Is It Time to Reassess?

In the beginning, I poured my modest startup cash into three buckets. The first was for immediate needs – creating the company, buying merchandise, and building the website to version 1.0 (core functionality). That bucket emptied quickly. The second was to subsidize operating costs, expand my inventory, and enhance the website to version 1.1 (some simple customizations). That money dribbled away more slowly; in fact, because I’m a financially timid individual, some of it is still left.

I put the third and last bucket into a bank CD. Last week, the CD matured, freeing up my last planned cash infusion. Disastrous Mother’s Day sales results, however, are giving me pause. Should I still go ahead? Or should I cut my losses while I still have some money in the bank? Does the bloodbath mean anything at all? Today’s business news says that April retail sales were poor across the board. Maybe I’m just seeing the leading edge of recession.

Now that 2007 is nearly half over, let’s step back and look at what the Mother’s Day Bloodbath means for the rest of the year. My goals for 2007 were to:

• Double last year’s sales volume;
• Earn in salary the same amount that I will reinvest; and
• Turn a profit of $1

Double last year’s sales volume. Curio City was barely operational in early 2006, so it was easy to make my sales plan during the first couple of months of this year. Then the 2007 sales graph remained stubbornly flat while last year’s line gradually rose up to meet it. In the three weeks leading up to Mother’s Day, sales fell dramatically short of expectations. Far from doubling last year’s sales, I’m suddenly failing to equal them.

Doubling LY was an arbitrary goal. So last week I hit my spreadsheet to figure the smallest year-over-year increase that will still support my other two goals. I'd still need to beat LY by 75%. Without a marketing miracle, that is not going to happen. In fact, because I’m up against strong Fall benchmarks, it’s unlikely to happen even with a marketing miracle. This goal is an unambiguous failure.

Earn back as much as I will reinvest. Ignoring a lot of accounting details, this is pretty straightforward. In 2006, Curio City generated $5,000 in payroll. In 2007, I intended to invest an additional $10,000, and expected my salary to double to $10,000. Now that sales have dried up, I’ll be lucky if I earn $5,000 again this year. The only way to attain this goal, then, would be to reverse the equation. Instead of doubling salary, I could halve investment. That’s self-defeating, because a smaller cash infusion will yield lesser results. So this goal is almost surely another clear failure.

Turn a profit of $1. Believe it or not, this isn’t out of reach. Many of my costs are scalable. As sales fall, so do expenses. My YTD loss so far is less than half of what it was at this time LY. If I can keep the operating loss from growing too badly as the summer drags by, I might still be able to make it up in December. It will be a pyrrhic victory if my token profit comes amid declining sales and shrinking paychecks. But at least it is something.

Next week, I’ll ponder what -- if anything -- all of this means.