At last, Christmas is over! Traffic has drifted back below 200 daily visitors and just a few sales. I’m still shell-shocked from the workload. Where are all the emergencies? Lost and mis-shipped packages! Damaged and defective items! Fraudulent claims! Irate customers! It’s too quiet. Well, I guess people are probably going through the formality of presenting gifts right now. AFAIK I did not screw up any of my 600+ Christmas shipments this year.
I should probably try to find my telephone. I’ll bet there are voicemails.
I'm resisting the temptation to spew forth my 2009 statistics until the year actually ends, even though the remaining week isn't going to change much.
Things I’m pondering for 2010:
Exploiting Facebook. I’ve figured out the basics. I’ve got 50 fans (halfway to my goal of 100 by the end of 2010). I’ve got fan boxes on my blog and on the News page of my store, with a link in every newsletter. Short enough posts automatically go out over Twitter. Now I need to figure out what to use it for. Using “wall” posts for short news announcements and impromptu discount codes is obvious. But does the site itself have a role? How does it fit in with my store, my blog, and my email newsletters? How can I encourage participation? What kind of content do I need, and how much effort should I put into it? Most of all, how do I make it attract more fans? I think this has meaningful potential for marketing next year.
(Tentative answer: Use it to show the personal side of the business – pictures of me, my house, my car, etc – sort of like I tried to do years ago with the Kraken Enterprises website. Perhaps I could use it for personal/political subjects like my health insurance struggle. I need to explore some other business pages for ideas. The next version of Sunshop will reportedly include a Facebook product feed, so that could become a reason to advertise my page.)
Drop international shipping. I figure roughly 1-2% of my sales go to foreigners. Processing those is extra work and currency conversion fees make them less profitable. The requirement that I hand them to a postal employee, rather than drop them in a box, forces me to schedule a carrier pickup or wait in line at the post office. The rate of customer dissatisfaction is high, especially among Canadians thanks to their government’s vigilance about collecting stiff duties. The so-called global economy is a myth from a business-to-consumer viewpoint. Still, can I really afford to turn my back on up to 2% of my existing business if I want to reach 15% growth next year? Maybe I’ll just eliminate UPS Standard to Canada, which seems to generate most of my complaints.
Drop Google Checkout: Again, it’s a small percentage of my business, and I’m sure that those customers could find another way to pay. Exorbitant shipping rates probably repel as many sales as the GC badge attracts. Google is apparently never going to address the shipping bugs that I reported to them a couple of years ago. I cringe every time a GC customer pays $8 to UPS something that I could mail for $3, and I resent having to drive to the UPS store to drop it off. But I suppose that as long as some customers are willing to overpay, I should be happy to have their orders.
Discontinue Cards: Write all of those suckers off and close the department. I very rarely sell any, even at cost. This one’s a no-brainer. I’m just waiting for the calendar to flip so that I don’t ding this year’s profit.
Drop Giftwrapping: In all of 2009 I made only $118 selling giftwrapping service -- most of it in December, when my time is most precious. Now, I don’t mean to scoff at $118. But a product’s giftwrap option dialog prevents you from adding it to your cart directly from the category page; you have to go to the product page to choose “No giftwrapping”. That adds an extra click to most of my products. And last year I spent $149 on wrapping paper, so I didn’t even pay back my cost (admittedly, I bought a huge supply of my two most popular papers, and my wife appreciates the “free” wrapping paper at Christmastime). Giftwrapping doesn’t make financial sense and it makes shopping a little less convenient.
Rather than kill it, I revised my spreadsheet to take giftwrapping revenue out of sales and add it to payroll. I’ll be more kindly disposed to wrapping when the money goes directly into my pocket, and it’s mainly a labor expense anyway. Of course, this is just an Excel fiction; to QuickBooks, it’s just “Other” income. I would need to change that if I ever used QB to calculate my payroll, rather than just plugging in the number that Excel kicks out.
Another Raise: I’m going to raise payroll from 19% to 19.5% of net sales, effective with my next paycheck. If sales are on plan, I’ll achieve my 20% target in the fall.
Cosmetic Facelift: The latest Sunshop release added two new templates. You can see them at the demo store here. In the “Choose Your Theme” dialog at the top of the page, choose “Modern Black” to see the template that I use now. It’s functional, but tired. “Custom One” and “Custom Two” are new. The first one is an up-to-date commercial look. The second one’s more interesting, but I think it would wear out its welcome pretty quickly. I’d want to customize Custom One, rearranging some page elements and changing some colors. I’d also want to add some “Web 2.0” features (very simple animations, color changes, etc.). I need to find some examples that I like and ask Brad if he can implement it. What do you think? Is it enough of an improvement to justify spending hundreds of dollars?
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.
Friday, December 25, 2009
Friday, December 18, 2009
Achieving the Minimum
In December 2008 I set a record of 49 sales in one day. Last Friday that record fell when those precious Whisky Stones pushed me to 51 sales. I sold all 60 pieces in 18 hours…without advertising! The local store featured in the Boston Globe gift guide must have run out within hours, and then all the frustrated people went online and found me via natural search, which is really heartening. I could have sold hundreds more if I'd had the stock. Ordinarily the sales tax drives Massholes away from my site, but last weekend brought numerous in-state sales. The big day had 461 visitors and a phenomenal 10% conversion rate. 47 people came directly to my URL without any referral.
Week 6 of the Six Weeks of Christmas is within striking distance of LY’s sales. At the moment, the Six Weeks together are exactly $17.86 behind LY. There are still two weeks to go in December, and some pent-up demand for Power Caps, so there’s a chance I’ll still pull the month out of the fire. For some odd reason traffic peaked at 581 visitors on Tuesday, when I had only 14 sales.
My optimism about a general economic recovery has soured as our household finances continue their slow slide from dire to desperate. I reduced my 2010 growth plan from 30% to 15%...and that still feels over-optimistic, at least for the first half of the year.
I earned about $10,800 in salary this year. Hitting five figures is a big psychological milestone. Kraken Enterprises should finish with a profit of roughly $6,200 (down from $7,400 LY), which is distributed to me and taxed on our personal return. (I’ll actually withdraw about $4,500, cashflow permitting, and reinvest the rest in the company). My total compensation this year will be around $17,000, vs. $16,400 in 2008. A fulltime worker earning the $8 Massachusetts minimum wage grosses $16,640. So I have finally achieved my longstanding goal of earning minimum wage – I actually earn more working for myself than I could earn working for somebody else. Wow.
We fell into the 15% federal tax bracket this year and Massachusetts takes 5% more, so taxes will take $1,200 of my $4,500 payout. If I really make my planned 15% sales increase in 2010, I could hit $20,000 in salary plus bonus next year. Since my salary and the company’s profit are almost the same thing, I’m raising payroll from 19% to 19.5% of gross effective in January. (The money paid from profits isn’t subject to Social Security or Medicare taxes, but I need more cash up front).
Just for perspective…I made $70,000 in the software industry one year during the Clinton boom, before George Bush and 9/11. Anne earned even more. It’s hard to remember that we were rich as recently as eight years ago. That was a completely different world.
Something new to hate: Facebook! The Facebook widget to your right pissed me off. While I was fixing the broken Tweeter widget directly below it I noticed that my FB feed had stopped updating. I figured out that they had changed the URL. I fixed that and the widget worked again…until Dec. 8. Grrrr. I need followers, and that’s my best way of getting some. They finally fixed it on Dec. 16.
Hey, here’s a new reason to hate QuickBooks!
Naturally, the Item List doesn’t tell you how many entries it contains or explain what a "nubmer" is. If it includes inactive items, mine must be in the vicinity of 1,000...and I certainly have more than 10 vendors. I reckon I should be glad they found and patched it before I filed my tax return. But...there's a bug in the patch, too, and now they're scrambling to produce R11 before the end of the year.
Week 6 of the Six Weeks of Christmas is within striking distance of LY’s sales. At the moment, the Six Weeks together are exactly $17.86 behind LY. There are still two weeks to go in December, and some pent-up demand for Power Caps, so there’s a chance I’ll still pull the month out of the fire. For some odd reason traffic peaked at 581 visitors on Tuesday, when I had only 14 sales.
My optimism about a general economic recovery has soured as our household finances continue their slow slide from dire to desperate. I reduced my 2010 growth plan from 30% to 15%...and that still feels over-optimistic, at least for the first half of the year.
I earned about $10,800 in salary this year. Hitting five figures is a big psychological milestone. Kraken Enterprises should finish with a profit of roughly $6,200 (down from $7,400 LY), which is distributed to me and taxed on our personal return. (I’ll actually withdraw about $4,500, cashflow permitting, and reinvest the rest in the company). My total compensation this year will be around $17,000, vs. $16,400 in 2008. A fulltime worker earning the $8 Massachusetts minimum wage grosses $16,640. So I have finally achieved my longstanding goal of earning minimum wage – I actually earn more working for myself than I could earn working for somebody else. Wow.
We fell into the 15% federal tax bracket this year and Massachusetts takes 5% more, so taxes will take $1,200 of my $4,500 payout. If I really make my planned 15% sales increase in 2010, I could hit $20,000 in salary plus bonus next year. Since my salary and the company’s profit are almost the same thing, I’m raising payroll from 19% to 19.5% of gross effective in January. (The money paid from profits isn’t subject to Social Security or Medicare taxes, but I need more cash up front).
Just for perspective…I made $70,000 in the software industry one year during the Clinton boom, before George Bush and 9/11. Anne earned even more. It’s hard to remember that we were rich as recently as eight years ago. That was a completely different world.
Something new to hate: Facebook! The Facebook widget to your right pissed me off. While I was fixing the broken Tweeter widget directly below it I noticed that my FB feed had stopped updating. I figured out that they had changed the URL. I fixed that and the widget worked again…until Dec. 8. Grrrr. I need followers, and that’s my best way of getting some. They finally fixed it on Dec. 16.
Hey, here’s a new reason to hate QuickBooks!
We are writing to let you know about a Sales Tax Report issue related to the December 1, 2009 Release 9 (R9) of QuickBooks 2009. If you downloaded R9 earlier this month, the Sales Tax Liability and Sales Tax Revenue reports are not displaying the correct data in some cases. Specifically, this issue applies to you only if you meet the following conditions: within QuickBooks the sum total of items in your Items List multiplied by the nubmer of vendors in your Vendor List equals more than 10,000.
Naturally, the Item List doesn’t tell you how many entries it contains or explain what a "nubmer" is. If it includes inactive items, mine must be in the vicinity of 1,000...and I certainly have more than 10 vendors. I reckon I should be glad they found and patched it before I filed my tax return. But...there's a bug in the patch, too, and now they're scrambling to produce R11 before the end of the year.
Friday, December 11, 2009
Saved By the Stones
Remember how I expected Week 4 to finish thousands of dollars behind LY’s corresponding week (which benefited from a free mention in the NY Times gift guide)? Instead, I finished less than $100 down. 2008’s stroke of marketing luck moved about 300 Recycled Motherboard Christmas Trees at $10 a pop. (I just sold out of those this morning, btw). This year I moved 150 of the surprise bestseller Whisky Stones at $20. I made the same amount of money on half the work. Sweet! Maybe next year I’ll find a $40 product that’s good for 75 units.
Week 4’s unexpected success crippled Week 5. First Panther Vision tied one hand behind my back by selling completely out of Power Caps. I effectively ran out on Wednesday and can’t get more until next Friday, Dec. 18…optimistically. Then I tied my other hand by underestimating the run on Whisky Stones; I ran out on Monday. Sales fell when I stopped advertising my nonexistent products and continued to slide all week. Week 5, which should have been the single biggest week of the year, threatened to deliver the huge setback that I had expected in Week 4 – it was struggling to reach 50% of LY. And then, another last-minute miracle saved my bacon again. My last 60 packages of Whisky Stones came in. I sold 18 sets within two hours -- without advertising. While this week will still be down, it won’t be as bad as it looked this morning.
What’s bizarre is that my workload remains heavy, with 15-20 sales per day. They’re all small orders. I’m getting almost none of the grab-bag orders that I’ve seen in years past. People aren’t impulsively putting a dozen items in their cart this year. Because the process of putting things in boxes is only a small part of the labor in filling an order, one $10 item is nearly as much work as a $200 order with a dozen products. I know I ought to be grateful for all these little sales, but I’ll admit that I cringe every time one comes in.
Well, at least my on-hand inventory is shrinking. I’ll be effectively out of old 2-LED caps by the time my Power Caps finally show up. I have less than $18,000 worth of stuff in the cellar. If only it weren’t the most desirable stuff that’s gone!
With only one week left, nothing that I do now can affect the outcome. The caps either will arrive in time to make a difference, or they won’t. Whisky Stones are out of the picture. Customers either will flock to something else (save me, Switchables!), or they won’t. Week 6 either will reverse some of Week 5’s slide, or it won’t. December either will completely cancel out the previous 11 months’ sales increases, or it won’t.
The Boston Globe’s holiday gift guide mentioned two products that I carry: Whisky Stones (moan) and the Pop Quiz Blackboard clock. That clock was actually introduced a year ago; it’s the white “graph paper” version that’s new. I only have three left in stock; should I panic buy? Hardly. The Globe only promotes stuff from bricks-and-mortar stores within the city limits, and their readership has fallen to barely 200,000 people (from over 500,000 just a few years ago). It was worth a Facebook bleat, but nothing more. I’d be happy to move the three that I have left.
Here’s something cheerful: I have a new reason to hate Sunshop. Or maybe it’s just more venom for old hatred; I didn’t check my own post archive.
A customer flipped out after I shipped her order correctly. She had entered different ship-to information in the PayPal interface, but Sunshop ignored it. The ship-to on my packing list was her default PayPal address. It turns out that I had reported exactly the same bug in October 2008. Ah, nostalgia! Turnkey replied then that “we may have to take a look at this”. This year, they invited me to add it to their bug tracker. I swear I feel like I work in software QA again. I wish I was earning that kind of money.
Week 4’s unexpected success crippled Week 5. First Panther Vision tied one hand behind my back by selling completely out of Power Caps. I effectively ran out on Wednesday and can’t get more until next Friday, Dec. 18…optimistically. Then I tied my other hand by underestimating the run on Whisky Stones; I ran out on Monday. Sales fell when I stopped advertising my nonexistent products and continued to slide all week. Week 5, which should have been the single biggest week of the year, threatened to deliver the huge setback that I had expected in Week 4 – it was struggling to reach 50% of LY. And then, another last-minute miracle saved my bacon again. My last 60 packages of Whisky Stones came in. I sold 18 sets within two hours -- without advertising. While this week will still be down, it won’t be as bad as it looked this morning.
What’s bizarre is that my workload remains heavy, with 15-20 sales per day. They’re all small orders. I’m getting almost none of the grab-bag orders that I’ve seen in years past. People aren’t impulsively putting a dozen items in their cart this year. Because the process of putting things in boxes is only a small part of the labor in filling an order, one $10 item is nearly as much work as a $200 order with a dozen products. I know I ought to be grateful for all these little sales, but I’ll admit that I cringe every time one comes in.
