It's the Economy, Stupid!

Or, it’s the stupid economy. This morning’s headlines are dire. Bush’s emergency financial bailout is stalled amid rising opposition. Another huge bank, Washington Mutual, has failed. Housing sales plummeted again last month as the credit crunch drove mortgage rates up. The economic indicators say that we are now in a worsening recession that will not turn around until 2010 (how they decided that, I don't know). Nobody knows if McCain will show up for tonight’s scheduled campaign debate. Buried on page 3, US and Pakistani troops exchanged gunfire at the Afghani border yesterday. And last night my computer monitor conked out, imposing a $200+ expense and at least a couple of hours’ product research that I can ill afford today.

In my 51 years I have seen a lot of dire economic and political news. I don’t remember ever seeing this degree of fear and pessimism at high levels.

In spite of all this, Curio City is about to close the books on a successful September, thanks to two large lighted cap sales. With a day and a half left in the fiscal month, sales are running just a smidgeon under the planned 60% sales increase (which I lowered from 100% after my dismal August). If I don’t actually make plan, I’ll be within a few hundred bucks – pretty astonishing when the president is warning of financial collapse and one of the vice-presidential candidates raised the specter of another Great Depression. Fortunately, I don’t think she knows what she’s talking about.

So I’m lurching toward Christmas with some trepidation. On one hand, I have a lot of cool new products coming in (Clocky should arrive today or Monday; how can you not want this little guy?), plus a website that’s improved incrementally from this time last year, plus an ever-growing customer base. Carrying my 60% increaseforward into the big months is going to be extremely challenging, but it’s not impossible. OTOH, of course, is all of the dire news about the economy. Curio City may be too small to get swept up in trends, but it can’t buck the macroeconomic trends forever. I am not feeling very optimistic about achieving the very optimistic plans that I laid out for the next few years.

Let’s focus on the positive. September business recovered from August’s stumble. The year to date is good. The max_connections bug that haunted me for a month has not returned since Eric tried an experimental code change. October’s sales targets aren’t terribly challenging – assuming, of course, that we don’t careen into an epic recession. I didn’t open a store this year, and Curio City has no debts. Even if sales dry up, only my personal income is severely impacted – the company won’t fail unless I pull the plug on it.

I still intend to write a few more “canned” blog posts in the weeks to come, and then I’m going to declare Curious Business “finished”. That doesn’t mean that I won’t update it from time to time, just that I’m abandoning my weekly schedule in favor of ad-hoc topics and irregular progress updates.

Forthcoming Topics:

• SCORE!
• Legal extortion
• The zombie store
• Wacky ideas

Slow Motion

Curio City has a pulse. Traffic surged from a somnolent 93 visits to a lively 164 visits as office workers returned after Labor Day weekend. Sales picked up less dramatically. The max_user_connections bug still haunts me. Yesterday my web host raised the number of connections available, which is at least a band-aid…but the underlying bug is still at large.

The resolution that I made in last week’s post to double sales twice in two years is almost certainly doomed. Let’s see where slightly more realistic (but still exceedingly ambitious) sales goals might get me by the time I turn 55 in 2012.

Start with $10,000 in salary plus bonus this year (henceforth, my bonus shall be 75% of the annual profit, leaving 25% for company growth). I’ll need at least one big surge next year to raise that base. Let’s plan 75% growth in 2009, 50% in 2010, 35% in 2011, and 20% in 2012. That gets me to $17,500, $26,250, $35,438, and finally $42,525. As some costs remain stable while overall revenue grows, I can raise the salary percentage a bit – I just did some spreadsheet hocus pocus to give myself a raise from 17% of gross revenue to 17.5%. (Of course, that just takes those dollars out of my profit, which is taxed more favorably than salary, so there’s a limit to how much I want to do that.)

Looking up from the perspective of this year’s $10,000, $42,500 seems like a fine income. Yet, it’s still far short of what I earned in the early 1990s. Am I deluding myself? Should I save myself three more years of struggle, and just go bag groceries?

Those increases (75%, 50%, 35%, and 20%) are the lowest goals that I can get away with planning. Even after August’s dismal results, 2008’s YTD income is still running 77% ahead of LY. Gross profit is up 85%, payroll is up 93%, and bottom-line profit is a couple thousand bucks in the black, versus $5 in the red at this time LY. If 2008 returns to that growth rate after last month’s stumble, I’ll just need to duplicate it in 2009. If I did it once, I can do it twice.

Unfortunately, right now sales are barely even tracking LY. If sales remain lackluster for the rest of this year, I’ll have to consider folding my tent as soon as late winter, when Christmas peters out. I would not kill Curio City outright, but I’d cut it back to a part-time gig that supplements a minimum wage job.

Speaking of failures… the fall Boston Gift Show (a.k.a. the Cavalcade of Crap) was canceled. On one hand, I’m not surprised or sorry to see it go. OTOH, it was my only physical connection with the retail world outside of my house. If it doesn’t come back in the spring, I ought to find a different show to replace it…and that would entail travel and expense. I’m not sure what to do about this. It pretty much guarantees that I won’t find any unexpected great new products for this Christmas (not that the Cavalcade of Crap ever delivered anything substantial anyway, but at least the potential was always there.)

• Legal extortion
• The zombie store
• Wacky ideas