January By the Numbers

January and YTD

Total income: +7.2%
Total COGS: +13.8%
Payroll: -3.2% 
Marketing: -53.7%
Net Income (Profit) vs LY: +116.2% (+$781) 
Actual Profit/Loss: +$109

Three unexpected kite returns and a lost package nicked those numbers. The (fortunately small) lost shipment has been replaced. The return that I authorized grudgingly has been completed. The one that I was bullied into authorizing and the one that I authorized cheerfully are both still out there. If they'd all arrived in a timely fashion this would have been Curio City's first-ever negative sales week. Instead it looks like procrastination will push those payouts into February.   

The numbers for this rollercoaster month ended up pretty good. I don't like to see COGS rise more than income, but the big drop in marketing more than makes up for the overall cost increase. The bottom line doesn't mean much until taxes and fees are all paid, and I have way more debt than I can handle, but it's nice to see black ink anyway.

February is traditionally the slowest month of the year so this year's targets are nice and soft. I'm more concerned that cash flowed in the wrong direction this week than I am with beating benchmarks. Maybe I'll get a bump from the Metal Earth project that's scheduled to launch after Valentines Day.

Going Political, Part 2: The Red Post

Let's get my bias out of the way up front. I am  not a Democrat, but I'm even less of a Republican. I've sometimes voted for socially liberal, fiscally conservative, moderate Republicans of the type that New England breeds. But now that the national Republican Party's anti-science, anti-intellectual tea party wing has discovered open racism and xenophobia as a winning strategy, supporting Republicans is virtually impossible. I am a highly rational person who is going to try to treat the Republicans rationally in this post, even though they don't do themselves the same courtesy.  

To put it mildly, the Republican Party is in disarray. It might be disintegrating as a national force, although it will always dominate the South and rural areas, especially out west. I don't take any delight in watching it die; to the contrary, I feel sorry for reasonable Republicans. Our political system needs at least two functional parties and it's worrisome if one tears itself apart. In an effort to impose some order on this chaos, I'll divide their field into three categories: the Insurgents, the Establishment, and the Irrelevant, whom we can simply ignore. 
 
Liberals understand the appeal of insurgents, too. Dissatisfaction is propelling Bernie Sanders past Hillary Clinton despite the tremendous odds in her favor. Left or right, we can all agree that the middle class is in decline. Polls indicate that roughly 70% of Republican voters favor one of the Insurgent candidates -- Trump, Cruz, and Carson -- while the 30% who prefer a traditional Establishment candidate can't unite behind one. Since none of the individual Insurgents poll much higher than 30%, there's still an opening for a united Establishment. 

The frontrunners in Iowa and New Hampshire are both Insurgents. Donald Trump and Ted Cruz both court the same alienated, poorly educated, angry, white, and elderly demographic. Misled by FOX News and talk radio, these so-called "low-information voters" are primed to direct their fear and hatred at outsiders like terrorists and immigrants, rather than the oligarchs who pose the true threat to our republic. Science, education, and reality are all liberal plots to these people. They want to burn government to the ground. A defensive tribe who are not swayed by facts or logic, they vote emotionally, and are therefore easily manipulated. Trump and Cruz both use authoritarianism to simultaneously calm and excite these voters. They are masters of misdirection, diverting concern from the two smoldering crises that really can bring down our nation (income inequality and global warming) to two acute problems that cannot (terrorism and immigration). Trump's probably doing that consciously, while Cruz is harder to read. 

Understanding Trump is half the battle in understanding the Republican field. Trump is a demagogue who's starring in a reality TV show that some voters passionately love. He'll utter whatever outrage keeps the spotlight on him and feeds his ego. He has no consistent ideology (the "fascist" label doesn't fit him because fascism is an ideology). He's a Republican in name only and mainstream Republicans know it. Somehow, he is popular with evangelicals despite being a thrice-divorced casino developer who displays no convincing faith of his own. Trump is a bully and a blowhard whom people find charismatic. He speaks his mind with no filter and he isn't for sale. The man is pure Ego. Any ideology and policies that might lurk under his bluster are a cipher.