Well, at least my on-hand inventory is shrinking. I’ll be effectively out of old 2-LED caps by the time my Power Caps finally show up. I have less than $18,000 worth of stuff in the cellar. If only it weren’t the most desirable stuff that’s gone!
With only one week left, nothing that I do now can affect the outcome. The caps either will arrive in time to make a difference, or they won’t. Whisky Stones are out of the picture. Customers either will flock to something else (save me, Switchables!), or they won’t. Week 6 either will reverse some of Week 5’s slide, or it won’t. December either will completely cancel out the previous 11 months’ sales increases, or it won’t.
The Boston Globe’s holiday gift guide mentioned two products that I carry: Whisky Stones (moan) and the Pop Quiz Blackboard clock. That clock was actually introduced a year ago; it’s the white “graph paper” version that’s new. I only have three left in stock; should I panic buy? Hardly. The Globe only promotes stuff from bricks-and-mortar stores within the city limits, and their readership has fallen to barely 200,000 people (from over 500,000 just a few years ago). It was worth a Facebook bleat, but nothing more. I’d be happy to move the three that I have left.
Here’s something cheerful: I have a new reason to hate Sunshop. Or maybe it’s just more venom for old hatred; I didn’t check my own post archive.
A customer flipped out after I shipped her order correctly. She had entered different ship-to information in the PayPal interface, but Sunshop ignored it. The ship-to on my packing list was her default PayPal address. It turns out that I had reported exactly the same bug in October 2008. Ah, nostalgia! Turnkey replied then that “we may have to take a look at this”. This year, they invited me to add it to their bug tracker. I swear I feel like I work in software QA again. I wish I was earning that kind of money.
Friday, December 04, 2009
The PayPal Mystery Loop
Today’s post is a bit more disjointed than usual.
Every year I’m amazed anew when the shoppers swarm exactly when the calendar says that they will. Another last-minute stroke of luck rescued November. I kick-started last weekend by accepting a customer’s lowball price offer for all 35 of my remaining dark green 2-LED caps. A superlative 13-transaction Saturday then proceeded to push the month $500 over LY, and the frenzy commenced. I’m hitting 400 visits a day now and routinely closing 20+ sales. That will continue through next week unless I run out of merchandise.
Despite the warning about supply problems that I laid out last week, I'm getting caught short in a couple of areas. Panther Vision has actually run out of Power Caps (can you believe that?) and their new shipment isn’t due until the week of 12/7…if it clears Customs promptly. Those caps are my bread and butter and meat and potatoes. I haven’t been this low on them in years. I sold out my Peace Sign Ornaments very early on. I'm nearly out of LED Peace Sign Tree Toppers. The sales rep for that company has ignored my last two emails, and now it's too late to reorder.
This December can’t possibly match LY, but I’ve known that all year. This fourth of the Six Weeks of Christmas was better than expected given that the corresponding week LY was supercharged by my NY Times mention. The fact that I’m actually within hailing distance of that high water mark is impressive. My open-to-buy is back in the black and my cash on hand is in five figures. I feel rich!
Facebook has surpassed Octopus Overlords among my top referring sites. Those news bleets that I send out periodically must be drawing a little traffic.
Besides managing the sales rocket, I’m trying to define a couple of bugs prior to going after Turnkey for them.
The PayPal bug: Four or five people have complained of being unable to complete PayPal sales. When they return to Curio City from the PayPal interface, Sunshop takes them back to the account setup screen rather than forward to the checkout confirmation screen. They can’t get out of that loop. I’m still getting the expected number of PayPal transactions so it’s not a general problem. But I figure that for every person who reports the behavior, several more probably give up and either go away or pay by another method. I don’t know how much business I’m losing to the PayPal bug, but I must be losing some.
I can’t reproduce the bug on my own business computer, my gaming computer, or my wife’s computer, using either Firefox or Internet Explorer 8. None of the complainants have yet given me any useful information – they all seem to be low-skilled computer users who can’t or won’t answer simple questions about their browsers and computers. If I can't duplicate it, I can't understand it, and if I can't understand it, I can't fix it. My suspicions, from most to least likely:
It’s hard to test PayPal. I can’t check out using the same Curio City account that’s receiving the funds and I don’t have a separate, personal account. I should create one and perform some tests. I obviously don’t have time for that now.
The Google Checkout bug: I recently noticed that when somebody uses Google Checkout to buy a product with Option Stock, the individual Option Stock inventory numbers get updated properly, but the product’s overall In Stock number is not debited. I think that this caused one instance of selling more pieces than I actually had in stock as the program consulted two different on-hand quantities. I don’t have a GC account so I can’t verify this directly or demonstrate it for the developers. It must relate to Google's callback API -- but is the problem on Google's end, or Sunshop's end, or did my last upgrade introduce an implementation error?
The Google Checkout bug suggested possibility #2 for the PayPal bug – since I'm pretty sure a bug exists, it might logically affect both payment types. Both of these bugs most likely appeared with the Sunshop upgrade to 4.2.0. So the ultimate question is whether they derive from an error in the upgrade process, or an error in Sunshop’s code.
Turnkey’s Support forum is full of developers, not merchants, so they never see real-world operational bugs (and most merchants lack the tech savvy to recognize stuff like this). The Turnkey company rep is primarily concerned with denying and disowning bugs, as is the way of software companies everywhere. So their Support forum hasn't been any help so far, and I haven't had time to force the issues.
If you can suggest a possibility that I haven’t thought of, please leave a comment. I'm leaning toward believing that the GC bug is a straight-out Sunshop flaw, but I'm baffled by the PayPal loop.
Every year I’m amazed anew when the shoppers swarm exactly when the calendar says that they will. Another last-minute stroke of luck rescued November. I kick-started last weekend by accepting a customer’s lowball price offer for all 35 of my remaining dark green 2-LED caps. A superlative 13-transaction Saturday then proceeded to push the month $500 over LY, and the frenzy commenced. I’m hitting 400 visits a day now and routinely closing 20+ sales. That will continue through next week unless I run out of merchandise.
Despite the warning about supply problems that I laid out last week, I'm getting caught short in a couple of areas. Panther Vision has actually run out of Power Caps (can you believe that?) and their new shipment isn’t due until the week of 12/7…if it clears Customs promptly. Those caps are my bread and butter and meat and potatoes. I haven’t been this low on them in years. I sold out my Peace Sign Ornaments very early on. I'm nearly out of LED Peace Sign Tree Toppers. The sales rep for that company has ignored my last two emails, and now it's too late to reorder.
This December can’t possibly match LY, but I’ve known that all year. This fourth of the Six Weeks of Christmas was better than expected given that the corresponding week LY was supercharged by my NY Times mention. The fact that I’m actually within hailing distance of that high water mark is impressive. My open-to-buy is back in the black and my cash on hand is in five figures. I feel rich!
Facebook has surpassed Octopus Overlords among my top referring sites. Those news bleets that I send out periodically must be drawing a little traffic.
Besides managing the sales rocket, I’m trying to define a couple of bugs prior to going after Turnkey for them.
The PayPal bug: Four or five people have complained of being unable to complete PayPal sales. When they return to Curio City from the PayPal interface, Sunshop takes them back to the account setup screen rather than forward to the checkout confirmation screen. They can’t get out of that loop. I’m still getting the expected number of PayPal transactions so it’s not a general problem. But I figure that for every person who reports the behavior, several more probably give up and either go away or pay by another method. I don’t know how much business I’m losing to the PayPal bug, but I must be losing some.
I can’t reproduce the bug on my own business computer, my gaming computer, or my wife’s computer, using either Firefox or Internet Explorer 8. None of the complainants have yet given me any useful information – they all seem to be low-skilled computer users who can’t or won’t answer simple questions about their browsers and computers. If I can't duplicate it, I can't understand it, and if I can't understand it, I can't fix it. My suspicions, from most to least likely:
- It is a cookie handling error tied to a specific browser, probably IE, and possibly an older version of IE.
- It is caused by products with Option Stock. Sunshop tracks and enforces the quantities of each separate color or style option for products that have them. PayPal sales complete properly when a customer buys only one variant of a product with options stock, but I haven’t tested it yet with multiple options of the same product. (See the Google Checkout bug below).
- It is caused by a virus or spyware on the user’s machine. It’s easy to blame the customer, but they do seem to be inexpert computer users, and those are the people most likely to have infected computers.
- It is caused by simple user error, such as completing their bill-to or ship-to information wrong. Again, I’m reluctant to blame the user...and Sunshop should prevent them from leaving the account setup screen in the first place.
- It is caused by large sales. I hadn’t had a PayPal transaction exceeding $100 in months. But I got one this week, so I think I’ve ruled this one out.
It’s hard to test PayPal. I can’t check out using the same Curio City account that’s receiving the funds and I don’t have a separate, personal account. I should create one and perform some tests. I obviously don’t have time for that now.
The Google Checkout bug: I recently noticed that when somebody uses Google Checkout to buy a product with Option Stock, the individual Option Stock inventory numbers get updated properly, but the product’s overall In Stock number is not debited. I think that this caused one instance of selling more pieces than I actually had in stock as the program consulted two different on-hand quantities. I don’t have a GC account so I can’t verify this directly or demonstrate it for the developers. It must relate to Google's callback API -- but is the problem on Google's end, or Sunshop's end, or did my last upgrade introduce an implementation error?
The Google Checkout bug suggested possibility #2 for the PayPal bug – since I'm pretty sure a bug exists, it might logically affect both payment types. Both of these bugs most likely appeared with the Sunshop upgrade to 4.2.0. So the ultimate question is whether they derive from an error in the upgrade process, or an error in Sunshop’s code.
Turnkey’s Support forum is full of developers, not merchants, so they never see real-world operational bugs (and most merchants lack the tech savvy to recognize stuff like this). The Turnkey company rep is primarily concerned with denying and disowning bugs, as is the way of software companies everywhere. So their Support forum hasn't been any help so far, and I haven't had time to force the issues.
If you can suggest a possibility that I haven’t thought of, please leave a comment. I'm leaning toward believing that the GC bug is a straight-out Sunshop flaw, but I'm baffled by the PayPal loop.
Friday, November 27, 2009
Red Ink on Black Friday
Week 3 of Christmas will follow the first two weeks into the crapper unless an unexpected rush pulls it out in the next day and a half. “Black Friday” is typically quiet while the Normals are out looking for deep discounts in stores. “Cyber Monday,” which finds the office workers back at their desks, is better, but accounting-wise that’s in December.
If November does come in behind LY, it will be my first losing month since June. After pulling all the stops out of advertising I'm now paying a frightful sum to buy 250-300 visits a day, but my conversion rate has fallen. Many transactions are in the $10-20 range when they should be averaging $50-100. Wednesday brought a respectable 10 sales. It would have been a good day if my historic average of $40 each held up, but instead the day finished at $185. Bleah. People are shopping, but few are buying. Those who are buying are spending less, and they’re buying the wrong stuff. Well, at least I’m liberating a few dollars that have been locked up for years in old, dead merchandise.
How to explain this? I lost half a day’s business to a technical problem late last week before I found and fixed it (thanks to my developer’s rapid response to the Brad Signal). I lost 32 newsletter subscribers when Comcast decided to block all email from Constant Contact. I emailed all of those customers individually and asked them to re-enroll with a different email address, but I don't expect to get any of them back. Setbacks like this crop up routinely, though.
I think macroeconomics are to blame. Last October’s financial crash only hammered people with stocks and big retirement portfolios. Housing values had only begun to plummet and employers had just started destroying jobs, so ordinary people were not yet impoverished. A year ago the rich were hurting, but the middle class could still shrug it off. This year, bailouts have restored prosperity to the rich, but average people are desperate. And my customers are average people.
What can I do? Yesterday I used a newsletter and Facetweet to put out a discount code good for free shipping (actually 60-cent shipping because Sunshop is too stupid to waive the handling fee). That code is BIGBIRD – use it! It’s good on a minimum $25 purchase to any US address, and it expires Monday. I should probably facetweet a reminder on Sunday. It was a particularly entertaining newsletter, if I say so myself. Sadly, only 44 out of 278 recipients have opened it, thanks to yesterday’s accursed holiday. If it were up to me the Normals would be chained to their desks 365 days a year. :)
Both the new Power Caps and the old 2-LED caps have stopped selling almost entirely. I’m buying 50 clicks a day, but only bottom feeders looking for outrageous discounts are responding. I don’t think anyone’s undercutting my retail price online…they just plain aren’t selling.
With my core products dead in the water (even Whisky Stones have fallen to nearly nothing) this week is running about 25% behind LY, which was in turn down from 2007. So with only three more weeks to go I’m up against LY’s free mention in the NY Times gift guide. December is not going to be pretty.
Here are November’s numbers:
Total income: -2.9%
Total COGS: -16.5%
Payroll: +371.5%
Net Income (Profit): -39.7%
The YTD numbers:
Total income: +20.6%
Total COGS: +15.8%
Payroll: +50.3%
Net Income (Profit): -21.4%
What is there to be thankful for? Well, November didn’t drag the YTD numbers down too badly. The bar is set low for next year. Costs fell farther than income, and more money went into my pocket. The year should still end with a small profit, and if it's smaller than LY’s, then I'll owe less tax on my K-1 income.
If November does come in behind LY, it will be my first losing month since June. After pulling all the stops out of advertising I'm now paying a frightful sum to buy 250-300 visits a day, but my conversion rate has fallen. Many transactions are in the $10-20 range when they should be averaging $50-100. Wednesday brought a respectable 10 sales. It would have been a good day if my historic average of $40 each held up, but instead the day finished at $185. Bleah. People are shopping, but few are buying. Those who are buying are spending less, and they’re buying the wrong stuff. Well, at least I’m liberating a few dollars that have been locked up for years in old, dead merchandise.
How to explain this? I lost half a day’s business to a technical problem late last week before I found and fixed it (thanks to my developer’s rapid response to the Brad Signal). I lost 32 newsletter subscribers when Comcast decided to block all email from Constant Contact. I emailed all of those customers individually and asked them to re-enroll with a different email address, but I don't expect to get any of them back. Setbacks like this crop up routinely, though.
I think macroeconomics are to blame. Last October’s financial crash only hammered people with stocks and big retirement portfolios. Housing values had only begun to plummet and employers had just started destroying jobs, so ordinary people were not yet impoverished. A year ago the rich were hurting, but the middle class could still shrug it off. This year, bailouts have restored prosperity to the rich, but average people are desperate. And my customers are average people.
