Hold Your Breath

July wasn’t the disaster that it looked like a couple of weeks ago. Week 3 was the second-best of the year, erasing Week 2’s dramatic loss. The numbers below show how close I came to beating LY before sales dried up again this week. There’s no doubt why I failed: Tea Party Republicans held the economy hostage all week. Americans are all holding our breath until we find out whether Congress will allow a quick collapse through inaction or actively speed up our long-term decline. 

When the rosiest outcome removes trillions of dollars from the economy, the situation is inescapably dire. The Democrats bought into the conservatives’ deficit-reduction butchery months ago, so the conversation is entirely about how to alleviate the inevitable pain. Nobody (except economists) advocates postponing it until the patient is stronger.


It’s fascinating, and a little frightening, to watch the Republican Party splinter.

About 70% of American voters know that Republican radicals are behind today’s political paralysis. What’s wrong with the other 30%? If you subtract the 20% of Americans who are hopelessly ignorant about everything, that leaves only 10% of mentally competent voters who have been either blinded by ideology or hoodwinked by the vaunted Republican propaganda machine.

Surviving another 15 months until we get another chance to throw the bums out will be hard for all of us. So let’s just focus on next week and hope that Washington will get past its self-inflicted crisis and consumers will get back to consuming.

July: 

Total income: -3.4%
Total COGS: 1.7%
Payroll: -43.4%
Net Income (Profit): -471.5%


Year to Date:

Total income: -11.6%
Total COGS: -15.6%
Payroll: -11.3%
Net Income (Profit): -1,319.4%

And in the hope of surviving…an 80,000-circulation New Jersey magazine called EDGE plans to feature the Science Quiz wall clock in a gift guide due out in late August or early September. That’s right: it’s another random act of media! I could potentially sell hundreds of these, subject to their availability, my ability to physically move that much bulky stock, and my web host’s tolerance for a big traffic surge. This should solve my cash-flow crisis in time to buy new Christmas products. Better: It might lead to an ongoing relationship with the publication. If they will feature just one or two products a year, it could change my fortunes considerably.

I think I can survive another month. I used half of my emergency reserve to cover operating costs this month. Today’s bank balance is $19.74 against $2,154 in August charge bills. I can just barely stay above water if August sales match LY. Last August is when 2010 started to lose steam, so I have a realistic shot unless the government blows up the economy.

One small help: Host Gator closed my account and refunded $153 of my original $167 charge. And the company that owes me $235 says my check is in the mail. Celebrate the small victories!

And finally, a new reason to hate Blogger: A few weeks ago adding images through their new post editor stopped working. I got around that by going into "edit HTML" and inserting my links that way. Well, as of this week they have screwed up standard HTML tags, too. After way too much effort I figured out that I can upload images in the "edit HTML" view using the old post editor interface, and it does finally insert the picture with a whole paragraph of weird, non-standard HTML formatting. The way things are going, though, they will probably remove that soon, too, and you won't get these amusing little pictures anymore.

When Worse Comes to Worst...and Back Again

July began with this message from Host Gator:

“I apologize, but I was forced to suspend the script "index.php" as it was causing a high load on the server, and due to it affecting all of the other accounts on the system, I forced to take immediate action for the health of the server.”

A text log that would freeze your brain followed, but all I needed to know was in that sentence: They shut down my store.

Brad the support guy said it’s Turnkey’s problem. Turnkey invited me to file a support ticket, which brought some general advice about optimal server configurations. I shut down all my advertising and threw myself on Host Gator’s mercy. What else could I do on the Fourth of July?

Now, it’s good that Gator monitors their server performance. I’m glad that they shut down scripts that degrade service for everyone else. I’m a lot less glad that they shut me down with no warning on Sunday morning of a holiday weekend -- at the beginning of the week that I’m leaving for vacation, no less. With my anemic cash flow and payroll taxes due by the end of the month, I was dangerously close to insolvency. Downtime could push me over the edge.
I persuaded them that my backup scripts might have been to blame and that they should revive me after I removed them. Curio City was back up by afternoon.

