Microbusiness Chronicles: Slumming It In The Off Season

Today I spent virtually my whole day in an elementary school gymnasium at a craft sale that was a fundraiser for the PTA or some shit like that. The sale went from 10-3pm, I got there around 845 to setup and left around 3:30.   The event cost $50 for a table.

How much did I make?    $46.   I couldn’t get that final sale to push me over the bar to at least recoup the table fees.    So basically after accounting the $46, I’m out $4 and then probably about $25-30 in product and most important, about seven hours of my time.

Although there was about as much traffic as you’d expect at something like this (on the low side), no one was really interested in our tea.  This was easily the worst show we’ve done so far.    I think the next closest might have been close to $100 and an honorable mention to one where we paid $100 to do $200 in sales.  I think the people next to us selling string art sold nothing.  I don’t think my story today was really unique, as it looked like most vendors spent most of the time on their phones.

I don’t know what to make of it. On one hand, it’s easy to look at these kinds of events and say my time is better spent doing absolutely nothing at home due to the real chance of not making enough money to justify the time/resources spent.  On the other, just like the lottery you can’t win if you don’t play.   You never know who will come across you, maybe someone might buy a few bags of tea and then become a regular customer who buys a few more over the course of the year and tells one of their friends to buy a few.  You never know.

At any rate, I guess it’s not money that I was really banking on, like if we don’t make anything at this show we starve the rest of the week or anything like that.  Losing from time to time is a part of doing business and if you take the rewards, you have to take the risks too.  I guess today was just one of those days…

We’re doing another show at a better location with the same people next month.  Hopefully that goes a little bit better.

Microbusiness Chronicles – Seasonality

Our time at the Farmers’ Market is winding down, with one more date in a couple weeks.   When we started out at the beginning of the year, in my head I thought our fairly regular appearances at the Farmers Market would be good enough to make a profit and then figuring we would get a date or two at the winter market and that would be a successful year.   Then we would have a big enough customer base that we would be able to count on a few online orders a week to put us through the winter.

Turns out that’s not quite enough…or at least it’s not optimal.  There’s a whole, big holiday season and according to people who do similar things this is where most of the money is made.

Our farmer’s market season has been successful, I think.   I wasn’t sure what to expect when we started and hadn’t talked to anyone to get a good, solid ballpark figure (if that exists).   What we actually make was below what I had in mind, but not too far below.   At any rate, it wasn’t bad at all for our first season.

Although we were doing pretty good, we figured we should do more than just accept the dates that were given to us at the Farmers’ Market.   So we went looking for a few other places to peddle our wares and got a few dates at a smaller farmers’ market and hit up another place a couple hours away.   Both of these things weren’t anywhere near as successful as our regular dates, but still worth waking up for.

Anyways, we’ve been booking ourselves up for several shows in the area between Halloween and Christmas.   We’re still waiting to hear from a few other places, but it looks like we’ll have at least around a half dozen big holiday themed shows lined up.

Here’s what I’m hoping – my mentality was wrong.   Instead of the farmers’ market season being the main show, maybe this time is.   And maybe instead of getting enough recognition with our customers to coast over the winter on online sales, we’re gaining recognition for the holidays.   We’ll be putting together tea gift bags and hopefully what happens is people see us around the holidays and remember that they talked with us or bought this or that and then decide to pick up one of these bags to give out for the holidays.

…and then the people who get our bags as gifts like what they see and repeat the cycle next year.

We’ll be busy, but I’m glad.   It would be nice to pay back the <modest> loan I took out to get started on this business and maybe, just maybe pay for our honeymoon this year out of it.   We’ll see…

Microbusiness Chronicles – Credit Cards

About a decade ago there was a commercial for one of the major credit card companies.   Everyone was at some kind of professional sporting event going through a line to buy food and drinks…or maybe it was the fan shop.    Doesn’t matter.   The line was huge, but going through quickly.   Everyone was swiping their debit card and rapidly moving on.   Some guy pulls out cash.  The line holds up, everyone groans, a sad trombone plays.  After the guy fumbles around with cash, the line moves with machine precision and speed afterwards.

