retailing comics alive. As a result, they find themselves in the helpless position of having to dump their remaining inventory on the market, usually for pennies on the dollar, just to try and quiet a few of their threatening creditors.

What my experience in these sad situations has burned into my psyche is that not everyone is ready to own their own business. More importantly, even within the small population that pass the initial hurdle of having the abilities to become an entrepreneur, even fewer have the personality traits and skills required to retail comics. I remember reading a Small Business Administration (SBA) pamphlet 30 years ago which laid out the hard facts that 70% of new businesses started in America fail within three years, and that 85% fail within five years. At the time I read those chilling numbers I thought they must be wrong. I've since learned, however, that for the specialized area of comics retailing, those percentages were actually a bit optimistic. Very few of the stores that were opened from 1988-1999 are still in business, and I'll bet that 75% of those that are still open could be purchased for net asset value, with no consideration given for the enterprise as an ongoing business.

What is motivating me to write this series of columns on opening a comics retail store is a sincere desire to not repeat past mistakes. I will no longer simply give prospective comics retailers advice on the paths to follow to get a store open. As I said in my last column, opening a comics store is very easy. Diamond has low minimum order requirements, empty stores for lease abound in America, and fixtures can be purchased for relatively little initial investment. Where the process becomes much more complicated is in the day-to-day operations end of things. What most comics retailers never figure out (until it's too late...) is that they are losing money every day that they are open for business. They accumulate lots of inventory, and come to believe that owning lots of stuff is the same thing as making a profit. Well, that's only true if you have a cost-effective mechanism for turning your stuff into cash. If you don't own such a mechanism, you're not generating a profit, you're simply adding to your storage cost burden. Eventually that burden, combined with a lack of cash flow, will kill your business.

So why would you ever even consider opening a comics shop? Well, for one thing comics need your help. If you have the personality and the skills to operate a viable comics retailing business, the reality still exists that you can make a positive contribution to the world of comics, and also make a decent living. With some hard work, and luck, you might even be able to join those of us who have managed to figure out a way to make more than a little money selling comics. The world of comics is full of opportunities right now, and it looks as though sales are once again growing on a nationwide basis. This might very well be an excellent time to catch a growth wave, and consequently gain that little bit of extra advantage that every starting business seeks to achieve the critical mass needed to succeed in the longer term. My next few columns will explore other elements of comics retailing in order to help you make an informed choice as to whether to attempt the risky proposition of opening your own comics retailing business. Far from discouraging you from giving comics retailing a try, I hope that my columns clearly lay out to you some of the errors that have been made in the past. By frankly putting that knowledge in your hands, I am only trying to help increase your odds of success.

To be continued...

Please send your e-mails to chuck@milehighcomics.com, and your letters to:

Mile High Comics, Inc.
Attn: Chuck Rozanski
2151 W. 56th Ave.
Denver, CO 80221