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?

For What It's Worth

Seriously, lady? You're going to return a $4.98 item because it's not quite what you expected? Good lord. Fine, spend $3.75 to mail it back to me. I'll just drive to the UPS Store to pick it up, then process it through Excel, Sunshop, and QuickBooks, then log onto PayPal to issue your refund. Together with the credit for the product that you (suspiciously) claimed was defective, you just reduced my next paycheck by $3.40.

People like you are why I can't have nice things. 

No week has ever ended in the red before, but this week was heading there until it clawed its way up to $22 on Thursday afternoon. Since then it has soared to $69.45. I don't think any week has ever finished below three digits before, either, so we still have a shot at setting a record.

I honestly don't know why I'm still reporting monthly numbers. Of course they're going to decline year-over-year as I gradually run out of stock. Compiling them each month compels me to make sure that I'm taking enough markdowns to show a loss, and makes me explain any unexpected trends. And it's the last year, so there's a sense of completion. Mostly from force of habit, then, here they are:

January and YTD

Total income: -33.6%
Payroll: +39.8%

Marketing: -76.4%
Net Income (Profit) vs LY: -181.1% (-$160)

Actual Profit/Loss: -$72

$300 worth of Curio City markdowns more than offset a small Blue Hills payday. K-1 losses are one of the few tax deductions that the Republicans didn't take away. By passing 85% of its revenue through as payroll, Blue Hills is nearly incapable of losing money, so I need those Curio losses to keep coming all year.

Another Crappy Year Is Over

2017 was one of the worst years ever on so many levels. I've already said that Curio City had its worst December by a large margin: I only booked $1,690, compared to LY's previous record low of $4,637. For perspective, December 2008, when I was at the top of my game, brought in $16,163 -- 10 times what I made this year. 

Remember that the following numbers include Blue Hills, and the payroll line includes a couple of checks that went to my wife. I won't have "clean" Curio City numbers again until February.

December

Total income: -64.1%
Payroll: +37.6%

Marketing: -62.8%
Net Income (Profit) vs LY: -206.3% (-$1,585)

Actual Profit/Loss: -$816

2017 (Almost) Final

Total income: +41.9%
Total COGS: +2.3%
Payroll: +218.9%

Marketing: -44.2%
Net Income (Profit) vs LY: +258.4% (+$4,784)

Actual Profit/Loss: +$2,934

Annual sales were down by 5% from last year; that's my sixth consecutive decline. 

Profit is a bad thing at tax time, so I'm glad that fell from last month. Technically, Kraken owes me that bottom-line number, which is going to add roughly $735 in federal and state taxes to my personal 1040. In reality, Kraken can't really afford to pay even the anticipated taxes. I insist that it do so anyway...so I just transferred $800 from the company to myself a few moments ago in the guise of a "shareholder loan repayment", which is somehow preferable to a "shareholder distribution". I don't know why. Kraken still owes me $12,625 of the roughly $21,000 that I put into it in 2005.  

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Speaking of taxes (again)...I still don't know if Kraken Enterprises is, legally speaking, a pass-through entity in the eyes of the IRS. Logically, of course it is; each year's profit or loss goes onto my personal 1040. But tax policy is only ever accidentally logical. This story only sowed more doubt: 

The new pass-through provision is designed chiefly to aid capital-intensive companies, like a factory or a bakery, while excluding certain service industries such as accounting and medicine. But for some kinds of solo workers it could mean savings of hundreds or thousands of dollars, if they incorporate as a pass-through business. 

Details of exactly who might be able to claim these lower rates are still a bit unclear, even to specialists, and probably will be hashed out over the coming months as tax advisers and their clients test the limits of what qualifies as business income. 

Curio City could arguably be considered capital-intensive, since 80% of its revenue covers costs. Blue Hills, OTOH, is a service business with very little overhead. I might have to keep Curio City alive indefinitely just so that Blue Hills can qualify for the pass-through rules. But who knows? Not the experts, apparently. I'm sure I'll get a memo.

Massachusetts considers me a pass-through, but I'm exempt from withholding because all of my stockholders (me) are Massholes. I'm supposed to issue myself a form stating that that's true every January. Anarchist that I am, I don't.

