What About Facebook?

This week just brings a few random thoughts.

I got these brief replies when I asked my Facebook fans (now 56 strong, woohoo!) how I could make my FB page useful and interesting:

• “New products”
• “there's a simplaris blogcast app that you can use to broadcast your blogs each week.”
• “Items that have gone on sale”
• “Sale items and seasonal merchandise”

I integrated the simplaris app today, but haven’t tested it yet. Hopefully this post will just magically appear on my store's FB page. Turnkey says they’re developing a FB plugin for Sunshop that would let me put my whole store catalog on my FB page. I need to see if Constant Contact can integrate my newsletters as well. I expect that they can, for a price.

I’m slowly forming an idea of FB as a portal to the Kraken Empire. I’ll post a biography and a company history and supplement that with a few photos. I’ll use those plugins to port content from my store and my blog to my FB page. And I’ll try to direct FB visitors to the blog and store. Actual news will be confined to wall posts, as I’m doing now.

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Charter.net recently joined Comcast in blocking email from Constant Contact. I only lost four newsletter subscribers this time. I hate seeing interested customers get blocked by overzealous ISPs…oh well, I’m sure Constant Contact serves up a lot of real spam. Maybe the blocked customers will join Facebook.

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I finally wrote off $250 worth of greeting cards and closed the department. I wanted to get this insult to my bottom line out of the way early. My wife was happy to inherit them.

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Speaking of the bottom line, sales were decent vs. LY but well short of plan. I realized that my 2010 accounting January has one less week than 2009’s January, so plan is kind of hard to gauge this month.

Might as well pay taxes. I spent two hours filing four returns for $1,897.42. I know that payroll and sales taxes aren’t Kraken’s money in the first place, but it sure did take a whack out of my checking account. And I’m not done: the state isn’t ready yet to accept my $300 in unemployment taxes and $456 in corporate excise. There’s also something called a Pass-Through Entity Withholding Tax. I think this closes a loophole for big corporations. I don’t owe it, but I still have to file a form.

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Thank me for greatly condensing this next bit; my first draft reported each line item to three decimal places. Instead you get this summary: Four budget items – payment processing, printing, write-offs/shrink, and shipping supplies – cumulatively came in about 1% under plan last year. Another item – customer discounts – was half a point over. If 2010 makes plan then the half percent in play amounts to $344. I put $250 of that into my web support budget and $65 toward computer hardware/software. The remainder can go to profit. By such baby steps does a business crawl ahead.

Beyond the Great Recession

Stats and spreadsheets are my favorite part of running a business. (I’m a manager, not an entrepreneur.) If you're not of similar mind, you might want to skip this post.

Here’s a fun one: In November and December I shipped 705 (44.7%) of the year’s 1,575 orders. December alone had 457 sales, or 29% of the year. Compare that to 64 sales in the entire month of July.

Thirty-one of those December customers subscribed to my newsletter. After tossing out the three Comcast addresses (because Comcrap blocks Constant Contact), that leaves 28 likely repeat customers.

I awarded myself my annual bonus. When I did my ciphering on Wednesday, the tentative bottom-line profit was $5,900. As planned, I took 75% of that and let Kraken keep the rest. My payout was $4,425; the other $1,475 boosts retained earnings (i.e., cumulative losses) from an all-time low of (-$12,243) to (-$9,478). Federal income tax on my $4,425 is about $885 and the state gets $295, leaving me $3,245 free and clear. I took my money as a loan payment rather than a shareholder distribution. (I went into great detail about this a couple of years ago, and I trust that it’s still valid.) The company now owes its shareholders (me) just $20,275 of the $28,500 that I originally put in.

Thanks for all your hard work, Ken, here’s your big juicy bonus. Get out there and stimulate the economy! Hah! I don’t dare to spend anything until Anne gets a job. I threw $1,000 at her consumer debt -- $500 to principle and $500 to cover interest payments for the next few months -- making only a tiny dent in the staggering total, but at least it's something. The remaining $2,245 went into my personal savings. In the above-linked post I mentioned wanting to replace my five-year-old gaming computer. That machine’s now seven years old, and I still want to replace it.

Moving big piles of money between accounts was fun. When the dust settles I should have $500 left in Kraken’s checking after all current obligations are met. I also stashed $4,000 in a new savings account for a cash reserve beyond ordinary operating costs. I do like having money in the bank.


Here are the numbers for this dreadful December. The month finished $1,500 below LY and a truly painful $4,500 below plan.

Total income: -8.8%
Total COGS: -7.2%
Payroll: -20.5%
Net Income (Profit): +18.9%

The raw “final” 2009 numbers:

Total income: +12.7%
Total COGS: +9.8%
Payroll: +20.4%
Net Income (Profit): +3.1%

So December wiped out half of my previous YTD 25% sales increase. More money went into my paycheck at the expense of the company’s profit (but both end up in my pocket anyway). The ultimate bottom line – dollars in my pocket – rose by 13.4% (from $14,758 to $16,737). 2009 ended $6,700 over LY but $5,000 under plan. I’m $34,000 behind my cumulative plan since 2006. “Plan,” of course, is just a number I pull out of my ass. I could just move the target. But that would be cheating.

Despite the weak finish, I’m content with 12.7% growth during the worst year of the Great Recession. Planning a 15% increase in 2010 still seems reasonable if the economy doesn’t crumble again when the government stops plumping it up. I aim to earn a smooth $20,000 in 2010.