The point of the commercial?   Use your card, of course.  It’s much more convenient for everyone.   They have a point, sometimes it is easier to swipe a card and be done with it.   It’s easier to carry a card than to worry about the balance of cash you have in your wallet.

So far credit cards have been about 10% of our farmer’s market sales, which isn’t too bad.  Although the above-mentioned commercial makes it sound like they’re indispensable in modern commercial, we would definitely prefer cash.   We’re happy to get any form of payment we can, but cash is king.

Why?   We get dinged for about 40 cents on every $10 in fees.  This adds up, especially on low dollar/low margin items.   It also takes us slightly longer to process it than it does for say, the grocery store where it happens almost immediately due to not having the best equipment available.

On the second point, I will say that it is pretty impressive that we can swipe a credit card and make a sale as fast as we can with the technology out there, which seems like it’s improved over the past few years.   “Primitive” card readers for individuals seemed like they used to take two or three times as long.    I’m not necessarily bitching about the speed of the machine or the technology available, but the physical act of getting the reader out, clicking buttons, etc. takes about two to three times longer than “here’s some cash.  Here’s your change”.   It’s not that big of a deal for us, but it is for other types of small business.

Recently there was a big uproar on a local food Facebook page where a guy freaked out about many food trucks not taking credit cards.   He made a list of all the ones he knew of that didn’t (yeah, a little obsessive).   A few people on the list dignified him with a response, basically along the lines of that they wind up paying hundreds of dollars every weekend in fees and it can hold up the line when things get busy.

Now seeing the other side of the credit card transaction, it’s made me think about *how* I spend my money with smaller businesses and would prefer to do cash when possible…but a sale where you cut into the profit by paying a fee is better than not making a sale at all.

At this point most people probably lose out if you don’t accept credit cards.   Obviously we do on our website but at the market we don’t advertise than we do, hoping that it will cause people to cough up their cash instead of their cards.

Microbusiness Chronicles part 2: Initial Financing

When we started filing out various paperwork here and there to have a small business, we started seeing a lot of ads for small business loans and various “resources” here and there to get loans.

I definitely see the role of traditional loans to start off a small business if your costs are fairly high.   If you start a brick and mortar store, you need good enough inventory so people don’t show up and say “this place sucks, they don’t have shit” and write you off.   If you need special equipment or whatever, that can be pricey.   If you need enough to run at a loss for a little while until you can pick up momentum, that’s fine.

Fortunately for us in the microbusiness model, our startup costs weren’t huge and honestly we could’ve started a little smaller.   We spent about $1000 on tea from a wholesaler and about $1500 on various bulk herbs to start.   We needed about $700 to come up with a tent, tables and banner for the farmer’s market.   We needed $150 to pay for our first three dates at the farmer’s market.   Insurance is $500 a year.  We spent a few bucks on business cards, a couple hundred dollars on packaging and a couple hundred dollars on labels.   We had a few hundred dollars in various other expenses, such as filing fees, equipment, etc.   While I guess it’s not technically a business expense, I upgraded my laptop to a macbook and spent a little on some video editing software.    Then there’s a few bucks for web hosting and all of that.

Honestly, it came up to a little more than I initially planned once the ball gets rolling.

Some of it came directly out of my pocket, which is probably how most microbusinesses start.   As I’ve said before, part of the reasoning behind starting a small business was to bring in some extra money since the past couple years had been a little dry financially so the idea of taking *all* of that money straight out of my pocket was a little hairy because I might need it for other things or just to feel a little more secure at night.

For the past several years I’ve been putting into a cash value life insurance policy where I’m able to give myself loans at relatively low interest rates.   The book “Become Your Own Banker” is all about this method.   Without going too much into this, it has the tax benefits of a Roth IRA and a lot more flexibility.   Since I figured eventually I would have some kind of small business, I had been putting quite a bit into it over the past few years.    As of now I have a fairly sizable sum in there to the point where I have access to a lot of cash for something like this AND if we needed new vehicles or something, I could basically finance it myself through this.

