About Stuff (Part One), and January Numbers

“Find awesome new merchandise” topped last week’s list of goals because when you come right down to it, that’s the foundation of everything else that I do. Last year I didn’t find any new hit products. I’ll confess that I didn’t try very hard because, frankly, I hate shopping. Friends referred both of my two most successful products to me. This year I will try to think like a consumer, and read some product reviews and blogs. I’ll also browse some wholesale sites that have borne fruit in the past.

Notice that I said “find” and not “buy.” I don’t have any money for new products. The numbers at the bottom of this post will make it clear why I can't even come up with $1,200 for my CPA and the Commonwealth right now. For the time being, I can only compile a robust wishlist to consult when my statutory obligations are finally met.

Since this is January numbers week, I’m only going to look at winners today. Next week I’ll examine the mediocre and some notable losers.

One-hit Wonders aren’t part of a larger line. In fact, they’re usually the only item I carry from their vendors. Setting aside things that I can’t get anymore and things that surged once due to some random act of media leaves these:

Mini-briefcase business card holders. SKU 16 means it was one of the first products I ever bought. I’ve sold nearly 1,000 of them at a healthy markup without spending one dime on advertising. That’s a big win all around.

Whisky stones. They did benefit from a Boston Gift Guide mention a couple of Christmases ago, but would have made this list even without that turbocharge. A customer recommended them to me after seeing them elsewhere.

5-LED clip-on cap lights. These are an inexpensive way to achieve the same function as Panther Vision lighted caps. They haven’t sold so well lately, but their history of success rivals the mini briefcases.

Fuzz scarves  just barely make the list. I honestly don’t remember what made them so popular a few seasons ago. This year sales died back to mediocrity -- probably because of the mild winter -- but it’s a perennial seller that will undoubtedly endure for as long as the winters remain cold.

DayClock Classic. Another of my very earliest products and my first big hit, this will show up on next week’s list of losers as well. I am down to one left and I won’t be reordering, but it had one helluva good run.

USB Anything. For a year after my first random act of media propelled the USB Computer Fan into sales history, any USB gadget was solid gold. The USB Computer Vacuum and Light are still on the bestseller list today. All of these are cheap Chinese imports of quality that varied from one shipment to the next (only the light was really much good); in fact, half of my last batch of fans was defective. All of them delivered very nice markups. Due to flagging sales and dubious quality, all of them will be discontinued when my current inventory runs out. But, like the DayClocks, they had a long and illustrious run. 

Landing two or three more one-hit wonders would go a long way toward boosting the bottom line – or at least preventing its erosion; everything has a limited lifespan. Do they have anything in common? They range from $6 to $40, so price isn’t a great predictor, although inexpensive obviously always outsells expensive. They are all functional in some way. They are all unusual (hard to find), or at least they were when I adopted them. They are all uncomplicated and easily explained. They are all compact and lightweight. And they are all playful. The USB stuff turned out to be a fad, but I didn’t know it at the time. These all contributed to my working definition of what makes a Curio City product.

A few winning product lines are Curio City’s true workhorses. Finding just one more of these would ensure a successful year.


Panther Vision, of course, has long been the goose that lays the golden egg. LED caps define the kind of product I would love to find: Practical, clever, high quality, lightweight, reasonably priced, and with universal appeal. Bulk purchases occasionally spike my numbers. If these ever tank, I'm toast.

Bird kites looked like a mistake at first. The Canada Goose (SKU #1) barely budged at all. That changed when I found some YouTube videos a couple of years ago and figured out how to embed them in my pages. People use bird kites as scarecrows, as decoys, as stage or stadium props, and occasionally as toys. These are a prime example of a product that needs to be demonstrated, and of video’s ability to do that. Bulk sales are rare, but at $25 and $40 the price points are high enough that even single sales make a healthy contribution.

Golf balls are my last unequivocally stellar line. A couple of styles (especially Animal Print golf balls) have cracked the bestseller list, mainly on the strength of institutional sales, but the many slower-selling designs also carry their weight. Having found this vendor at the Boston Gift Show (a.k.a. the Cavalcade of Crap) is the main reason I keep going back year after year.
 
I’ve tried many other lines. I’ll look at a few of those near-hits and complete misses next week.Now on to the unpleasantness of January’s numbers.

I wanted to say “It’s not that this year was so bad so much as that last year was especially good”…but that’s not even remotely true. It was my worst January since 2007, leaving me $1,100 behind LY and $1,400 behind plan. There’s not much chance of making it up, either. February’s usually the second-slowest month of the year…I’m up against an unusually strong March target...I don't see any weaknesses in LY's numbers until July.


