Welcome to Curious Business

Every Friday, I post a small insight into running Curio City and/or Blue Hills Editorial Services. My most recent posts are directly below. You can also start with the first post, or use the subject labels to the right to home in on particular topics. Feel free to comment on anything that interests you.
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Friday, May 29, 2009

May Stumbles

It is unreal how fast time passes when you get old…not that I’m often moved to seize the day. I spent more time this week working on my garden, cleaning gutters, mowing the lawn, and puttering around the house…and suddenly it’s Friday again. I will knuckle down next week, when Fathers Day season starts.

May’s numbers are at the bottom of this post.

Advanta lowered the boom, as I knew they would do. My Mastercard is cut off from new borrowing as of tomorrow, and I don’t have a replacement for it yet. I just reactivated my personal Chase card in QuickBooks.

Speaking of QuickBooks, Intuit also lowered a boom that I wasn’t expecting. They only support QB for three years, so my QB 2006 goes obsolete on the same day that my credit card dies. Intuit will not only stop supporting my copy, but will cripple some of its features (payroll being the only one that affects me).

OK, fine. I understand that they have to limit backwards support and compel new sales. When I went to buy a copy, though, I was surprised to see that over 200 reviews on Amazon rated it just two stars.

Here’s what Intuit’s customers hate most about their product:

1. Registering the product requires a phone call. You have to spend 15 minutes giving an Indian call center proprietary company information and listening to multiple sales pitches before you get your registration code. Online registration is no longer supported.

2. The product was patched seven times (so far), requiring about 200 MB of downloads, restarts, etc. If you open your company file before you complete this process, you might destroy your company file.

3. Once you open your company file in 2009, you can no longer revert to 2006. Several users complained that their company file was damaged during conversion and could not be opened anyway.

4. If you have trouble with any of the preceding, Intuit tries to charge you for tech support. There was a lengthy explanation about Microsoft .NET, which I didn't understand. Oh, and a couple people said they had to reinstall Firefox.

5. Intuit added numerous nag screens, advertising popups, and sales menus. You can disable them, but they come back every time you restart the program. (This was true in 2006, too, until a patch finally fixed that toggle. It is extremely aggravating when a program that you've already paid for keeps spamming you with ads).

6. Intuit added about a dozen new features that few users care about (I sure don't). The bloated program brings older computers to their knees -- it can take half an hour just to load up and open the company file. Several users complained that they had to replace their computers. (Mine is four years old and QB 2006 already runs like a dog, so that's of major concern).

7. Intuit weakened some older features, such as online banking and automatic credit card reconciliation. (I don't use these functions myself). They also changed some previously-included features to paid add-ons. There were a LOT of complaints about payroll, but I don't know if they were talking about the paid payroll service or the built-in paycheck program that I use; I certainly do need the rudimentary payroll functionality that I already have.

8. The interface is more cluttered and the program is significantly harder to use in general.

There are no practical alternatives to playing Intuit’s "upgrade" game, which is obviously why they can get away with it. Eight major patches have reportedly fixed the most egregious bugs, so the new version should not be substantially worse than the old one. It’ll just run like crap and be harder to use. Yesterday I coughed up $100 for this unwanted piece of bloatware.


May was a lousy month, the weakest of 2009. Costs (mainly advertising and payroll, but really across the board) are up while revenue is flat. You can see that I'm paying myself more in salary at the expense of my year-end profit.

Total income: +1.2%
Total COGS: +31.5% (ouch)
Payroll: +84.6
Net Income (Profit): -152.3%

The YTD numbers:

Total income: +26.7%
Total COGS: +30.9%
Payroll: +50.8%
Net Income (Profit): -77.3%

June will surely be worse, because June 2008 included one sale for nearly $2,000 worth of lighted caps and another for over $400 worth of Switchables. Unless lightning strikes twice again this year, the YTD numbers are going to plunge next month.