Imagine how my heart sank when I received the same email on July 11, while I was vacationing in the Berkshires. There was no way I could bluff them into changing their minds a second time. I had to demonstrate that I’d taken steps to solve a problem that I couldn’t even analyze without a functioning store and direct access to their server. Either there was something wrong with their server configuration, or there was something wrong with my Sunshop script (possibly introduced during the transfer from Mocha). I had to figure out whether Sunshop or Hostgator was at fault, and I had no idea how to do that. They helpfully suggested that upgrading to a VPS for a mere $105 per month would make it all better.

Switching hosts again was the only way to break the impasse. It took a couple more days to make that happen. So much for vacation.

Curio City finally staggered back up on Saturday, July 16, after five days of downtime. Right now it’s running fine at MDDHosting, a small company that I chose for their personal service and their expertise with PHP scripts. I want to believe that this is all behind me at last. But because I was never able to figure out what went wrong at Gator, I have no confidence that Sunshop won’t go rogue at MDD at any moment and send me right back to oblivion.

If that happens, I will have to upgrade from a shared server to a semi-private one. That would double my hosting cost, but it would also solve the problem without needing to understand it first.

When Hostgator eventually followed up on the dormant support ticket, I tersely informed them that I had moved to another host, and got this: “We are sorry to hear that. Is there anything that I could do that would convice you to change your mind? “

Heh. I answered:

“Well, let’s see…

You locked my store twice in one month, costing me >$1000 in sales…

Then you tried to sell me a plan costing over $100/month…

No, I don’t think you can change my mind. Sorry it didn’t work out.”

The week ending 7/16 was my worst ever, barely topping $100 and sending me deep into the hole vs. LY’s pathetic vacation sales. My cash-flow crisis became a rout. Last year I had managed to stash $2,000 in a savings account earmarked for site improvements and emergencies. Now I expected to need all of that money to cover operating costs, and thanks to payroll taxes coming due it still wouldn’t cover my entire July credit card bill. For the first time ever, I was contemplating going out of business.

And now this week is on track to become my best since March. I’ve made up most of last week’s shortfall and I even have a realistic shot at matching last July (with one less week!). I can probably pay my taxes and pay off my credit card using only half of my emergency reserves – even less if last month’s purchase-order customer sends me a check on time.

There’s life in the old girl yet.

Flush

June swirled down the drain this week. I needed to average $105 per day to hit the month’s plan. I was running at $102 until this week fell to $67. June 2010 averaged $137/day, with nine days over $200 and three over $300; this year brought just five and one corresponding good days. Curio City covered its end-of-month credit card payment by less than $10, and that was a nail-biter. I nearly had to give it a loan.

June:

Total income: -26.5%
Total COGS: -27.9%
Payroll: -5%
Net Income (Profit): -85.7%


Year to Date:

Total income: -12.8%
Total COGS: -17.8%
Payroll: -7.6%
Net Income (Profit): -368%



July’s going to be craptastic, too. Last July was much better than average. 2010 didn’t waver until August and hit the skids in September, so I won’t have a chance to climb out of the hole until Q4, when my current slump settled in permanently. I will not despair until then. While the top line is probably hopeless, the YTD profit line is only down by $606 – hard to recoup, yes, but it’s not high finance.

I’m nervous that I’m going into a death spiral. Revenues just barely cover the cost of doing business, leaving nothing to invest in site improvements or new products. Payroll taxes are due again in July; I don’t know how I’m going to cover them. Vacation and its resulting income starvation is less than a week away.

Is there any way to put a positive spin on this? At this time LY my YTD sales were up 33%, so being down just 13% from that could be seen as a 20% rise over two years ago. Plus, Cost of Good Sold is down farther than sales, indicating better cost control. How's that for spin? I ought to work for the Democrats.


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Let us now mark the passing of Paypal’s Money Market Fund. I’ve always kept as much of my short-term cash as possible in PayPal to take advantage of their monthly money market dividend, since my checking account doesn’t pay interest. That brought in a few bucks a month before the economy collapsed. The interest rate gradually fell to its current microscopic 0.05%, yielding no more than a few cents a month. You can see why PayPal finally said “Why bother?”

I still have some emergency money earning 0.85% at ING Direct. The way things are going, that’s a better return than I would get from investing it in Curio City.

But I said I wasn’t going to despair unless Q4 flops. That’s my story and I’m sticking with it. I’ll be “off” for the next two Fridays (not that I ever really take a day entirely off), so you’ll have to amuse yourselves elsewhere.