Thank Janus It's Over

I should’ve known 2010 would end with a mini-disaster: Sunday’s blizzard took out our Internet access. For most people that means being deprived of funny cat pictures and Facebook chatter. It’s a little more serious for an online business.

I shoveled for three hours on Monday to excavate Anne’s car for the short drive to Panera Bread to pay too much for coffee and free WiFi. But I couldn’t print postage (thank Janus nobody bought expedited shipping!) and therefore couldn’t ship the weekend orders. Tuesday morning, still no Internet. I couldn’t let the weekend go unshipped for another day. Anne figured out that I could at least create my Priority Mail labels at the FedEx/Kinkos shop; I wasn’t sure how I was going to handle First Class labels (USPS doesn’t sell those online). Our cable finally revived shortly after lunch on Tuesday and spared me that effort and expense, but not the anxiety.

Hmm…that’s a micro disaster at best and a boring story at worst. In fact, this post doesn't even merit a "Disasters" tag. It seemed like a fitting end for 2010, though. I was reminded how completely I rely, both professionally and personally, on technology that scarcely mattered 10 years ago. I am a lost soul without the Internet.

Here are the grim (Quickbooks) numbers:

December:

Total income: -9.0%
Total COGS: -14.1%
Payroll: +2.5%
Net Income (Profit): -17.0%


2010 (almost) Complete:

Total income: +6.3%
Total COGS: +12.4%
Payroll: +13.5%
Net Income (Profit): -38.1%

Now it’s time to set 2011’s plan. Ignore discrepancies with the official numbers shown above; I use Excel for planning, and those numbers are typically a little grimmer than Quickbooks.

Sales have more than doubled since 2006, yielding a long-term annual growth rate of about 50%. But as you can see, most of that growth came all at once:

• 2006-07: 14.8% (^ $4,142)
• 2007-08: 61.5% (^ $19,722)
• 2008-09: 15.6% (^ $8,102)
• 2009-10: 2.9% (^ $1,714)

I need to sustain double-digit growth if this business is going to earn me a real living by the time I reach retirement age. But the rate is slowing as the dollars involved increase, my business matures, and both technology and popular culture leave me farther and farther behind. Needing and wanting 20% growth isn’t exactly a sound reason to plan for it. What’s a reasonable compromise between the number that I need and the number that I consider likely on my current glide path?

First, let's consider outside forces: The economy is noticeably quickening. Benighted states like Michigan and Nevada and California probably don’t see it yet, but progress is obvious here in Massachusetts. The $660 billion of new economic stimulus that Obama bought with his millionaire tax bribe will surely fuel the trend. Barring any shocks, the economy will exceed expectations in 2011 as even the worst state economies finally turn around, employment picks up, and consumers get back to consuming.

Counterbalancing that, the activist 111th Congress yields to renewed Republican obstruction and backsliding next week. Blocking new progressive legislation won't actively harm the economy. Real (not symbolic) spending cuts certainly will, though. Mainstream Republicans don’t have the stomach for cuts of sufficient magnitude to start another recession; they eat from the same trough as Democrats, after all. But the battle for control over their party in the 2012 election cycle makes the Republicans a wild card; they could do real damage if their newly energized fringe acquires serious policy influence while the party leadership is focused on destroying Obama (as it has vowed to do).

Does the national economy even matter? If there’s any relationship at all with Curio City, it’s inverse. The deepest year of the Bush Recession (2008) brought my best growth ever. The second half of 2010, when the economy gained real traction, is when my business started to slump.

So let’s set the economy aside and focus instead on my own history. If you throw out the outlier years then 15% is a reasonable growth expectation. Given 2010’s weak ending after a robust first half – as of August I was still running 30% ahead of LY -- I’m pessimistic about 2011’s chances. But 3% growth (or 6% by Quickbooks reckoning) is unacceptable. If that’s to become my new standard, I should pull the plug on this endeavor right now; I’d make a lot more money bagging groceries. So I’m going to split the difference between the 15% that is my birthright and the 3% of recent experience. Halfway between 3 and 15 lies number 9. Being unwilling to embrace a single digit, though, I’m going with a 10% plan this year.