January & Year to Date:

Total income: -24.8%
Total COGS: -17.5%
Payroll: +29.0%
Marketing: +4.1
Net Income (Profit): -788.1%

There’s simply no good news in any of those numbers. Marketing should fall at least as much as income; instead it increased, so I can’t blame the lost sales on advertising cuts. COGS should decrease more than income, so that’s another fail. Payroll is only up because changing paydays from Friday to Monday placed an extra one in this month. I don’t know why January only delivered 86 of the expected 100+ transactions. Tired products? Unidentified new competitors? My increasingly dated website? Or just a run of bad luck? Yeah, I’m going with that one. The economy’s finally pulling out of recession, so I can’t even blame that.

Meet the New Goals

Same as the old goals...mostly. I added a few new items to last week’s warmed-over list and ranked them by priority and likelihood.

Find awesome new merchandise. This dwarfs everything else. I’ll cover it separately next week.

Control advertising costs: My marketing budget is topped out. I need to get below LY’s overspend without cutting into sales proportionately. Ideally I’ll increase sales on the same ad spend, but if sales won’t cooperate I will have to cut the actual outlay. As a first step, I’m adding Ad Spend to my monthly reports to keep this one front and center. So far this year I’ve gotten the daily outlay down to $20, but traffic has also fallen below 150 visits and sales…well, let’s not go there.

Facelift: Sunshop’s first major overhaul in five years is tentatively scheduled for October. Its true release date will determine whether I can upgrade before Christmas or if I have to delay it for another year. I have to see the new templates before I can do a cosmetic overhaul (although if I were rolling in money I would give the existing version a facelift; I hate the prospect of waiting until early 2013). I can at least mock up a layout and color scheme in the meantime.

More video: Learn how to use my new phone’s video camera. If it’s viable, I will post at least one original product demonstration video to YouTube before the year is out.

Start using LinkedIn. This one’s easy, just pointless and tedious.

Expand Facebook: Facebook is a constant source of frustration and a periodic irritant. But I can’t just ignore it. The goal is to increase my followers from 144 now to 200 by the end of the year. Secondary goal is to update my company page.

Personal incentives: I’ll raise payroll by 0.1% of gross if net sales are up by 7.5% at the end of June. If I finish the year over plan I’ll bump it another 0.1% and buy everyone in the company a new laptop. If the first three weeks of the year are prelude to the rest, there is no danger of this happening.

Insurance? Fnd out if Kraken Enterprises needs separate liability coverage or just a rider on my personal policy, and how much that would cost…without tipping off my agent that I am running a home business or inviting some other agent to solicit me. This is a low priority only because I can’t possibly afford a monthly insurance bill.

Double Reward Points? I could permanently increase my customer Reward Point awards from 5% to 10% of full-priced merchandise sold. Many people earn points; few redeem them. If that’s because of low awareness and interest, doubling the rewards for the tiny minority who do care would just cut income without improving the incentive. If, OTOH, the program is ineffective because the points are too stingy, doubling them might encourage more repeat business at a lower cost than advertising for new business. I offered double points as a promotion once last year with no discernable effect. Personally, I find customer loyalty programs to be a huge incentive (especially in restaurants)…but I’m a famously cheap bastard. 

What would really make a difference is being able to email customers a reminder that they have x.xx points. But Sunshop can’t do that. I wonder if Brad could implement it for me. This is another question to put off until Sunshop 5 ships; I suggested the feature for the new version.

Ess-Eee-Oh: It’s been on the list for years; I’d still like to invest in professional optimization should I ever luck into both a financial windfall and a reputable company with a bargain price. Meanwhile I will keep doing the small things that I can understand and affect.

Target the rich: The middle class is shrinking and the poor are getting poorer while the ruling class consolidates the nation’s wealth. Aiming for the people who have all the money is a no-brainer. I have two problems with that: First, I’m dangling from the lowest rung of the middle class myself: I have no idea what the rich buy (Gems? Furs? Apple electronics? Designer fashions?) or how to reach them. Second, their tastes are expensive and I already can’t afford to keep my current low-end inventory in stock. So why’s this even on the list if it’s out of my reach? I can try to carry more products that are $50 and up and fewer that are under $10. Bumping up my average price point hardly takes me into millionaire territory, but it’s a step in that direction.

