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Sunday, September 25, 2016

Financing Approval Obtained For The New House and Pictures!

This has been a crazy busy week trying to get things in order with the financing for the new house. On Tuesday this week, we finally received approval from the lender that our mortgage broker was working with, so our only challenge remaining is to bridge finance for two months between the date our remaining funds for our down payment become available, in January 2017 and the closing date of November 30. I am still fairly confident that one of my contacts will be keen to make an easy $500-$1,000 of interest income for a 2 month loan, but with any luck, we won't have to go that route. The reason is that we may qualify for a Small Business Finance Loan with the local branch of our bank in Saint John. Those of you who have been following the ongoing saga of our troubles in obtaining financing will recall that I had tried to obtain a mortgage here first with our bank. We were completely unsuccessful with our bank wasting a month of our time. However, we were referred back to the Saint John branch by our contact at Opportunities New Brunswick. All of the sudden it seemed like they were VERY keen to help us.

Their small business loans officer has called me personally three times this week to walk me through the application process. They require a full business plan with three years of financial projections. So I had to spend the later half of this week updating the business plan that I had prepared back in 2014. If nothing else it felt really good to revisit our plan with the benefit of the historic actual results that we have achieved to date. The plan basically says that we will generate modest income for the period from 2017 and 2018, but 2019 will be our breakout year - our fifth year. By then, most of our inventory will have been listed, and we will have had our first full time employee since mid 2018. This is entirely within the norm for newly established businesses, in that it takes 3-5 years for the average business to become profitable, let alone generate significant income.

But it is going to be a hard grind. I cannot emphasize enough the importance of these two things in starting a business:

  • Persistence
  • Adaptability
My blog posts hopefully provide a real-time illustration of these two concepts. When we started this business full time last year we had no intention of leaving Toronto. Our business plan projected a growth rate from the use of social media that has not materialized. It is not to say that social media hasn't paid dividends - it is definitely starting to. However, it is not happening as quickly as we thought. Profit margins are as projected though. In addition, we have endured a major setback with one of our investors pulling out.  These types of setbacks are part and parcel of every business plan execution. I don't there are very many exceptions. 

It's how that adversity is handled that I believe makes all the difference. Despite the low response over social media and lack of engagement by readers, we have persisted in posting to our blogs, Facebook and Pinterest. Now, this month, we have had engagement from readers of the blog every week and a few new customers. So we can see that persistence is the key to success. Likewise, some of the issues that I have posted for sale on E-bay took a month or two to start selling, but once they got going they have been continual sellers. 

Our move to New Brunswick is the result of being adaptable: the business, while profitable, is not generating enough volume to make living in Toronto a prudent move. Taking that much cash out of the company as this early stage of its development will threaten its financial health. So we looked calmly for alternatives and found one that we both like. 

That's what it is all about.  

Now that we have nearly all the hurdles out of the way with regards to the purchase, I think it is safe to post pictures of the new house:

The yard to the left of the house as seen from the front.

The back mud room with the basement door to the left

Bedroom #1. We're getting rid of that awful rug the day we move in!

Bedroom #2

Bedroom #3 has its own bathroom right inside. The toilet is to the left behind the folding door.

Another view of bedroom #3 from the open corner shower stall. 

Bedroom #3 again looking toward the door

The dining room looking from the front of the house. The fireplace is not working. 

Another view of the dining room. 

The front hall looking toward the front sunroom.

The front sunroom.

The kitchen - a bit dated, but still decent. 

A brighter view of the kitchen. 

The upstairs hall looking up from the stairs

The living room. The fireplace in this room works.

Bedroom #4 from the ensuite door

The office for the business.

My favourite feature of the office - two glass doors enclosing built in shelves - perfect for our inventory!

The front stairwell.

The shared upstairs bathroom. I love the vintage 50's tile. You almost never find this nowadays.

The upstairs hall. 

That's it! This 132 year old house on a double corner lot for $132,000. There are literally dozens of properties in Saint John just like this that are in this price range. I'm not saying this to boast or gloat, but rather to simply raise awareness that there is a lovely and affordable city in this country that you can live in very affordably if you are prepared to create your own livelihood. I'd love to have friends there that we can share good food, good drinks and good times with. 

First round is on me!

