crunching numbers and figuring out the questions

so i’m crunching numbers on this whole dvd rental store idea, which is an interesting exercise. there’s still so many things i don’t know, but it’s fun. (i’m beginning to understand those people who enjoy playing with excel that i never really understood before.)

i’ve been building up layers of back-of-the-envelope calculations to determine how much shelving would fit in a hypothetical space, how many dvds that would hold, how many new movies (and to what depth) to buy, how many employees (and how much to pay) would be necessary based on hypothetical hours, and all sorts of other equations based on various variables. (how much should you charge for rentals? how long should the rental period be? what about late charges? what about a subscription plan?)

and when the crunching tells you things like you’d need to rent 18.42 movies per hour, or $801.35 per day, to break even, you go in and try to get better numbers for the ones you’ve just made haphazard guesses about.

it becomes clear pretty quickly that the single biggest monthly expense is new inventory. (but it can also be a revenue driver: what happens when you assume that you sell off half of the new inventory after five weeks as previously-viewed movies, after it has made 80% of the purchase cost in revenues?)

the modeling job i haven’t undertaken yet is to plug in the unit count for the various downtown developments (existing and planned), make up some sort of formulation of what percentage of those units would become customers based on the distance, and then figure out where the ideal location would be. it seems like it would be fun, even if it is probably a completely bogus exercise.

new bookmarks: the video store shopper and speciality store services are two places that sell store equipment for video retailers.

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