Over the Hills

I’ve written hundreds of columns about Curio City Online over the past 13 years. I haven’t been posting much lately, because what more is there to say? A year ago Blue Hills Editorial Services crept into my blog. Since then, my focus has shifted almost entirely to Blue Hills; last week I removed Curio City from my voicemail message, since I had already stopped returning most phone calls. You want to order a $10 thing but you’re afraid of the internet? I’m sorry. Back in the day, I would have taken 20 minutes to call you and enter the order for you, but the time and aggravation aren’t worth the $2 that I would pocket anymore.

Yesterday I completed a $3,000 editing assignment for a new client (who will almost surely have more work for me). It took me roughly 80 hours over three weeks. When sales are average, Curio City takes four months to pay me $3,000…and sales are (unsurprisingly) running well below average. If Blue Hills can eventually land one project like that each month, I’ll be on easy street.

Most of my clients are corporate, but I do some work for individuals as well...if you ever need writing or editing help, have a gander at our website. I wish I'd made this transition nine years ago, when Curio City first started to stumble. But I have a lifelong habit of riding out doomed situations for too long, mostly because I hate change, and Curio’s fate wasn’t unavoidable until two years ago.
 
Blue Hills has no overhead; 85% of its revenue goes to payroll. Curio City is nearly the opposite; 80% of revenue is lost to overhead. So why is it even still in business? 

Curio income arrives in advance -- shoppers pay when they check out, before I fill their orders. Blue Hills, again, is the opposite. Some clients pay on acceptance, some pay on publication (when they themselves get paid). My most regular customer’s small jobs only rack up $50 or $75 each; it takes me a month or longer just to reach their minimum $200 billing threshold. They then have 30 days from the invoice date to pay, and they are routinely late. I'm still waiting for a $200 check for work that I did in December and billed in January. I won’t see the $3,000 for the project that I turned in yesterday until the first week of May, at the soonest. Curio City reliably pays me at least some pittance every two weeks. 

Corporate clients always pay up eventually. Individuals are chancier. If someone flat out refuses to pay, there’s nothing I can do. That hasn’t happened yet, but it’s a hazard of the freelance business.  It's not like I have a battery of lawyers standing behind me. Unions are not a thing in the gig economy. 

Long delays in payment are okay as long as the pipeline stays full – being owed money well into the future is fine as long as you also have previously-owed money coming in now. Blue Hills isn't steady enough to provide that yet, and will never be entirely reliable: the five-figure project that I was expecting in April got canceled this year because the client’s grant didn’t come through, and they figured out that they could do it in-house. 

So Blue Hills’s success is not written in the stars, although it’s promising. Curio City’s just a matter of managing decline. I think that I can do that gracefully, much as Obama managed America’s decline for eight years, but I can’t rule out a chaotic and catastrophic failure, such as the US is undergoing now.     

The Sale of the Century!

A friend asked if Curio City will have a big clearance blowout at any point. It hadn't occurred to me. Maybe. If so, it won't be until late summer at the earliest. 

Most merchandise is already reduced to near cost. I don't like to go below cost. If I paid $5 for a thing, I want to get my $5 back. Sometimes I might let it go for $4 or even $3, but not often. Isn’t it better to recover a couple of my five bucks than nothing? Not necessarily. Sometimes reducing Kraken Enterprises' profit by $5 is more valuable than increasing its income by $4. 

The first draft of this post walked through the accounting in mind-numbing detail, but I’ll cut to the end without showing you how I got there. Essentially, if I take $4 for that $5 item, I increase my personal income by $0.80, and at the same time I raise my personal income tax liability by $0.80 (because Kraken’s profit/loss goes directly onto my 1040), for no net gain. If I write off $5 instead, I don’t pocket anything, but I reduce my tax liability by about $1. 

In favor of selling below cost anyway, I’d rather have 80 cents now than save a dollar later on. I’d also rather ship the item to somebody than throw it away, and I usually make a buck on the shipping charge. Blue Hills Editorial Services enters the picture here. 85% of Blue Hills income goes into payroll. The other 15% covers the employer's portion of payroll taxes and leaves a tiny profit toward the $1,500 it costs to be a corporation every year. Apart from that, Blue Hills has almost no expenses to offset its profit -- that's where Curio City’s losses are nice to have. When Curio City is losing money on operations, as it’s doing right now, it offsets Blue Hills' profit without needing to take markdowns. I can sell that $5 thing for $4 and pocket my 80 cents without driving up next spring’s tax bill. But when kite season puts Curio operations back in the black, I need write-offs to make Kraken's profit disappear.

I'll talk more about Blue Hills in my next post. To return to what I opened with: I don't plan to have a big end-of-business blowout sale because the write-offs are usually worth more than the small amount of cash that I can get for them. Between now and closing day, individual prices will slide a little bit here and there, but if you see something you want...don't wait. It probably won't get any cheaper, and it might sell out at any time. 