Ted Cruz, OTOH, is an ideologue hiding a real political agenda under the same glib xenophobic scare-talk. Cruz has shrewdly positioned himself to take Trump's place if that show gets canceled. He is accused of being a Dominionist who believes that the Bible should be the supreme law of the land -- the Christian version of Sharia Law. If Cruz wins Iowa, it will be his fundamentalist bona fides that give him the edge. Cruz is more dangerous to Republicans (and to the nation) than Trump is if only because True Believers are always more dangerous than opportunists. Cruz appears to have almost no support beyond his evangelical base and would lose the White House by a historic landslide. I've read that establishment Republicans really, really hate Cruz personally, too, and in the past week they've started reluctantly coming together behind Trump in order to stop Cruz at any cost.

Ben Carson -- is he really still in this thing? -- is the least qualified candidate to hit the national stage since Sarah Palin; I guess that he draws the same anti-intellectuals who liked her. Since Carson will surely join the Irrelevants after the first round of voting, that's enough about him. 

Remember the original "insurgent" candidate, Rand Paul, who staked out the "crazy" niche before anyone else did? Paul lost control of that niche because he has demonstrated an ability to work within government rather than try to tear it down, as the insurgent voters prefer. Paul has one foot in the Irrelevant camp, but he's not there yet.

So much for the Insurgents. The Establishment wing of the party hasn't coalesced behind an electable candidate yet, nor have the Koch brothers showered one with money. Nobody in this group can unite the three legs of the Republican stool: Evangelicals/social conservatives, military interventionists, and corporate supremacists. For what they're worth, recent polls have either Chris Christie or John Kasich eking out a second- or third-place finish in New Hampshire and suggest that Marco Rubio might run the strongest nationwide. Jeb Bush reportedly has enough money to stick it out to the end; his "last man standing" strategy is not quite impossible.

The Establishment needs to narrow its field quickly and significantly to channel the non-Trump demographic into an anointed one, whomever that proves to be. There's no sign that that's happening yet, but don't dismiss the Establishment's power to manipulate the game behind the scenes.

Can I get behind any of these Establishment guys? Despite 30 years of experience showing that they clearly don't work, all of them fall back upon some flavor of the same weak beer: cutting taxes on the rich; cutting benefits for the poor and middle class under the guise of reducing deficits (spoiler alert: they won't); pumping up military spending and doling out corporate welfare; and undoing regulations.
 
As I said earlier, I understand the appeal of blowing up the system and frustration with the status quo. If you want an Insurgent, Trump is the most satisfying choice -- you know that he will upset the apple cart and that he'll entertain you while doing so. Trump's nomination will probably keep the White House in Democratic hands, but it won't damage the Republican Party as badly as Cruz would because Republicans can easily disown Trump. Cruz, OTOH, is one of them, whether they like it or not. He has Tea Party bona fides that could tear the Republicans down for many years to come by sending minorities, young people, and independents into the arms of the Democrats. Trump has lost the Latinos, but he could still make a credible bid without them if he can peel away enough of the Democrats' older whites.

If you want the most electable candidate, then Rubio's name usually floats to the top, although I think he's too young and glib to take seriously. He probably lives with his parents and doesn't have a driver's license. Christie's just another bully and he doesn't pull it off as successfully as Trump does. Rand Paul has shown that he's capable of governing, and he's the only Republican who isn't promising to start another war in the Middle East. If you want to vote for an "outsider" (insofar as any senator can be an outsider), then Paul is the one least likely to destroy the country, the party, or both...so there's a lukewarm endorsement for you. If you want to actually win the presidency, your best choice to submit to an increasingly liberal electorate is John Kasich, who passes for a "moderate" in a party that's fallen off the right end of the cliff. He seems to be the most pragmatic of the bunch and is the only one who is pushing a positive message (so there's another tepid endorsement). Bush might be innocuous enough to entrust with the presidency, but his brother poisoned the family name for at least a generation.

Well, that was tortuous, but there are your endorsements: Vote for Rand Paul if you want an Insurgent who won't destroy your party, or John Kasich if you want a safe and competent Establishment man who could conceivably win the White House. 
 
All of this is probably moot because the nomination looks to be Trump's to lose. That will transform the party for a generation, which isn't necessarily a bad thing; the Republican establishment degenerated into the Party of No during the Obama years and has nothing to offer besides obstruction and stale failed policies. I don't think that Trump can defeat Sanders. He will have a somewhat better chance against Clinton. I honestly can't see the American electorate sending him to the White House under any circumstances...but I'll save the general election analysis for another day.  