Target corporate buyers. My biggest scores go to golf courses, resorts, universities, businesses, even churches. Yet these sales are hit-or-miss. Institutions approach me out of the blue, and most of their inquiries come to naught because they expect personalization (imprinting or embroidering), deeper discounts than I can offer, and more pieces than I keep in stock. I can’t address the factors that discourage closure, but I might be able to encourage more inquiries. The obvious question is, How? 

Cut the handling fee: Every order invisibly pays 75 cents to cover the cost of boxes, labels, ink, paper, packing tape, etc. I raised that fee last year to slightly overcharge small orders to offset undercharges on larger ones stemming from last year’s postal rate changes. Ultimately, I collected more for shipping than I paid out LY by a comfortable margin. I could afford to cut my fee by at least 10 cents, and possibly as much as 25 cents. That cuts revenue by $10-25 in a typical 100-parcel month. But would customers notice? Maybe those who place the very smallest orders would…but they’re exactly the ones I want to de-emphasize.  Anyway, the goal for this list is to reevaluate my handling fee after this year’s postal rate hikes. Would a 10-25 cent price cut make enough difference to justify the foregone revenue?

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Time sure flies when you’re getting old. Every three years, Intuit requires QuickBooks users to upgrade to the newest version. This week’s “version 14 upgrade” notice included “changes to help you with the May 31 service discontinuation.” Would skipping the update prevent them from crippling my software or did it come with a time bomb built in? What happens if I simply continue using the 2009 version beyond their “discontinuation of service”? 

I appreciate that developers want to keep their user base current in order to avoid legacy issues. I also know that one buys a license to use software, not the software itself. Intuit is within their rights. It still pisses me off that they can demand upgrades rather than enticing users with actual improvements. Each new version of QuickBooks is more bloated than the last, and some of the changes that they introduce are arbitrary or actively cripple previous functionality. I bought my current laptop when the 2009 QuickBooks upgrade brought my old one to its knees.

I applied the update today. Just bend over and take it.

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A couple of weeks ago the subject line “domain name dispute: curiocityonline” appeared in my mailbox. A young lady named Julia wrote to tell me that 

“This email is sent by CN Network Information Center LTD. which is a registration organization in China. Here we have something to confirm with you. We received a formal application on 11th January, 2012. One company called "Aoher Imports, Ltd" was applying to register "curiocityonline" as Network Brand and the following domain names:

(Eight variations on my name with Asian domains followed)

After our initial checking, we found the names were similar to your company's, so we need to check with you whether your company had authorized that company to register these domain names. If you authorized this, we will finish the registration at once. If you did not authorize, please inform us within 7 workdays, so that we will handle this issue better. Out of the time limited we will unconditionally finish the registration for "Aoher Imports, Ltd".”

My first reaction to something like this is panic. My second? To the Internet! Unfortunately CN Network Information Center has a legitimate looking website. Fortunately, this site came up first. Scores of complaints about emails identical to mine confirmed my hunch. Apparently they’re trying to trick me into registering all those unwanted Asian domains through them, and probably sell me other services as well. Lying to frighten someone into buying your service might not technically be a scam, just a sleazy business practice. Or maybe not: The company is not listed on InterNIC’s list of accredited registrars. Anyway, Googlebot take note: Chinese domain name scam!

Retooling Old Goals

It’s amazing how quickly one can burn through $10,000.  I’m down to $500 after paying out my bonus, slaying my December credit card bills, and making all of my various tax deposits. January sales are not replenishing the coffers as fast as expected. I still need to pay the Mass. Secretary of State $456 for the privilege of remaining a corporation and come up with my CPA’s tax prep fee. Meanwhile, I’ve got no means of buying the spring products that are starting to ship already…but that’s not stopping me; my credit card just began a new statement period today so $700 worth of orders went out this morning. Welcome back, cash flow crisis! I’m half tempted to loan the company some of the money it just repaid me. But only half tempted. After six years in business the money should only ever flow one way between us.

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It looks like Congress isn’t going to shut me down this year after all. Even if they get their act sufficiently together to overturn the Supreme Court’s 1992 ruling that exempts online retailers from collecting interstate sales taxes, the bill that they’re considering reportedly exempts businesses with sales under $500,000. Whew. Being forced to charge both sales tax and shipping fees would take a huge bite out of sales and the complexity of becoming a tax collector would crush my spirit, which isn’t all that bubbly to start with. I’ll be keeping an eye on the news reports, though; you never know what kind of crap the 112th Congress is going to pull next, but it's a safe bet you won't like it. 

Let’s assume that the government won’t accidentally put me out of business and make some operational plans, starting with a look at 2011’s goals.

