Two Realities (June Numbers)

If Only Real Life Were Like This

I love to count my money after a lucrative month. My wacky accounting calendar defines “June” as May 30–June 26 this year, so the month ends tomorrow. My spreadsheet uses 7-day blocks to facilitate weekly comparisons. But calendar drift eventually moves a week from one month to the next. When a four-week month becomes a five-week month my comparisons suffer.

I really ought to beat my spreadsheet into compliance with calendar accounting. Doing so would invalidate monthly comparisons between 2011 and previous years, but eliminate calendar creep in future years. Nobody cares about any of this except me, of course. But since I’m 100% of the staff, it’s a burning issue in Curio City...and that's what this blog is about, right?

June finished phenomenally after May’s mediocrity. Whisky Stones did great for Fathers Day…bird kites have been selling steadily across the board…and two large Business Card Briefcase orders really kicked it over the top. I have temporarily shelved my plan to move bird kites to their own top-level category on the “If it ain’t broke” principle.

Here are June’s numbers, followed by explanations.

Total income: +48%
Total COGS: +56%
Payroll: +28.8%
Net Income (Profit): +189.2%


Year to Date:

Total income: +32.7%
Total COGS: +48.9%
Payroll: +49.7%
Net Income (Profit): -2,258.3%

The YTD bottom line looks incredibly scary, but it only represents $472. Last year I was very slightly in the black; this year I’m still a few hundred bucks in the red. Closing the gap won't be trivial, but neither is it impossible. Remember that for all the dramatic percentage moves, there still aren't that many dollars flowing through this company.

I must have explained what these numbers mean at some point over the years, but here’s a refresher course for newcomers and the forgetful.

• Total income: Very simply, the top line dollars coming in over the transom.
• Total COGS: Cost of Goods Sold should rise in lockstep with Total Income. Lower is good, higher is bad.
• Payroll: Dollars in my pocket. More is nice for obvious reasons, but bad to the extent that it reduces my year-end profit payout and increases my personal payroll taxes paid. This number ought to track Total Income, plus a bit for the raise I gave myself at the end of last year.
• Net Income: Earnings before interest, taxes, depreciation, and amortization (ebitda) – the first draft of the accountant’s bottom line. Naturally, I want this number as high as possible. As an S corporation, Kraken Enterprises is obliged to pay its profit to its stockholders each year. I actually only take out 75% of it and leave 25% as retained earnings for company growth, even though I’m responsible for 100% of the taxes due. Ideally I’d take all of my compensation this way and screw the paychecks, because one doesn’t pay social security or medicare taxes on dividend income. But the IRS can smite me if I don’t take a “reasonable” salary, and I obviously need beer money.

Anyway, Payroll + Net Income = my total compensation, more or less. Theoretically both of those numbers should rise in lockstep with the top line. The YTD numbers show that I'm getting nicer paychecks this year but the year-end bonus is in some doubt.

Now we come to July, the low point of the year. I’ll be shutting down for 10 days as usual. Making plan should be easy, but if there’s one month when it doesn’t matter, July’s the one.



Unfortunately, Real Life Is Like This

Republicans once again blocked unemployment benefit extensions. Yesterday Senate Democrats gave up (after multiple votes over eight weeks) and walked away from the table. When Anne’s current benefit tier runs out, we will lose our only regular monthly income. And because Medical Security Program reimbursements are restricted to unemployment benefit recipients, we will have to pay the full cost of health insurance. If Republican obstructionism isn’t overcome soon, we will finally fall off the cliff after 17 months of dancing on the edge. Repeatedly closing and re-opening Anne’s claim to report her freelance income makes it impossible to know exactly when her current benefit tier expires, but it’s coming up soon.

Oh, and the state’s denial of double-digit rate increases on individual health insurance plans was overturned yesterday. That $990 Fallon plan that I had my eye on is likely to top $1,200 a month if Fallon’s appeal is also upheld. I don’t know what to do now. How are we supposed to pay for that without unemployment checks? Our health insurance crisis is back on the front burner. Thanks, Republicans!