Take away my credit card, cripple my accounting software, and give me an impossible sales plan. It’s going to be an ugly summer.

Friday, May 22, 2009


I took a lot of time off this week to put in my squash and tomato plants. Next week will be another light schedule as I finish planting my peppers, beans, and herbs. I’m knocking off early today to go see the Star Trek movie. This “being your own boss” thing would be really nice if it paid better.

Corresponding with my first SCORE exec was helpful. His feedback was much more in-depth than I’d expected. The takeaway points are:

• My conversion rate is indeed pretty good, so I should focus on increasing site visits (as I surmised).

• The most cost-effective way to do that is probably to boost organic traffic through search-engine optimization (which I’d been leaning toward doing; I know that my organic search results mostly suck).

• An alternative to SEO would be a narrower focus. Identify what’s selling now, do more of that, and use social media and internet PR to push a consistent, targeted image. This butts against my general-interest nature. I wonder if I can turn that liability into an asset and specialize in being a generalist – run with “you never know what you’re going to find in Curio City”. It’s a contrarian approach to online retail, that’s for sure.

• Having a merchandise turn rate below 2, when I should be flipping things between 4 and 6 times per year, locks up too many dollars in nonperforming stock. Cutting my inventory by half or two-thirds would free up a lot of money that I could invest in SEO. (This had not occurred to me). This should be my primary immediate challenge. The piles of boxes in the cellar have been gradually shrinking, but I need to be more deliberate about it.

• The way that I calculate my open-to-buy is largely responsible for my chronic overstock. Although QuickBooks handles cost-of-goods-sold (COGS) properly (deducting the cost at the time of sale), my Excel spreadsheet regards my merchandise orders as an expense, without regard for the assets being held. While that’s useful for managing cashflow, it’s not a valid accounting procedure and it distorts both COGS and open to buy.

• There is no easy way to pick and price SEO companies, so extensive research is necessary before hiring anybody.

• As for long-term financing…anyone who loans me money is going to expect a personal guarantee, which ultimately puts my house at risk. Being a corporation doesn’t get me around that. If I think there’s any chance that I might not be able to pay back a loan, I should not borrow in the first place. In order to obtain a loan, I need to prepare a conventional business plan.

Altogether I have a better sense of direction than I had going into this. I’m still going to run my situation past a couple more SCORE people to see what they have to say.

Friday, May 15, 2009

The 150

Remember how I once said that Curio City is too small to fail? Well, here’s an angle I hadn’t considered. Advanta, the number one credit card issuer for small businesses, is reportedly cutting off all of their million customers effective June 10 (they haven’t notified me yet). I use my Advanta Mastercard for all of my merchandise purchases -- $26,000 last year – because I like getting the 1% cash back. Now I’m left with only my Amex Platinum Business card. I consider myself lucky – a lot of businesses my size lack any fallback.

I broke down and applied for the Visa business card that UPS keeps pitching me, month after month, but I’m skeptical that I’ll be approved in today’s tight credit market…especially with 1 million other small business owners suddenly looking for credit.
Carrying a UPS-branded card will be bittersweet anyway, given my feelings about that company (see the Reasons to Hate UPS tag). But feelings have no place in finance.

Incidentally, remember how I said last week that I could theoretically finance my modest expansion plans with credit card advances? Uh, not any more. Losing Advanta cut my available credit by more than half.


I finally sifted through a lot of SCORE member biographies and found four whose backgrounds might be helpful. I’m going to approach the first of them this afternoon. I don’t know why I have such a mental block about involving outsiders. I am not bound by their advice.


Four years. That’s how long it took to reach Google AdSense’s $100 payout threshold. My check arrived last week. Today the repair estimate for my nine-year-old wristwatch came in at a cool $100. Thanks for clicking on those ads, readers. Now let’s see if we can reach the next $100 in less than four years. You know what to do…clickety click click!