Facelift: I shelved last year’s planned cosmetic overhaul when Turnkey announced that Sunshop 5 is development. No point spiffing up templates that will soon be obsolete. The new Sunshop is now scheduled for October; of course, so is Christmas season. I never buy version x.0 of anything until other users have found the inevitable bugs. So even if Turnkey publishes on Oct. 1, I wouldn’t be comfortable upgrading before November. My site needs a new coat of paint almost as badly as my house does, but I’m going to face a hard decision about whether to risk adopting new software while Christmas spools up. This goal therefore stays on the list. At a minimum I should mock up a layout and color scheme that I’d like so that I can move immediately after Christmas.

More video: They stopped making the Flip camera that I wanted to buy. The free iPod that I won at a whiskey tasting takes video, but its camera quality is marginal and it outputs some proprietary Apple file format that I can’t use without a file converter. I haven’t tried to use my new cell phone’s camera yet. I did add a few more manufacturer videos with very minor impact. For 2012, the goal is to learn how to use my phone’s video function and decide whether or not I still need to buy a camera.

Mobile computing: I finally broke down and replaced my old dumb phone with a new dumb phone. The smartphone goal is officially scrapped until the contract expires in two years. My iPod does most of what a smartphone can do, but does it poorly and doesn’t mesh well with the Windows world. My wife got a smartphone that I could use if I feel that I need one for some reason.

Random Acts of Media: The one random media insertion that came my way was a complete flop. Why is this even on the list? It’s random by definition. I’m not carrying it forward.

Ess-Eee-Oh: These three letters are chum that makes spam sharks frenzy, so I dare not type them out. There are too many shady operators eager to take advantage of the gullible and the reputable ones are much too expensive. Still a backburner possibility, though, should I stumble upon both an unexpected fortune and a good company with a great price, so it stays on the list. Meanwhile I will keep reading my email newsletter and doing the small things that I can understand and affect.

Reevaluate newsletters. I’m still putting them out, and they’re still ineffective. I could save $250/year by discontinuing them, but I’d probably lose about as much in sales. Since I’m not planning to change anything it ought to come off the list.

Further Exploit Facebook: Last year’s Valentines Day experiment ruled out Facebook advertising as too expensive and ineffective. Trying to profit from free FB posts is futile. I raised my follower count to 144, only to discover that only 20 or 25 of my 144 FB followers ever see my updates…even my own wife can’t see them…the “Reasons to hate Facebook” tag has more about that. FB is probably a lost cause unless I can scrap my current page, which is a sub-page of an unused personal account, and start over with a proper business page…which I probably can’t do since my store name is tied to the existing personal subpage. FB changes their rules and their technology arbitrarily and without warning, making any investment of effort highly speculative. So, does this stay on my list or not? Just barely, I guess. I can’t ignore any opportunity for free marketing, however frustrating and ineffective.

Start using LinkedIn. No, I did not. I just don’t care about LinkedIn. I probably should. LinkedIn users have more money and influence than Facebook users…so maybe it’s worthwhile in some abstract way. It makes the list.

Focus on Profitability: This would be a clear success had advertising costs not inflated faster than the universe following the Big Bang. This year I’m changing the name of the goal to reflect my focus on controlling advertising expenses. Even after whittling down a lot of keyword bids, I’m still racking up $20 per day on Google without reaping anything near the $200 in sales that would justify it.

Carry More Weight: Accomplished! Kraken Enterprises is paying the Internet portion of our BELD bill now. I could make a case for Curio City picking up some gasoline expenses again – the gods know our household budget needs all the help it can get -- but my company budget is tapped out this year. This comes off the list.

Give myself another raise? Uh, no, I certainly didn't. I’m not a Fortune 500 CEO who gets bonuses for failure. However, I’m dangling it in front of myself again in 2012. If I am running 7.5% ahead of LY in July, I’ll raise payroll by 0.1% of gross. If I finish the year over plan I’ll bump it another 0.1% and buy the company a new laptop. 

Insurance? I avoided it again. I need to find a way to ask about options and prices without tipping off my agent that I’m running a home business or inviting some other agent to woo my business. This stays on the list…I can’t afford insurance, obviously, but I’d at least like to find out what my homeowners policy covers (if anything) and whether Kraken Enterprises needs separate liability coverage or just a rider on my personal policy. And I need to do that without letting an inspector see the fire hazard that is Curio City’s warehouse!

Speaking of shipping: I cut my shipping fee collections by 8% and outlays by 9.3% by selling fewer big, bulky items. Assuming that next week’s USPS rate hike goes smoothly, I’m not planning any changes this year, except possibly to cut my handling fee by a dime. This is off the list.