One of the best things about these kinds of loans is that you keep the principle, so your investments are still there and you just loan against it (at low rates).   A lot of my money in this account is in guaranteed return funds from the insurance company that pay about what they charge in interest.

Anyways, the payback structure is really flexible, you just do it when you want to (of course the longer you wait, the more you pay).   We’re probably a couple dates at the farmer’s market away from being able to write a check to pay it off and at that point I’ll consider us basically “in the black” or at least well on track to getting there.

At that point we *should* have enough cash flow to cover our basic operations and if all goes well, we will have made enough to pay the taxes, ramp up for next year and of course pay ourselves, which is the whole point of this.     But it is nice to know if we ever need a few thousand dollars to do something to take us to another level, I just have to make a phone call and a few days later check my mail for a check.



Microbusiness Chronicles Part 1: Why?

So Red Dragon Herbs is under way and we’re starting to pick up some steam.  I’m going to talk from time to time about some of the brass tacks things we’re experiencing and rationale behind some decisions in order to clarify our business plan to myself and maybe help others.


So let’s discuss “why” we’re doing it, which seems to be one of the first questions we get from people close to us.


First, the past couple of years have had a lot of changes for both Mary and I.   I have one of those rare high-paying industrial jobs but over the past four or five years I’ve seen my wages pretty much flatten out.   As the way I get paid is kind of complicated based on piecework and other factors, it seems like we’ve been getting nickeled and dimed here and there coupled in with a notable drop in business, which has caused a lot of brief shutdowns amounting to several weeks of pay over the course of a couple years.   We’ve also had a simple administrative change in the pay period which took us from getting a paycheck at 36 hours one week and then 48 the next (so 8 hours of overtime) to getting 42 hours a week (so a cut in overtime with no change in actual work).     Then we had our schedules changed to 40 hours a week doing the 8 hours a day five days a week thing.

So now I feel less financially secure with my job than I did a few years ago…and now I have each and every weekend free (well, there’s the possibility of mandatory overtime)

Mary had a job as a waitress at one of the fanciest restaurants in town, so it’s probably one of the best gigs of its type around.   With my schedule change, we would have to get a baby sitter for both of us to work and after running some numbers on the back of a napkin, it didn’t really amount to much for her to work after extra expenses.    So at this point we decided that it would be good if we could find *something* to bring in extra money.   Overtime at my job was out of the question.   She will occasionally fill in as a dental assistant here and there but that’s sporadic and not something she really likes doing.   I guess I could get a part time job, but that’s honestly a last resort thing because I figured we could find something of our own.

I’ve always wanted something of my own, business wise.   Early on I was influenced by reading Robert Kiyosaki’s Rich Dad, Poor Dad and The Millionaire Next Door by….I forgot.  Oh, and the biography of Alex Spanos, which was a good one about a guy basically starting from nothing and building a multimillion dollar business.  I read these books when I was in my late teens and pretty much just had life knock my on my ass right off the bat.  I knew it was time for some lifestyle and mentality changes and these books along with some other observations helped me a few years later in life when I was ready to buckle down and “adult” as the kids call it these days.

These books stressed the entrepreneur mindset and the idea that not many people become successful by simply collecting a paycheck.   Millionaire Next Door is big on this, the difference in mindset between the small business owner and the employee.   I definitely come from a worker bee background (i.e. my dad held the same job from the time he was about 19 until retirement) so the idea of risk is a little…risky to me.

I *think* I’m fairly creative.   I get all kinds of ideas on what I should do with myself all the time and like a lot of great ideas, usually that’s about as far as they get.  So sometimes I need to temper what comes into my head with reality.

I am happy (enough) at my job.   I have no plans to quit, there are some good things about staying there.   But I know I want *something* of our own in order to have a little extra security financially and some of the tangible benefits of being a small business owner.    I also want/am enjoying some of the intangible things, such as being able to share information about things I’m passionate and knowledgeable about, which is something that’s lacking in my day job.    I also want the challenge of building something…and so far we seem to be on the right trajectory.