What can I do? Yesterday I used a newsletter and Facetweet to put out a discount code good for free shipping (actually 60-cent shipping because Sunshop is too stupid to waive the handling fee). That code is BIGBIRD – use it! It’s good on a minimum $25 purchase to any US address, and it expires Monday. I should probably facetweet a reminder on Sunday. It was a particularly entertaining newsletter, if I say so myself. Sadly, only 44 out of 278 recipients have opened it, thanks to yesterday’s accursed holiday. If it were up to me the Normals would be chained to their desks 365 days a year. :)
Both the new Power Caps and the old 2-LED caps have stopped selling almost entirely. I’m buying 50 clicks a day, but only bottom feeders looking for outrageous discounts are responding. I don’t think anyone’s undercutting my retail price online…they just plain aren’t selling.
With my core products dead in the water (even Whisky Stones have fallen to nearly nothing) this week is running about 25% behind LY, which was in turn down from 2007. So with only three more weeks to go I’m up against LY’s free mention in the NY Times gift guide. December is not going to be pretty.
Here are November’s numbers:
Total income: -2.9%
Total COGS: -16.5%
Payroll: +371.5%
Net Income (Profit): -39.7%
The YTD numbers:
Total income: +20.6%
Total COGS: +15.8%
Payroll: +50.3%
Net Income (Profit): -21.4%
What is there to be thankful for? Well, November didn’t drag the YTD numbers down too badly. The bar is set low for next year. Costs fell farther than income, and more money went into my pocket. The year should still end with a small profit, and if it's smaller than LY’s, then I'll owe less tax on my K-1 income.
Friday, November 20, 2009
Measuring the Days
A late surge saved last week from the disaster that I prematurely reported in my last post. It was still behind LY, but not dramatically so. Thank you, customers, for playing the cavalry. Don’t scare me like that again.
Last week I reluctantly stopped advertising DayClocks because bottom-feeders have driven the price into the ground. The very next day, DayClocks announced their first new model in years – a smaller version of the Oak Contemporary. The day after that, I actually sold my first DayClock in over a month, followed by another one the very next day. I’d like to wait 10 days to see if the discounters will ruin the new clock, too, but I can’t waste valuable Christmas days on indecision. So I spent the $200 price of admission, even though my open to buy is $2,600 in the red and the old Contemporary DayClock never sold well.
But last week is ancient history. This week began with an uphill slog when one of last week’s customers canceled a $116 order that she had placed in error. Watching a day struggle to reach zero is depressing, but these things happen. Right now it’s a nail-biter whether the week will achieve LY or not. Forget about plan. Merchandise shortages are appearing. Manufacturers were conservative this year, so supplies of the most popular stuff are spotty. Retailers would rather miss incremental sales than mark down leftover inventory, so stock levels are light. Virtually everybody is understaffed from job-cutting – yesterday I gave up trying to reorder Temperature Controlled Faucet Lights when the manufacturer’s phone went unanswered. And because companies fired their oldest, most experienced workers, the overworked cheap youngsters who are left can't meet the pace. If you're one of those shoppers who waits for last-minute markdowns, you’re only going to find crap this year.
*****************
Several months ago I read a news report about the Mass. Medical Security Program running out of money. Enrollment had spiked from 3,800 to 27,000 people as of August. The state had sent us information about this program when Anne was first laid off, but there was no way we could qualify at the time. I trashed the paperwork and forgot about it. Six months later, with her salary a distant memory, our circumstances were sufficiently reduced to give it another try.
Yesterday we were accepted! The state’s 80% reimbursement will reduce our stifling $770 monthly health insurance premium to a manageable $154 for as long as Anne’s unemployment checks hold out, surpassing the expired federal COBRA subsidy. This is not the first time I’ve thanked the gods that we live in the most liberal state in the US. Saved by socialism! I don't know how people in miserly red states survive without lifelines like this. They just suffer, I guess.
Now I can cheerfully mothball the health insurance topic until the next threat comes along. It looks like we’ll be OK until COBRA expires next August. I think Anne’s unemployment checks will continue into Fall 2010, although the DUA seems to be unable to tell her when her claim extensions will all be exhausted. Maybe the national economy will take another plunge and Congress will keep extending benefits forever.
Last week I reluctantly stopped advertising DayClocks because bottom-feeders have driven the price into the ground. The very next day, DayClocks announced their first new model in years – a smaller version of the Oak Contemporary. The day after that, I actually sold my first DayClock in over a month, followed by another one the very next day. I’d like to wait 10 days to see if the discounters will ruin the new clock, too, but I can’t waste valuable Christmas days on indecision. So I spent the $200 price of admission, even though my open to buy is $2,600 in the red and the old Contemporary DayClock never sold well.
But last week is ancient history. This week began with an uphill slog when one of last week’s customers canceled a $116 order that she had placed in error. Watching a day struggle to reach zero is depressing, but these things happen. Right now it’s a nail-biter whether the week will achieve LY or not. Forget about plan. Merchandise shortages are appearing. Manufacturers were conservative this year, so supplies of the most popular stuff are spotty. Retailers would rather miss incremental sales than mark down leftover inventory, so stock levels are light. Virtually everybody is understaffed from job-cutting – yesterday I gave up trying to reorder Temperature Controlled Faucet Lights when the manufacturer’s phone went unanswered. And because companies fired their oldest, most experienced workers, the overworked cheap youngsters who are left can't meet the pace. If you're one of those shoppers who waits for last-minute markdowns, you’re only going to find crap this year.*****************
Several months ago I read a news report about the Mass. Medical Security Program running out of money. Enrollment had spiked from 3,800 to 27,000 people as of August. The state had sent us information about this program when Anne was first laid off, but there was no way we could qualify at the time. I trashed the paperwork and forgot about it. Six months later, with her salary a distant memory, our circumstances were sufficiently reduced to give it another try.
Yesterday we were accepted! The state’s 80% reimbursement will reduce our stifling $770 monthly health insurance premium to a manageable $154 for as long as Anne’s unemployment checks hold out, surpassing the expired federal COBRA subsidy. This is not the first time I’ve thanked the gods that we live in the most liberal state in the US. Saved by socialism! I don't know how people in miserly red states survive without lifelines like this. They just suffer, I guess.
Now I can cheerfully mothball the health insurance topic until the next threat comes along. It looks like we’ll be OK until COBRA expires next August. I think Anne’s unemployment checks will continue into Fall 2010, although the DUA seems to be unable to tell her when her claim extensions will all be exhausted. Maybe the national economy will take another plunge and Congress will keep extending benefits forever.
Friday, November 13, 2009
Taking Leave
I seized a couple of beautiful days this week to rake my accursed lawn. I’ve got nothing personal against leaves, but one must meet minimum expectations. Sales stumbled badly while Curio City took a back seat. This was the first week since early July that I didn’t beat last year…and I missed it by well over 50%. Maybe it had something to do with Veterans Day – observed on Monday by many companies and on Wednesday by the government. Maybe it’s a school vacation week. Sales are always poor when the office workers aren’t shopping at their desks, and when their kids are underfoot. I hope it’s just a blip and not a harbinger. I don’t think there’s anything I can do about it, anyway.
At least I got the stupid leaves cleaned up. I hate that chore almost as much as I hate shoveling snow.
To counter the sales stumble I reined in some of my worst advertising excesses. I killed the most expensive words in a couple of popular products – the ones that get 4 or 5 clicks a day but never convert to sales. After years of reliable sales, I reluctantly suspended my DayClocks ads because I can’t compete with discounters ($30 plus free shipping for an item that costs $20? How do they live on a $5 markup and still outbid me in advertising?). I pulled the plug on Pirate category ads. Based on the click prices Jolly Roger stuff must be ubiquitous, and that always means that bottom feeders own the market. Not being a consumer myself often blinds me to things that are obvious to normal people.
I drove my open-to-buy deeper into the red than it’s ever been before (mainly to get the next round of new Power Caps due out in early December). Relying on tomorrow’s sales to pay today’s bills is not ordinarily my kind of gamble…but that’s how capitalism works, right? Combining deep deficit spending with a drastic drop in expected sales has me very, very worried right now.
Apparently American Express is worried, too. They noticed that I never use my whole line of credit and cut my ceiling by 50%. That’s OK; my Citizens Bank Mastercard does the heavy lifting now. The lower LOC on my Amex card will probably improve my credit rating. It's just another sign of hard times.
Well. I’m out of money and running out of time, so Christmas is locked in. Six weeks out of the year really matter. The first one just ended in unambiguous failure.
At least I got the stupid leaves cleaned up. I hate that chore almost as much as I hate shoveling snow.
To counter the sales stumble I reined in some of my worst advertising excesses. I killed the most expensive words in a couple of popular products – the ones that get 4 or 5 clicks a day but never convert to sales. After years of reliable sales, I reluctantly suspended my DayClocks ads because I can’t compete with discounters ($30 plus free shipping for an item that costs $20? How do they live on a $5 markup and still outbid me in advertising?). I pulled the plug on Pirate category ads. Based on the click prices Jolly Roger stuff must be ubiquitous, and that always means that bottom feeders own the market. Not being a consumer myself often blinds me to things that are obvious to normal people.
I drove my open-to-buy deeper into the red than it’s ever been before (mainly to get the next round of new Power Caps due out in early December). Relying on tomorrow’s sales to pay today’s bills is not ordinarily my kind of gamble…but that’s how capitalism works, right? Combining deep deficit spending with a drastic drop in expected sales has me very, very worried right now.
Apparently American Express is worried, too. They noticed that I never use my whole line of credit and cut my ceiling by 50%. That’s OK; my Citizens Bank Mastercard does the heavy lifting now. The lower LOC on my Amex card will probably improve my credit rating. It's just another sign of hard times.
Well. I’m out of money and running out of time, so Christmas is locked in. Six weeks out of the year really matter. The first one just ended in unambiguous failure.
Friday, November 06, 2009
Shop Your Way to a Greener World
Environmentally-friendly practices usually coincide with sensible economics. Curio City reuses every possible shipping carton primarily because a virgin box costs $0.50 or more. I reuse 90% of the packing material that comes my way, and I wad up the Braintree Forum when I need more. Most of the little trash that I do generate goes to curbside recycling, so virtually nothing ever reaches the SEMASS trash-to-energy plant. I use USPS carrier pickup not just to save me a trip, but also to avoid standing in line with international shipments. Two of the three light bulbs in my “warehouse” are CFLs. (I keep whacking my head and breaking the third one, so I went back to a cheaper incandescent there.) I turn off the lights and my computer at night not out of altruism, but to cut the electric bill. It’s sensible and easy for a tiny home business to be “green”.
Mega-conglomerates have a tougher row to hoe in their quest to appear green.
My bank, RBS Citizens, has the Greensense program. In exchange for accepting electronic statements instead of paper, I get a debit card with a picture of a tree on it. The core of the card is made from cornstarch instead of plastic (the skin is obviously still plastic, and corn is an environmentally destructive crop, but let’s not dig too far beneath that nice tree). They pay me 10 cents every time I use my debit card if I make the minimum 10 monthly transactions (I usually don’t). I don’t understand how swiping my debit card is “greener” than using cash money or my credit card, but I suppose I must be spending my way to a better world. Otherwise there wouldn’t be a tree on my card, would there?
Now UPS is “Introducing a greener way to ship!”. Well, that’s nice. UPS's enormous fleet of trucks and airplanes is probably among the biggest carbon emitters on the planet. They must be using alternative fuels or electric vehicles, right?
Uh, no. They are voluntarily buying carbon offsets before cap-and-trade legislation compels them do to so, because “shipping your packages produces emissions that many believe contribute to global climate change.” (Notice the care not to offend global warming deniers). Cap’n Trade is the dubious practice of paying companies that don’t pollute for the right to do so yourself, on the theory that the overall cap will reduce aggregate emissions. To be fair, UPS didn’t invent that questionable scheme. Arguably, they deserve congratulations for doing it before they’re legally compelled.
Here’s the fun part: For “as little as” 5 cents per package, anyone can “ship carbon-neutral”. That’s right: They’re asking their customers to pick up the cost of the carbon offsets. If I tick a box to pay their premium, UPS will add a logo to my customers’ tracking emails showing them what swell companies we are. And, for a limited time only, UPS will match the first $1 million in contributions that their shippers make. That’s right: They will graciously chip in toward their own offsets. Gosh, what a great company!
What’s really sad is that I’m actually tempted to pay for their emblem. Consumers are easily hoodwinked into thinking that they can shop their way to a brighter future. And so we have this week’s new reason to hate UPS. Here’s their page if you want to see their side of the story, complete with hummingbirds and rainbows.
********************
Remember a few weeks ago I said that all of my medical bills are paid in full and the bill collectors have all been caged? It started with a colonoscopy in November 2008. Before I scheduled the procedure Blue Cross assured us that as long as I’m over 50 and my doc recommended it, it’s 100% covered. Unfortunately, the clinic entered my insurance number wrong. Just as a paperwork mishap in Terry Gilliam’s Brazil led Mr Archibald Buttle to suffer for the sins of arch-terrorist Archibald Tuttle, we’ve been fighting the system ever since.
To date, I’ve paid $489.36 to four separate companies for assorted deductibles and copays. Today I got a new bill for $105 for “unpaid copays”. None of these bills ever come with itemized explanations, of course, so each new bill requires another call to Blue Cross – an ordeal in itself. I wonder if they can explain how our supposed $20 copay got to $105.
So the insurance struggle resumes. I swear two things: First, I will die before I ever consent to another diagnostic procedure of any kind. And second, the conservatives who oppose health care reform are gibbering idiots. I want to see the insurance companies dissolved and all their executives hanged.
Mega-conglomerates have a tougher row to hoe in their quest to appear green.
My bank, RBS Citizens, has the Greensense program. In exchange for accepting electronic statements instead of paper, I get a debit card with a picture of a tree on it. The core of the card is made from cornstarch instead of plastic (the skin is obviously still plastic, and corn is an environmentally destructive crop, but let’s not dig too far beneath that nice tree). They pay me 10 cents every time I use my debit card if I make the minimum 10 monthly transactions (I usually don’t). I don’t understand how swiping my debit card is “greener” than using cash money or my credit card, but I suppose I must be spending my way to a better world. Otherwise there wouldn’t be a tree on my card, would there?
Now UPS is “Introducing a greener way to ship!”. Well, that’s nice. UPS's enormous fleet of trucks and airplanes is probably among the biggest carbon emitters on the planet. They must be using alternative fuels or electric vehicles, right?
Uh, no. They are voluntarily buying carbon offsets before cap-and-trade legislation compels them do to so, because “shipping your packages produces emissions that many believe contribute to global climate change.” (Notice the care not to offend global warming deniers). Cap’n Trade is the dubious practice of paying companies that don’t pollute for the right to do so yourself, on the theory that the overall cap will reduce aggregate emissions. To be fair, UPS didn’t invent that questionable scheme. Arguably, they deserve congratulations for doing it before they’re legally compelled.
