27 February 2017 | 17 Comments
This morning I received my company’s annual statement from our accountant. I knew from my monthly bookkeeping that Stonemaier Games had a good year, but the final result was even better than I thought.
Making a profit isn’t what drives me to design and publish games; rather, it’s what sustains my goal to bring joy to tabletops worldwide. It’s why almost every decision I make is a cost/benefit analysis seeking a return on investment.
This was the case when I ran Kickstarter campaigns, and it’s still the case now. On Kickstarter, the profit per unit was geared towards three goals:
- Provide a buffer when things don’t go as planned.
- Generate the capital to increase the size of the print run to include retail products for distribution.
- Contribute to sustaining the business throughout the process of production and fulfillment.
Perhaps it seems obvious that you’d focus on profit, but I think it’s easy to get caught up in other numbers like Kickstarter funding totals, revenue, employees, page views, or valuation. The value you place on those numbers is up to you, but for me, I choose profit.
I recently read an excellent article that perfectly sums up my thoughts on profit. I’ll share my favorite points from the article below:
“Profit buys you time and flexibility. Profit is the ultimate flexibility because it buys you the ultimate luxury: time. As long as you remain profitable, you can go in any direction you want and take as much time as you need.”
My Thoughts: I love when profit buys me time. I wouldn’t be able to spend 16 months working on Charterstone if our other games weren’t continually generating profit. I’d rather deliver the best possible version of the game than to rush it to market. Profit gives us room to create, experiment, and make mistakes.
“Profit protects you from your ego. One of the easiest things to do in business is get ahead of yourself. To feel so grand! To be obsessed with growth and potential and “if only…”. To hire too many people, to take on too much rent, to do one too many things, to complicate your business by tying strings around your money. The list goes on.
“But when you set out to be a profitable company, you watch your costs. You don’t hire that extra person if you can’t afford them. You don’t get into an office space that’s too big for you. You don’t sign a long-term lease that you can’t afford. You don’t sink a pile of money into things just because you can, you consider your spends more carefully.”
My Thoughts: I love that profit makes me smarter about expenses, especially for big decisions like hiring (I only hired myself after we had cleared a profit on Euphoria, months after it successfully funded), office space (I work from home), and manufacturing (I’m risk averse to over-producing). It’s also crucially important during a Kickstarter campaign–it’s not all about the funding total. If you make a million dollars but your stretch goals push expenses up to $1.1 million, you’re in trouble.
Profit enables generosity. This is my addition–it’s not in the article. If you’re profitable, you can afford to be generous, especially to those who give more than they take. You can give an illustrator or employee a bonus if they did an amazing job. You can add a special component to the product. You can send fancy chocolates to important partners. You can run an annual charity event to benefit content creators and the causes they believe in. And so on.
My Thoughts: Those are my thoughts. :)
Do you choose profit? If so, how has that approach been beneficial?
- Would You Quit Your Day Job to Create Board Games?
- Kickstarter Lesson #4: Accounting and Finances
- Kickstarter Lesson #201: A Step-by-Step Guide to Pricing Your Core Reward