Categorize: Accomplished! I will fiddle with categories more in conjunction with a facelift, if I indeed do that. I've written off enough dead product to close or consolidate some obsolete categories.

Everything else on LY’s list was too picayune to address here. Suffice it to say that I achieved most of it and ceased caring about the rest. Next week I’ll build a new goal list for 2012 so that I can promptly start ignoring it.

Ending 2011...Initializing 2012

I promise that this will be my last boring numbers post for awhile. My year-end profit-taking was based on these stats as of mid-afternoon on 12/31. Being only slightly different from what I posted last week, they’re just for my own reference. You’re invited to skip down to the forecasting part.

Excel says that I beat LY’s net sales by 4.41%. The year came in $3,100 below plan.

Quickbooks says:

December: 

Total income: +0.6%
Total COGS: +4.2%
Payroll: +11.3%
Net Income (Profit): -3.2%

2011 Total:

Total income: +2.3%
Total COGS: +2.5%
Payroll: +2%
Net Income (Profit): -4.8%

My profit was $2,950 (down from $3,100 LY). I withdrew 20.3% for income taxes, or $600. Of the remaining $2,350, I pocketed the traditional 75%, or $1,750 (plus $600 for taxes = $2,350). 

My salary was $12,718. My total 2011 compensation (salary + gross profit) was $15,668. That’s $509 below LY’s $16,177. My high water mark was $16,737 in 2009. 

Advertising was the killer, up a whopping 27% (or $1,700) over LY. Advertising is now running at more than 11% of gross vs. a budgeted 9.5%. Reducing that expense will be hard when competitors keep bidding up my keywords; I’ve already surrendered Page One placement on a lot of words. I was still getting 200-250 visitors a day last week at a cost of $25-30…which would be marvelous if they were dutifully spending the expected $250-300. They weren’t. In fact, most days this week were in double digits.

This is going to take some finesse. For now, I’m just cutting my bids by a few cents a day, but that’s potentially self-defeating. This year I’m going to add another line to my monthly numbers reports: Advertising Spend.

So…how’s 2012 look? 

What economists like to call “headwinds” doomed 2011’s planned double-digit increase from the start. First, USPS’s rate restructuring broke my shipping tables for three days. Mochahost’s always-marginal service gradually deteriorated into no service at all by May. After a promising start, Hostgator shut me down twice due to “excessive” server use (meaning they run overloaded servers). I lost at least $1,000 worth of business to substandard hosting before I finally came to roost at MDD Hosting. I can’t recommend MDD highly enough. If you need reliable, affordable shared hosting with excellent support, use my affiliate link to sign up today. Curio City has not suffered any measurable downtime since mid July.

There was no engine to fight these headwinds. I didn’t have any major new products or any lucky marketing or media events to drive sales, and the economy was stuck in neutral for the first 10 months of the year. I only eked out my 4.41% gain because the American consumer rallied in November and December (and Quickbooks, as we see above, says I only gained 2.3%).

This year I’m planning a 7.5% increase – nearly double last year’s gain, but I believe it’s achievable for five reasons. First, I don’t foresee major technical problems (not that I foresaw them last year, either, but never mind that). Second, I expect a slowly strengthening economy and more confident consumers unless tea party Republicans successfully torpedo the economy or the Republican presidential candidate ruins consumer confidence. Third, I have a whole year to find a killer new product or line. Fourth, I can’t possibly get less free publicity than the one failed media mention that I had last year, so there’s nowhere to go but up from there. And fifth, the percentages don’t involve a lot of dollars. LY’s year-over-year increase was just $2,750. This year I’m looking for $4,850. A $2,100 increase in my increase isn’t trivial, but we aren’t dealing with megabucks here. Two or three big B2B sales, or one major hit product, would do it.

To motivate myself, I will raise my salary from 20% of net sales to 20.1% if Excel says that I am ahead by 7.5% in July, and to 20.2% if I make the year. 

Next week I’ll mull over some specific goals. Right now I have grunt work to tackle. I really ought to trash out my office. I’d like to rearrange the cellar to condense some boxes and make some room. I need to issue my W-2. I should place some reorders and small new-product orders with Valentines Day in mind – I’m holding off because tax deposits and payroll have already reduced Curio City’s checking balance from over $10,000 to just $5,100; with $4,900 worth of credit card bills already in front of me, I have to wait until the next statement period starts on the 12th. But if I hold off too long, I’ll miss Valentines Day (not that that holiday has ever shown me any love).