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Monday, June 4, 2018

Sometimes You Just Have to Burn the Ships

It is hard to believe that I haven't posted anything since the end of April, so a post is long overdue.

Since I opened the website on April 24, the date of my last post, I have had 338 visitors to the site and exactly one order. According to Google analytics, only 27.5% of those visitors are over the age of 65, while a surprising 23.75% of visitors are under the age of 44. The rest of the visitors, some 49% are between 44 and 65. So the hobby is far from dying: there is still a vibrant interest in stamps for many years to come, judging from the simple demographic information that I have been able to glean from Google.

It is easy to get discouraged at the lack of orders, which I did toward the middle of May. However, I had to remember that I have done no advertising for the site and that 100% of my traffic has been organic. Also, it takes time for Google to properly index the site content. My items are now beginning to show up in Google organic search thanks to the meticulous job I did in completing the meta tags and meta data for every item in my store. Finally, only a very small proportion of my inventory is currently listed in the site. As of today, there are just over 1,150 items. But these are confined to only a few issues and represent a very in-depth selection of these few stamps. So the lack of orders is likely a reflection of the relatively narrow selection of material at the moment. On a very positive note, I now have 45 VIP customers signed up out of the 200 or so brochures that I mailed out in April. So, roughly 25% of those I mailed to have acted on my offer, and I expect that some more of those that have not yet acted will do so as the July 31, offer deadline date approaches.

In general, the customer feedback about the appearance, layout and ease of use for the website was very positive.

So, there were plenty of reasons for feeling encouraged. But my the middle of May, I was super down to the point that I almost decided to give up. I wrote a post in my Canadian stamp blog titled "Is There Really Any Room In The Hobby Anymore For Professional Stamp Dealers?". The initial response to this post was from the negative, cranky collectors in the Facebook groups and this negativity almost prompted me to throw in the towel.

But later in the weekend came the groundswell of positive feedback from my loyal customers and other strangers telling me to please not give up. These people reminded me that there is indeed a very large place in the hobby for someone with my attitude and knowledge. So, within a few days I was back to normal and energized. I decided though to take a much needed trip to Vancouver to rest, see my son, my mom and my friends. It was after this trip that I came to a stark realization.

During this trip my thinking was on how to solve the immediate problem that was stressing me out so much: insufficient cash flow. Not insufficient my very much, but insufficient nonetheless. The shortfall was predicted to hit in October. So I was trying to hatch all kinds of plans to generate another income stream to supply this cash through October 2018. I had come up with ideas to offer my accounting and business knowledge through online courses and seminars. The ideas I came up with seemed really good until I realized one very important thing:

The potential cash shortfall was a symptom, and not the underlying problem.

The implications of this were profound. I realized that taking my focus off the business to go off and do something else might solve the immediate problem of a cash shortfall. But it would create an even bigger problem: the loss of almost all the forward momentum that my business has attained over the past three years. It takes a long time to build that momentum, and it drops off, very, very quickly if you stop working on the business.

I further realized that the reason why I am experiencing these difficulties is that I am attempting to execute my business plan with too few resources. I need help from employees to get my inventory listed for sale online so that I can sell it to the customers that I have who already trust me, as well as attracting new customers. I also need to start travelling to stamp fairs and shows. Finally, I need more inventory to replenish the better material I have now sold and to expand my selection. I cannot do any of this without additional investment. I hadn't considered seeking additional funding because I had this idea stuck in my head that I am a failure if I cannot fully execute my plan using the capital I started with. Hogwash! I achieved great success with what I had to start with. I built a customer list of over 1,500 names. I have managed to generate a steady cash flow stream that has become less and less dependent on E-bay, and I have established a large online presence in all the major Facebook groups through my blogs. But the time has come to seek more resources - to take on more risk and not play it safe so much.

This realization made me remember something from my days as a history student in university. When I was at university in 1989, one of the courses I took was Latin American History. One of the required books was Bernal Diaz's "The Conquest of New Spain". It was a first hand account of the conquest of the Aztecs by Bernal Diaz, who was one of the conquistadors that served under Cortes. In his book, Diaz describes battle after battle in which the Spaniards were nearly wiped out. The men followed a ritual after every battle though: retreat to camp, tend to the wounded, eat and pray to the makeshift shrine of the Virgin Mary. At the end of one particular battle though, Cortes ordered all the ships that brought them to the New World to be burnt to the waterline. It was an all-in moment, a clear message that this was do or die. The conquistadors pressed on knowing that there was to be no return to Spain, and the rest is history.

Thus in business, sometimes it is necessary to go all in, to burn the ships so to speak.

You hear all the time about how it is important to know when to quit in business, but you rarely hear people write about going all in. There is of course a fine line between the two, but when your business plan is fundamentally sound and all the indicators are that it will succeed over the longer term, then you owe it to yourself to burn the ships. In my case:

1. The demographics show that the market for stamps still has a lot of years left in it.
2. My business so far has been highly profitable for the amount of material I have been able to process and list.
3. I have built a loyal customer following that trusts me, is spending more and more with me and is growing.

E-bay was manipulating my ability to grow and I have now taken steps to solve that problem by moving away from them. But the business has been a success fundamentally. Therefore, there is absolutely no reason not to pull out all the stops and seek the money I need to take it to the next level.

Thus, this month, I am preparing a new business plan to present to the Business Development Bank of Canada to seek financing which will finally allow me to hire the help that I need.