Here’s the fun part: For “as little as” 5 cents per package, anyone can “ship carbon-neutral”. That’s right: They’re asking their customers to pick up the cost of the carbon offsets. If I tick a box to pay their premium, UPS will add a logo to my customers’ tracking emails showing them what swell companies we are. And, for a limited time only, UPS will match the first $1 million in contributions that their shippers make. That’s right: They will graciously chip in toward their own offsets. Gosh, what a great company!
What’s really sad is that I’m actually tempted to pay for their emblem. Consumers are easily hoodwinked into thinking that they can shop their way to a brighter future. And so we have this week’s new reason to hate UPS. Here’s their page if you want to see their side of the story, complete with hummingbirds and rainbows.
********************
Remember a few weeks ago I said that all of my medical bills are paid in full and the bill collectors have all been caged? It started with a colonoscopy in November 2008. Before I scheduled the procedure Blue Cross assured us that as long as I’m over 50 and my doc recommended it, it’s 100% covered. Unfortunately, the clinic entered my insurance number wrong. Just as a paperwork mishap in Terry Gilliam’s Brazil led Mr Archibald Buttle to suffer for the sins of arch-terrorist Archibald Tuttle, we’ve been fighting the system ever since.
To date, I’ve paid $489.36 to four separate companies for assorted deductibles and copays. Today I got a new bill for $105 for “unpaid copays”. None of these bills ever come with itemized explanations, of course, so each new bill requires another call to Blue Cross – an ordeal in itself. I wonder if they can explain how our supposed $20 copay got to $105.
So the insurance struggle resumes. I swear two things: First, I will die before I ever consent to another diagnostic procedure of any kind. And second, the conservatives who oppose health care reform are gibbering idiots. I want to see the insurance companies dissolved and all their executives hanged.
Friday, October 30, 2009
The Halloween Ball
It’s funny, how products sometimes blow up out of nowhere. I’ve carried novelty golf balls since the beginning. A few months back somebody bought enough Halloween balls to propel that style onto the bestseller list (they do sell year-round). This week a blogger in Italy picked up on them (see the 29 Ottobre 2009 post). I can’t read Italian, but I do know that her link works. Links are good. Creating product links is part of this blog's reason for existing. Even if none of her readers buy anything from me, that link will raise the page’s stature in the all-seeing eyes of Google. Halloween is over, so that should be the end of it…but who knows where it will really go from there?
I’ve explained that I don’t particularly like international sales. I lose money on the currency conversion, the charge processing cost is higher, the shipments take considerable time to prepare, and I am supposed to hand the parcels to a postal employee, which means either scheduling a carrier pickup or (shudder) standing in line. Last week I stood in line with a package to Denmark and one to Canada among my domestic shipments. One clerk was working the counter while three others bustled around officiously. The working clerk was tied up with an old woman who apparently had set aside her whole afternoon for the post office. Eventually a manager-type came out and started trying to steer people toward the automated postal center. He couldn't take my international packages, though – those had to be handed to a counter clerk, he said, and he couldn’t hand them off for me. :rolleyes: OK, whatever. Finally I made it to the front. The clerk took my packages, and then told me that he couldn’t scan in labels purchased online because those are already “accepted”, technically. From now on, I’m going with carrier pickup, even though it adds an extra day.
Which brings up a new reason to hate both Canada and UPS – a twofer! A customer paid $39.98 for two sets of Whisky Stones – which is to say, rocks. Postage to Canada was $16.15, bringing it to $56.13. Converting to Canadian funds made that $60.76. And then Canadian Customs hit him for $36.49 in import duties. Bottom line: $97.25 for 18 pieces of rock. They’re nice rocks, but wow.
I strengthened my international shipping wording. Truth is that this seems to happen to everyone who chooses UPS Standard to Canada. USPS shipments are less likely to be intercepted. I don’t know whether that’s Canada’s fault or UPS’s, and so I shall hate them equally this week.
**************
I went back to manual click bids after seeing some weird money allocations from Google’s conversion optimizer. I only had the nerve to stick with it for four days. My daily spend rose by about $4 per day. On three of those days I got the usual 50-75 clicks. On the last day I got 83 – a little better than average. I did make three international sales during the period, which is also more than average…but that’s hardly desirable. I think I’d have to run this for at least a month to draw any conclusions, and that’s a more expensive experiment than I care to perform. Maybe I’ll try it again during the slow season. Or maybe not. I don’t really like surrendering control.
October was a phenomenal month. I wish that the changeover from 2-LED to 3-LED lighted caps could go on forever. Sadly, the old ones are selling out, and that’s going to take some wind out of November’s sails.
Of course it all comes down to November and December, but here’s what it looks like going in. Remember, this year’s plan is +25% growth (reduced from 33% when the economy collapsed).
For October:
Total income: +58.0%
Total COGS: +61.2%
Payroll: +232.5%
Net Income (Profit): -50.1%
The YTD numbers:
Total income: +24.2%
Total COGS: +21%
Payroll: +44.2%
Net Income (Profit): -37.4%
I continue to steer more money into my paycheck at the expense of my year-end profit -- not the optimal tax strategy, but I need every penny while Anne is unemployed. COGS is rising more slowly than income. And income is very near my 25% growth target. Pretty good numbers all around.
The next two months will decide next year’s plan. Tentatively, I’ve set it at 30% growth, but I might lower that if Christmas is a bust.
I’ve explained that I don’t particularly like international sales. I lose money on the currency conversion, the charge processing cost is higher, the shipments take considerable time to prepare, and I am supposed to hand the parcels to a postal employee, which means either scheduling a carrier pickup or (shudder) standing in line. Last week I stood in line with a package to Denmark and one to Canada among my domestic shipments. One clerk was working the counter while three others bustled around officiously. The working clerk was tied up with an old woman who apparently had set aside her whole afternoon for the post office. Eventually a manager-type came out and started trying to steer people toward the automated postal center. He couldn't take my international packages, though – those had to be handed to a counter clerk, he said, and he couldn’t hand them off for me. :rolleyes: OK, whatever. Finally I made it to the front. The clerk took my packages, and then told me that he couldn’t scan in labels purchased online because those are already “accepted”, technically. From now on, I’m going with carrier pickup, even though it adds an extra day.
Which brings up a new reason to hate both Canada and UPS – a twofer! A customer paid $39.98 for two sets of Whisky Stones – which is to say, rocks. Postage to Canada was $16.15, bringing it to $56.13. Converting to Canadian funds made that $60.76. And then Canadian Customs hit him for $36.49 in import duties. Bottom line: $97.25 for 18 pieces of rock. They’re nice rocks, but wow.
I strengthened my international shipping wording. Truth is that this seems to happen to everyone who chooses UPS Standard to Canada. USPS shipments are less likely to be intercepted. I don’t know whether that’s Canada’s fault or UPS’s, and so I shall hate them equally this week.
**************
I went back to manual click bids after seeing some weird money allocations from Google’s conversion optimizer. I only had the nerve to stick with it for four days. My daily spend rose by about $4 per day. On three of those days I got the usual 50-75 clicks. On the last day I got 83 – a little better than average. I did make three international sales during the period, which is also more than average…but that’s hardly desirable. I think I’d have to run this for at least a month to draw any conclusions, and that’s a more expensive experiment than I care to perform. Maybe I’ll try it again during the slow season. Or maybe not. I don’t really like surrendering control.
October was a phenomenal month. I wish that the changeover from 2-LED to 3-LED lighted caps could go on forever. Sadly, the old ones are selling out, and that’s going to take some wind out of November’s sails.
Of course it all comes down to November and December, but here’s what it looks like going in. Remember, this year’s plan is +25% growth (reduced from 33% when the economy collapsed).
For October:
Total income: +58.0%
Total COGS: +61.2%
Payroll: +232.5%
Net Income (Profit): -50.1%
The YTD numbers:
Total income: +24.2%
Total COGS: +21%
Payroll: +44.2%
Net Income (Profit): -37.4%
I continue to steer more money into my paycheck at the expense of my year-end profit -- not the optimal tax strategy, but I need every penny while Anne is unemployed. COGS is rising more slowly than income. And income is very near my 25% growth target. Pretty good numbers all around.
The next two months will decide next year’s plan. Tentatively, I’ve set it at 30% growth, but I might lower that if Christmas is a bust.
Friday, October 23, 2009
Paper Poverty
I first looked into the Medical Security Program (see last week’s post) right after Anne was laid off. Our income during their six-month lookback was too high then. Now it’s eight months later. Our COBRA subsidy is expiring, I’ve ruled out Commonwealth Care as a lifeline, and Anne’s January employment income no longer counts. The MSP is nearly out of money; I need to try for a piece of it before it dries up.
It’s going to be tight, but we’re pretty close to the state’s income cap (4x the poverty line). That's the sweet spot that everyone wants in this economy: Poor enough to tap some of the vast pools of government money sloshing around, but not so poor as to be seriously deprived. As soon as Anne fills in a couple of blanks and exhumes some documentation, I can mail in the application. I’m nervous about showing them exactly how much freelance income she’s earned, but we have honestly reported it and forfeited unemployment checks every time she bills a client. I do not intend to deceive or cheat anyone.
While I was researching all of this I learned that only businesses with six or more employees are subject to the unemployment tax that funds the MSP. Kraken Enterprises will be spared next year’s 40% increase in that tax, so I can afford to raise my payroll percentage from 18.75 to 19% (incidentally paying a smidgeon more in employment taxes, too). That’s right: effectively immediately, I’m giving myself another tiny raise! It diverts roughly $150 a year from my profits to my paychecks -- three bucks a week, woohoo!. It also takes me a small step closer to my long-time goal of devoting 20% of sales to payroll (I started at 15%, IIRC).
In semi-related personal news, Anne finally straightened out a medical billing error from last November. Everybody’s paid off, all of our copays and deductibles are met, and the bill collectors have stopped harassing us. Remember the story I told you about Blue Cross paying 85 cents of a $270.85 bill? Well, Anne shamed them into waiving the deductible even though we really did owe it. That’s right; she appealed for mercy on humanitarian grounds and won! How astonishing is that?
Curio City’s sales drooped early this week. As an experiment, I’m letting Google’s automatic “conversion optimizer” override my manual keyword bids. Their algorithm sets per-click bids based on my historical cost per conversion and each keyword’s conversion percentage -- basically replacing my intuition with their formula. Of course it’s designed to maximize Google’s revenue, so I’m watching costs closely. My daily spend has indeed risen. The jury is out on whether sales will go up commensurately. I'll reserve judgment for a week.
Now it's time to violate my open-to-buy budget for Christmas inventory. I’m already $350 in the red. I have three big new-product orders that I'd like to place ASAP and another huge one coming up in mid November; this is beyond routine reorders. I’ve said before that I’m more of a manager than an entrepreneur -- I’m most comfortable following budgets and keeping numbers in the black. But to succeed I need to break out of my comfort zone. It’s time to place bets on holiday hits, use the credit card float, and hope that new products start selling before the bills potentially expose me to usurious credit card interest rates. This high-stakes juggling would be fun if my own money weren’t on the line.
It’s going to be tight, but we’re pretty close to the state’s income cap (4x the poverty line). That's the sweet spot that everyone wants in this economy: Poor enough to tap some of the vast pools of government money sloshing around, but not so poor as to be seriously deprived. As soon as Anne fills in a couple of blanks and exhumes some documentation, I can mail in the application. I’m nervous about showing them exactly how much freelance income she’s earned, but we have honestly reported it and forfeited unemployment checks every time she bills a client. I do not intend to deceive or cheat anyone.
While I was researching all of this I learned that only businesses with six or more employees are subject to the unemployment tax that funds the MSP. Kraken Enterprises will be spared next year’s 40% increase in that tax, so I can afford to raise my payroll percentage from 18.75 to 19% (incidentally paying a smidgeon more in employment taxes, too). That’s right: effectively immediately, I’m giving myself another tiny raise! It diverts roughly $150 a year from my profits to my paychecks -- three bucks a week, woohoo!. It also takes me a small step closer to my long-time goal of devoting 20% of sales to payroll (I started at 15%, IIRC).
In semi-related personal news, Anne finally straightened out a medical billing error from last November. Everybody’s paid off, all of our copays and deductibles are met, and the bill collectors have stopped harassing us. Remember the story I told you about Blue Cross paying 85 cents of a $270.85 bill? Well, Anne shamed them into waiving the deductible even though we really did owe it. That’s right; she appealed for mercy on humanitarian grounds and won! How astonishing is that?
Curio City’s sales drooped early this week. As an experiment, I’m letting Google’s automatic “conversion optimizer” override my manual keyword bids. Their algorithm sets per-click bids based on my historical cost per conversion and each keyword’s conversion percentage -- basically replacing my intuition with their formula. Of course it’s designed to maximize Google’s revenue, so I’m watching costs closely. My daily spend has indeed risen. The jury is out on whether sales will go up commensurately. I'll reserve judgment for a week.
Now it's time to violate my open-to-buy budget for Christmas inventory. I’m already $350 in the red. I have three big new-product orders that I'd like to place ASAP and another huge one coming up in mid November; this is beyond routine reorders. I’ve said before that I’m more of a manager than an entrepreneur -- I’m most comfortable following budgets and keeping numbers in the black. But to succeed I need to break out of my comfort zone. It’s time to place bets on holiday hits, use the credit card float, and hope that new products start selling before the bills potentially expose me to usurious credit card interest rates. This high-stakes juggling would be fun if my own money weren’t on the line.
Friday, October 16, 2009
You Can Go Crazy Being Public Spirited
I needed to write a Whisky Stones ad for Google AdWords. I came up with:
“Chill your wine or spirits without
ruining the flavor with melting ice”
The “without…with” construction offends my inner grammarian, but it fits the template. Except that Google forbids the word “spirits.” I placated the software by changing “spirits” to “liquor” (apparently less objectionable). Yet, they approved the ad that I'd written just minutes before:
“Whiskey Stones are soapstone cubes
To cool your spirits without water”
Go figure. Maybe "wine and spirits" was the formulation that got their panties in a bunch.
I’ve never been able to advertise the Crazy Clock on Google, either, because “crazy” is a forbidden word. I wonder if I could rechristen the product "Insane Clock".
Incidentally, Whiskey Stones are going to be a hit this Christmas. I’ve sold 3 out of 12 in the first week. One of my customers suggested the product some months ago.
Health Insurance: The Topic That Makes Me Sick
Our coverage downgrade finally went through. Yay! Our premium fell from $924 to $770 per month, which is below any retail price that I’ve seen anywhere, including the Mass. Connector. With a higher deductible and copays and lower reimbursements, we can’t afford to actually see our doctor or fill our prescriptions…but we couldn’t afford to use our earlier plan, either, so the $150/month saved up front trumps the out-of-pocket expenses that we can’t pay in either case. We’d have to cut our coverage to near-nothing and give up our doctor to save any more money.