My hunch says that I’ll fall short during the first half of the year and make it up during the all-important Q4, when 2010 unraveled.

Christmas 2010 is probably an accurate baseline. Both 2008 and 2009 enjoyed unexpected stimuli. In 2008, the NYT Gift Guide drove many of the sales records that still stand today. In 2009, the Boston Globe gift guide mentioned Whisky Stones on the same day that my last reorder happened to arrive, while Panther Vision introduced a new cap line. Supply problems created pent-up post-holiday demand for their new 3-LED caps, bringing surprisingly strong numbers during the last two weeks of December.

This past Christmas shows what happens when lightning doesn’t strike.

To bring these numbers down to the pocketbook level: I raised my salary from $10,870 to $12,417 this year. But my raw profit fell from $5,900 to $3,760. That adds up to just $16,177 of the $20,000 that I was looking for and falls slightly below last year’s $16,737 compensation. If I worked 40 hours a week for 52 weeks I earned $7.77 per hour – better than the “20 cents an hour” that Anne thinks I earn, but still a little below minimum wage. Using a more realistic 35-hour workweek brings me up to $8.88/hr. That makes me feel a little better.

Of course Kraken Enterprises can’t really pay out its entire profit. My rule of thumb has always been to take out 75% and leave in 25%. This morning I took the $750 needed to cover the personal income taxes due on $3,760, plus an additional $2,050 in free and clear bonus money to get me through next year’s slow months. That leaves $960 in retained earnings. And although it fell short of expectations, pocketing $2,050 makes me feel better, too.

Officially, this is a stockholder loan repayment, not a shareholder distribution. There’s some obscure advantage to repaying my investment and letting the company keep its whole profit, but I don’t remember what it is. I think it improves the company’s worth despite giving me $2,800. Kraken Enterprises still owes me $17,475 of the $28,500 that I invested in it so there’s still plenty of room for profits in that bucket…for whatever reason it is that I do that.

Next week: Ideas for restoring double-digit growth

Good Riddance to Bad Elves

Christmas finally died last Tuesday after a long illness. It will not be missed. After a second consecutive December decline, I’d love to hibernate until Valentines Day…but when the self-employed rest, we lose. I am already pondering how to better cash in on next year’s spending orgy.


Since my past few posts were so number-heavy, and since I'll have the year-end wrap-up next week, and since I’m currently suffering yet another lousy week, I’ll spare you the nitty-gritty today.

I only lost one Christmas shipment this year, sending a $10 item to West instead of East (Whatever) Street in NYC. UPS apparently lost a 2nd-Day Air shipment this week, although I haven’t confirmed that yet because the customer fell silent after her initial complaint (she’s traveling). Otherwise everybody’s packages got where they were supposed to go. That’s 235 packages in November and 410 (so far) in December. With one more crappy week left in this crappy month, I should end up very close to LY’s 705 shipments – the monetary decline reflects the Curse of the Small Orders that I identified a couple of weeks ago, not an absence of customers. (I’m sorry, I said I was going to skip the statistics!)

The three thefts and two cellar floods that washed more than $1,000 off my bottom line were this year’s lows. New fraud control will prevent those scams from being repeated, albeit at the cost of rejecting some legitimate sales – APO addresses in particular usually fail the metrics (sorry, soldiers). Pray to Neptune that global warming won’t raise the waters again next year.

At the beginning of 2010 I had set myself the goal of acquiring 100 Facebook “fans” by the end of the year. As of today I’m at 112. FB changed “become a fan” to “Like” midway through the year because “liking” something is a lesser commitment than “becoming a fan” of it. The effect is the same, but the goal was easier to reach. FB seems to be spreading of its own accord now – not that I don’t still need the active support of my FB “likers”.

Other items on my 2010 agenda were:

Drop international shipping: Nope, didn’t do it. I was sorely tempted after this year’s thefts (all of them by foreigners), but I’m still reluctant to cut 1-2% off my top line. I'll reconsider if sales recover beyond expectations.

