Welcome to Curious Business

Every Friday, I post a small insight into running Curio City. 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, February 25, 2011

So Far, Yet So Close


Tomorrow closes out yet another monumentally bad month. February broke all kinds of records for suckage (or is it suckitude?). A couple of huge lighted cap sales propelled last February to my best non-Christmas month ever, so without a comparable lightning strike this month was all about trimming the inevitable shortfall. Coming within $2,000 of LY would have been good. Finishing down by more than $3,000 was most definitely not. Oh well, at least I surpassed February 2009, my most recent normal benchmark.



It almost didn’t end like this. Yesterday someone inquired about buying 200 caps. I quickly determined that I could get what she wanted from Panther if we moved quickly; they’re closing out their old 3-LED caps and stock is very low. I offered her a good price on the colors that she wanted and she promised to get back to me early today with exact numbers.

Nine out of ten inquiries like this go nowhere, so I don’t get too excited. In spite of myself I was thrilled when her email was waiting for me this morning. This stroke of luck would not only erase my massive deficit…it would actually set a new high water mark for me to worry about next year.

Alas. Her message read: “After a quick conversation with our executives, I was told to check with one of our field Managers to see if we have a vendor that we have a contract with. We have to stay compliant to our contracts. I will contact you when I find out.”

(Moan)

Executives…field managers…vendor contracts. Big companies suck. While it could still come through and invalidate the following numbers, I’m not holding my breath. Behold the latest sea of red!

February:

Total income: -52.4%
Total COGS: -46.8%
Payroll: -26.7%
Net Income (Profit): -381.4%


Year to Date:

Total income: -31.3%
Total COGS: -38.2%
Payroll: -24.2%
Net Income (Profit): -472.7%

Breathtaking, huh? When can I expect my government bailout? The post mortem:

At this time last year, the new 3-LED lighted caps were blowing out of here so fast that they set sales records. This year their sales just plain blow. A competitor is offering free custom embroidery with no minimum quantities plus free shipping, for a dollar less than my delivered price. I would need to cut my retail by a buck just to match them, and of course I don’t have an embroidery machine or the space to get one. Should I cede the market to them or become that most reprehensible of creatures, the discounter? The only thing I really have going for me right now is my quantity discount schedule.

There’s no point in tweaking my own variables before the equation changes, and yesterday’s frenzy of lighted cap activity revealed that the first of the new 4-LED Panther caps are now available. I will spend this afternoon working up an order on the gamble that blowing my entire cash reserve on their revitalized lineup will goose the March numbers.

A new blockbuster product line would solve everything. I wish finding one were easy. Maybe next month’s Cavalcade of Crap (aka Boston Gift Show) will reveal something good for a change. Meanwhile, thank the gods for the power of Switchables to drive repeat sales. Regular readers might recall that I've nearly pulled the plug on that line twice before, but I persisted and they came back.

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The more I thought about the shipping-charge idea that I outlined last week, the better I liked it. So I ended my experiment early and restored Parcel Post rates. I raised the handling fee from 50 cents to 75 cents to offset the lost margin on bigger packages. If I ship five First Class orders for every Parcel Post order, the extra $1.50 in handling fees will cover the cost of upgrading to Priority mail. Parcel Post/Priority Mail customers won’t notice the extra quarter. First Class customers might, but if I have to gouge somebody, they’re the ones to hit. And since I can print stealth postage through Endicia but not through Click-n-Ship, First Class customers can’t even see the spread.

This month’s sales slump did begin when I removed Parcel Post. Sales did revive when I reinstated it two weeks later. Association is not causation, of course, but I can’t really afford to run a lengthier trial.
Did it work? It’s hard to say. I choose to believe that my Parcel Post experiment was partly to blame for February’s failure.

Now begins the year-long uphill slog just to match LY’s mediocre sales numbers. At least there are no more dramatic spikes in my sales targets for the rest of the year. At least February ended stronger than it began. At least that huge cap sale is technically still in play. At least Switchables are still lively. I’m not quite ready to slit my wrists yet.

I remembered to file my annual report despite not receiving a bill or reminder from the Secretary of State this year. O, what a good boy am I! With that $109 deposited to the state’s coffers, I am finally done paying last year’s taxes and accounting…and I’ve still got $88 in the bank!