Two potential game-changers remain: (1) Congress looks increasingly likely to renew the federal COBRA subsidy that’s kept us going for the past nine months; and (2) today’s Boston Globe says that the state’s Medical Security Program for laid-off workers is nearly out of money. This state equivalent to the COBRA subsidy -- separate from the Commonwealth Care that I explored earlier – is news to me. From what this story says, it could reduce our insurance costs to nearly nothing, if I can get in. Here’s the money quote:
Why, that would be us! I obviously need to investigate that this afternoon. Of course, what’s good for workers is bad for employers:
Crap. I was planning to raise my payroll percentage by another quarter-point next month, but not if my unemployment tax bill is going up by 40%. I wonder if falling unemployment will eventually trigger an automatic decrease. Hah!
At the risk of turning this blog into a soap opera about my personal life, I’ll run with the tangent. My wife’s unemployment checks were interrupted when she exhausted her initial 26 weeks. Next week we’ll get a token check for the 27th week of partial benefits that Massachusetts adds automatically. Then a 50-week federal extension kicks in. Obama is talking about tacking 26 more weeks onto that. Thanks to that interrupted unemployment checks and the expiring COBRA subsidy, October’s budget is perilous. But it looks like we’ll have an income floor for almost a year after that, and perhaps even longer. Maybe the moribund journalism/publishing job market will revive by then.
Did you know that there are 6.7 unemployed Americans for every job opening? That’s the worst ratio since they started keeping track, and it doesn’t include the underemployed or those who are trapped in bad jobs. Most of those job openings are in highly skilled, specialized areas like health care and biotech. The ratio of unemployed writers to available publishing jobs would be a frightening number indeed.
OK, back to Curious Business: Sales are still booming and Curio City is generating much larger paychecks than expected. Today's pay works out to $6.61 per hour based on two 40-hour weeks, or $7.56/hr using the 35-hour weeks that I really work. That’s very near my longstanding goal of earning minimum wage (currently $8.00 in Massachusetts and $7.25 in the hinterlands). Ordinarily I only see those big bucks for three weeks in December.
Generating a substantial paycheck from my own business, without an employer, feels really good. Kraken Enterprises could still fail, but I can't be laid off! The sales surge that I’ve enjoyed for the past month depends almost entirely on the phase-out of Panther Vision’s 2-LED caps. Once those are gone, things will drop back to normal. But since “normal” is now getting into Christmas-normal, I can expect a non-trivial income for the rest of this year.
“Chill your wine or spirits without
ruining the flavor with melting ice”
The “without…with” construction offends my inner grammarian, but it fits the template. Except that Google forbids the word “spirits.” I placated the software by changing “spirits” to “liquor” (apparently less objectionable). Yet, they approved the ad that I'd written just minutes before:
“Whiskey Stones are soapstone cubes
To cool your spirits without water”
Go figure. Maybe "wine and spirits" was the formulation that got their panties in a bunch.
I’ve never been able to advertise the Crazy Clock on Google, either, because “crazy” is a forbidden word. I wonder if I could rechristen the product "Insane Clock".
Incidentally, Whiskey Stones are going to be a hit this Christmas. I’ve sold 3 out of 12 in the first week. One of my customers suggested the product some months ago.
Health Insurance: The Topic That Makes Me Sick
Our coverage downgrade finally went through. Yay! Our premium fell from $924 to $770 per month, which is below any retail price that I’ve seen anywhere, including the Mass. Connector. With a higher deductible and copays and lower reimbursements, we can’t afford to actually see our doctor or fill our prescriptions…but we couldn’t afford to use our earlier plan, either, so the $150/month saved up front trumps the out-of-pocket expenses that we can’t pay in either case. We’d have to cut our coverage to near-nothing and give up our doctor to save any more money.
Two potential game-changers remain: (1) Congress looks increasingly likely to renew the federal COBRA subsidy that’s kept us going for the past nine months; and (2) today’s Boston Globe says that the state’s Medical Security Program for laid-off workers is nearly out of money. This state equivalent to the COBRA subsidy -- separate from the Commonwealth Care that I explored earlier – is news to me. From what this story says, it could reduce our insurance costs to nearly nothing, if I can get in. Here’s the money quote:
The health insurance program, which is funded solely by a tax on employers, helps middle-income people who make too much money to qualify for Medicaid and other state-subsidized health care programs designed for the poor. Since January, enrollment in the program has doubled, the state said, to roughly 34,000 people.
Traditionally, the state program has paid 80 percent of a laid-off worker’s monthly health insurance premium for as long as the worker is collecting unemployment benefits. But the federal government designated stimulus money earlier this year to reimburse some of the health insurance costs of the unemployed, so most recipients are now paying about 9 percent of their monthly premiums.
Why, that would be us! I obviously need to investigate that this afternoon. Of course, what’s good for workers is bad for employers:
The unrelenting rise in unemployment will also trigger an automatic 40 percent increase in the tax businesses are required to contribute for unemployment benefits. In January, the tax will increase from an average of $594 per employee to $832.
Crap. I was planning to raise my payroll percentage by another quarter-point next month, but not if my unemployment tax bill is going up by 40%. I wonder if falling unemployment will eventually trigger an automatic decrease. Hah!
At the risk of turning this blog into a soap opera about my personal life, I’ll run with the tangent. My wife’s unemployment checks were interrupted when she exhausted her initial 26 weeks. Next week we’ll get a token check for the 27th week of partial benefits that Massachusetts adds automatically. Then a 50-week federal extension kicks in. Obama is talking about tacking 26 more weeks onto that. Thanks to that interrupted unemployment checks and the expiring COBRA subsidy, October’s budget is perilous. But it looks like we’ll have an income floor for almost a year after that, and perhaps even longer. Maybe the moribund journalism/publishing job market will revive by then.
Did you know that there are 6.7 unemployed Americans for every job opening? That’s the worst ratio since they started keeping track, and it doesn’t include the underemployed or those who are trapped in bad jobs. Most of those job openings are in highly skilled, specialized areas like health care and biotech. The ratio of unemployed writers to available publishing jobs would be a frightening number indeed.
OK, back to Curious Business: Sales are still booming and Curio City is generating much larger paychecks than expected. Today's pay works out to $6.61 per hour based on two 40-hour weeks, or $7.56/hr using the 35-hour weeks that I really work. That’s very near my longstanding goal of earning minimum wage (currently $8.00 in Massachusetts and $7.25 in the hinterlands). Ordinarily I only see those big bucks for three weeks in December.
Generating a substantial paycheck from my own business, without an employer, feels really good. Kraken Enterprises could still fail, but I can't be laid off! The sales surge that I’ve enjoyed for the past month depends almost entirely on the phase-out of Panther Vision’s 2-LED caps. Once those are gone, things will drop back to normal. But since “normal” is now getting into Christmas-normal, I can expect a non-trivial income for the rest of this year.
Friday, October 09, 2009
Christmas in October
I blew off the health insurance quest this week. Business is booming and I couldn’t waste time on a pointless pursuit. Maybe I’ll come back to it next week if the pace dies down.
After Christmas, when my Kraken Enterprises paychecks fall back to nothing, I’m going to have to look for a job with health insurance. If I can’t find work with benefits – I've been out of the conventional workforce for over five years and the job market isn't exactly promising -- I might still try to pick up a few hours a week doing something menial to supplement my meager business income. With the COBRA subsidy gone our household budget has tipped into major, chronic deficit.
I haven’t eviscerated our budget yet pending two rays of hope: Obama has talked to Congressional leaders about extending unemployment benefits and “the COBRA tax credit”, by which I hope they mean the COBRA subsidy. That would keep us afloat for another six or nine months. And, my wife got a strong tip on an excellent potential job today. She’s well qualified and two of her references work for the company, but competition will be brutal. Do you know how many journalists are out of work these days? Catching either one of these breaks really would be like Christmas in October.
Wait. Back up. Did I say business is booming? Yeah, let’s talk about that….
First, I raised my 25-cent-per-click ceiling to 30 cents and increased my daily spending limit at Google AdWords. I’ve also been chipping away at a radical overhaul of Yahoo Search Marketing, which I will use through the Christmas season. Spending more on advertising has (so far) come with a proportional increase in sales. I’m unsure how strong the cause/effect relationship is.
Second, Christmas started in September this year. I am looking forward to a good holiday season. At this time last year, the economy was just starting its freefall. This year, it’s just starting to claw its way back up.
Third, and biggest of all, is the Panther Vision product changeover. The old 2-LED caps are blowing out of here at two bucks off; America loves a bargain. The new 3-LED caps are starting to move, if unspectacularly. This situation can only last as long as Panther’s inventory of old caps does, and the most popular colors are already extinct. I had to delay my reorder for several valuable days while I waited for a customer to make up his mind about a potential large purchase. I phoned in my order this morning (driving my open-to-buy back into deep red ink) as soon as he told me that he’s deferring his decision until next week. But I was too late to beat the three-day weekend. Curse you, Columbus Day!
After Christmas, when my Kraken Enterprises paychecks fall back to nothing, I’m going to have to look for a job with health insurance. If I can’t find work with benefits – I've been out of the conventional workforce for over five years and the job market isn't exactly promising -- I might still try to pick up a few hours a week doing something menial to supplement my meager business income. With the COBRA subsidy gone our household budget has tipped into major, chronic deficit.
I haven’t eviscerated our budget yet pending two rays of hope: Obama has talked to Congressional leaders about extending unemployment benefits and “the COBRA tax credit”, by which I hope they mean the COBRA subsidy. That would keep us afloat for another six or nine months. And, my wife got a strong tip on an excellent potential job today. She’s well qualified and two of her references work for the company, but competition will be brutal. Do you know how many journalists are out of work these days? Catching either one of these breaks really would be like Christmas in October.
Wait. Back up. Did I say business is booming? Yeah, let’s talk about that….
First, I raised my 25-cent-per-click ceiling to 30 cents and increased my daily spending limit at Google AdWords. I’ve also been chipping away at a radical overhaul of Yahoo Search Marketing, which I will use through the Christmas season. Spending more on advertising has (so far) come with a proportional increase in sales. I’m unsure how strong the cause/effect relationship is.
Second, Christmas started in September this year. I am looking forward to a good holiday season. At this time last year, the economy was just starting its freefall. This year, it’s just starting to claw its way back up.
Third, and biggest of all, is the Panther Vision product changeover. The old 2-LED caps are blowing out of here at two bucks off; America loves a bargain. The new 3-LED caps are starting to move, if unspectacularly. This situation can only last as long as Panther’s inventory of old caps does, and the most popular colors are already extinct. I had to delay my reorder for several valuable days while I waited for a customer to make up his mind about a potential large purchase. I phoned in my order this morning (driving my open-to-buy back into deep red ink) as soon as he told me that he’s deferring his decision until next week. But I was too late to beat the three-day weekend. Curse you, Columbus Day!
Friday, October 02, 2009
A Fistful of Failures
I gritted my teeth and wasted six hours this week trying to beat the health insurance system.
Commonwealth Care’s online worksheet makes it official: We legally can’t afford health insurance. The state figures that we should be able to pay about $500 a month for insurance, and there’s nothing available that cheap. Massachusetts will graciously exempt us from being fined if we choose not to buy insurance, but they won’t help us pay because we make more than three times the poverty rate. Although it's nice to know that it's legal, going uninsured is a last resort. FAIL
Commonwealth Choice is the state’s insurance clearinghouse. Their website offered 21 plans ranging in price from $732 to $2,071 per month. We currently pay about $925 for Blue Cross Blue Shield of California. A comparable BCBS plan through Commonwealth Choice is $1,112 – about what we’ll pay for our current plan after COBRA expires. The only option that really saves us any money is the $732 Neighborhood Health Plan. It carries a $2,000/$4,000 deductible (vs. our current $500 deductible)...and our doctor doesn’t accept it. Changing doctors is a nonstarter. FAIL
All righty then, what about getting a group rate through some club or association?
Sadly, AARP group insurance (via Aetna) is still not available in Massachusetts. FAIL
AAA offers dental, life, homeowners, auto, long-term care, accident, and travel medical…but no general medical insurance. FAIL
The American Society of Journalists & Authors has nothing for Massachusetts. FAIL
Anne doesn’t qualify for membership in the Author’s Guild. FAIL
The Editorial Freelancers Association has nothing at all. FAIL
Health Service Administrators (HSAmembership.com, formerly the Mass. Business Council) is wicked confusing. All I could find were a bunch of links to insurance company websites with no information about pricing. I need to spend a couple more hours examining all of those links. Provisional FAIL.
The cheapest Fallon Community Health Plan that our doctor accepts is $942/mo with a $2,000 deductible. It does include dental, which we currently lack, so in that way it’s better than our current BCBS plan. FAIL for now, but I might come back to this one after COBRA runs out.
Various online quote finders are really just trolling for my phone number -- they don’t really show quotes online. The two agents who tried to sell me cut-rate coverage were both peddling Mid-West National Life, which Google tells me is the object of numerous complaints and lawsuits. FAIL. We already have enough problems with Blue Cross. (In fact, the next item on today’s agenda after posting this essay is calling a collection agency that’s dunning me over a wrongly-denied medical bill).
Speaking of problems with Blue Cross, here’s a funny story: South Shore Hospital billed BCBS $691 for an X-ray that Anne needed. The hospital settled for the $270.85 that BCBS said was the covered amount. But they raised our deductible last month from $250 to $500, and there was a $20 copay. Bottom line? BCBS paid 85 cents. We got billed for $270.
For this, we pay $925 a month?
CONCLUSION: It is difficult to get a group health insurance rate and impossible to get a subsidy without either having a job or being truly impoverished. Unemployed individuals have no alternatives to paying retail, and Massachusetts has the highest health insurance costs in the US.
So I’m going to have to be creative.
Kraken Enterprises could establish a Section 125 Voluntary Plan and designate Commonwealth Choice as an available health insurance option. (A Voluntary Plan is one to which the employer does not contribute.) I’d then set up an account with the Health Connector (which represents six carriers). My employees – i.e., me – can then enroll in a Commonwealth Choice plan through the Health Connector. Kraken Enterprises would collect my insurance payments via payroll deduction on a pre-tax basis. Kraken is then billed for my health insurance premium on the 15th of every month. Any shortfall is the responsibility of the employee – i.e., me.
The monthly insurance premium is triple my gross monthly salary, so payroll withholding is a joke. But wait. What if Anne’s freelance business became a Kraken enterprise? She’d become an employee of my company and her revenues would filter through my corporate accounting. The accounting would be a nightmare – I’d need to manage a separate operating company. I would need to consult my CPA and probably a lawyer as well. It would certainly complicate our already-Byzantine tax situation. After all of that, I have no idea whether this would actually save us any money. As far as I can tell, the only advantage is paying in pre-tax dollars. I’d need to actually create the Section 125 thingie and get an employer number before I can see the employee pricing – I assume it would offer me the same 21 plans that I saw as an individual, and probably at the same prices. Although I'm reluctant to draw the state's attention, maybe I’ll do that next week.
