How to Open Your Own Comics Retail Store Part IV

If you've read my previous columns on the factors you need to take into account when considering opening your own comics shop, you already know that my opinion in the matter is that you need to have a great deal of dedication to be a full time comics dealer. You also need to be honest, fair, and have the ability to communicate well. Finally, it is critical that you realize that once you open a store (of any kind...), that the assets of your business have to remain separate from your personal assets. Your business will live and breathe on the working capital foundation you have initially provided for it, and it is only from the retained earnings you keep in the business that it derives the strength to keep growing.

If you feel that you have all the above mentioned personal qualities, I would then question if you have the courage required to be an entrepreneur. One trend that quickly became evident during the comic book store boom of the early 1990's was the propensity of many new comics shops owners to cut and run when the going got tough. They were very interested in owning a comics shop when the prospect of quick profits were on the horizon, but when sales started dropping off steeply in mid-1993, we saw the largest number of store closures in the history of comics fandom. This left tens of thousands of fans without any local source for their comics. Without a doubt, this greatly aggravated the decline of comics publishing during the mid-1990's.

Before you jump in with a "Sure, I really have what it takes to stick out the hard times!," think first about those who depend on you. It is very easy to be courageous when you're young, only risking assets that you feel that you can easily replace. It becomes an entirely different story when you have a spouse, children, and/or elderly parents who are depending upon you as a regular source of income. Right now is an excellent case in point, as the early Fall period tends to be very slow in the comics world, as many of our regular customers head back for school. Sales in many retail stores quite suddenly drop anywhere from 15%-35% in late August or early September, right as those big Summer bills are coming due. Gut check time. If you haven't been able to accumulate any cash reserves during the Summer, this can be one of those periods of misery that make you wonder why in the world you ever went into business for yourself. The folks in the Diamond credit department are not unreasonable, but they have to make sure that Diamond gets paid...

There are three possibilities for how to avoid a cash crunch in the early Fall. First, have lots of working capital in your business right from the beginning. I know a few people who have actually been able to inherit, or save, enough money to be debt-free in their store right from the beginning. The second option is to have a second income. I know of more than a few comics retailers who have kept their high-paying day job, and hired someone to run their store for them. This is more successful than you might think. The third option is to have a store that generates enough operating cash flow to allow you to have a cash reserve. This almost never happens.

If you're wondering why a comics store seldom generates positive cash flow, the answer is usually inventory. Go to any comics shop in America, and the odds are very high that the store is chock full of all manner of toys, games, books, comics, t-shirts, etc. At first glance, this would lead you to believe that the store is very successful and prosperous. If you delve deeper, however, I'll bet that you'll discover that most stores are filled primarily with their mistakes. Comics retailers are notorious for seldom liquidating slow product, and as a result, what you see in a store is not what their customers are seeking, but rather what they got stuck with from previous weekly shipments. Sadly, most stores are forced to forgo the hot new products that everyone is eager to purchase, because all their working capital is tied up in product that will be very slow to sell.

The final issue I want to address for this week is to dispel the commonly held notion that when you go into business for yourself that you become "Your own boss." Hah! Nothing could be further from the truth. As a small business owner in any field, you become responsible to those who provide you with funding, your staff, your customers, and your community as a whole. This situation becomes even more pronounced in the comics world, where Diamond is the sole and exclusive supplier on most comics product. As much as they hate to admit it, most comics store owners are de facto employees of Diamond. Whether they like it or not, they run a Diamond catalog outlet store, carrying primarily merchandise that Diamond lists in their monthly PREVIEWS magazine. While this makes the ease of opening a comics store far more simple than opening a store in many other retail fields, it can be galling to know that out of every dollar you take in through the register, Diamond is taking (at the least) 5% of the gross. It is true that no one at Diamond can fire you in the way that a boss can, but if you fall behind in your payments, they can force you out of business, and possibly into personal bankruptcy. Think about this for a long time before you put yourself into the position of "Being your own boss."

Next week, I'll get into the hard numbers for opening a store.

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