Polls and predictions are notorious for falling apart when the voting begins. Maybe Trump does not even want the job. It would be a huge pay cut; the POTUS lacks the dictatorial powers of a corporate CEO; government is not a for-profit endeavor; and Trump hates to lose. Maybe he will sell the nomination at the convention rather than risking all that. 

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This week brought last week's boom to a crashing halt. Curio City Online started out offline when MDD Hosting's server upgrade didn't go well. (I still recommend this company highly for fast, usually-reliable, reasonably priced web hosting.) Since going dark always tanks my ads and search rankings for at least a few days, I can't tell if the technical failure killed the magic advertising strategy that worked so well last week or if it was just random luck in the first place. In any case, the doldrums of late January are back. Next week's numbers will look good anyway thanks to that one unexpectedly great week -- this January is already a smidge ahead of LY with more than a week left to run.  

Going Political, Part 1: The Blue Post

With the 2016 presidential primary voting coming up, I'm going to go off-topic and present one small businessman's view of the political landscape. Sure, it's a little early; although the Iowa caucuses are almost upon us, they're an irrelevant dog-and-pony show that rarely predicts the eventual outcome. Things get serious with the more relevant New Hampshire primary, and that's still a month out.

Gone are the days when Republicans and Democrats were the mirror-image Tweedle-dee and Tweedle-dum of American politics. People are far more polarized today, and populist movements on both sides show that the parties aren't keeping up. Some things haven't changed: Republicans are still evil and Democrats are still incompetent. But that's a choice we don't have to make until the general election, and today we're thinking about the primaries that decide which evildoer will face which incompetent boob.  

In open primary states like Massachusetts, unenrolled voters (i.e., independents, the majority of the electorate) get to choose whether to take a Democratic or a Republican ballot. Are you going to take the blue pill or the red pill? Ordinarily I take whichever ballot looks more competitive. This year, the Republican primary looks wide open while the Democratic side wants you to believe that voting is just a formality. Therefore, take the Republican ballot unless you reject the Democrats' coronation narrative. 

My working draft of this post tackled the Republican field first, because it's the most interesting. Being interesting, however, also makes it hard to evaluate. Since I can't endorse anyone on that side yet, I'm going to let it bake for another week and skip to the Democrats. 

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If you took the blue ballot, you either didn't have a choice or you reject the official narrative. The Democratic establishment would have you believe that their party is insulated from the outsider insurgency that's sweeping the GOP. The Democratic Chosen One has spent her life burnishing her resume for the presidency. The corporate, big-money, hawkish Hillary Clinton has certainly dotted all the I's and crossed all the T's to appear qualified for the Oval Office by every conventional measure. The party establishment is her lapdog. She has locked up the big money and the important endorsements. The mainstream media treats her as inevitable and shuns her rivals. By all conventional measures, she's a shoe-in. Being a woman gives her an edge with older female voters who would love to follow the first black president with the first female president. Interestingly, this historical milestone carries less weight with younger post-feminist voters because they accept it as given that a woman will be president someday. They just don't feel compelled to make that woman be Clinton.  

One must also acknowledge two things, though. First, the anti-establishment sentiment sweeping voters is not neatly confined to the Republican Party. Clinton's success at sewing up the conventional path to power is, ironically, a big strike against her for a lot of people this year. Like our conservative brethren, many liberals and independents are fed up with cautious, centrist, politics as usual, and Hillary Clinton embodies mainstream convention.

Second, a lot of people really, really don't like Hillary Clinton. Scandal dogs her at every turn. She's so anti-charismatic that her disapproval rating is chronically higher than her approval. She comes off as sleazy and insincere, and she's a tightly scripted campaigner. She always seems to be one news cycle away from destruction. The DNC's united front of inevitability is not likely to survive its encounter with actual voters, and indeed the latest polls show Sanders winning New Hampshire and threatening to take Iowa.

Ah, Bernie. Running an irreligious socialist Jew is audacious and might be doomed on at least three self-explanatory levels. Yet Bernie Sanders is a very rare thing in American politics -- a man of genuine integrity whose political message has been consistent throughout a long career, and whose support is genuinely populist -- if you aren't sold on that statement, check out this profile from (of all places) Bloomberg. Unlike Clinton, Sanders isn't for sale. He takes no corporate money and doesn't have a super PAC. Electing Bernie Sanders would be a grassroots political revolution similar to what's happening on the Republican side, but without all the hate and fear and crazy talk. Think of him as the Bizarro Anti-Trump.