I keep mentioning kite season. Kites sell year-round because there are people who live in warm places. But it really gets going when spring weather settles in. Ordinarily it opens with Christians buying dove kites for church plays. Dove kites have been out of stock since last October, and the manufacturer will only say that they'll be back "in the spring." So I don’t know if I can count on the Christians to kick things off this year.  

Finally: The same person who asked about a going-out-of-business sale also wondered when Curio City will close. I still don’t know myself. The short answer is “It depends.” At this point I'm only staying open in anticipation of kite season. If it doesn't perk up by the end of March, and the cost of staying open continues to exceed the money coming in, I’ll close earlier than I had intended. 

September – the end of kite season -- is the earliest ending that I foresee; Christmas is the latest. But circumstances can change – for example, PayPal keeps sending me technical emails that I don’t quite understand about PayFlow integration, and a friend identified a problem with my security certificate that will, if I don’t do something about it, blow up in either April or June (I’m not clear), but only on the Chrome browser…maybe. Meanwhile, Turnkey just published another Sunshop update, putting my store software at least three versions behind now. Some technical thing might come along and deep-six my site before I’m ready to sink it myself. OTOH, I keep updating my master Excel file each month, and that’s currently formatted through next February, so there’s a ghost of a chance that I’ll keep going into next year. I don't plan to or want to, but I just got word that my biggest Blue Hills job isn’t going to come through this year, so I still need Curio City’s financial lifeline.  

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Speaking of that, I robbed myself of more than $100 last month by forgetting to reset February's payroll percentage from 10 to 20% of sales. Since Curio City unexpectedly bought me a new computer, though, I’m going to let it off the hook for the difference.

Sometimes I Can Have Nice Things

This is not a post I had planned to make. In fact, all planning crashed with my laptop's hard drive on Friday the 16th. I had suspected that it was dying, as I'd already had to run CHKDSK on it a month earlier, so my most critical files were backed up. After spending all day Friday and part of Saturday trying to revive Windows, I finally performed last rites. Curio City itself is a shopping cart on a remote server, so it wasn’t injured in the crash. But everything that I need to manage the business – a couple of Excel files, a couple of Word files, my QuickBooks company file, my Outlook database, and my browser settings and bookmarks -- was on that hard drive. I was paralyzed without that handful of files and programs. I decided to close the store.

I recovered my backup from Jungle Disk – a service that I’ve been running for years, but had never before needed or tested -- and brought my desktop computer up to the minimum functionality required to tend to both of my businesses. Ordinarily I keep my personal life on my gaming desktop and my work life on my business laptop with no crosstalk between them, but now my desktop would have to step up to cover my Blue Hills workload. I could safely put Curio City in stasis, but I couldn’t freeze Blue Hills.  

You might remember me musing that Curio City might buy me a new laptop this year. Suddenly that thought turned to how quickly I get one and how much I could spend, so I spent all day Sunday shopping. My last three laptops were all cheap, utilitarian Dells. Because Curio City’s days are numbered, and because I'm optimistic about Blue Hills' future, I decided to splurge on a low-end gaming laptop instead of getting another unwanted boring business machine. Even though I couldn’t access QuickBooks to see exactly what my balance sheet looked like, I had a pretty good idea that I might barely stretch to afford it. 

That complicated things. High performance isn't cheap and Curio City isn’t rolling in money. After two days of intensive research and shopping, I bought a Dell Inspiron 15 7000 with a very good GeForce video card for under $1,000. Of course, that deal was online-only. That meant waiting up to five business days for delivery. Well, February is slow in Curio City anyway. It could stay closed, and I could keep pecking away at Blue Hills from my desktop in the meantime.

The box from Costco arrived on Thursday, and I had the store open again last Friday. Business has returned to normal (which isn’t saying much, but it’s something). I had neglected to back up a few files, such as the database for my postage program and my browser bookmarks. I lost all of my web graphics. Once upon a time, a file with thousands of verified postal addresses would have been a salable asset; nowadays, not so much…and my published privacy policy prohibits selling customer info anyway. Not that anybody else would have known…but I would have. 

After the financial dust settles I need to find the money for a game that will show off my screaming new GTX 1060. So far, loading QuickBooks is the most challenging thing it’s done. It does that admirably, I might add. 

Missing a week in a weak month left February’s numbers incredibly anemic. Let’s put it this way: Curio City only paid me $117.29 for the entire month – before taxes. I need to pocket $600 a month to support my lavish lifestyle. I’m finally getting year-over-year Blue Hills numbers, but they don’t mean anything yet, so let’s just look at the customary Kraken Enterprises as a whole:

February

Total income: -40.5%
Payroll: +46.3%

Marketing: +100%
Net Income (Profit) vs LY: -435.8% (-$1,536)

Actual Profit/Loss: -$1,222

YTD

Total income: -36.1%
Payroll: +43.4%

Marketing: -57.6%
Net Income (Profit) vs LY: -388.5% (-$1,757)

Actual Profit/Loss: -$1,305

A nice big loss bodes well for next year’s taxes, and means that I don’t need to take any write-offs yet. Payroll is up while revenue is down because 85% of Blue Hills income goes to payroll. Sales are down because...well, have you been paying attention or not?