Possible Future 4: A Curious Hobby

It’s a good thing I’m not superstitious, because mentioning failure is probably a jinx. My wife has been patient and supportive of this venture right from the start, and she remains so; I have hardly contributed a dime to our household budget in the past two years. But she has career ambitions, too, and carrying the financial weight for both of us retards her own goals.

This is why I have startup phases with success criteria. Phase 1 was simply forming a corporation and putting all the systems in place to open a web store; that was completed in November 2005. Phase 2 was learning the basics of online retailing, the gift shop industry, website maintenance and related operational skills; testing and refining the business concept and the merchandise; and building a customer base – all without being under pressure to earn a profit. This ended ended after Christmas, when I finally had a full year’s experience behind me.

Phase 3 doesn’t actually begin until another infusion of startup cash becomes available in May. It is the first phase with an actual success criterion: By December 31, 2007, Curio City needs to show a profit of at least $1. Over the course of the year, it should pay me as much in salary as I will infuse in startup cash, making it revenue-neutral from both a personal and a corporate point of view. Last year’s experience enabled me to refine my costs structure (including a payroll cut for me). My revenue projection is double last year’s sales – which is ambitious, but not impractical.

If 2008 dawns on a profitable business, I’ll move into Phase 4 – securing a loan and expanding, so that Curio City finally earns me a living. That’s what Possible Futures 1, 2 and 3 have assumed.

Possible Future 4 is, quite simply, what happens if I fail.

My startup cash will be gone at the end of Phase 3. I will not take on debt to prolong a business that remains unprofitable after two years. So, should Curio City end 2007 with a loss, I will spend 2008 trying to become somebody’s wage slave again. I’d rather not explore that topic unless it starts to look necessary.

There are degrees of failure. In 2006 Curio City lost roughly 10% of gross sales. If I cut that in half to 5% or less in 2007, I could get by with a part-time job in 2008, and continue to entertain scaled-down versions of Futures 1-3. Only if I fail to improve substantially on 2006 will I take a fulltime job. Even then, I would not fold Curio City entirely. Instead I would continue trying to make it profitable as a supplemental income. If I have to take a fulltime job, though, Curio City will never be much more than a hobby.

Fortunately, the magic 8 ball says that Curio City will definitely be profitable in 2007, so the “Curious Hobby” future looks unlikely.

Forthcoming Topics:

• Possible Futures 5: Exile On Main Street
• Startup Phase 3 Revisited
• Credit Card Processing

Possible Future 3: Tentacles of the Kraken

Conventional wisdom says that specialized online stores do better than general-interest stores. Pick a narrow niche, and market to it exclusively, say all the advice books.

Bucking conventional wisdom has been a consistent theme in my life. I have always been a generalist in an increasingly specialized world. This has not worked out at all well for me, career-wise…but it’s who I am, and I’ve learned not to fight it. There has to be a niche for generalists, right?

Getting the attention of a general audience is much more difficult and expensive than targeting a well-defined demographic. This might be the single biggest brake on my growth. Curio City sells a wide range of unusual gifts for all kinds of people and all occasions. Its only specialty is the appeal of the unusual. I try not to carry anything that you’d find at Wal-mart or in a shopping mall. Curio City’s customer share two qualities: They like to find the unexpected, and although they don’t like to shop, they’ll spend a little time browsing if the merchandise is interesting enough. Finding those people and getting across that message has to be the focus of Curio City’s marketing.

So “Tentacles of the Kraken” is easy enough to understand: Curio City is supplemented by some number of specialty websites that sell the same products to narrower audiences – customers who want to find what they’re after quickly, without hunting around for it. Customers who don’t want surprises. One web store might sell only timepieces; another, only gadgets; another, home décor, and so on.

All of these sites would point visitors to Curio City.

Advantages: Each individual site is theoretically easier (and cheaper) to market because of its narrow focus. Each site will theoretically enjoy a better conversion rate because it’s less demanding on customers’ time and attention.

Disadvantages: The logistics of maintaining and promoting half a dozen sites is intimidating. I have no real reason to think that I’ll be any better at marketing them than I am at marketing CC, and my budget will be stretched much thinner. None of the individual sites would have much personality – if I am maintaining them all myself, they will essentially be clones, with only the products differing. Establishing and maintaining half a dozen URLs and payment gateways and so on is likely to be much more expensive than the same requirements for one site. Six sites would almost surely not translate into a six-fold sales increase. Perhaps most important, there is already ample competition in every product niche that I can think of. And finally, it sounds neither fun nor interesting.

“Tentacles of the Kraken” is therefore my least likely path in the near- to medium-term. I can’t imagine Kraken Enterprises taking on any other ventures until CC is paying the bills. I laid it out only because circumstances can always change, and the idea should remain in play.

Forthcoming Topics:

• Possible Future 4: Curious Hobby
• Possible Future 5: Exile On Main Street
• Startup Phase 3 Revisited, & Phase 4 Envisioned
• Credit Card Processing

Possible Future 2: Curio Metropolis Online

My original design for Curio City Online was much grander than the basic web store that you see today. Drawing on my experience in PC game design, I wrote a long, detailed design document that described an e-commerce website like none other – one that made Curio City as much a community as a store. An old friend who owns a successful web design firm estimated that my ambitions would set me back $7,500, rock bottom, and probably substantially north of $10,000 – if they were even viable at all. My technology budget at the time was $2,500.

