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