Despite this, we’re going on vacation in three weeks. A dumb financial decision, to be sure, but it’s a needed psychological balm. My beautiful blonde tresses are literally turning gray from the past year’s chronic money stress. (Or maybe I'm just nearing my expiration date).

The 12 job applications that Anne sent out a couple of weeks ago got seven responses, five of which led to interviews. One of those jobs is an excellent opportunity (the others all have serious drawbacks). She passed the phone interview and has a 2.5-hour follow-up with four interlocutors next Thursday. She could potentially land a near-perfect job just as our house of governmental cards blows away.

If you’re the praying sort, get down on your knees. Either delivering this job or destroying the Republican Party would be a satisfactory miracle. (Sorry, I'm just venting frustration...I can think of a few objections to letting Democrats frolic at peace. It's just that every time I think I've got things under control....).

Happy Fathers Day

Curio City beat last May’s sales either by 68 cents or by $108, depending on whether you believe Excel or Quickbooks. Neither result came close to plan. Turns out that I wasn’t the only disappointed merchant: Retail sales fell by 1.2% nationally – the biggest drop in eight months. However, non-store (i.e., Internet) sales were up by 2%, which is pretty good for big mature businesses (only us little guys can budget double-digit growth). So what are the economy’s prospects as summer settles in?

This week’s last-minute dash to Fathers Day came on weak and late. My new bacon-themed products arrived too late to…um, save my bacon…I’m sure that some dads out there would’ve gotten bacon wallets and bacon belts if I’d pulled together my order a few days earlier, or if the vendor’s old-fashioned order process hadn’t taken five days. Then a large, unexpected non-holiday order for Mini Briefcase Business Card Holders (sku 16, one of my debut products) kicked it comfortably over the top. Next week’s sales target is laughably low…but business (and my paycheck) turns laughably low after Fathers Day, so I'm not sanguine about it.


Dad’s getting Whisky Stones on Sunday, btw. Last week’s report of their impending demise was premature.

Every year, the Fathers Day surge resolves me to set aside my own feelings about Hallmark Holidays and make a push for next Mothers Day. And then every May I either forget about it entirely or blow it off as a triviality. Idiot. These made-up holidays drive the sales calendar, and I’m foolish to downplay them out of personal disinterest.

Anyway, Curio City has already beaten last June and should make plan easily (numbers are coming next week). New England is growing more robustly than the rest of the country due to several advantages:

• We prefer older homes to new construction, so we escaped the housing crash that afflicted the sprawl states
• Our biggest economic sectors are health care (which is obviously swimming in money) and technology, which picks up when business starts expanding again
• Yankee thrift kept us less indebted than most Americans
• Democrats are in charge – as one of their main power bases, Boston always prospers under Democratic governments and suffers under Republicans.
• Because land is comparatively expensive here, we didn’t overbuild big-box retail stores or office towers, so vacancies are filling up and rents are stabilizing. (Apparently some people still shop in stores.)

The state has added jobs for the past four months, and Anne’s marathon job search has quickened over the past couple of weeks. There is at least a small chance that a job offer will materialize before COBRA expires. All in all, a feeling of normalcy is returning here. Morning in America, and all that tommyrot.

Since Curio City’s physical location hardly matters…So what? The national economic news hasn’t been encouraging. Readers in more benighted areas should take heart. If Curio City is any indicator, June should look sunnier all over.

The Next Big Thing

The year’s already half over and Christmas is bearing down. I need a new hit product.

Last year’s darling Whisky Stones are ubiquitous now. I had a great run with them as one of their first peddlers. The retail price is still holding up so far, but some competitors are throwing in free shipping, and that always leads quickly to discounting. Although they aren’t dead yet -- I've sold four sets this week for Fathers Day -- Whisky Stones won’t be this year’s wunderkind.

I'm counting on Panther Vision Power Caps to stay on top again. After four years as the backbone of my business, I’m nervous about their staying power…but so far, so good. Maybe last year’s inventory shortages will carry forward into some pent-up demand this Christmas.