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Republican shenanigans that I previously shrugged off as showboating have crossed the line from annoying to worrisome. The GOP’s wingnuts are focused on union busting, environmental degradation, and devastating cuts to lower- and middle-class programs to restore that halcyon Bush budget of 2008 that brought us such prosperity. Meanwhile, their leadership practices its core competency: Frightening voters into backing oligarchs and generals over their own interests. Obama’s poll-driven march to conservatism offers no hope until after 2012. Teabaggers threaten to shut down the government if they don’t get budget cuts that would reduce economic growth by 2% over the next half year (according to Goldman-Sachs), yet 25% of Americans polled support them, and 37% want even deeper cuts. You have to admire Republican skill at selling misinformation (or Democratic incompetence at rebutting it). People simply don't understand why a government budget doesn't have to follow the same rules as their household budget does.

Together with spiking oil prices, these stifling Republican budget cuts pretty much guarantee a new recession. Which very well might be their intention, given their announced priority of defeating Obama at any cost. Paradoxically, that might be good for Curio City; my best growth ever came during those desperate days of 2008 that the conservatives are pining for.

Friday, February 18, 2011

The Incredible Shrinking Profit


I got my tax return back, so here’s a little statistical trivia: At the end of last year I estimated my annual profit at $3,760. The actual final bottom line was $3,256. The return is much too complex to understand the $500 discrepancy between my guess and reality, and Schedule K-1 has a couple of little adjustments that bring my share down to $3,192. The bad news is that my total compensation for 2010 was only $15,609, not the $16,177 that I had thought. The good news is that I set aside a little more for taxes than I’ll really need. The bad news is that the $2,800 that I took out was really 86% of my profit, not the 75% that I meant to take; the $350 difference explains why my company is having so much trouble making ends meet right now.

Well, that plus the sales collapse.

February is running way below half of LY after recording the worst week since last July. My expectations were low this month, but not that low. Traffic is within normal parameters. My conversion percentage is slowly recovering from the burst of low-quality visits that I bought from Facebook. The average order value has slipped below $37 ($45 is normal). Sales this week averaged $47 per day, vs. $175 needed for success. I’d almost rather have no business at all than these little nuisance sales.

Next week’s monthly sales report is going to be grim.

The consolation for making no money is having ample time. This morning a test drive unexpectedly turned into the full-blown ordeal of buying a new Honda Fit. I’m finally just sitting down to Curio City at 3 pm. The consequences of missing most of a day? None, apart from trading our whole savings account for a new car.

I’m going to give my Parcel Post experiment one more week before I blame this slump on eliminating those cheap rates. My latest thinking goes like this: If I reinstate Parcel Post, I will again have to pay more than I collect to ship some of my larger orders (because I always ship Priority Mail). But suppose that I raise my handling fee 20 cents instead of cutting it by 10 cents, as I did last week. People placing larger orders won’t notice the 30-cent difference if they’re offered the cheapest rate class again. The real impact will be on low-end First Class orders. Because they’re more numerous, they should make up for the lost margin on bigger orders.

I like the idea of the small sales subsidizing the bigger ones. I’m just not sure yet that shipping costs are the root of my current problem.

Friday, February 11, 2011

And Then, Nothing Happened

Nothing happened this week. There were no disasters. The weather was quiet. I didn’t have any brilliant insights or tragic setbacks. No vendors screwed me over. Republicans did nothing to harm the economy (assuming that the $60 billion worth of misguided budget cuts that the House proposed this week are dead on arrival). There was one minor Stupid Customer Trick: some guy stomped away when I wouldn’t let him order by mail and pay with a check. The 1980s are over, dude.


I’m not unsympathetic. I resisted using credit cards myself throughout the ‘90s because they encourage the undisciplined to spend impulsively and accrue debt. I only started using my debit card last year when Citizens Bank started paying 10 cents per transaction. But becoming a merchant changed all that. Electronic payment is faster, easier, and more secure than paper. After setting up my business, I moved all of my personal banking online, too. Bills that I used to spend hours processing every month are now automated. Some habits die hard, though: I still maintain paper checkbook registers and balance them every month. Some people think that’s quaint.

