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Every Friday, I post a small insight into running Curio City and/or Blue Hills Editorial Services. My most recent posts are directly below. You can also start with the first post, or use the subject labels to the right to home in on particular topics. Feel free to comment on anything that interests you.
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Friday, October 03, 2008

The Zombie Store

Before I raise this topic from the dead again, I ought to mention the economic news that still overshadows everything. Congress has larded up last week’s failed bailout bill with $100 billion worth of “sweeteners” – or bribes, more accurately – that might grease its passage through the House today. Conventional wisdom now says that if the bill passes, we are merely facing a deep recession. If it doesn’t, we’re facing complete economic meltdown.

That would suck. I wonder if it's true.

Last week's sales started out strong, and then weakened with each passing day. The first fiscal week of October still blew away both LY and plan, simply because LY was so weak. Still, I'm content with average sales, under the circumstances.

And that’s a good enough segue into today’s subject: The Zombie Store.

Eventually Curio City has to grow up and get its own place. Yet, only two months each year bring in enough money to cover a rent payment. It’s going to be a very long time before revenues rise sufficiently to cover commercial rent the other 10 months. By that time, my November and December business will have outgrown my ability to handle it.

This conundrum always points toward opening a store. Its purpose would be shipping/receiving for my Internet business, while producing just enough additional sales to cover its own expenses: Rent, utilities, and 1-2 employees. Even though I slew the store once after considerable anguish, the concept is going to keep coming back from the dead until the underlying problem is solved.

(Incidentally, the financial meltdown makes me really, really glad that I decided against borrowing big bucks to open a store this year. I would surely be facing final failure right now).

While I was killing the store, I mentioned once that maybe Curio City should always be a home-based business. This heresy was discussed very briefly during Wife Summit II, and then dropped. Today I’m going to resurrect and explore it.

The zombie store keeps arising because my commercial space has to bring in enough money to cover its existence; web sales can’t subsidize such an albatross. But I can justify feeding a money pit if it fills more than one purpose – such as housing.

Why, exactly, does CC need to move in the first place?

1. Our house is too small. We run two businesses out of a 1,100 square foot “starter house” that we bought 20 years ago. My wife is a pack rat, and my merchandise needs storage space. The house is simply stuffed to overflowing.

2. It’s configured all wrong. My office is a closet on the second floor. My warehouse is a dark cave in the cellar. My loading dock is an ordinary door on the first floor, with steps down to ground level. When sales are good, I spend a lot of energy running up and down stairs. It couldn’t be less efficient.

3. It’s inseparable from our living space, so I can never bring in an employee. That means I can never get sick or take a long vacation. I have to work ~350 days a year.

My wife (Anne) and I would both like to trade up to a larger house for personal reasons. The ideal time to do that would be at the bottom of the depressed market – probably 12-24 months from now, say the prognosticators. That’s also about when I expect Curio City to need more space.

To serve as Kraken Enterprises world headquarters, the new house would need these characteristics:

  • Two offices (repurposed bedrooms), ideally on the first floor;
  • Two actual bedrooms and bathrooms (one for us, one for guests);
  • Warehouse space on the first floor (a heated garage or utility room, or another bedroom);
  • Easy drive-up access to the warehouse;
  • Secure entrance/exit, separate from the rest of the house, so that an employee could come and go in my absence;
  • A “public” bathroom for my employee and Anne’s students;
  • Another area where Anne can teach her classes; and
  • Proximity to commercial shipping outlets (post office and UPS store).

That’s a tough list. I count four to six bedrooms and three bathrooms (the public one, a private one, and a guest bath). That is a ton of house to expect for $500,000, particularly if we want to stay in a desirable neighborhood and not move out to some damned suburb. But we might just be able to swing it if we can buy at the market bottom. I can’t justify buying a new house purely on its merits as living space. But if it doubles as the zombie store (and if Anne is running her classes out of it, too)…well, suddenly it makes sense. Some of the money that Curio City would have spent on rent would instead offset our utilities and expenses, just as Curio City already reimburses us for telephone service and gasoline.

Unfortunately, we have a $0 down payment, almost no savings, and $40,000 worth of personal debt. Could we churn the equity in this house into a new house? In the pre-crash credit market, no problem. Now it’s going to depend on how the mortgage industry gets restructured. Our house is worth roughly $200,000 more than we owe on it. Subtract the equity loan, subtract some repairs and spruce-up, subtract the costs of selling and moving, and we would still come out $100,000 in the black. That’s a 20% down payment on a $500,000 house. The logistics of financing and moving are scary, but shouldn’t be unsolvable.

One large problem remains: It’s a residential address. None of the carriers will provide business services to a residential address, nor would I ever get volume shipping rate discounts. I’d still need a commercial place to accept deliveries, and I’d still need to drive my shipments to the post office/UPS outlet every day in my little Miata. I’m going to outgrow the UPS Store within the next year or two.

Maybe renting a storage facility could fill this gap. Anne says that you can arrange for one to accept deliveries. But now I’m back to paying rent again, and that inevitably snowballs into opening a store that will pay its own way, and that in turn negates the whole home-business argument. Outsourcing order fulfillment is another (expensive) non-store option that negates the arguments for being home-based.

So I just solved nothing by spilling all of those words. Well, I’d like to keep this idea warm. If we discover that we just can’t do it, I’ll resurrect the zombie store yet again.

Forthcoming Topics:

  • SCORE!
  • Legal extortion
  • Wacky ideas


  1. I remember reading in Business Week that Amazon does some type of order fulfillment. I know you mentioned it was expensive, and I've never looked into it myself, but the article made it seem like a reasonable step for some small businesses.

    Oh, and I've been waiting for months to see what "Legal Extortion" means.

  2. I reckon I should at least find out what the numbers are. Outsourcing fulfillment would be a huge cost compared to doing it myself...but it might be more practical than the alternatives. Kicking the business out of the house will be a huge step in any case.

    The "Legal Extortion" post has been on the hook for a long time. I'll publish it next.


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