Google changed their AdSense placement routines recently so that readers’ browsing habits now determine the ads that you see on my blog. When I look at Curious Business on my desktop gaming machine, I see much more interesting ads than the boring banky things that appear on my work laptop. That ought to generate a lot more clicks.


My wife, who is learning about using blogs and social networks for business, tells me that I don’t post often enough. Now, I think that once a week is plenty. It takes me that long to polish a post, and after writing 150 posts (as of today!) I don’t have much more to say. So she suggests that I start a second blog aimed more at casual readers than business people. I guess I’d be spewing my endlessly fascinating news commentary, economy observations, and political opinions. Or something like that. The secret agenda, of course, would be pimping my products and my store.

I suppose I could give it a try. It’s not like it will cost me anything, and it might expand my little online empire. She’s trying to convince me to revisit Twitter, too, because all of these things are supposed to reinforce one another and ultimately feed me customers. I don’t know how that’s supposed to work; it seems like I’d be spending an awful lot of time writing about work instead of actually, you know, working.

Not that I’m doing a whole lot of that. May is not going to be one for the record books. Sales are slow and there’s no money to spend, so I don’t have a whole lot to do.


Dayclocks did start selling again after I marked them down to what looks like their new prevailing price. So I’ll keep carrying and advertising them despite the reduced markup...at least for awhile. Who knows, maybe they’ll go back up to their rightful retail price eventually.


OK, so that's all I've got for post #150. Sad, huh?

Friday, May 08, 2009

For SCORE, And Several Years to Go (Part Two)

I face three major challenges:

1. Increasing business dramatically in a short time, as discussed last week; and
2. Dealing with the logistics of succeeding at goal 1; and
3. Absorbing substantial new expenses that will change my cost structure.

How Do I Get There?

Here’s where I need informed advice. I have a decent sense of what I need to do to grow and what problems growth will bring. But I don’t know how to approach them – in what order, and at what expense?

Business is all about money. A wad of cash would fuel rapid growth. I let Curio City keep 25% of its annual profit each January; that should bring about $2,000 this year. Ordinarily I like to put that into new merchandise. Two charge cards have $50,000 in combined credit. I need to keep $10,000 of that liquid for operations, so I could actually spend $40,000 of it. That makes about $42,000 that I could access easily early next year. I get new credit card offers all the time, too, so I could easily raise more money that way. However, every instinct tells me that using credit card advances is a bad idea. The fine print on credit card agreements usually imposes personal liability for corporate debts – is that enforceable?

So let’s say that I really have $0 beyond operating cash. Two obvious questions arise.

1. How much money do I need to achieve the sales increase that I specified last week?

2. How can I get that money without risking my house or giving up ownership? Is that even possible, or am I stuck with the bootstrap approach that has brought me this far?

I can show a lender a profitable and growing business, but its only tangible asset is its inventory. Will a banker accept merchandise as collateral? My only personal assets are my house, my Fidelity IRA, and my Roth IRA. How can I borrow money without risking my house? My credit card contracts probably impose personal liability for corporate debts – how enforceable is that? My retirement accounts lost so much money in the crash that even liquidating them probably wouldn’t finance this expansion…which I obviously don’t want to do anyway.

Let’s pretend that I’ve somehow conjured up $50,000 or $100,000 on terms that are acceptable to me. How do I put it to work quickly and effectively?

1. Spend it on technology. Hire a web design firm to give my site a complete makeover. Graduate from Sunshop to a custom e-commerce engine. I currently spend very little on technology upgrades, relying mainly upon whatever improvements Turnkey makes to Sunshop. My budget just covers Sunshop version upgrades and the rare non-website expense (such as the version of QuickBooks that I’m about to buy). Based on past spending, $200,000 in planned sales suggests a $6,600 budget for technology. I’d probably need 2-3 times that much to abandon Sunshop for a complete redesign on custom software – let’s guess $15,000.