Having two employees would magically qualify Kraken Enterprises to purchase group-rate insurance outside of the Commonwealth Choice umbrella. (The insurance industry defines a “small business” as 2-19 employees). Creating this legal fiction might get us around the assumptions that are limiting us to individual/family coverage. However, being married might screw that up. Insurers want two potential enrollees. I wonder how we’d make out if we got divorced and bought two individual plans? We are both willing to divorce if it will save us enough money on health insurance.
Next week I should spend a few more hours on this:
Incidentally, it does not appear that federal healthcare reform is going to help us. The plan that's taking shape cuts off subsidies at double the poverty rate.
The only thing that would save our bacon now is if Congress extends the COBRA subsidy for another nine months. AFAIK, that has not even been proposed.
Commonwealth Care’s online worksheet makes it official: We legally can’t afford health insurance. The state figures that we should be able to pay about $500 a month for insurance, and there’s nothing available that cheap. Massachusetts will graciously exempt us from being fined if we choose not to buy insurance, but they won’t help us pay because we make more than three times the poverty rate. Although it's nice to know that it's legal, going uninsured is a last resort. FAIL
Commonwealth Choice is the state’s insurance clearinghouse. Their website offered 21 plans ranging in price from $732 to $2,071 per month. We currently pay about $925 for Blue Cross Blue Shield of California. A comparable BCBS plan through Commonwealth Choice is $1,112 – about what we’ll pay for our current plan after COBRA expires. The only option that really saves us any money is the $732 Neighborhood Health Plan. It carries a $2,000/$4,000 deductible (vs. our current $500 deductible)...and our doctor doesn’t accept it. Changing doctors is a nonstarter. FAIL
All righty then, what about getting a group rate through some club or association?
Sadly, AARP group insurance (via Aetna) is still not available in Massachusetts. FAIL
AAA offers dental, life, homeowners, auto, long-term care, accident, and travel medical…but no general medical insurance. FAIL
The American Society of Journalists & Authors has nothing for Massachusetts. FAIL
Anne doesn’t qualify for membership in the Author’s Guild. FAIL
The Editorial Freelancers Association has nothing at all. FAIL
Health Service Administrators (HSAmembership.com, formerly the Mass. Business Council) is wicked confusing. All I could find were a bunch of links to insurance company websites with no information about pricing. I need to spend a couple more hours examining all of those links. Provisional FAIL.
The cheapest Fallon Community Health Plan that our doctor accepts is $942/mo with a $2,000 deductible. It does include dental, which we currently lack, so in that way it’s better than our current BCBS plan. FAIL for now, but I might come back to this one after COBRA runs out.
Various online quote finders are really just trolling for my phone number -- they don’t really show quotes online. The two agents who tried to sell me cut-rate coverage were both peddling Mid-West National Life, which Google tells me is the object of numerous complaints and lawsuits. FAIL. We already have enough problems with Blue Cross. (In fact, the next item on today’s agenda after posting this essay is calling a collection agency that’s dunning me over a wrongly-denied medical bill).
Speaking of problems with Blue Cross, here’s a funny story: South Shore Hospital billed BCBS $691 for an X-ray that Anne needed. The hospital settled for the $270.85 that BCBS said was the covered amount. But they raised our deductible last month from $250 to $500, and there was a $20 copay. Bottom line? BCBS paid 85 cents. We got billed for $270.
For this, we pay $925 a month?
CONCLUSION: It is difficult to get a group health insurance rate and impossible to get a subsidy without either having a job or being truly impoverished. Unemployed individuals have no alternatives to paying retail, and Massachusetts has the highest health insurance costs in the US.
So I’m going to have to be creative.
Kraken Enterprises could establish a Section 125 Voluntary Plan and designate Commonwealth Choice as an available health insurance option. (A Voluntary Plan is one to which the employer does not contribute.) I’d then set up an account with the Health Connector (which represents six carriers). My employees – i.e., me – can then enroll in a Commonwealth Choice plan through the Health Connector. Kraken Enterprises would collect my insurance payments via payroll deduction on a pre-tax basis. Kraken is then billed for my health insurance premium on the 15th of every month. Any shortfall is the responsibility of the employee – i.e., me.
The monthly insurance premium is triple my gross monthly salary, so payroll withholding is a joke. But wait. What if Anne’s freelance business became a Kraken enterprise? She’d become an employee of my company and her revenues would filter through my corporate accounting. The accounting would be a nightmare – I’d need to manage a separate operating company. I would need to consult my CPA and probably a lawyer as well. It would certainly complicate our already-Byzantine tax situation. After all of that, I have no idea whether this would actually save us any money. As far as I can tell, the only advantage is paying in pre-tax dollars. I’d need to actually create the Section 125 thingie and get an employer number before I can see the employee pricing – I assume it would offer me the same 21 plans that I saw as an individual, and probably at the same prices. Although I'm reluctant to draw the state's attention, maybe I’ll do that next week.
Having two employees would magically qualify Kraken Enterprises to purchase group-rate insurance outside of the Commonwealth Choice umbrella. (The insurance industry defines a “small business” as 2-19 employees). Creating this legal fiction might get us around the assumptions that are limiting us to individual/family coverage. However, being married might screw that up. Insurers want two potential enrollees. I wonder how we’d make out if we got divorced and bought two individual plans? We are both willing to divorce if it will save us enough money on health insurance.
Next week I should spend a few more hours on this:
- I need to investigate the comparable options available to the self-employed. I really prefer to keep our businesses separate, if we can.
- I need to revisit that inscrutable Health Service Administrators website and see if it can make some sense out of who they are and what they do.
- I might open a Section 125 plan so that I can price the insurance options available to employees of Kraken Enterprises. That’s the first step in figuring out whether taking over Anne’s freelance business and getting divorced make financial sense.
Incidentally, it does not appear that federal healthcare reform is going to help us. The plan that's taking shape cuts off subsidies at double the poverty rate.
The only thing that would save our bacon now is if Congress extends the COBRA subsidy for another nine months. AFAIK, that has not even been proposed.
Friday, September 25, 2009
For Richer & Poorer
September goes out with a rock-‘em sock-‘em week. The numbers below tell most of the story. I spent more money on inventory this month than in any previous (non-Christmas) month. None of my new merchandise is doing much yet, but that’s to be expected. It takes time for the Internet to absorb a new product page.
Panther Vision forced my hand by rolling out a third-generation cap, available (so far) only in black. I combined a case of those with a reorder of other colors in the “old” style. A couple of days later Panther unexpectedly landed a container of Power Caps in several more colors, rendering most of my $1,000 reorder obsolete before it even arrived. By way of apology, Panther let me place a small order for the new-style caps at their big-order price, but it still put the kibosh on my new-product acquisition plans for now. I have paused to catch my breath.
Are you here to read more of my health insurance soap opera? Well, I fiddled with it a little bit. The first step in determining whether we can get state subsidies is figuring out our annual income, which is bloody hard to do. Anne was employed for a month. There was a check for unused vacation time. Then she got unemployment checks, but not every week; she had to skip checks in weeks that she reported freelance income. I have kept track of the estimated taxes due on her freelance income, but not the income itself, so I had to guess at that for Q1 and Q2. Did I remember to include her parttime teaching salary? Half of my Kraken Enterprises salary won’t be earned until Q4, so I have to guess at that, too. Whatever profit Kraken reports at the end of the year also counts as personal income. The number that I finally came up with for our combined gross income is only accurate to within 15- 20%. We should earn about half of what we made last year.
The “good news” is that we might be in the sweet spot…poor enough to qualify for subsidies, but not so poor as to actually be, you know, poor. I might have time to explore Commonwealth Care later today…or it might slip into next week.
Last Tuesday I came into a little money from an auto insurance refund. I deposited that check on Wednesday, intending to apply it toward debt. On Thursday a collection agency dunned me for a medical bill that I never intended to pay (some faceless clinic doctor that I’ll probably never encounter again)...but since the bill was almost exactly the same amount as my windfall, I figured I might as well buy peace. This morning I wrote the check and sealed the envelope, relieved to be fully paid up at last. An hour later the mailman brought us another medical bill. The hospital charged Blue Cross Blue Shield $617 for an X-ray. The hospital settled for the $270.85 that BCBS allowed for the procedure. As it happens, our deductible reset on Sept. 1. With the copay, we are responsible for $270. BCBS paid the remaining 85 cents.
For this coverage, we pay $925 a month. What’s really funny is that they really should not have even covered the 85 cents. Our deductible doubled this month.
So now I have another unpayable medical bill on my desk, twice as large as the last one. Oh well, it won’t go to collection for at least a few months.
Enough of this depressing health care crap. Here are the rosy September numbers:
Total income: +72.5%
Total COGS: +42.2%
Payroll: +108.3%
Net Income (Profit): +1,076.9%
Year-to-date:
Total income: +18.6%
Total COGS: +15.5%
Payroll: +25.0%
Net Income (Profit): -36.7%
I'm still far below my ultimate goal of earning minimum wage, but do you know anyone else who’s making 25% more than LY?
Panther Vision forced my hand by rolling out a third-generation cap, available (so far) only in black. I combined a case of those with a reorder of other colors in the “old” style. A couple of days later Panther unexpectedly landed a container of Power Caps in several more colors, rendering most of my $1,000 reorder obsolete before it even arrived. By way of apology, Panther let me place a small order for the new-style caps at their big-order price, but it still put the kibosh on my new-product acquisition plans for now. I have paused to catch my breath.
Are you here to read more of my health insurance soap opera? Well, I fiddled with it a little bit. The first step in determining whether we can get state subsidies is figuring out our annual income, which is bloody hard to do. Anne was employed for a month. There was a check for unused vacation time. Then she got unemployment checks, but not every week; she had to skip checks in weeks that she reported freelance income. I have kept track of the estimated taxes due on her freelance income, but not the income itself, so I had to guess at that for Q1 and Q2. Did I remember to include her parttime teaching salary? Half of my Kraken Enterprises salary won’t be earned until Q4, so I have to guess at that, too. Whatever profit Kraken reports at the end of the year also counts as personal income. The number that I finally came up with for our combined gross income is only accurate to within 15- 20%. We should earn about half of what we made last year.
The “good news” is that we might be in the sweet spot…poor enough to qualify for subsidies, but not so poor as to actually be, you know, poor. I might have time to explore Commonwealth Care later today…or it might slip into next week.
Last Tuesday I came into a little money from an auto insurance refund. I deposited that check on Wednesday, intending to apply it toward debt. On Thursday a collection agency dunned me for a medical bill that I never intended to pay (some faceless clinic doctor that I’ll probably never encounter again)...but since the bill was almost exactly the same amount as my windfall, I figured I might as well buy peace. This morning I wrote the check and sealed the envelope, relieved to be fully paid up at last. An hour later the mailman brought us another medical bill. The hospital charged Blue Cross Blue Shield $617 for an X-ray. The hospital settled for the $270.85 that BCBS allowed for the procedure. As it happens, our deductible reset on Sept. 1. With the copay, we are responsible for $270. BCBS paid the remaining 85 cents.
For this coverage, we pay $925 a month. What’s really funny is that they really should not have even covered the 85 cents. Our deductible doubled this month.
So now I have another unpayable medical bill on my desk, twice as large as the last one. Oh well, it won’t go to collection for at least a few months.
Enough of this depressing health care crap. Here are the rosy September numbers:
Total income: +72.5%
Total COGS: +42.2%
Payroll: +108.3%
Net Income (Profit): +1,076.9%
Year-to-date:
Total income: +18.6%
Total COGS: +15.5%
Payroll: +25.0%
Net Income (Profit): -36.7%
I'm still far below my ultimate goal of earning minimum wage, but do you know anyone else who’s making 25% more than LY?
Friday, September 18, 2009
Less Coverage, Bigger Bills
After I posted last week’s health insurance essay I told Firefox to stop blocking ads on this page, just so that I could see what Google’s serving up. As I suspected, all the ads are for health insurance now. Well, what the heck? I get a few cents whenever somebody clicks one (hint, hint). Clicking ads on your own site is considered click fraud (as is imploring readers to click them, hint hint), but I’m legitimately interested in the products. I even filled out some forms and got a couple of phone calls. I’m still avoiding doing real legwork, though. Neither Anne nor I wants to go through the hassle of changing insurers, and we’re still hoping that she might get a job offer any day now. And so I procrastinated for another week.
We downgraded our COBRA policy to offset the recent rate increase (the monthly payment rose by $96, the deductible doubled, and the copays increased by 50%). Instead of a 90/70 plan with a $500 deductible, we now have an 80/60 plan with a $750 deductible for $150 per month less. I don’t understand what those numbers mean, but since we can’t afford to use our insurance anyway it hardly matters.
**************
My HP Deskjet 6980 crapped out on me after four years of daily service. Printing suddenly slowed to a crawl and the clarity degraded. Hours of troubleshooting failed to shoot the trouble. In our throwaway society it’s cheaper and easier to replace it than to repair it…and it always had some annoying quirks (WiFi was very difficult to set up, and it balked at using third-party cartridges). So I bought a wireless HP Officejet 6000 for $90, delivered. It’s supposed to be a simple, reliable, and above all economical printer. It will be at least the fourth HP inkjet that I’ve owned. That’s $90 that I’d like to have spent on something more productive, of course, but…what can you do?
*************
Hey, I’ve got two Facebook fans that I don’t know. Actual fans! I wish I could afford to spend more time figuring out how to pimp my Facebook page. I’ve given up on Twitter. I simply don’t see any point to it.
*************
Sales have been very good for the past couple of weeks. Three institutional sales (all via telephone and one of them quite huge) have already put September ahead of plan and way over LY – with over a week left to go! Today I finally earned a big enough paycheck to dig out of the personal financial hole that summer vacation dug for me.
Oh, and one other thing: Citizens Bank approved my Mastercard application, so I should soon have my customary credit line restored. After all the years that banks showered applications upon nonexistent household members, who would have guessed that getting a credit card would ever become difficult?
OK: Next week I shall grapple with the health insurance bugbear. I’ve been ordering new merchandise like crazy, but I'm finally scraping the bottom of the budget and I sure don't want to start that new Mastercard off with a balance.
We downgraded our COBRA policy to offset the recent rate increase (the monthly payment rose by $96, the deductible doubled, and the copays increased by 50%). Instead of a 90/70 plan with a $500 deductible, we now have an 80/60 plan with a $750 deductible for $150 per month less. I don’t understand what those numbers mean, but since we can’t afford to use our insurance anyway it hardly matters.
**************
My HP Deskjet 6980 crapped out on me after four years of daily service. Printing suddenly slowed to a crawl and the clarity degraded. Hours of troubleshooting failed to shoot the trouble. In our throwaway society it’s cheaper and easier to replace it than to repair it…and it always had some annoying quirks (WiFi was very difficult to set up, and it balked at using third-party cartridges). So I bought a wireless HP Officejet 6000 for $90, delivered. It’s supposed to be a simple, reliable, and above all economical printer. It will be at least the fourth HP inkjet that I’ve owned. That’s $90 that I’d like to have spent on something more productive, of course, but…what can you do?