The choice on the Democratic side is stark and therefore easy to make. If you want another conventional centrist administration with an interventionist foreign policy, Hillary Clinton is your candidate. If the status quo is treating you well and you're already in the top 5% or you aspire to the oligarchy, then Hillary solidly represents your interests. If, on the other hand, you believe that it's time to transform our New Gilded Age into a New Progressive Era through peaceful revolution, then you have to choose Bernie. It's really that clear.

You probably guessed that this struggling one-man corporation is squarely behind the socialist Bernie Sanders. 

Next week I'll force a conclusion on the messier Republican side.  

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Sales were remarkably good this week, especially since most of my ads were turned off most of the time. My spend is down to $25 a day or less -- still over budget at $750 a month, but I can cope if sales keep coming like they did this week. Last week's deficit is more than erased and I only need modest business for the rest of the month to beat last January. I need to do better than that if I'm going to survive the spring, but a couple more weeks like this one would do the trick.

Yesterday I finally took the Metal Earth plunge that I've been threatening for weeks. $600 bought me the minimum that I need to support the joint venture that I told you about. I could easily have spent $1,000 more, and I'll need to go back to the well next month if the promotion works. The resulting debt will dog me for at least a couple of months. If this experiment flops, then this inventory and the debt that comes with it will still be with me until Christmas, assuming I can last that long.  

2016: The Plan

I'd clean up if I could repeat last Christmas right now. Applying the lessons that 2015 taught me 10 months from now will be like a general fighting the last war. I want to emphasize the nine months of the year that aren't Christmas this time around instead of gambling everything on Q4. That plan is off to a lousy start.  

Blowing out my December ad budget (see last week's post) hamstringed 2016 right out of the gate. Because I vowed to stop numbing you with numbers, I'll paint with broad strokes: January-February started out more than $4,500 in the hole, and I can expect to rack up at least another $2,000 in unavoidable costs during these months. Last January and February together only brought in $4,600. Back in the day, those months were good for at least $6,000 and as much as $10,000, which would fill the hole that I'm in and cover my operating expenses. Reaching the high end of that range isn't impossible, but even the bottom-end $4,600 revenue expectation already looks rosy. 

This December crept past 2013's December by $15, making it the best since 2011. Then my fortunes flipped with the calendar page. One week into the new year, I'm already running $850 behind LY and looking at the worst week since last September. Business has been so poor that I wondered if there was something (technical) wrong -- my "IT Department" periodically gets jargon-filled emails from PayPal and my web host; crossing my fingers and hoping for the best usually works out fine, but one never knows. I turned my Search ads back on, because what choice do I have? The meter is running again. I feel like a taxi driver in an Uber world.  

I would love to restock the 21 Metal Earth models that sold out completely. Even better, I'd also back up the dozen that are down to one or two pieces. Better still, I'd bring in some of the new titles that were out-of-stock when I wanted them in November. In an ideal world, I'd add all 82 of the models that I don't yet carry to the 74 that I do. I'd use more debt to do at least some of that if I were confident that it would pay off. Most of December's advertising blowout was spent on stronger-than-expected Metal Earth clicks and those ads still get more hits than I can afford, so I can see the interest. The trick is refining that expensive traffic into profitability. Having the most desirable models would be a great first step, but that takes money, and if you're paying attention you can see my dilemma.

But wait: There's a wild card. Next month I'm going to launch an arrangement with a specialty retailer who will sell a limited selection of models through his store, which I will then dropship. I'm skeptical that there's enough markup there for two retailers to profit from the same item, but if it works it will be like selling the line through a second store at a modest additional cost...but without having to buy the rogue advertising clicks. I can't say anything more about that until after Valentines Day. If it all goes swimmingly, it might be enough to float me back above water by the end of March.

This is where I usually resolve to find some great new products. Even though I barely have the money to keep my existing stuff in stock, I have to find a way to expand, and I can't afford any missteps. Who knows? Maybe Jackite will finally bring back the Create-a-Bird. The $500-1,000 a year that that one item used to bring in would make a nice addition after a two-year absence. 

OK, that was still a lot more numbers than I wanted to lay on you, but I'm going to leave you with one more: I've planned 2016 to end just $1 higher than 2015 did. Reversing my years-long slide will be a victory. If I can't do that, then squeezing a profit out of my declining sales will be an acceptable consolation.