I had wanted to file my tax returns early, but I spent most of this week fighting my dying laptop. Its performance started degrading a couple of weeks ago, and by yesterday it was all but unusable. All I'll say about that is that CHKDSK may be >30 years old, but it still saved my bacon. I had really feared that I would have to rebuild Kraken Enterprises from the ground up on a new machine, but now I'm tentatively confident that I can keep this three-year-old Dell going for another year.

(For some reason, I can't upload any images to Imgur via any method today and I've wasted way too much time trying. Today's hotlinked pic might not work.

Let's Get This Show On the Road

November sales were lackluster. Lackluster is good, considering that I've done nothing to support Christmas.  At this time last year, I was $8,000 in debt and ramping up my ad spend. This year I'm not taking on any expenses at all. Well, I did make good on my threat to return payroll back up to 20% of sales after getting out of debt, so I should get a couple of slightly less laughable paychecks in December, and that will increase costs a wee bit.

Here's what Quickbooks says:

November

Total income: -38.9%
Payroll: +53.7%

Marketing: -79.8%
Net Income (Profit) vs LY: -108.6% (-$412)

Actual Profit/Loss: -$992

2017 YTD

Total income: +57.3%
Total COGS: +8.4%
Payroll: +240.1%

Marketing: -38.4%
Net Income (Profit) vs LY: +243.4% (+$6,375)

QB says revenue was down by $1,984, while Excel says it only came up short by $864. I don't know why the discrepancy is so huge.

December should come in way below LY, but again, without any expenses. LY's anemic sales came at great cost.

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Remember that Sunshop support renewal bill that I mentioned in my last post? The $125 payment was due on 11/29. I was leaning toward downloading the current version and then canceling the contract, since the odds that I will actually upgrade next year are low. Then Turnkey made the decision for me by charging my card on 11/24. I was displeased. I was even more displeased when I got a "Cyber Monday" discount offer on 11/27. I asked for a $25 refund. They gave it. So I've decided to keep the contract for another year.

Meanwhile, MDD Hosting decided that the price of my dedicated IP address is going up to $60/year unless I want a "free downgrade" to a shared IP. Yes, please. I don't even remember why I bought the dedicated IP in the first place.

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I spent four hours on MailChimp remembering how to make and send a newsletter. It went to 231 contacts on Tuesday. One bounced and two unsubscribed. 64 recipients (27.8%, vs. 13.3% industry average) opened the email. It got 19 clicks (8.3% vs. 1.6% industry average) and one conversion.

How can I afford to absorb the cost of shipping, which is my largest single expense? Well, I can't, especially when nearly everything is priced at break-even at best. The single coupon redemption (so far) cost me $20.69 to bring in $51, all for products that were priced below profitability. I did convert a big box of dead stock into dollars, so that's nice, but I'd go broke if all of my customers did that.

Newsletters transcend the mailing list. MailChimp was supposed to autopost it to my Facebook page. That didn't work, so I did it manually, and 24 more people (out of Curio City's 223 followers) saw it -- if you want to reach your whole list, you have to pay Facebook a bribe. The key is that Facebook then autoposts it to the bottom of my store's front page, where the people who see the offer should be highly motivated to use it.


It showed up there two days ago. Nobody has used it yet, but at least I have an offer linked on my front page now. There's no other good way to do that.

2,000 Steps Forward, 500 Steps Back

October was shaping up as another decent month, especially given that I've ceased all marketing efforts and cut advertising to the bone. And then stuff happened. The numbers (which include some Blue Hills income) look fine:

October

Total income: +82.3%
Payroll: +1,132%

Marketing: -69.4%
Net Income (Profit) vs LY: -1,889.1% (-$1,849)

Actual Profit/Loss: -$1,751

2017 YTD

Total income: +72.3%
Total COGS: +15.6%
Payroll: +267.6%

Marketing: -33.9%
Net Income (Profit) vs LY: +307.9% (+$6,897)

Actual Profit/Loss: +$4,656

Excel says that Curio City by itself beat LY by $34. Those big red numbers are there because I somehow screwed up my accounting. Blue Hills payroll is being reported differently than Curio City payroll. I pay my CPA the big bucks to fix stuff like that. 

Whenever I'm idly tempted to rethink my store closing plans, I remember that virtually everything that's selling now is steeply discounted, it's still a lot more work than it's worth, and I have to deal with the public:

A lady ordered $162 worth of Switchables and provided an invalid shipping address. Even though I could take a Google-informed guess at her correct address, I'm not going to ship $162 worth of stuff into the void, so I emailed her for clarification. Days passed, and I ultimately re-sent the email six times. Days became weeks, and now it's been a month...still nothing. She didn't leave a phone number.

