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).

Wrapping Up 2011: First Pass

A hefty order for 6-LED caps on Monday pushed an otherwise mediocre week into the plus column. The winning customer left me a voicemail on 12/22, and I didn’t hear it until 12/26. Sometimes messages rattle around Verizon’s system for days before coming to roost, but I do need to check my phone more often. 

Switchables were so noticeably absent from Christmas this year that I thought I was facing another reevaluation of that red-haired stepchild. Then they came back all by themselves this week. Go figure.

While I appreciate the respite from last month’s insane pace – I cut back to four hours a day this week -- I hope I won’t be back to two-digit bank deposits after this week. As of 11:00 this morning I had 396 sales in December and 210 in November (an average month has 85-100).

The numbers that follow are preliminary, since modest sales over the 1.5 days left in the year could tip a couple of reds into black. I’m going to have to make another pass at them tomorrow afternoon before paying out my year-end bonus, and I’ll post that revised version next week.

Excel reckons that I beat LY by 4.25%, surpassing LY’s 3.19% increase (but falling far short of my 10% goal). The year came in only $3,200 below plan. The gain came entirely in November and December, and a very large fraction of it was from $2,000 worth of sales to the same telephone customer. But let’s just bask in the numbers without fretting about how they were generated.

As usual, Quickbooks is more pessimistic than Excel. I need $126 to tip December’s profit into the black (vs. LY) and $243 for the whole of 2011. Here’s where things stand as of noon today, anyway. A mere $500 in sales would do it.

December: 

Total income: -0.3%
Total COGS: +4.8%
Payroll: +11.3%
Net Income (Profit): -12.4%

2011 Total:

Total income: +2.1%
Total COGS: +2.3%
Payroll: +2%
Net Income (Profit): -7.8%

My salary came in $301 ahead of LY at $12,718. It ain’t much but it beats a kick in the teeth (as my dad liked to say). Tomorrow I must take a year-end profit distribution. Using today’s QB numbers, I have a profit of about $2,900 (down from $3,100 LY). As the sole stockholder in an S Corporation, I owe 100% of the income tax on that $2,900, so I have to withdraw at least $600 (15% for the feds and 5.3% for the state). Of the remaining $2,300, I traditionally take 75% as a shareholder loan repayment and leave Kraken Enterprises the remainder to reinvest. That would make my bonus $1,725 (plus $600 for taxes = $2,325). But since I technically own the entire $2,900, my total 2011 compensation was $15,618. That’s a $559 drop from LY’s $16,177, and far short of 2009’s record $16,737.

But I need to go through all of this again before I pay out my bonus tomorrow (I've had two small sales and remembered an expense reimbursement check since I compiled those numbers). And I must mention that $495 of this year’s profit decline came from covering Internet access charges that I previously paid out of pocket. Had I covered that $495 myself rather than charging my company for it, my income would have been $16,113.

On the Eighth Week of Christmas, My Business Gave to Me...

...An eighth week of Christmas!

Christmas ended on the 21st this year, a full four days later than I had expected. I more than recovered Week 7’s shortfall and averted my first-ever year-over-year sales decline (2011 will finish about 2% over 2010, assuming that next week is merely average). These “extra” days amounted to an unexpected extra week of Christmas. I am incredibly glad that it’s finally over for another year, apart from the enjoyable massaging of numbers. Nice, black numbers. I’m going to miss the big daily bank deposits, though.

Reasons to hate UPS (redux): Yet another Credit Card Billing Adjustment, this time increasing a charge by $11 with no explanation. Ever notice that these adjustments are never downward? 

Well, at least I can take some small revenge: I finally discontinued UPS Standard after reading multiple complaints about it being a scam. UPS tempts Canadians with a reasonable-looking rate. Then, after the package crosses the border, UPS holds it hostage for brokerage fees that approach 100% of the shipment’s value. If the recipient declines to pay it, they offer to return it to the shipper – me – if I will pay the fees. When neither party wants to pay the ransom, UPS gets free merchandise. Virtually every international complaint I’ve had over the years has come from a Canadian, and the majority of those were UPS Standard shipments. Customers usually think that I’m in on the scam. No more.

For the time being I’m leaving Worldwide Expedited and Worldwide Express in place because they’re so expensive that nobody ever chooses them. But I might ultimately remove those, too, if they employ the same “brokerage” trick.

Reasons to hate Google (redux): I ended last week not knowing whether or not Google Product Search was going to exempt my site from their item identification requirement. On Monday they suspended my products. On Tuesday they told me that my exemption had been approved, but not whether my items reinstated or not. On Wednesday I was invited to rate their responses. Hee hee.


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Born yesterday? I was not. A suspicious email asking about international shipping led to somebody wanting to buy thousands of dollars worth of stuff to be picked up by his private courier (after he pays with a stolen credit card, obviously). There was some creative aspect involving shipping to Cyprus and prepaying customs duties and whatnot, too. It was probably just meant to confuse me, or maybe to make him look like a legit businessman. Bzzt! Sorry, find another sucker.