Spending A Dollar to Save A Dime
Saving money is an art form. Some people can take this to the extreme. Have you ever seen extreme couponing shows? They save tons of money and shop on next to nothing…getting many groceries for free. At one point, I decided to take a local class on extreme couponing. I soon discovered that what I would save in money, I would spend in time. The amount of time and effort that some people spend to save money might be better spent on earning more than trying to save every penny. What is your time worth?
I consider myself frugal, and I often must consciously think about this balance. I come from an upbringing that celebrated sales and savings. A family that would drive across town to fill up at the cheap gas station. I must look at the entire picture and break it down at a certain point. Driving out of my way 10 miles will cost me about $1.40 in fuel. If I’m filling up 15 gallons of gas and saving .10 per gallon, when it’s all said and done, I ended up only saving .10 AND I wasted more of my time. Now, that doesn’t mean I’ll go to ANY gas station. I still want to save money, but I limit the distance I will go and utilize technology. I use the Gas Buddy app, which shows me the cheap gas stations and their distance from me. I then will choose the cheapest one within a certain radius or the direction I’m heading anyway.
What does all of this have to do with your Family Entertainment Center, you ask? I’ve noticed in my travels that I’m not the only one who will often spend a dollar to save a dime in our business. We do it all the time! I’m going to mention just a few instances that I personally lost money by being too frugal.
There was more than one instance where I purchased used equipment. Sometimes it worked out in my favor, but many times it did not. I often spent more money to fix the equipment in parts and labor than had I just purchased the new equipment. This is a jagged pill to swallow and sometimes hard to admit. I would NEVER buy a new car because of the value it loses when you drive it off the lot, but I discovered that there are many more factors in business. Besides the cost of the parts to repair or restore the equipment and the labor it costs to restore the equipment, there is also the loss of revenue.
How much money am I losing daily that this game or ride is down? This is the main reason that experienced operators will have many extra parts and will often pay big money for overnight parts they need when a game or ride is down. Sometimes it seems ridiculous to pay hundreds of dollars in shipping, but when you actually run your revenue numbers, you are losing more than that each day that you don’t have the machine operational. This is another reason that experienced operators have a maintenance staff, and they are one of your most valuable staff members. Spending MORE money to hire the right person or persons to maintain your equipment and have a proactive preventative maintenance program will save you much more money than you will spend in their salary. When looking for someone to maintain your arcade games, look for someone who can repair them down to the component level. Again, this is like the fuel analogy earlier…just because it’s cheaper doesn’t mean it won’t cost you more in the long run. Am I saying that you shouldn’t look for a bargain or that you should never buy a used game…. absolutely not. I purchased a Slam-A-Winner at an auction for $25, and it turned out to be a workhorse that made me much more money than that. Sometimes used equipment is great…but sometimes, it’s not. Try to see the WHOLE picture and weigh the risks and all the potential costs before deciding one way or the other.
I’m sure I’m the only one who has done this, but have you ever purchased a bunch of an item only to find out that ½ of them don’t work or break shortly after selling them to the customer? For me, my fondest memory was a laser pointer. They would fly off the shelves. Everyone liked them. And the price point was great. But I soon discovered why they were so cheap…. because they were cheaply made. I’m sure I had just as many returned as I sold. Although most of the redemption companies are great about offering you a credit for damaged or non-working merchandise, sometimes the damage is already done with your frustrated guest and lower guest satisfaction rating. Redemption is a balance. You want to have a high perceived value.
You are looking for items that people want that are inexpensive but not cheap. This is one of these areas where the few cents you may save on an item will have a very expensive cost in the long run if you have frustrated guests who feel like you are selling them junk. Buying expensive stuff that never moves from your shelves will also cost you. Just like in a retail environment, if you aren’t selling stuff, you are going out of business. You WANT to see customers winning and turnover in your redemption merchandise. That signifies that you are making money and will keep your guests returning.
This goes for ANYONE you hire, from staff to vendors to independent contractors you hire such as consultants, accountants, etc. This often goes back to the old adage, “you get what you pay for”. I quickly realized the first time that I decided to hire an accountant rather than try to do my own taxes, that the money I saved in hiring an expert was MUCH more than what I paid him. This can be true with anyone that you hire. Your front-line staff can impact your bottom line and guest satisfaction…. positive and/or negative.
Consider this…a raise of .50 more per hour comes to $20 per week based on a full 40-hour work week. If that employee worked an entire 52 weeks, 40 hours a week, it would only cost you an extra $1,040. Now, consider how broad your hiring pool becomes and the quality of employees you will find by raising your wages slightly. I can tell you that a good employee with a good work ethic will be worth much more than the extra that you are paying them, and they will bring much more to your bottom line. Your place will be cleaner, your turn-over will decrease, your customer satisfaction and return rates will be higher, your employee morale will be higher, and you will make more money than the extra you spend on hiring quality employees. Now, not everyone that demands more money will be high quality…you still must do your homework and make sure you hire the people that offer you good value. Don’t just hire the most expensive consultant and assume they are the best because they are the most expensive. As with anything, research and check references (ask for good AND bad references). When hiring anyone, including vendors, consultants, and employees, you will always want to ask negative questions. “Tell me about a project that didn’t make it or turn out right.” Find people who can own up to problems and not blame others but learn from life lessons.
The art of saving money is truly an art form that anyone can learn, but you must realize that it IS a delicate balance. Sometimes the cheapest isn’t always the best and will be more costly in the long run. Try to approach each transaction and decision by weighing all the factors, and don’t forget that your time also has a value to it, so if you are wasting too much time shopping around to save a few cents, it might not be worth it.
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Amber Lambert is the Regional Sales Representative for Betson Enterprises. She began her career in the amusement industry 12 years ago when she started her own family entertainment center she built from the ground up. She also managed a corporate-owned family entertainment center, held a sales role with an industry supplier, and is active in industry associations.