Welcome to Curious Business

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, December 26, 2008

Farewell to 2008...By the Numbers

I said that I was going to stop posting financials, but I slacked off a lot last week, and I don’t have any remarks prepared for today. Besides, it’s logical to literally sum-up the year. My spreadsheet closes the year on Saturday, December 27, so these numbers (through Christmas) are final enough despite having nearly a week left in the calendar.

Do you see a recession hiding in here?

December 2008 vs. December 2007

• Total income: +75.5%
• Total COGS: +66.9%
• Total payroll: +49.6%
• Total expenses: +22.1%
• Net income (profit): +488.2%

2008 vs. 2007

• Total income: +71.7%
• Total COGS: +68.7%
• Total payroll: +79.7%
• Total expenses: +48.4%
• Net income (profit): +220.7%

In 2007, my gross salary plus profit came to $6,600, and I did not take out any of the $1,200 profit. Curio City paid out $5,400.

In 2008, my gross salary plus profit came to $16,400, and I took out $3,800 of the (estimated) $7,400 profit. $2,200 of my $3,800 goes to taxes. I put $1,000 of the remaining $1,600 into my Roth IRA and gave $600 to my wife. Altogether, Curio City put roughly $12,800 in my pocket, or more than double LY. (I took the payout as a stockholder loan repayment rather than a shareholder distribution, btw. The profit is applied to reducing my life-to-date negative retained earnings. Curio City now owes me $24,700 of the $28,500 that I invested.)

In 2009, I’m planning a 50% sales increase over this year – ridiculously ambitious in light of the collapsing economy, but not in light of 2008’s 70% increase. If I can achieve that, my gross salary should reach $13,700 and my profit should top $11,000; I will pocket $18,000-$20,000 of that. For my first act of the new year, I’ll raise my payroll percentage again to shift a little bit of that anticipated profit into my paychecks. And with a couple clicks on my spreadsheet, I am now paying myself 18% of gross, up from 17.75%.

Sales and traffic were both poor last week, but it’s a throwaway week anyway so I don’t read anything into that.

Friday, December 19, 2008

Happy Numbers

Last week was another doozy, even though traffic gradually drifted back below 300 per day. I raised my spending cap on Google Adwords to an obscene $20 for 100+ clicks per day, and I’m not seeing many conversions. But I’m not going to pare that back until the cash register stops ringing next week.

And ringing it is, as Christmas hangs on. Over the last two weeks I will have personally earned something just over $20 per hour, or nearly $40,000 per year. When you add the substantial end-of-year profit distribution that I’ll be paying myself next week, I would be approaching what I earned in my last real job – if, of course, I could sustain the last two weeks for 12 months. (In fact, if sales kept up at this level all year my profit would make me downright rich.) That’s much more than I ever imagined this whole owning-a-business gig could possibly pay. It’s really encouraging. Makes me wonder what would happen in a growth economy -- or if that would make any difference at all.

Now I’m feeling combat fatigue. I am too old to keep up this physical pace. Next week I look forward to having time to place some reorders, calculate my year-end bonus, tidy up my office, sort out some weird accounting things, deal with vendor errors, tune up my AdWords, work up some proper blog entries, read my trade magazines, and just generally sit on my butt. Meanwhile, I’m happy to keep slogging through frantic orders and watching my bank accounts swell for as long as shoppers are desperate to throw money my way.

I’ll try to write about something more interesting than sales numbers now that the holiday is past and I’m getting some free time back. The year-end report is going to be something to crow about.

Saturday, December 13, 2008

Christmas Screwups

Today finally brought a breather. I’d better post while the posting’s good, because I expect a few more rocking days ahead.

After that incredible 2,012-visitor spike that I told you about last week, traffic fell back to 636, then slowly drifted back into the 400-500 range – about what I would ordinarily expect during this week. I really like seeing the number of those visits that convert to sales. It’s grown from the traditional 1-2% to as much as 8%, and my average sale has crept up from $40 to nearly $50.

I’m doing phenomenal business. I surpassed last December’s total sales – which I had thought were pretty impressive – on the 10th of this month. I recorded 233 sales in those 10 days – nearly 100 of them in just two days -- and worked two 16-hour days to process and ship them all. Those 10 days surpassed my combined sales in June, July, and August – the entire summer. I’ll wait while that sinks in: I did three months’ business in 10 days. Every time I think I can’t possibly get any busier…I get a little busier. I’ve already topped $10,000 for the first time ever and am contemplating a $15,000+ month. Not bad for some old geezer selling stuff out of his cellar. With two healthy paychecks this month and shareholder distribution time looming, I’ll have enough money left after paying the dentist to get my wife a generous Christmas present…and maybe even buy myself something nice. I haven’t treated myself to anything in literally years. Oh, who am I kidding? I’ll put whatever the taxman leaves me toward personal debt.

Worst screwup of the week: I blew through all 144 of my Recycled Motherboard Christmas Trees by Wednesday morning. Not to worry: Last Thursday I placed a 72-piece backup order, followed by 72 more on Friday. My sales rep assured me that I’d have them on Monday. When they still weren’t here on Tuesday, I found out that they hadn’t even shipped yet! If they had arrived as expected, I’d probably have needed another 72 pieces for next week. Instead, I missed two critical peak demand days, and now I’m looking at a mountain of those things as sales slow to a dribble. Although the vendor screwed me over by shipping later than promised, I’m partly to blame for being conservative with my initial order.