The first sale of the new year was transaction #4,500, and it uncovered an inventory error (fortunately Excel and QuickBooks were wrong, and I had the merchandise). The second sale is going to London. International sales are 50% of my business at the moment – rather ironic in light of what I wrote last week.


Last item: A customer named gigi took the time to write: “love your emails. … you guys take a lot of time to make your content fun!” Aw, shucks. Thanks Gigi! I’m tickled to know that at least one reader enjoys my newsletters.

Look Forward to Looking Back

At last, Christmas is over! Traffic has drifted back below 200 daily visitors and just a few sales. I’m still shell-shocked from the workload. Where are all the emergencies? Lost and mis-shipped packages! Damaged and defective items! Fraudulent claims! Irate customers! It’s too quiet. Well, I guess people are probably going through the formality of presenting gifts right now. AFAIK I did not screw up any of my 600+ Christmas shipments this year.

I should probably try to find my telephone. I’ll bet there are voicemails.

I'm resisting the temptation to spew forth my 2009 statistics until the year actually ends, even though the remaining week isn't going to change much.

Things I’m pondering for 2010:

Exploiting Facebook. I’ve figured out the basics. I’ve got 50 fans (halfway to my goal of 100 by the end of 2010). I’ve got fan boxes on my blog and on the News page of my store, with a link in every newsletter. Short enough posts automatically go out over Twitter. Now I need to figure out what to use it for. Using “wall” posts for short news announcements and impromptu discount codes is obvious. But does the site itself have a role? How does it fit in with my store, my blog, and my email newsletters? How can I encourage participation? What kind of content do I need, and how much effort should I put into it? Most of all, how do I make it attract more fans? I think this has meaningful potential for marketing next year.

(Tentative answer: Use it to show the personal side of the business – pictures of me, my house, my car, etc – sort of like I tried to do years ago with the Kraken Enterprises website. Perhaps I could use it for personal/political subjects like my health insurance struggle. I need to explore some other business pages for ideas. The next version of Sunshop will reportedly include a Facebook product feed, so that could become a reason to advertise my page.)

Drop international shipping. I figure roughly 1-2% of my sales go to foreigners. Processing those is extra work and currency conversion fees make them less profitable. The requirement that I hand them to a postal employee, rather than drop them in a box, forces me to schedule a carrier pickup or wait in line at the post office. The rate of customer dissatisfaction is high, especially among Canadians thanks to their government’s vigilance about collecting stiff duties. The so-called global economy is a myth from a business-to-consumer viewpoint. Still, can I really afford to turn my back on up to 2% of my existing business if I want to reach 15% growth next year? Maybe I’ll just eliminate UPS Standard to Canada, which seems to generate most of my complaints.

Drop Google Checkout: Again, it’s a small percentage of my business, and I’m sure that those customers could find another way to pay. Exorbitant shipping rates probably repel as many sales as the GC badge attracts. Google is apparently never going to address the shipping bugs that I reported to them a couple of years ago. I cringe every time a GC customer pays $8 to UPS something that I could mail for $3, and I resent having to drive to the UPS store to drop it off. But I suppose that as long as some customers are willing to overpay, I should be happy to have their orders.

Discontinue Cards: Write all of those suckers off and close the department. I very rarely sell any, even at cost. This one’s a no-brainer. I’m just waiting for the calendar to flip so that I don’t ding this year’s profit.

Drop Giftwrapping: In all of 2009 I made only $118 selling giftwrapping service -- most of it in December, when my time is most precious. Now, I don’t mean to scoff at $118. But a product’s giftwrap option dialog prevents you from adding it to your cart directly from the category page; you have to go to the product page to choose “No giftwrapping”. That adds an extra click to most of my products. And last year I spent $149 on wrapping paper, so I didn’t even pay back my cost (admittedly, I bought a huge supply of my two most popular papers, and my wife appreciates the “free” wrapping paper at Christmastime). Giftwrapping doesn’t make financial sense and it makes shopping a little less convenient.

Rather than kill it, I revised my spreadsheet to take giftwrapping revenue out of sales and add it to payroll. I’ll be more kindly disposed to wrapping when the money goes directly into my pocket, and it’s mainly a labor expense anyway. Of course, this is just an Excel fiction; to QuickBooks, it’s just “Other” income. I would need to change that if I ever used QB to calculate my payroll, rather than just plugging in the number that Excel kicks out.

Another Raise: I’m going to raise payroll from 19% to 19.5% of net sales, effective with my next paycheck. If sales are on plan, I’ll achieve my 20% target in the fall.

Cosmetic Facelift: The latest Sunshop release added two new templates. You can see them at the demo store here. In the “Choose Your Theme” dialog at the top of the page, choose “Modern Black” to see the template that I use now. It’s functional, but tired. “Custom One” and “Custom Two” are new. The first one is an up-to-date commercial look. The second one’s more interesting, but I think it would wear out its welcome pretty quickly. I’d want to customize Custom One, rearranging some page elements and changing some colors. I’d also want to add some “Web 2.0” features (very simple animations, color changes, etc.). I need to find some examples that I like and ask Brad if he can implement it. What do you think? Is it enough of an improvement to justify spending hundreds of dollars?