Drop Google Checkout: Nope. In fact, my GC business grew slightly last year. That’s fine; their processing fees are slightly lower than the competition. I hate to see so many of those customers drastically overpay for shipping because of Sunshop's flawed GC integration, but I’m not going to lose sleep if it doesn’t bother them.

Drop Giftwrapping: Nope. In fact, I sold $8 more worth of giftwrap this year than last despite lowering the fee and removing the option from many products. The $124.50 that it brought in is trivial when merged into general sales…less so when committed directly to payroll. Unfortunately, the floods forced me to replace $94 worth of destroyed paper, so the company barely broke even on the deal. I am dropping it from everything that’s bulky or odd-shaped, though.

Cosmetic Facelift: Nope, the unexpected expenses torpedoed that. It's probably for the best, since Turnkey seems to have abandoned the Sunshop template that I was going to adopt. It’s still on my wishlist for next year.

Discontinue Greeting Cards: Yup, wrote those suckers off and folded the department. I might not have done so if I’d known about the other losses 2010 had in store…but I’m glad they’re gone.

Another Raise: Yup, I increased payroll in two steps from 19 to 20% of net. That’s why my paycheck set a record this year despite lackluster sales.

In a couple of weeks I’ll publish a similar punch list for 2011.

Although I don’t celebrate Christmas myself, neither do I fight it like I used to. Why try to harsh everybody else’s buzz? In observance of the holiday (and the impossibility of accomplishing anything this weekend anyway) I’m taking this afternoon off. I’m finally going to finish moving into the new computer that arrived just before Thanksgiving. I might even treat myself to a new game next week...it would be my first in years.

Next week: Counting the money and planning the plan.

If I Only Had the Stones

Week 6 finished at 91% of LY. Not bad. It would’ve topped LY had it not been for the 2009’s Boston Gift Guide stroke of luck. I only foresee setting one new record this year, but it's a doozy. Here are some milestones from Google Analytics and my accounting spreadsheet.

• Most visits in one day was 2,012 on 12/8/08 (New York Times gift guide mention); this year, 514 on 12/8.
• Most sales in one day was 51 on 12/9/09; this year, 39.
• Biggest day ever was $2,168.69 on 12/9/08; this year, $2,099.65 on 2/1 (two huge cap sales on one day).
• Biggest week ever was $6,344 on 12/13/08; this week is going to top $5,000. It ain’t $6,300, but ain’t bad.
• Best 2-week paycheck ever is the one I’ll collect next Friday: $1,900 and still counting. That’s almost as much as I used to make with a real job! Previous record was $1,692.39 on 12/27/08.

Week 7 – the last week of Christmas – opened with the month staggering along at 75% of LY. I feared that Christmas had already died when I had only three paltry sales before I left for Sunday’s 5 pm grocery run…then a rush on Whisky Stones pushed the day to 22 sales, including a few juicy orders for Panther caps (why do these things always happen in clusters?). Being low on stones and with the calendar running down, I killed my Facebook ad and placed a hail-Mary reorder…only to learn on Monday morning that the manufacturer was out. You’d think there’d be enough stone in Vermont, but apparently not. I shipped my last nine Recycled Motherboard Christmas Trees – the product that drove those 2008 records -- to Italy Monday morning.

Monday brought 32 whisky-fueled sales. Tuesday was this year’s high water mark with 39. Where were all these people during Weeks 5 and 6, when I expected them? I gradually lost control of my business and started making dumb (but so far minor) packing and shipping errors as I scrambled to beat the post office’s 5 pm daily close. I stopped answering the telephone entirely and spent many hours in our dark, cold, dungeon-like stone cellar. Wednesday started out downright sedate. And then lighted caps rallied unexpectedly for 25 healthy sales. Sweet.

Financially speaking, it's a good thing I didn't kill myself when it seemed prudent. The week made up all of last week’s shortfall and put a sizable dent in Week 5’s disaster. With 50 more stones I could have recovered completely. Quickbooks, whose word trumps Excel’s, says that sales are currently within a few hundred dollars of LY, so the official numbers I’ll report at the end of the month won’t look nearly as dire as my more useful planning numbers do. Although the Seven Weeks of Christmas are effectively over, sales should remain elevated until Presidents Day, and we’re down to where fewer dollars can change the year-to-year comparisons.