Second worst screwup: The USPS rate lookup servers were chronically offline, so my site could only find and display UPS rates. Shoppers had to either buy UPS at triple the USPS cost, or simply leave. Lighted cap sales tanked when that started on Monday, and didn’t start to recover until the post office fixed it on Wednesday. And by “fixed it”, I mean they reduced their server load by disabling Click-n-Ship, the consumer’s online postage interface. I’d have been utterly screwed without Endicia as a fallback. Click-n-Ship didn’t get back to normal until today.

Third worst screwup: Those Christmas trees arrived a day earlier than promised…but instead of getting the 144 that I worried were excessive, they double-shipped 288. Oops. Yes, I can send them back, but in the meantime they are occupying a substantial chunk of my living room floor…and I dread figuring out how QuickBooks is going to want the accounting handled.

After cutting my backorder in half I got the correct eight Equal Measure measuring cups, but the manufacturer charged me for the originally ordered 16. I don’t know how to handle that in QuickBooks, either. My CPA is not going to be pleased with me.

Fourth worst screwup: I’ve had a couple of minor hit products from Can You Imagine over the years, but because they have a way of running out of stock on their popular items, nothing has ever really sold spectacularly. This year I noticed some early movement on the Amazing Coin Factory Bank. Even though exorbitant shipping costs from the Left Coast yield a very marginal gross margin, I decided that keeping it in stock will pump up my dollars. It has obligingly sold a respectable number of units -- better than anything else I've had from this vendor. Early this week, though, I started getting complaints. The defect rate is running a little over 10% (I consider anything over 2% to be unacceptable). I won’t find out how bad it is until disappointed children all over America discover broken toys on Christmas. I am already juggling returns and replacements, much to the consternation of QuickBooks and eventually of my CPA. With a little luck this won’t blow up into the customer-dissatisfaction disaster that I fear.

Least screwup: AFAIK, I have made only two minor packing errors, and I didn't switch any shipping labels during my crunch time. I've been very, very careful...but I've also been very, very tired and very, very stressed.

Friday, December 05, 2008

Into the Stratosphere

Everything comes down to December. The month started well. Sunday hit 13 sales (my record is 19) and traffic surpassed 300 visitors for the first time this year. On “Cyber Monday” traffic rose to 336 even while transactions fell to 6. Tuesday brought no sales at all through noon – maybe because the stock market dropped 600 points on Monday? Then it came back in the afternoon to finish strong.

I spent Wednesday morning in the dentist’s chair, and then struggled to catch up for the rest of the day. Visits surpassed 400. That afternoon a New York Times editor called to tell me that they are featuring one of my products in their holiday gift guide. I only had 21 of my original 24 recycled motherboard Christmas trees in stock. They were gone by 10 am Thursday morning.

There are not enough superlatives to describe Thursday. I had 49 sales (previous record was 19, remember?). Google counted 2,012 visits; I had thought 400 was a lot. The day’s dollars surpassed my monthly totals in February, April, and August – I did a month’s worth of business in one day. This week (with most of two days left) beat April and August combined – two months worth of sales in one week.

Yes, it’s a silly product, but such is the power of the media. I’m taking notification requests for the 288 more that are now on order; some could arrive as soon as today, but more probably on Monday and Tuesday. An astonishing 89 people have joined my notification list, many asking for three or four pieces. I’m running out of merchandise, boxes, packing material…everything. Shoppers are stripping me of even my oldest, most moribund merchandise. I am having trouble keeping up.

Ironically, the New York Times was not among the 50-or-so newspapers that we targeted with our email marketing last month, nor was this product among those that I tried to promote. It really was a random lightning strike.

I aspire to earn the minimum wage someday. Earlier this year I got my average pay consistently up to about two bucks an hour, but that still makes the Massachusetts $8 minimum wage seem like a distant pipe dream. Well, for the two weeks ended 11/22, I earned $9.84 per hour. Thanks to the New York Times, my next paycheck is already at $15 per hour and still growing. $20 per hour isn't out of the question. It’s been many years since I’ve earned that kind of money. I can even pay the dentist!

Earning a living without an employer, working alone and from my home -- in my pajamas! – must describe some kind of new American dream. Especially for an undereducated, unskilled person like myself.

Now my thoughts turn to the annual shareholder distribution. How big will Curio City’s profit be this year? How much of that will exist as cash on hand? How much of it will I pay myself? (Answer to the last question: As much as possible! I must cover the 25% income tax burden at the bare minimum, and I hope that I can buy my wife a lavish Christmas present, too. OTOH, I need to make sure the business has enough cash to cover its tax payments and charge bills, with enough left over to pay my CPA for tax prep, too. I am spending money like a madman this week to service the traffic I'm getting.)


November ended a little weaker than I had hoped and dragged down my annual numbers. December is obviously going to pump them back up again. Here are the numbers for November:

  • Total income: +53.9%
  • COGS: +74.3%
  • Gross profit: +38.8
  • Payroll: +60%
  • All expenses: +95.3%
  • Net income (profit): (-38.9%)

Same numbers for YTD:

  • Total income: +69.8%
  • COGS: +70.2%
  • Gross profit: +69.5%
  • Payroll: +88%
  • All expenses: +57.5%
  • Net income: +97.7%

As you can probably imagine, I need to get back to work pronto.

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