2. Spend it on online marketing. Hire a search engine optimization company to improve my organic search results. I might be able to squeeze a little more business out of pay-per-click advertising, but I think I’ve taken that about as far as it can go without becoming too expensive. How much should SEO cost? I’ve had offers ranging from $500 to optimize a few product pages up to many thousands of dollars for a complete site overhaul with ongoing maintenance. Staying toward the lower end is probably adequate for the modest sales boost that I’m seeking – remember that overshooting my goal would create all kinds of new hardships. Let’s guess $5,000.

3. Spend it on offline advertising. This is way outside my competence. I’d need to develop a professional-looking ad for a particular product, place it where it would generate at least ten times its own cost in new sales, and do that on a regular, predictable basis. I would have to outsource this whole process. Right now advertising is budgeted at 9% of gross sales. To sell $200,000 worth of stuff, do I need $18,000 (minus my current $4,000 expenditure) for a consultant and ad buys, or will that cost more than I expect? Let’s guess $20,000.

4. Spend it on inventory. I often say that “I cannot sell what I do not have.” If conversions remain steady and traffic grows as planned, I run into a storage problem. Given my low turn rate, additional merchandise might be the least efficient place to spend money. But bringing in new items is the easiest (and most fun) thing to accomplish. I’ve already got a stack of 15-20 catalogs with items that I know I could sell. How much money should I spend on inventory? If I want to sell $200,000 worth of stuff, and my turn rate is 1.5, then I need $133,333 worth of inventory, right? I currently have $42,400 worth of stuff in my cellar. That suggests that I need to spend about $45,000 to buy an additional $91,000 worth of stuff. Physical space is the biggest problem here. The only way I can double or triple the amount of stuff stuffed into my cellar is if my wife throws away her mounds of trash. But she won’t even throw away 2-3 boxes to make room for our storm windows. Renting off-site storage raises both cost and logistic problems.

Those rough estimates add up to $85,000. Let’s call it a cool $100,000 just for comfort.


If sales suddenly tripled, would my website withstand the traffic? Could I physically fill the orders? Routinely processing and shipping 12 orders per day would take some time and attention away from my higher management functions. But I could physically handle it 10 months out of the year. Christmas is a different story. During last December’s big surge I hit 49 sales in one day. For a couple of weeks I was routinely making 20 sales per day. What happens if my peak numbers triple, too? I would smother under 60-150 orders a day.

This brings us back to a subject that I’ve written about again and again (check the posts tagged “planning” and “operations”): Kicking Curio City out of the house. It would be suicidal to crank up sales before I get a grip on this old problem. What is the best way to move shipping and receiving out of my house for the six weeks that I can’t handle alone? Should I rent a storage facility and hire some part-time kid to fill orders for a few weeks out of the year? Or should I permanently outsource fulfillment to a professional fulfillment firm, even though I don’t need that level of service 10 months out of the year? My warehouse and fulfillment costs are zero right now. It would be an enormous new expense. How much would it cost?

I’m no closer to answering these questions than I did the last half dozen times I posed them. Everything that came before is easy compared to this. Until I can figure out how I’m going to physically handle it, I don’t want a big sales increase. And so we reach point #3, "Absorbing substantial new expenses that will change my cost structure." I don't know what those expenses are, much less how much they will cost or how I will pay them. I only suspect that my business has to change fundamentally if I'm going to triple its size.

This is where I throw up my hands. As usual, I am stuck.

Friday, May 01, 2009

For SCORE, And Several Years to Go (Part One)

Last September I set some ambitious sales goals that would finally make Curio City pay me a living salary. Then the economy fell off a cliff. Although running 33% ahead of LY is pretty good under the circumstances, it’s less than half of the increase that I had originally budgeted for 2009.

I need a plan to make up for lost time when the depression ends. So it’s time to explore something that’s been back-burnered for literally years: Finding a mentor from the Senior Corps of Retired Executives (SCORE). I hope that I can persuade an informed, technologically-literate retailer to read enough of this blog to understand who I am, what my company is about, and what my goals are…starting with this post.


