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Industry Report 5 (2011 Numbers)

July 15th, 2014 Posted in business
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I just checked into Statistics Canada and their 2011 numbers are finally out.  I thought I’d share some of my thoughts on looking it over, comparing what I have from the 2008 numbers to the new 2011 numbers.  This is a 3 year difference, so this should be interesting:

 

1) Number of Businesses

Interestingly, the number of businesses (or businesses reporting) are down from 1,413 to 1,329.  That’s a drop of about 6%.  No idea if this is just a reporting issue or a drop in industry size, though at a guess it’s a reporting issue.

 

2) Better revenue

Average revenue has jumped 330.5k from 320.3k.  I don’t know if this is just a reporting issue or just an overall increase, though from experience I’d say overall.  That’s an increase in average revenue of 3.2% , which if you think of it over 3 years is barely a 1% increase.  That’s horrible because it doesn’t even keep up with inflation.

Where you see the biggest gains seem to be the top quartile of all stores, where revenue jumped by over $40k compared to the 2008 numbers.  In fact, for the bottom half of the stores, the average revenue was actually lower than 2008.  I’d guess that it’s because more new stores are reporting numbers rather than that old stores are failing, but again; complete guess.

3) Better Margins & Profitability

Margins have improved overall, from 41.8 to 42.3%.  Profitability bounced up to 3.2% overall which is a huge increase from the 2.6%.   Again, remember these numbers are averages.  There certainly were a lot more profitable businesses in 2011 – 69% reporting were profitable compared to the 60% in 2008.  Of those profitable businesses, in the Top 50% they average a net profit of 40.1k

4) Salaries

I’m always interested in salaries.  Taking a look at the 3rd and 4th quartiles, wages made up 14% and 18.5% of the businesses expenses.  Taking net profit and wages together, a business owner who worked by himself could assume to make (on average) $38.6k and $202.7k respectively.  Okay, that last number just isn’t happening because an average business in the 4th quartile is making $947.3k in revenue and no single person could handle that much work.  Still, it sure does show the jump between the amount that is spent on salaries between the 3rd and 4th quartiles.

I should also add, that you shouldn’t believe the numbers of the Bottom 50 – their losses are significantly more than reported.  For example, the salaries and wages reported for the bottom 50 are reported on average to be $5.7k for the year.  That’s no way that’s includes the salary paid for to the owners, so their net ‘profit’ of $4.7k is probably paid to the owners and/or they are unpaid labour.

5) Marketing

No surprise as usual that marketing sits at the 1.9% range.  It’s never really moved outside of that band and is about right I would think for this kind of store.

6) Rent

Ah, rent.  Outside of COGs and Labour, Rent continues to be the largest expense.  It’s on average 8.5% for the reported industry expenses or about $28.1k per year.  Of course, that covers a huge range from $4.1k (or about $400 a month) to $75.9k (or $6.325 a month).  Thankfully, not everyone has to pay Vancouver prices or that $400 a month would get you a 150 -200 sq ft location – about the size of a large storage location.

7) Inventory Turns

Glancing at the opening and closing inventory, turns are very healthy on the average at 4.2.  Of course, those numbers are very different for the bottom half which turns at 2.5 times and the top half that are turning inventory 4.5 times.  Of course, the top 50% also have about $131k in inventory compared to the bottom half’s $24k.  The usual rule holds true – you need inventory to sell.

Last Thoughts

Looking at the data, there’s nothing spectacularly different from 2008.  If anything, I’d say the report seems to showcase quite well the difference between the newer small businesses that have opened and the longer, larger, more established businesses.  The more established businesses are doing well but are feeling a squeeze from their expenses (3rd quarter profitable businesses actually reported on average smaller profits than 2008) but a lot more are profitable.  It seems the wealth is spreading around a bit more…

Even among the non-profitable businesses, those businesses were making fewer losses.  Considering this is 2011; I’d say that’s about right from my recollection – we certainly started seeing better revenues and profits around this time.

It’s kind of fun to benchmark ourselves against the players here, though with data being 3 years old it’s not exactly apples-to-apples but it does show our marketing expenses and rent are significantly higher than they should be.  Of course, that’s partly due to our latest move where we went up in size significantly; and it’ll take a while for our revenue to catch up with the space. So, anyone have any thoughts on these numbers?

 

 

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  1. 2 Responses to “Industry Report 5 (2011 Numbers)”

  2. By Dave on Jul 16, 2014

    My thought is the game store business is not the place to be in.

  3. By Tao on Jul 18, 2014

    Eh, right now the MtG world is incredibly hot and if you have an active player base, it seems people are minting money. We aren’t because we aren’t a B&M store though so we kind of watch it with amazement.

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