A telephone call from a satisfied customer made me feel better about turning away Mr Mail-Order. She loves her Panther Vision cap and was really impressed with my fast order fulfillment. “And…?” I kept thinking, because most phone calls are bad news. But no other shoe dropped. “You should tell everyone in your company what a great job they’re doing,” she said. So I sent everybody home early.

In spite of our magnificence, sales were abysmal. Is the elimination of cheap Parcel Post rates turning people away? Or did they just blow their money on pink lovey crap for Valentines Day? This Hallmark holiday ordinarily doesn’t affect me one way or the other, but theoretically shoppers aren’t here if they’re somewhere else. If that’s the case then things should bounce back to normal next week. Either way, I can’t spend money when I don’t have money coming in. Maybe I should’ve taken that guy’s check.

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I ordinarily trash snail mail from VistaPrint unopened. This local company already gets my printing business because they do quality work at fair prices online, where I don’t have to interact with humans. But their marketing is a relentless spammy barrage of sales and promotions. This particular envelope brought a $100 coupon for Google AdWords. It was obviously meant for new AdWords customers, but what the hell -- when I tried it anyway my account was credited $105. Cha-ching! I reckon Google can afford a little generosity after I spent $1,500 on ads in December. I also reckon Google didn’t take over the Internet by being generous to puny schmucks like me, however wonderful and deserving we might be.

Well, look at that. I filled a whole screen writing about nothing. I should be writing television sitcoms.

Friday, February 04, 2011

Snowmageddon!


Weather is local and my business is international. The Internet doesn’t get snowed in. But everybody lives somewhere. When storms afflict 2/3 of the country for two days there are bound to be consequences.

This week’s back-to-back snowstorms made me wonder how weather affects a virtual business. Boston is having a horrendous winter. Local snowfall to date is 70 inches, with more due tomorrow. A normal winter is just 40”. We’re running a little behind the record 102” in 1995-96, but the absence of our usual thaws between storms has created a deeper snowpack than I’ve seen in the 25 years that I’ve lived here. Side streets are down to one lane, there are no sidewalks, and drivers – especially Miata drivers -- can’t see over the snow banks.

When snow keeps me from driving to the post office, I post a “shipping delays” notice on my News page and remove expedited shipping options (because someone will inevitably spend the big bucks on Next Day Air when I can’t get out of my driveway). That doesn’t noticeably affect sales because so few shoppers ever read the News page, but it does cover my ass. I can’t receive shipments, either – vendors will only ship to my commercial UPS Store address, not my residence. That hurts if I’m waiting for an important reorder in the run-up to Christmas. I’ve had four days this year when no merchandise could come in or go out.

There’s a small productivity hit, too. It can take me anywhere from two to four hours to shovel us out, depending on each storm’s nasty factor. That eats up most of a workday. Being tired and sore harms my stamina for days afterwards and being depressed saps my motivation.

Sometimes blizzards shut down my suppliers. Switchables were selling beyond expectations – so much so, in fact, that I ran out of the most popular designs. I put off reordering for several days to take advantage of Switchables’ February special. I finally dropped my big reorder on Tuesday the 1st with the expectation that this local company would deliver by today. But the massive storm that shut down New England on Tuesday and Wednesday screwed that up, so the $75 I saved probably cost me more than that in missed sales.

Sales were on the high side of normal this week. Was that because of the storm, in spite of it, or unrelated? Some people who would have been in stores undoubtedly shopped online instead. But office workers who ordinarily shop from work weren't there. Those factors probably canceled each other out. On the whole, I think the relentless winter encourages people to stay home whenever they can, and that probably works in my favor.

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After I posted last week’s jewelry lamentation, an order for two necklaces landed on Saturday. My resolve to continue advertising Bottled Up jewelry for another week was validated. I did get one more small jewelry order this week. Altogether, though, $200 worth of ads brought in $200 in sales. Rather than throw good money after bad I declared the effort a failure and shut down my ads today. The only winner was Facebook.

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Malaysian pirates sailed in again almost exactly a year after they robbed me the first time. Fraud control repelled them this time. I’ve had legitimate sales to Malaysia before, and I might have rejected a real customer who was trying to place a valid order. But I doubt it. I have added Malaysia to my blacklisted countries.

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