Friday, April 9, 2010

Cashflow and the Secret to running a extremely successful RPG Company…

Cashflow in the business world is your lifeblood. Keeping your cashflow going is how you survive. Since this is tax season, I have been looking at my company’s cashflow and have thought to myself, “How could I double our cashflow in a month?” Tough question to answer right? Here is a better question to answer, “How can I get something for free and make it so I could sell it and make a profit?” This is where the real money gets made. This is the basic concept behind webcomics. They give their online webcomic strips away to get you to come to the website where they make money by selling hard copies of the collected webcomics and online advertising at the site. Chris Anderson wrote a book called Free that many people might find interesting to read if they want to learn more about making money of free things. But this post is about CASHFLOW not about making money on free stuff.

How did I increase my cashflow? I did something radical. I stopped work hard for it. Let me tell you what I mean. Over the years of 2002 thru 2003 I have a 400% growth in LPJ Designs revenues, and over the years of 2003 thru 2004 I have another 400% growth in LPJ Designs revenues. These were the two best years I ever had growth wise in the business. What helped make such a massive growth in cashflow possible? I stopped working so hard in my business and started working hard on my business. What does that mean in plain English, well

#1) I hired freelancers do write roughly 95% of the work I was releasing at LPJ Design.

#2) I set the budget for making small 2 to 6 page projects to only $20 for writing and artwork.

That is it. That is the secret to making money in the arena of PDFs.

A typical PDF will normally sell no more than 50 copies, so you have to make as much money as possible within the initial 50 copies. If I make a $2 PDF and sell 50 copies I will make $100. Subtract 35%, the amount drops to $65 and then subtract the $20 budget to break even, I make $45 in profit. I then take the $40 and repeat this again twice, leaving me with $5 to place in the bank to save for a rainy day. Simple, easy and it work.

But here is the funny part of this post, most of you don’t believe me when I tell you this. You make up excuse why you don’t do or believe what I am telling you to do: “I can’t find people who work for that cheap” or “You have to pay people more money, it isn’t fair” or “You lying that can’t be done like that”. My answers are the same: “Yes you can find people” or “I pay what I can afford, they don’t have to work for me” or “Yes it can, you are just lazy”.

Once again I worked ON my business, NOT IN my business. I worked on the marketing, distribution, partnerships, accounting and manufacturing of my business. The hard and boring stuff creative people HATE with a passion. Not the making the cool fantasy world building, creating amazing NPCs and exciting magic items stuff. I worked hard on making sure I can pay my people on time and getting more products out to consumers as part of my business. Simply put, most people who want to work in the RPG industry, don’t want to deal with this side of the business. They want to be the name on the cover of the RPG book. They want to be the ones who the fans come to see at cons and sign their RPG books. They want to be the “ROCKSTARS” of the RPG industry.

I, on the other hand, want to be the “MAJOR RECORD LABEL” that makes and creates the rockstar, while at the same time makes the cashflow to create even more rockstars who make even more cashflow. See where I am going with this. CASHFLOW IS THE MOST IMPORTANT PART OF YOUR BUSINESS. Talk to you later…