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Every Friday, I post a small insight into running Curio City and/or Blue Hills Editorial Services. 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, September 16, 2016

After Christmas, What?

Christmas is crowding out debt repayment as I begin bulking up for holiday sales. This year I'm going to pass up virtually all of the cute novelty items that I ordinarily buy from the same vendors and invest only in sure bets, with very few gambles. I am going to hold my debt to $8,000 (I'm at $7,000 already) and I am going to be stingy with advertising. That's going to mean lower sales.  

In days of yore, November and December combined brought in $25,000; for the past two years, that's been closer to $16,000. Let's say that this year's extra caution knocks it down to just $13,000. $6,500 of that pays for merchandise (I'm pre-spending some of that already in the form of debt, so I won't need to spend an additional $6,500, but let's pretend that I do as a worst-case scenario). $2,600 goes to payroll (I'll live on that until June) and another $300 to payroll taxes. I refuse to spend more than 20% on advertising, or another $2,600. PayPal's cut is about $400. The $600 "profit" that's left is diddlysquat. So I anticipate being $7,500 in debt when the 0-interest Amex promotion expires in January. I'll need another $1,000 to pay my CPA and taxes, and this year I have to come up with $400 for the USPTO if I want to keep my trademark. $9,000 would get me free and clear after Christmas.

That's an obscene amount of money. Where could it come from? PayPal Working Capital allows one to borrow up to 18% of one's annual PayPal sales; if my sales this year come in at $50,000, that just happens to be the $9,000 that I need. PayPal would then take a percentage of my sales plus a one-time fee based on the percentage that I choose to give them. For example: If I let them take 30% of my revenue, their fee is just $762 and I have to repay $9,762 for an 11.8% interest rate; at the other extreme, they skim just 10% of my income and tack on a $3,005 fee, making the repayment amount $12,005 (33% interest). One must pay at least 10% of the total debt every 90 days for the first 540 days of the loan. So on a debt of $12,005 I would need to pay them $1,200 every 90 days, or $400 per month. A typical month's sales are $2,500, so if they're taking 10% I'm going to come up short by $150 per month. I'd have to make up that difference or go into default. And it would take me 30 months to get out of debt. 

At the low extreme my debt would "only" be $9,762, so I would owe $976 every 90 days or $325 per month. 30% of my sales would be $750 out of my monthly $2,500, easily covering the minimum requirement, and it would only take me 13 months to get out of debt. Of course, that assumes that I can function on 70% of my usual income without going further into debt, which would defeat the whole purpose.  

Amex "only" gets 12.49%, which isn't too bad for a credit card. Their minimum payment requirement is trivial. However, the interest isn't finite, as it would be under the PayPal scenario, and would siphon off $100 per month indefinitely. Because it's revolving credit, I'm constantly adding to the same balance that I'm trying to pay down, so no monthly decrease is guaranteed. The PayPal scenario has the advantage of separating past debt from current operating expenses, while the Amex scenario can drag on forever. 

I'm probably going to look for a part-time job come February. My Curio City salary this year happens to also be $9,000 -- again, equal to the capital that I need. If I stop taking a salary and survive on my outside job I can bail Curio City out in a year. But then, what's the point of owning a business that doesn't pay me? 

I need to think on all of this a lot harder. I won't be able to take any action until I see how Christmas goes, but I need to have some options defined before then.


Google finally wore me down. When I gave the whole sordid history to an account rep and begged her for help she just said "That sounds like a Support issue" and gave me the 800 number for the same people who failed me last time. I'm absolutely not going to waste any more time with Kriti in India, so I'm stuck...for now, anyway. Implementing conversion value tracking is beyond my paltry skills and I can't get any help from Google. Maybe I'll pay my developer to do it.

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