I don’t have a boss. I don’t have a partner. I don’t have any coworkers or employees. I’m not into social networking. I don’t belong to any professional associations. I work in a complete vacuum. That suits me fine for day-to-day operations and short-term planning. I’m a loner, and I like it that way.

However, I want a growth plan ready if the economy starts to recover. I need expert advice on how much money to borrow, where to borrow it, and how to best spend it. It’s a bet-the-company proposition.

SCORE lets me ask for informed opinions without obligation. Finding someone with a relevant background will be difficult, but I can approach as many people as I care to try.

Incidentally, Dear Reader, if you have ideas of your own, leave a comment or send me email. There’s no reason insight has to come from a SCORE member.


1. To earn a living wage
. My salary plus profit this year should approach $19,000. I want to earn $60,000 per year by 2012. In order to triple my 2009 income, I’ll need to triple my 2009 sales, from this year’s anticipated $67,000 to about $200,000 by 2012. I will need to average 12 sales per day by then.

2. To retain full ownership
. Ideally I will remain a one-man, home-based enterprise (contracting for marketing and tech support, and eventually outsourcing order fulfillment). Ideally, I can avoid hiring employees or leasing commercial space. I will not cede any ownership to investors.

3. To sell Curio City Online and retire by age 65
. My exit strategy is to retire 10 years after reaching goal #1, in 2022. That means either selling my business or hiring a manager to run it while I live off the profits. Since our meager retirement savings were devastated in the crash, and we’re not putting anything aside while Anne is unemployed, Curio City is probably our only hope for retiring.

The actual numbers needed to triple today’s business are not staggering. I don’t need hundreds of sales per day or millions of dollars a year. Let me be explicit about this: I do not want to grow too much too quickly. I value my time and my sanity more than I value money. I think that I can handle a $200,000 business by myself without destroying my quality of life. Overshooting that goal would overwhelm me. Perhaps I’ll want to grow large someday, but definitely not now.

How I Can Reach Those Goals

Achieving major sales increases will be the easy part. There are three ways to approach that:

1. Increasing overall traffic. I now rely exclusively on search engine traffic: pay-per-click advertising at Google and Yahoo drives paid search results, and my own amateur efforts at search engine optimization (SEO) drive natural search. I should be able to triple traffic by (1) hiring a marketer to strategically place some professionally crafted advertisements; and (2) hiring a SEO professional to raise my profile for maybe half a dozen key products. How do I actually choose these experts, and how much should they cost?

2. Increasing conversions. To increase the percentage of shoppers who buy something, I could offer more and better things to buy (invest in inventory), and improve my store’s design and my website’s performance (invest in technology). Free shipping would certainly boost conversions, but how can I possibly afford to do that? You need to ship lots of packages before you can get deals from the carriers. Finally, I could subscribe to one of those seals (like McAfee Hacker-Proof or whatever it’s called) to enhance the perception of security. They claim to deliver an average 14% sales increase, although I’d expect less than that because my GoDaddy seal already gives me some benefit.

3. Increasing the average sale. This would mean either selling more things to each customer, or selling more expensive things (or fewer cheap things). Some of the same tricks that convince people to buy will also encourage them to buy more. Free shipping on purchases over $x is one obvious idea. I could also stop carrying things under $10; cheaper items are often more trouble than they’re worth.

According to Google Analytics, Curio City received 58,551 visits (4,875 per month or 160 per day) between April 2008 and April 2009. 1,237 transactions produced a conversion rate of 2.13%. The average sale was $47.96. I think that both the conversion rate and the average sale are pretty good by ordinary gift shop benchmarks. So I should emphasize increasing overall traffic without degrading its quality (by poorly targeted mass advertising, for example), and thereby lowering my conversion rate and average sale.

Let’s stop there for this week. Next week: Challenges and logistics.

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