The mouth-breathing knuckle draggers came out this week, too. You know who they are: The customers who overpay for the slowest and least reliable shipping method (UPS Ground), send two frantic emails at 2 AM asking when their order will arrive…and mistype their email address so that I can’t reply. Or they are looking for an order that they never actually completed because the internet is just too complicated (“I’m checking on an order I placed last week to be billed later” Yeah, right…how did you do that exactly?). Or they want to phone in their credit card number and make me place their order because it’s too scary to do it themselves. Or they want pick it up locally and get pissed when I won’t let them come to the house to save $3.

Yeah, those people. I know this is indiscrete – I genuinely appreciate my customers and I am unfailingly polite to them -- but I can’t resist sharing this message from somebody who bought a $10 business card holder:

ATTENTION PLEASE! I am purchasing this as a Christmas gift for a prominent leader in science/academia. Overall, I have been impressed with the reviews but there was a review that I found on amazon regarding this particular product that I found VERY DISTURBING. He had said that the latches did not work and that it was an inconvenience just to open and shut because it would not open properly and would not close properly. He went onto say that the gold latches and such did not appear as nice like the one with the silver latches he had seen from another picture. I think it was because the gold was not bright in color but rather discolored. PLEASE DO CHECK ALL THE LATCHES FOR EASE OF OPENING AND CLOSING AND FOR NICE GOLD LATCHES AND SUCH. Also for SYMMETRY in the apperance of the case outside and inside. The person I am purchasing this for has a Type A personality and is very particular, QUITE PARTICULAR. I believe in customers' reviews and it seems like you take great pride in showing highlighted reviews of highly satisfied customers. Sincerely, xxxxx, PhD Candidate

I talked her off the ledge and assured her that she would get her $10 worth. Don’t take this the wrong way; it’s a great little item that’s sold nearly 600 pieces...but how much can you expect of something that Chinese slaves stamp out by the millions? I genuinely hope that her Curio City purchase will raise this PhD candidate’s status in the eyes of her Type A eminence.

Rant over. Thank you, I feel better now. Venting like this is one of the perks of being self-employed. Yes I’m an asshole, but you can’t fire me!

The Christmas Curse

Week 5 staggered to its knees with 19 sales on Friday, but could still only reach 60% of last year’s corresponding day. Saturday finally broke the small-purchase curse with a whopping 26 sales amounting to 115% of LY. One stellar day couldn’t staunch the bleeding and Week Five ended up at only 60% of LY.

Week 6 took off like a rocket with 27 sales on Sunday; I’d already beaten LY’s total by 5 pm. I spent five hours boxing and labeling shipments and completely failed at my normal Sunday priority: Planning the week’s menu, clipping coupons, returning bottles, buying groceries, and making dinner. This was obviously no normal Sunday. Was the panicked desperation of Christmas finally here?

Sadly, no. I’ll spare you the daily blow-by-blow, but Christmas gradually sputtered out as the curse of the small orders returned. I’m working flat out to ship about 20 orders a day, but the boxes are too small and the dollars too few. Last year, Panther Vision ran out of caps in Week 5 and I sold out in Week 6. With no corresponding inventory shortages yet this year, I had hoped that Week 6 would recoup some of Week 5’s epic loss. Until today I did indeed have a tiny lead over LY. But on this day in 2009 the Boston Globe Gift Guide unexpectedly featured Whisky Stones on the same day that my last reorder arrived; I sold all 36 sets in one day. This year’s Globe guide had only typical mainstream crap. Today’s target number is impossible – I’m currently at $160 vs. $1200+ LY -- so this week will surely finish behind LY again, although not as dramatically as Week 5 did.

In another one of those random acts of media that I mentioned last week, Fuzz Scarves mounted a bizarre run of 13 sales in one hour on Sunday. I had no idea why until one customer added a note explaining that a character in some football game wore one on television.