Customers introduced both of those products to me. I’m neither a consumer nor a shopper myself. My oblivion to retail might enhance Curio City’s attempts at unorthodoxy, but I’m blind to new products that don’t come from my existing suppliers. I'm getting a better sense of what does and doesn't work and I can usually recognize a great new item when someone else points it out. The ideal Curio City product has these characteristics:

• It’s useful, functional, or practical, versus merely decorative
• It’s clever in function or design
• It’s unique – no competing product does exactly the same thing
• It’s unusual – you won’t find it in mainstream stores or websites
• It’s of high quality
• It’s classic or retro, not trendy
• It’s cool, not kitschy or crafty or countrified
• It sells for $10-$40
• It’s compact, lightweight, and durable enough to ship safely and economically
• It lights up. (People love brightly colored lights!)

I've already got my eye on a few novelty products. Novelties add interest to my store and bring in steady revenue, but the best of them only sell a dozen or two units. The bacon-themed items arriving next week violate my own “not trendy” principle, but that meme is getting so old it borders on retro.

Anyway, if you ever come across some amazingly clever new thing that meets some of these criteria (nothing satisfies all of them), by all means email me. If the pricing and logistics work out I’ll give it a whirl. Nobody knows what will really sell better than my customers do.

DayClocks were my first big hit and one of my original products (SKU 37 isn’t linked because it’s out of stock right now). I sold hundreds of them at $40-50 before discounters ruined them; now some bottom feeders are clearing less than $5 on each one. I quit advertising them ages ago. Logically, I should have discontinued them when I sold my last Classic DayClock yesterday. But, as an isolated work-at-home person, I frequently lose track of the day of the week. I actually consult my DayClock regularly. It’s a signature Curio City product even though it no longer carries its own financial weight and you can buy it at (shudder) Walmart. As long as it still sells any units at all, the DayClock will have a home at Curio City.

I usually can’t spot the hot Christmas product until October, if one is going to break out at all. I do need something, and I haven't seen it yet this year.

Switching Up Switchables...Again

Switchables Stained Glass Nightlights are one of a few good things that have ever come from the Cavalcade of Crap. Years ago, Curio City became the first store to sell them online. Sales were solid and the markups were good. Craftspeople even propelled the basic fixture onto my Bestsellers list by buying a dozen at a time.

Nothing lasts long on the Internet. Competitors moved in and sales slowed. Some of these newcomers must have used professional Search Engine Optimization – or maybe sleazy tricks like link farms – to knock my pages down from the top of Google’s natural search results. The orders finally stopped coming in altogether. A new web store devoted exclusively to Switchables, with their name in its URL (no link here for obvious reasons, but it’s much too easy to find), killed the category. It’s nicer than my site and obviously has some money behind it. Faced with the prospect of investing in the latest new styles, I considered discontinuing the line.

My natural reaction to bullies is always to turn tail and run. Then I heard my dad’s voice counseling “Pick up a stick and beat them bloody. Do whatever it takes to win.” (Loyd hated seeing his skinny weakling son get pushed around).

It turned out that most of this big galoot’s prices were higher than mine. I also had a slight edge over their shipping charge for small orders. I cut a few prices and jazzed up my ads, and the line recovered a pulse. Encouraged, I moved all of the Switchables pages out of the Nightlights category and into their own subcategory in a bid to regain my natural search positions.

Big mistake. Google’s crawler apparently doesn’t like digging down two levels. So this week I moved them again, to a top-level category. It’s inconsistent with my overall organizational scheme, and it will take time for Google to re-index the pages, and I’ll lose the advantage of longevity…but it’s worth a try. Anything that makes the store easier to shop is good, organizational principles be damned; if it works I’ll extend the approach to other products. Switchables are moribund and new summer designs will soon demand more inventory dollars.

If this effort doesn’t work by Christmastime, I’m getting out of the Switchables biz. I’ve already got nearly $2,000 invested there and can’t afford to tie up more inventory dollars in a line that I have to keep poking with a stick. They might have become too mainstream to be a Curio City product anymore -- another victim of popularity.

Footnote: Eight hours after I finished doing this task, I got a nice $50 Switchables order. Coincidence? Of course it is. But gratifying all the same.