*************
Hey, I’ve got two Facebook fans that I don’t know. Actual fans! I wish I could afford to spend more time figuring out how to pimp my Facebook page. I’ve given up on Twitter. I simply don’t see any point to it.
*************
Sales have been very good for the past couple of weeks. Three institutional sales (all via telephone and one of them quite huge) have already put September ahead of plan and way over LY – with over a week left to go! Today I finally earned a big enough paycheck to dig out of the personal financial hole that summer vacation dug for me.
Oh, and one other thing: Citizens Bank approved my Mastercard application, so I should soon have my customary credit line restored. After all the years that banks showered applications upon nonexistent household members, who would have guessed that getting a credit card would ever become difficult?
OK: Next week I shall grapple with the health insurance bugbear. I’ve been ordering new merchandise like crazy, but I'm finally scraping the bottom of the budget and I sure don't want to start that new Mastercard off with a balance.
Friday, September 11, 2009
We're Going to Need a Bigger Band-Aid
The dire health insurance situation that I outlined last week just got direr. The already-stratospheric price of our COBRA coverage has attained orbit – it’s going up by $96 a month, retroactive to Sept. 1. Our deductible is doubling, from $250 to $500 per person. Generic drugs are going from $10 to $15. Name-brand drugs were already out of reach, so that price hike doesn’t affect us -- we simply can’t fill prescriptions that don’t have generic versions.
If worse comes to worst and I can’t find something better than our COBRA Blue Cross/Blue Shield insurance, I can step down to a lower-quality BCBS policy that carries a $750 deductible and pays a lower percentage of medical charges, but costs $150 per month less. Since we can’t actually afford to get health care under either plan, we might as well go with the cheaper monthly payment. ("Cheaper" being a decidedly relative term).
Naturally, this gets dumped on me just as I’m ramping up for Christmas. I’ve already placed $1400 worth of orders so far this month, two of them with new vendors (take a look at Funkeyboards. Nifty, huh?). I've got a few hundred dollars left that I need to deploy quickly and intelligently. These things take time and at least a little brainpower -- I'm not filing TPS reports here. Last week’s sales were the strongest since last March. Although this week's business fell off again, I’m too fracking busy for this idiotic distraction. Seriously, who wants to shop for health insurance?
Well. It’s not like I have a choice. My wife just came back from CVS shell-shocked by the 50% increase in her prescription copays -- the crisis is happening now. I need to explore Commonwealth Care and find out what’s available through the Massachusetts Business Council or Small Business Association or some other similarly-named organization. I'm sure that Kraken Enterprises would have to pay a membership fee to access those.
In case last week’s post gave you the impression that I’m anti-capitalist, let me say clearly that I appreciate the power of the market economy. Letting individuals pursue their own best interest is the most powerful social force there is to maximize wealth and happiness. When the aggregate of self-interest contradicts our collective interest, though, government has a duty to step in. Sometimes that just means nudging the market with tweaks to the tax code. Sometimes it means setting firm rules through legislation. When the market fails to deliver a vital service at all, or bungles it badly enough, government must fill the gap directly. Who else can?
Our medical payment system breakdown is waaaaay beyond tax tweaks. Congress's will to impose new rules on the existing market system appears to be weakening by the day (unless Obama’s speech this week revives it). So I had to conclude that the for-profit health insurance system should be replaced with a nonprofit payment mechanism. I don’t care whether that’s directly government-run or administered through government-chartered private coops. I am not an ideologue. I only care about what works. Show me a for-profit medical payment system – anywhere in the world -- that works better than a nonprofit monopoly, and I’ll reconsider.
Maybe Congress will buy us some time by extending the COBRA subsidy for another nine months, but I don’t think that that’s even on the table right now. We can't hope for a last-minute saving throw. Unfortunately, this saga will continue in future posts.
If worse comes to worst and I can’t find something better than our COBRA Blue Cross/Blue Shield insurance, I can step down to a lower-quality BCBS policy that carries a $750 deductible and pays a lower percentage of medical charges, but costs $150 per month less. Since we can’t actually afford to get health care under either plan, we might as well go with the cheaper monthly payment. ("Cheaper" being a decidedly relative term).
Naturally, this gets dumped on me just as I’m ramping up for Christmas. I’ve already placed $1400 worth of orders so far this month, two of them with new vendors (take a look at Funkeyboards. Nifty, huh?). I've got a few hundred dollars left that I need to deploy quickly and intelligently. These things take time and at least a little brainpower -- I'm not filing TPS reports here. Last week’s sales were the strongest since last March. Although this week's business fell off again, I’m too fracking busy for this idiotic distraction. Seriously, who wants to shop for health insurance?
Well. It’s not like I have a choice. My wife just came back from CVS shell-shocked by the 50% increase in her prescription copays -- the crisis is happening now. I need to explore Commonwealth Care and find out what’s available through the Massachusetts Business Council or Small Business Association or some other similarly-named organization. I'm sure that Kraken Enterprises would have to pay a membership fee to access those.
In case last week’s post gave you the impression that I’m anti-capitalist, let me say clearly that I appreciate the power of the market economy. Letting individuals pursue their own best interest is the most powerful social force there is to maximize wealth and happiness. When the aggregate of self-interest contradicts our collective interest, though, government has a duty to step in. Sometimes that just means nudging the market with tweaks to the tax code. Sometimes it means setting firm rules through legislation. When the market fails to deliver a vital service at all, or bungles it badly enough, government must fill the gap directly. Who else can?
Our medical payment system breakdown is waaaaay beyond tax tweaks. Congress's will to impose new rules on the existing market system appears to be weakening by the day (unless Obama’s speech this week revives it). So I had to conclude that the for-profit health insurance system should be replaced with a nonprofit payment mechanism. I don’t care whether that’s directly government-run or administered through government-chartered private coops. I am not an ideologue. I only care about what works. Show me a for-profit medical payment system – anywhere in the world -- that works better than a nonprofit monopoly, and I’ll reconsider.
Maybe Congress will buy us some time by extending the COBRA subsidy for another nine months, but I don’t think that that’s even on the table right now. We can't hope for a last-minute saving throw. Unfortunately, this saga will continue in future posts.
Friday, September 04, 2009
Just Put a Band-Aid On It
As an economic flyspeck, Curio City doesn’t give me any special insights into the effects of health care reform on small businesses. So I’m coming at this from the personal, demand side.
Some people assume that I’m conservative because I’m a small business owner, so let’s get this straight up front: I’m not much of a capitalist. I’ve never been a money-driven person. In my youth I was a hippie communist (in principle, at least; in reality I enjoyed the fruits of middle-class materialism). My politics have ranged widely since then, but I’ve consistently been socially liberal and financially conservative.
When my wife lost her job in February and we had to start buying health insurance out of pocket, I drifted back toward liberalism (without the embarrassing youthful naiveté this time). To do otherwise would be hypocritical. Praise Obama that the federal government is subsidizing our COBRA coverage, and praise Kennedy that COBRA exists at all. Without those two social programs I’d have had to fold Kraken Enterprises months ago to beg for some degrading minimum wage job. And I'd probably not even have found one.
COBRA lets you keep your previous coverage at the employer’s group rate for 18 months after the layoff. Although it’s less expensive than equivalent coverage would be for individuals, the price is still ruinous. Imagine getting a new bill that’s more than your monthly mortgage payment, at a time when you’re scraping by on unemployment checks, self-employment income, and a pittance from your moribund home business.
The federal government has been paying 65% of our COBRA bill since March. Anne’s cheap-ass former employer only ever subsidized 50% of the price, so we actually pay less for insurance now than we did while she was employed. This subsidy has kept our household budget liquid so far this year.
The COBRA subsidy expires in November. I haven’t heard a peep about extending it. We will face a major budget crisis if Anne’s still unemployed when those federal dollars run out. (After being out of the mainstream workforce for five years, and with no education to speak of, and with the job market dead, I’m unemployable).
The obvious remedy is to join the ever-growing legions of the uninsured. But Massachusetts state law requires us to carry health insurance (federal reform will duplicate this mandate). Even if we choose to pay the penalty instead of insurance bills, letting your coverage lapse for more than three months gives future insurers the right to require a physical exam and exclude pre-existing conditions. By age 52 virtually everything that can befall a body is a pre-existing condition, so going uninsured would effectively make us uninsurable in the future. (Federal reform would forbid insurers from excluding the sick and the old).
We need subsidized, group-rate insurance – without an employer -- in a system that’s based upon employment. None of Anne’s professional associations provide insurance in our state, nor does the AARP (yes, we’re card-carrying fogies). Sure, Kraken Enterprises is technically an employer…but the insurance moguls don’t offer a one-man, chump-change corporation the same deals that the big players get. (Federal reform would enable small businesses to band together for leverage).
Fortunately, Massachusetts has a “public option” of the sort that makes conservatives froth at the mouth. It works like this: Commonwealth Care negotiates group rates with private insurers who offer a range of health plans. The state subsidizes premiums for those of us whose income is low enough. Thanks to our state’s health insurance reform, we will not be left twisting in the wind. The “public option” is insurance of last resort. It keeps us legally insured without going bankrupt (while providing only the most rudimentary coverage, of course). I’ll need to look into the details of Commonwealth Care if Anne’s still unemployed late this month. If it comes to that, I’ll post a follow-up. Here’s a Boston Globe article summing up the results of our three-year-old reforms if you’d like to know more.
High co-pays and deductibles make it too expensive for us to actually use our pricey COBRA insurance plan. We already have a pile of medical bills worth thousands of dollars, all of them due to billing errors. Anne has spent hours making phone calls and writing letters to set things right. And yet, the same providers that screwed up their billing are now turning us over for collection. This would not happen anywhere else in the civilized world.
Only government can fix an overpriced system that rations rudimentary care at badly inflated prices, and then screws up the accounting. The status quo is clearly unacceptable. Everyone should be able to agree on that much. Don’t feel too smug about your affordable job-based health plan. One serious illness or defective child could ruin you. Medical bills cause the majority of personal bankruptcies.
I haven’t read the Byzantine bill currently being shaped by Congress. I wouldn’t understand most of it if I tried. But from what little I do understand, it merely tinkers around the edges of our capitalist system without addressing its inherent flaws…and it gets more watered-down every time Obama tries to compromise. Congress is too timid to enact the real reforms that we need and the president is too conciliatory.
First: Health insurance must be separated from employment. We could eke out survival on our self-employment income if health insurance didn’t compel one of us to hold a conventional job. Nobody should be trapped in a job just because of health insurance. And, as an employer, why should I be in the insurance business at all?
Second: Health insurance should not be a for-profit industry. The profit imperative conflicts with granting payouts and the marketplace can’t work when consumers don’t see the prices, don’t pay them directly, and lack the knowledge needed to comparison shop. Health care is a service that everybody needs and nobody can afford, and therefore the payment mechanism should be a public utility with a bias toward payment, not denial. Let’s get capitalism out of the health insurance sector entirely.
OH NOZ!!! Socialism!!!! Yup. So what? Capitalism has failed an estimated 50 million Americans. Can government really do worse? The success and popularity of Medicare suggest that government is not as incompetent and inefficient as the capitalists want you to believe.
But Congress is not addressing either of these core flaws. Is their tepid tinkering better than doing nothing? Not if token reform props up the old wobbly system and kills the momentum for revolutionary reform. Maybe it’s better to let the whole system fail catastrophically.
Some people assume that I’m conservative because I’m a small business owner, so let’s get this straight up front: I’m not much of a capitalist. I’ve never been a money-driven person. In my youth I was a hippie communist (in principle, at least; in reality I enjoyed the fruits of middle-class materialism). My politics have ranged widely since then, but I’ve consistently been socially liberal and financially conservative.
When my wife lost her job in February and we had to start buying health insurance out of pocket, I drifted back toward liberalism (without the embarrassing youthful naiveté this time). To do otherwise would be hypocritical. Praise Obama that the federal government is subsidizing our COBRA coverage, and praise Kennedy that COBRA exists at all. Without those two social programs I’d have had to fold Kraken Enterprises months ago to beg for some degrading minimum wage job. And I'd probably not even have found one.
COBRA lets you keep your previous coverage at the employer’s group rate for 18 months after the layoff. Although it’s less expensive than equivalent coverage would be for individuals, the price is still ruinous. Imagine getting a new bill that’s more than your monthly mortgage payment, at a time when you’re scraping by on unemployment checks, self-employment income, and a pittance from your moribund home business.
The federal government has been paying 65% of our COBRA bill since March. Anne’s cheap-ass former employer only ever subsidized 50% of the price, so we actually pay less for insurance now than we did while she was employed. This subsidy has kept our household budget liquid so far this year.
The COBRA subsidy expires in November. I haven’t heard a peep about extending it. We will face a major budget crisis if Anne’s still unemployed when those federal dollars run out. (After being out of the mainstream workforce for five years, and with no education to speak of, and with the job market dead, I’m unemployable).
The obvious remedy is to join the ever-growing legions of the uninsured. But Massachusetts state law requires us to carry health insurance (federal reform will duplicate this mandate). Even if we choose to pay the penalty instead of insurance bills, letting your coverage lapse for more than three months gives future insurers the right to require a physical exam and exclude pre-existing conditions. By age 52 virtually everything that can befall a body is a pre-existing condition, so going uninsured would effectively make us uninsurable in the future. (Federal reform would forbid insurers from excluding the sick and the old).
We need subsidized, group-rate insurance – without an employer -- in a system that’s based upon employment. None of Anne’s professional associations provide insurance in our state, nor does the AARP (yes, we’re card-carrying fogies). Sure, Kraken Enterprises is technically an employer…but the insurance moguls don’t offer a one-man, chump-change corporation the same deals that the big players get. (Federal reform would enable small businesses to band together for leverage).
Fortunately, Massachusetts has a “public option” of the sort that makes conservatives froth at the mouth. It works like this: Commonwealth Care negotiates group rates with private insurers who offer a range of health plans. The state subsidizes premiums for those of us whose income is low enough. Thanks to our state’s health insurance reform, we will not be left twisting in the wind. The “public option” is insurance of last resort. It keeps us legally insured without going bankrupt (while providing only the most rudimentary coverage, of course). I’ll need to look into the details of Commonwealth Care if Anne’s still unemployed late this month. If it comes to that, I’ll post a follow-up. Here’s a Boston Globe article summing up the results of our three-year-old reforms if you’d like to know more.
High co-pays and deductibles make it too expensive for us to actually use our pricey COBRA insurance plan. We already have a pile of medical bills worth thousands of dollars, all of them due to billing errors. Anne has spent hours making phone calls and writing letters to set things right. And yet, the same providers that screwed up their billing are now turning us over for collection. This would not happen anywhere else in the civilized world.