Speaking as someone who only pockets about $300 in a good month, I find it hard to imagine spending $162 on something that one doesn't need, and even harder to imagine not missing the order when it doesn't show up. Even if this lady doesn't know how email works, she could leave me a voicemail (yes, this is one of those extremely rare instances where I would welcome a phone call).  

Her order is still boxed up and ready to ship. At some point I'll have to unpack it, return all the stuff to inventory, and refund her credit card, but I'm kind of morbidly curious to see how long this can go. I'll give her another month. Maybe she'll contact me when she sees the charge on her credit card statement, if she's still alive and mentally competent.

Then there's this other Switchables customer who leaves an angry voicemail because she can't figure out how to use the cover that she bought. Every single Switchables product page includes this text:

This is not a self-contained night light. Switchables stained glass night light covers are designed to be used with the Switchables Nightlight Fixture (sold separately). Switchables are "switchable" because you can easily swap any one of our covers onto the same simple fixture.

...and yet 25% of Switchables customers either don't read it or can't understand it, because they buy a cover or two and then come back to get a fixture separately later on. The lady in question returned her cover, so that's another $17 refund. I fully expect it to arrive in unsalable condition.

And then there's the guy who ordered two lighted caps without specifying which color he wants. A lot of my cap customers screw that up, and I have to email them. This particular fellow responded promptly with his choice, which is always nice; often it takes several attempts over a week or more. Then I discovered that he also gave me an invalid shipping address. I'm still waiting for him to fix that.

Come on, folks. The internet isn't that hard.

Then there's the guy who placed a $300 dropship order. After a week he emails to ask where it is. Tracking shows no activity. Turns out the vendor never shipped it; they apologize and send it out that day. The customer is silent until it reaches him a week later. Then he asks how he can return it because it arrived too late for his hunt. Three emails asking the vendor to issue a call tag are still unanswered after three days. Ultimately I'm going to have to refund the guy his $300 and then nag the vendor to refund my purchase.

$500 worth of refunds on $2,000 in sales remind me why I hate this job.   

When Numbers Lie

September was Curio City's first loser month in quite some time, and yet it beat expectations for three reasons: 

(1) The first week should have been September's strongest. Instead, it took Turnkey four days to fix the shipping module that the latest USPS rate change broke. $835 of this month's $390 shortfall happened that week -- which is to say that I might have finished up by $445, all else being equal.


(2) I've been advertising on both AdWords and Google Shopping for years. I write my own ads and select my own keywords on AdWords, but a couple of years ago I turned bidding over to their algorithm. I had gradually winnowed out product groups until I was only advertising kites. This month, I finally shut those ads down, too. AdWords produced five sales in August at a cost of $33.85 per sale, costing me $170 to bring in $350. Hypothetically, this month's sales might have been higher by that amount, but in reality kite season peters out in September anyway, so all I can really say is that I saved some money and forfeited a few sales. Shopping, OTOH, is entirely computer-generated from a product data file that I upload each month. In August it brought in 21 sales at just $5.46 apiece.

As an unexpected bonus, junk phone calls fell off dramatically after I shut down AdWords.  
 
(3) As sales remain unexpectedly strong, I am slowly running out of appealing products to sell, and most of what I do still move is heavily discounted.

Anyway, here are September's numbers according to QuickBooks. Three Blue Hills projects that have been billed out, but not yet paid, threw the stats seriously out of whack -- especially payroll, since that's where 90% of Blue Hills revenue will go. 

September

Total income: +121.8%
Payroll: -79.8%

Marketing: -73.2%
Net Income (Profit) vs LY: +963.2% (+$3,566)

Actual Profit/Loss: +$3,195

2017 YTD

Total income: +70.1%
Total COGS: +8.5%
Payroll: +229.2%

Marketing: -28.1%
Net Income (Profit) vs LY: +355% (+$8,300)

Actual Profit/Loss: +$5,962

Excel says that Curio City came in $389 behind LY. With a day and a half to go, that could still shrink to nothing. 

October is historically one of the sleepiest months of the year as Christmas sales don't really start cooking until Halloween. Expectations are low.