Just one more week to go before Christmas sputters out. Maybe Week 7 will surprise me…it was comparatively slow LY. This year hasn’t been any fun at all – it went from frenzied buying to whining and complaining in just days, rather than the usual two weeks. Ordinarily people don’t sink into bad humor until next week.

You're a Mean One

Week Five of the Seven Weeks of Christmas was the high water mark of 2009. This year’s Week Five is breathtakingly bad. Superlatives cannot convey just how bad things are going. 2010 is almost certain to see my first-ever year-over-year decrease as this week single-handedly wiped out the gains of the previous 11 months.

On “Cyber Monday” I spent about $70 to lure an astonishing 474 visitors who placed 17 orders, yet sales still didn’t reach half of LY. Tuesday delivered a still-respectable 13 sales, but they were only worth $299 versus a benchmark of $650 – again below 50%. And so it goes, with each day finishing at a third to half of LY’s sales. Today I’m already at nine sales by lunchtime (which rocks) worth $161 (which sucks).

I am not quite ready to open a vein yet. Divorced of context, those wouldn’t be bad sales numbers. Money’s coming in, product’s going out, and I’m busily taking things out of big boxes and putting them in small boxes. Christmas isn’t over for two more weeks and it’s supposed to be a time for miracles, right? What’s lacking is the usual sense of panicked urgency. I am not as frantic as I should be.

So…who stole Christmas? I’m too busy for nuanced hand-wringing, so these thoughts are raw and unsorted.

Too many small sales – or rather, too few big ones. While the problem really is this simple, the solution eludes me. Where are all the people who should be putting half a dozen things in their shopping carts? I don’t think bottom feeders are the problem; I’m not selling more discounted merchandise than usual. I wonder if it’s cell phone shoppers. People’s IQ drops at least 25 points when they use smart phones. They are distracted and rushed and their reading comprehension nosedives. It stands to reason that they would only buy the one item that led them here, especially on a text-centered site like mine. Whatever the cause, this dearth of big orders is my big downfall. In a few minutes I’ll take 15 orders downstairs to pick, box, and ship. If those 15 orders averaged $50 I’d be feeling smug. Fifteen orders averaging less than $20 is unambiguous failure.

I can’t blame the economy unless there’s an inverse relationship at work. My sales were strong while the economy was in the dumper and they’ve been fading ever since it started to revive in September. Maybe big-ticket mass-market items are crowding out the cheap novelties that people contented themselves with when times were harder? It would be comforting to believe that forces beyond my control are to blame…which probably makes it wrong.

I did make some bad product gambles. I’ve written about the infamous Buckyballs several times, but at least those are selling a little bit and I can understand why they’re disappointing. Why is nobody at all going for Jumbo Magic Christmas Trees or Christmas Boots? People ordinarily love holiday novelties. I haven’t even sold a single set of Peace Sign Ornaments, which did pretty well last year. But I always bring in some turkeys every season; it’s just part of the game.

Old standbys are disappointing me, too. Panther Vision caps are doing OK, but not nearly as well as they should be given my advertising spend. Fuzz Scarfs are moving at about 25% of the pace I expected. These things should be sure bets. Are they just too old and familiar now?

Thank the gods for Whisky Stones. At least one product is approaching my sales expectations.

My bush-league marketing efforts are failing – pay-per-click ads have grown too expensive, the competition is too crowded, and – for the first time ever – I didn’t get any serendipitous media this year. Usually at least one product enjoys a gift guide recommendation or a review with a link. This year the media has passed me by.

Trying to milk “Small Business Saturday” instead of Cyber Monday was a really idiotic tactical blunder. Nobody ever heard of Small Business Saturday and it’s meant for B&M stores anyway, whereas Cyber Monday has gained traction in the popular mind. Two shoppers contacted me on Cyber Monday (a first) to ask about sales or discounts, and I had nothing to offer. Even if it was the same shopper twice, that’s an opportunity foregone.

I don’t have the time to work through these thoughts methodically. I’ve just got to get through the next two weeks. I’ll try to make sense of it later.