Only government can fix an overpriced system that rations rudimentary care at badly inflated prices, and then screws up the accounting. The status quo is clearly unacceptable. Everyone should be able to agree on that much. Don’t feel too smug about your affordable job-based health plan. One serious illness or defective child could ruin you. Medical bills cause the majority of personal bankruptcies.
I haven’t read the Byzantine bill currently being shaped by Congress. I wouldn’t understand most of it if I tried. But from what little I do understand, it merely tinkers around the edges of our capitalist system without addressing its inherent flaws…and it gets more watered-down every time Obama tries to compromise. Congress is too timid to enact the real reforms that we need and the president is too conciliatory.
First: Health insurance must be separated from employment. We could eke out survival on our self-employment income if health insurance didn’t compel one of us to hold a conventional job. Nobody should be trapped in a job just because of health insurance. And, as an employer, why should I be in the insurance business at all?
Second: Health insurance should not be a for-profit industry. The profit imperative conflicts with granting payouts and the marketplace can’t work when consumers don’t see the prices, don’t pay them directly, and lack the knowledge needed to comparison shop. Health care is a service that everybody needs and nobody can afford, and therefore the payment mechanism should be a public utility with a bias toward payment, not denial. Let’s get capitalism out of the health insurance sector entirely.
OH NOZ!!! Socialism!!!! Yup. So what? Capitalism has failed an estimated 50 million Americans. Can government really do worse? The success and popularity of Medicare suggest that government is not as incompetent and inefficient as the capitalists want you to believe.
But Congress is not addressing either of these core flaws. Is their tepid tinkering better than doing nothing? Not if token reform props up the old wobbly system and kills the momentum for revolutionary reform. Maybe it’s better to let the whole system fail catastrophically.
Friday, August 28, 2009
Whither the American Consumer?
Hither the American consumer:
Total income: +96.2%
Total COGS: +75.2%
Payroll: +29.5%
Net Income (Profit): +411.4%
Year-to-date:
Total income: +11.8%
Total COGS: +11.3%
Payroll: +17.8%
Net Income (Profit): -76.2%
I beat my sales plan for the first time since April, the cost of goods sold is rising slightly less than revenue, I narrowed the profit gap a wee bit while still increasing my own pay, and the bottom line is showing black ink. Not bad for the worst economy since the 1930s.
So what are my prospects as September ushers in another Christmas season?
The macro economy is rising from the dead. Our regional housing market has bottomed out. Having been settled for nearly 500 years, New England doesn’t have open land to plop down the big tracts of overpriced McMansions that dragged down the sprawl cities. And Yankee thrift prevented the average down payment from dropping much below 20%, compared to near zero in boomtowns like Las Vegas; that means that we didn’t have many new homeowners with negative equity. Housing might not lead us back out of this mess, but at least it’s no longer dragging us down. Even the overbuilt sprawl cities are showing a pulse.
Gloom always sells better than good news so dire warnings are still easy to find. Some economists foresee another plunge as collapsing commercial real estate prices drag down more banks and persistent unemployment keeps the American consumer on the sidelines. Three hundred banks have already failed this year and 111 more joined the “troubled” list this week.
Wise men intone that consumers, bloodied by falling retirement accounts and home values and frightened by persistent unemployment, will remain on the sidelines. As a lifelong tightwad myself, I approve. But if everyone was as thrifty as I am, capitalism would have collapsed a generation ago. I have boundless faith in Americans’ instant-gratification materialism – Curio City depends on whimsy, after all. When they see their 401ks and house values rising reliably again, Americans will shrug off their ill-fitting prudence like a fading nightmare and resume the impulsive and frivolous spending that has powered the economy since the 1980s. When you combine a revived consumer with Obama’s aggressive deficit spending (most of which kicks in in 2010), you have the potential for a real boom – possibly even one whose proportions will mirror the recent collapse.
I’m going to buck the wise men. So remember, you read it here first: Gradual improvement will lead up to a robust December and accelerating growth after that. Year-over-year numbers should look quite good as we go up against last year’s most dire months (October through April).
The other possible scenario is stagflation – we get the slow recovery that economists predict while inflation and interest rates shoot up because of all the money that Washington printed this year. In that scenario we continue struggling for years to come. Let’s not dwell on it.
*****************
I braced for a run on free money when I announced the new Customer Rewards Program last week. Didn’t happen. AFAIK, nobody has used the Refer-a-Friend feature to earn an instant $5. Exactly three new customers have created accounts that generated 3 points altogether. One returning customer might have tried to take advantage of the program, but he failed to log into his account and so didn’t earn any points. I’m glad that customer reward points are not going to break the bank, but mostly disappointed that my big innovation for 2009 flopped. Well, it’s a long-term thing that should build momentum over time. We’ll see how it goes.
Following the SCORE exec’s advice, I have been slowly building up cash and selling down merchandise. My open-to-buy is now in four figures and I can begin acquiring new merchandise just as Christmas season gets started. In fact, my rough OTB formula tells me to spend all of my cash on hand; I need to be careful.
I applied again for another new MC to replace the Advanta card that I lost this spring, but I’m not optimistic. The people at Citizens Bank (where I have my business checking as well as a personal account) are notoriously incompetent. The clerk who took my application insisted that I’m a sole proprietor, and not an S Corp, and could not grasp that my store has one name and my company another. Clerical errors will probably sink this application. Still, I'm holding back on placing orders until I get a ruling on this credit card.
Next week: Curious Business tackles healthcare reform.
Total income: +96.2%
Total COGS: +75.2%
Payroll: +29.5%
Net Income (Profit): +411.4%
Year-to-date:
Total income: +11.8%
Total COGS: +11.3%
Payroll: +17.8%
Net Income (Profit): -76.2%
I beat my sales plan for the first time since April, the cost of goods sold is rising slightly less than revenue, I narrowed the profit gap a wee bit while still increasing my own pay, and the bottom line is showing black ink. Not bad for the worst economy since the 1930s.
So what are my prospects as September ushers in another Christmas season?
The macro economy is rising from the dead. Our regional housing market has bottomed out. Having been settled for nearly 500 years, New England doesn’t have open land to plop down the big tracts of overpriced McMansions that dragged down the sprawl cities. And Yankee thrift prevented the average down payment from dropping much below 20%, compared to near zero in boomtowns like Las Vegas; that means that we didn’t have many new homeowners with negative equity. Housing might not lead us back out of this mess, but at least it’s no longer dragging us down. Even the overbuilt sprawl cities are showing a pulse.
Gloom always sells better than good news so dire warnings are still easy to find. Some economists foresee another plunge as collapsing commercial real estate prices drag down more banks and persistent unemployment keeps the American consumer on the sidelines. Three hundred banks have already failed this year and 111 more joined the “troubled” list this week.
Wise men intone that consumers, bloodied by falling retirement accounts and home values and frightened by persistent unemployment, will remain on the sidelines. As a lifelong tightwad myself, I approve. But if everyone was as thrifty as I am, capitalism would have collapsed a generation ago. I have boundless faith in Americans’ instant-gratification materialism – Curio City depends on whimsy, after all. When they see their 401ks and house values rising reliably again, Americans will shrug off their ill-fitting prudence like a fading nightmare and resume the impulsive and frivolous spending that has powered the economy since the 1980s. When you combine a revived consumer with Obama’s aggressive deficit spending (most of which kicks in in 2010), you have the potential for a real boom – possibly even one whose proportions will mirror the recent collapse.
I’m going to buck the wise men. So remember, you read it here first: Gradual improvement will lead up to a robust December and accelerating growth after that. Year-over-year numbers should look quite good as we go up against last year’s most dire months (October through April).
The other possible scenario is stagflation – we get the slow recovery that economists predict while inflation and interest rates shoot up because of all the money that Washington printed this year. In that scenario we continue struggling for years to come. Let’s not dwell on it.
*****************
I braced for a run on free money when I announced the new Customer Rewards Program last week. Didn’t happen. AFAIK, nobody has used the Refer-a-Friend feature to earn an instant $5. Exactly three new customers have created accounts that generated 3 points altogether. One returning customer might have tried to take advantage of the program, but he failed to log into his account and so didn’t earn any points. I’m glad that customer reward points are not going to break the bank, but mostly disappointed that my big innovation for 2009 flopped. Well, it’s a long-term thing that should build momentum over time. We’ll see how it goes.
Following the SCORE exec’s advice, I have been slowly building up cash and selling down merchandise. My open-to-buy is now in four figures and I can begin acquiring new merchandise just as Christmas season gets started. In fact, my rough OTB formula tells me to spend all of my cash on hand; I need to be careful.
I applied again for another new MC to replace the Advanta card that I lost this spring, but I’m not optimistic. The people at Citizens Bank (where I have my business checking as well as a personal account) are notoriously incompetent. The clerk who took my application insisted that I’m a sole proprietor, and not an S Corp, and could not grasp that my store has one name and my company another. Clerical errors will probably sink this application. Still, I'm holding back on placing orders until I get a ruling on this credit card.
Next week: Curious Business tackles healthcare reform.
Friday, August 21, 2009
Upgrade Today for a Rewarding Tomorrow
Alert the media: I’m finally running Sunshop 4.2.0! The upgrade went smoothly, considering that it was my new developer’s first experience with both the software and my store; I’m encouraged about future projects (like the 4.2.1 upgrade that’s due out within weeks). Now I can finally offer a semblance of the customer rewards program that I envisioned in my original site design four years ago. The trick is setting the values high enough to motivate customers without breaking the bank. Three new customers who placed orders on the Rewards Program’s first day didn’t earn points because they didn’t create accounts, but a long-time customer just earned the program's first points a few minutes ago. Nice to see a newsletter pay off!
I had originally set $10 to earn 1 point, with 1 point being worth 50 cents (a 5% rebate). Anne declared that earning 50 cents is not very enticing. So I decided to make the points more valuable (1 point = $1) but harder to earn ($20 = 1 point). It’s still a 5% rebate, but the perceived value is higher...and I can hold double-point promotions with less confusion than raising and lowering the value of points would cause.
Switchables stained glass night lights, once among my strongest product lines, stopped selling entirely when a new competitor appeared. Apparently this retailer is following the “Tentacles of the Kraken” strategy that I rejected as too labor-intensive for a one-man operation. The new store – one of five that they operate -- is named after the product. It sells the entire line (including dozens of cutesy designs that I rejected). Because they carry nothing else, they can offer cheap fixed-rate shipping – something I can’t match because Sunshop won’t let me define shipping costs by product category. That’s a lot of obstacles for me. They have a bigger (and less thoughtful) selection…they are named after the product…their prices are the same as mine…and they have cheaper shipping. Oh, and a brand new, nicer-looking store, too. To top it off they’re outbidding me on most of my keywords. Bummer. I hate when somebody new comes along to eat my lunch…but that’s capitalism for you.
Well, the lunch was free for a long time. Now I face a dilemma: Should I order the new August styles and try to compete, even though the line has died completely? Or should I just try to liquidate my substantial inventory and cede the business to the new kids?
I have longevity going for me. I worked hard to achieve natural page-one Google search results. Shoppers (like me) who run AdBlock, or who ignore paid search ads, should find my store first. Also, some of the many people who’ve ordered Switchables from me in the past ought to come back for more -- customer loyalty again. I'm still in the game as long as I have those two things going for me.
As long as I’m telling fascinating product stories…DayClocks made a decent comeback when I started discounting them. A quick spot check found only one serious discounter ($24.99 on Amazon.com plus free shipping? WTF?). A couple of other stores are still doing the shady old “free shipping” on an inflated price trick. I reduced my discount by a buck to see what happens. I'd love to get full price for these clocks again.
Incidentally, I want to widen this blog’s focus to include more general thoughts about life, politics, the economy, etc. – the context in which Curio City exists, in other words. I’ve said that before, and I’m sure my legions of fans want to know Curio City’s take on health care reform, for example. Such subjects are more likely to win the attention of social media users as I continue to grapple with Facebook and (moan) Twitter. This week I just happened to have a lot of store-related news.
Speaking of Facebook, see that new signup box in the right column? Yeah, don’t be shy. Click that “Become a Fan” button right now. I’ll send you infrequent announcements and, once I have a few fans who aren’t friends and family, special discount codes, too.
I had originally set $10 to earn 1 point, with 1 point being worth 50 cents (a 5% rebate). Anne declared that earning 50 cents is not very enticing. So I decided to make the points more valuable (1 point = $1) but harder to earn ($20 = 1 point). It’s still a 5% rebate, but the perceived value is higher...and I can hold double-point promotions with less confusion than raising and lowering the value of points would cause.
Switchables stained glass night lights, once among my strongest product lines, stopped selling entirely when a new competitor appeared. Apparently this retailer is following the “Tentacles of the Kraken” strategy that I rejected as too labor-intensive for a one-man operation. The new store – one of five that they operate -- is named after the product. It sells the entire line (including dozens of cutesy designs that I rejected). Because they carry nothing else, they can offer cheap fixed-rate shipping – something I can’t match because Sunshop won’t let me define shipping costs by product category. That’s a lot of obstacles for me. They have a bigger (and less thoughtful) selection…they are named after the product…their prices are the same as mine…and they have cheaper shipping. Oh, and a brand new, nicer-looking store, too. To top it off they’re outbidding me on most of my keywords. Bummer. I hate when somebody new comes along to eat my lunch…but that’s capitalism for you.
Well, the lunch was free for a long time. Now I face a dilemma: Should I order the new August styles and try to compete, even though the line has died completely? Or should I just try to liquidate my substantial inventory and cede the business to the new kids?
I have longevity going for me. I worked hard to achieve natural page-one Google search results. Shoppers (like me) who run AdBlock, or who ignore paid search ads, should find my store first. Also, some of the many people who’ve ordered Switchables from me in the past ought to come back for more -- customer loyalty again. I'm still in the game as long as I have those two things going for me.
As long as I’m telling fascinating product stories…DayClocks made a decent comeback when I started discounting them. A quick spot check found only one serious discounter ($24.99 on Amazon.com plus free shipping? WTF?). A couple of other stores are still doing the shady old “free shipping” on an inflated price trick. I reduced my discount by a buck to see what happens. I'd love to get full price for these clocks again.
Incidentally, I want to widen this blog’s focus to include more general thoughts about life, politics, the economy, etc. – the context in which Curio City exists, in other words. I’ve said that before, and I’m sure my legions of fans want to know Curio City’s take on health care reform, for example. Such subjects are more likely to win the attention of social media users as I continue to grapple with Facebook and (moan) Twitter. This week I just happened to have a lot of store-related news.
Speaking of Facebook, see that new signup box in the right column? Yeah, don’t be shy. Click that “Become a Fan” button right now. I’ll send you infrequent announcements and, once I have a few fans who aren’t friends and family, special discount codes, too.
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