I doubled my tech budget and approached the contractors whom she had mentioned. The first one thought I was nuts. That's fine; his portfolio was pretty humdrum. The second developer was more diplomatic. He agreed to get a basic retail website up and running for me, and we’d see about the rest of it later on. One by one, I started pruning design elements and lowering my expectations. It was painful, but he was right: establishing a basic retail website was much more work than I had imagined.

My second possible future, which I call “Curio Metropolis Online,” is simply implementing my original site design.

Startup Phase 3 already includes some modest technological change for 2007. First, I have to absorb the long-delayed Sunshop version upgrade just to keep my site current; nothing can proceed until that’s out of the way. Then I need to find a new developer. Eric has consented to provide basic support, but he said long ago that he’s not interested in doing further implementation on my freaky design. Two other contractors have expressed some interest in implementing two important new features that I consider critical. (Sorry, but I have to be vague in case competitors stumble across this). But with the damnable Sunshop upgrade lying in the road ahead like a big steaming pile of muck, I can’t make any plans beyond that.

If I can roll out this planned functionality in 2007, and if Sunshop 4.0 delivers its promised search-engine enhancements, and if I can afford to pay for some modest professional SEO as well, then I will go into 2008 with a far stronger website than I have today. And that is the nucleus for the Curio Metropolis future.

If I go with Curio City Offline, web development more or less stops after Phase 3. If I go with Curio Metropolis instead, then the money that I would’ve borrowed to open a store in 2008 will instead go toward realizing my original 2005 design.

Moving Curio City out of my house is the one constant across all possible futures. On the positive side, the space requirements (and costs) for Curio Metropolis would be much more modest than those for a full-blown store, and the sales potential might be comparable. I’ll have a much stronger sense of that going into 2008.

On the negative side, web technology is my weakest skill area. Although it does build on all that I’ve learned up to this point, I would certainly remain dependent on SEO, marketing, and programming experts...something that hasn't worked out particularly well so far, thanks to my small startup budget. Running an offline store is a lot easier – not less work, you understand, but less demanding of specialized knowledge beyond my experience.

The Curio Metropolis future is compatible with Curio City Offline Lite, of course. At the moment, I consider this my most likely path. It seems unlikely that I will ever rent space without an eye toward OTC sales.

Forthcoming Topics:

• Possible Futures 3: Tentacles of the Kraken
• Possible Futures 4: Exile On Main Street
• Startup Phase 3 Revisited, & Phase 4 Envisioned
• Credit Card Processing

Possible Future 1: Curio City Offline

Curio City was originally going to be a physical store, with an ancillary website that might possibly overshadow it someday. See Kraken Enterprises Begins and related posts for the full skinny on that.

As I refined the concept and made choices during the summer of 2005, I realized that I wouldn’t have either the time or the money to open a store in time for that Christmas. Opening a store at any other time of year is foolish; you need that initial big surge of sales to make it through the lean months. Yet, I couldn’t very well wait another full year to make some kind of career move.

Then my wife came up with the brilliant idea of going web-first. The rest of the story is in my posts tagged “early history.”

All of my money and energy went into making the website succeed. I’m confident that Curio City Online will become profitable this year, but I can see that I can’t handle the volume necessary to earn a decent living. Christmas 2006 pushed my abilities as a one-man operation right to the edge. Next Christmas, I hope to double that volume; I have serious reservations about coping with it. Come 2008, I need to move Curio City Online out of my cellar. Our house is too small, and the sheer bulk of stock going in and out is too great. Plus, I can’t very well hire anyone to come work in my house. I can probably get through 2007 without help, but then I’m going to need an employee.

Offsite space has to provide not only warehousing and shipping, but also a rudimentary office from which I can manage the business. That means internet access, which means cable or a phone line. And because I refuse to commute any distance, it needs to be close to home. Commercial space is expensive anywhere around here.

Going offsite will bring major new expenses – rent, utilities, internet, insurance, and things I can’t foresee. An incremental sales increase won’t cover it. I’ll need to make a serious leap. I don’t see any way around opening a storefront. And so we’re back to the original idea for Curio City.

There are two ways Curio City Offline could go.

(1) Nice retail display space in a good location. In this approach, I start out with a full staff to prevent shackling myself permanently to a busy cash register (and free myself to focus on my web store). We’d be talking about 2,000+ square feet of prime space with a staff of 2 or 3 fulltime people besides me. This is a high-risk, high-debt proposition. It’s inconsistent with the bootstrap approach that has gotten me this far…but it also offers the best prospect for a increasing sales sufficiently to cover the huge leap in costs.

(2) Cheap warehouse/shipping/office space with a simple counter for low-volume retail sales. In this approach, which I think of as “Curio City Offline Lite”, I’d continue to keep costs as low as humanly possible. OTC sales are secondary to the web business. I remain a one-man operation, with part-time seasonal help for a little relief. This has the advantage of being comparatively low-risk, with the disadvantage of being unlikely to increase sales sufficiently to cover the new costs.

Every time I start thinking about Curio City Offline, I eventually talk myself out of it. A store is a ball and chain. I would practically have to live there. It would suck down all of my money, time, and attention. Mostly, I just don’t think I’d enjoy it. Although I'm good at customer service and don't mind interacting with people in writing, I don’t care much for F2F contact with the public.

This much is certain: I must get Curio City out of the house if it’s going to grow large enough to support me. This leads into my next possible future: Curio Metropolis Online.

Forthcoming Topics:

• Possible Futures 2: Curio Metropolis Online
• Possible Futures 3: Tentacles of the Kraken
• Credit Card Processing
• Startup Phase 3 Revisited

(P.S. As you can see, I decided to try a different template for a while. Not because anyone complained about the basic black one, but because I was bored with it. Let me know what you think of the change)