Tuesday, September 20, 2016

Our House Hunting Trip to New Brunswick is Successful and Major Developments in Sales

After looking at residential properties for over three months, Steph and I decided that it was finally time for us to go out there to view the properties we liked. We didn't want to stay in Toronto past November 30, as it would consume far too much of our cash and we would be faced with moving in winter, which just didn't make sense to us. Steph had been looking at every area in New Bruswick that you could possibly imagine: Saint John, Fredericton, Moncton, and all the smaller towns. After that long, and that many properties, you are able to tell pretty quickly whether a property is a good deal or not. One thing that is very apparent to us is this: although the maritimes have historically been a "have not" region, with depressed economies, and low real estate values, it is very difficult to see how this trend can continue, especially when one sees how expensive houses are in every other major city in the country, and how many businesses now can operate independently of geographic location.

To conserve our resources, which are limited right now, Steph went ahead and found us an Airbnb for two nights at a cost of $220. The place had a kitchenette, so Steph made some hard boiled eggs, some chicken salad, toasted some bread and then packed a large cooler bag with fresh fruit, nuts, bread and the food that she prepared. The idea was that we had all meals prepared except for dinner on Friday and Saturday night. I tell you, Steph is the most amazing partner in this regard. She knows how to economize like nobody's business, and while we both appreciate the finer things, we are equally at home eating peanut butter sandwiches on the hood of the car, by the side of the highway for dinner if need be.

The drive to Saint John is about 15 hours from Toronto. We decided, as with all our trips out that way to do it in just one day. So we set out at 6 am on Friday morning and arrived there at about 10:30 at night, with Steph and I switching back and forth every four hours or so. She drove through Ontario, which is about 4-4.5 hours. I drove through Quebec half way, then Steph drove the other half of Quebec to Edmunston in New Brunswick, which is at the border. We stopped there and had some decent and cheap buffet food and then I drove the rest of the way to Saint John, which was primarily through moose territory, which was a bit scary. We actually did see a moose cub crossing the road at one point. However, our high beams are pristine because we have never used them in the city, so they worked absolutely perfectly for the entirety of the drive through New Brunswick.

What we both found striking during the drive over, is how vast and how beautiful this wonderful country of ours is. Ontario east of Toronto is very green and dotted with charming, small towns, while Quebec has both a very varied landscape. Finally, New Brunswick is the most beautiful province of all, with rolling hills, rivers, and forest as far as they eye can see. In contrast to British Columbia, where the trees are generally only evergreens (spruce and pine), in New Brunswick, there is a much wider variety of trees and vegetation. The best part from a driver' perspective though, is the high speed limit - 110km/h, which is the highest posted speed limit that I know of in the country.

We arrived in Saint John at 10:30 and proceeded to our accommodation, which was right off the highway. We were greeted by an older woman who I would guess was in her 60's. She seemed to be drunk, and even joked about appearing so and made out like she had a problem walking. We made our way in and yeaaahhhh. It was, how shall we say? A bit like you would expect a university student's apartment to be: tidy and almost clean, but by no means impeccable. But it gets creepier. We get to the end of the hall and notice a glass door with a curtain over it right across from our room. Steph opens it and the old woman calls out "Hello!". OMG! It is her bedroom! and the door has no lock, so she can just come in and out. No big deal, we thought. I mean we can always lock our bedroom door right? Well not so much. No, our door had no lock. So basically we both spent the next hour wondering if we were about to become murder victims in the middle of the night. Eventually we realized that this was probably a trusting east coast thing and that we posed as much of a danger to her as she did to us. So reluctantly, after trying to wedge a chair under the door, unsuccessfully we settled for placing the tin garbage can in front of the door, so that we would wake up if she came in. The bed was extremely comfortable and clean though, and soon we were asleep. Just before we went to sleep, our realtor called to confirm our meeting time in the morning and gave us some bad news: one of the houses we had really liked was sold and could not be viewed.

We woke up in one piece in the morning and after a quick breakfast, set off to meet our realtor at the first of 9 properties we were scheduled to view on Saturday. We arrived at the first house located in a small town called Norton. It was a nice house downstairs and had two very friendly cats, which we appreciated. But the upstairs needed a lot of work, and we weren't sure how good the internet out there was. Still, we left feeling that this house was a 6 or 7 out of 10. The second house was just gorgeous: an 1870's home in Hampton, with beautiful tin ceilings, huge cast iron radiators, and wainscoting on every wall. It was split into two very large apartments, which would work well for the business. However, it had issues with the roofing and the windows, which would easily cost $50,000 to upgrade. This was just what we could see! So as grand as it was, we moved on to the next house.

The third house in the same area, looked great online and was in the same area as the second house. We went inside and immediately felt claustrophobic. Although it was "done", it reminded me of one of those "pioneer" homes, with super low ceilings. Someone over 6'2 would have to duck in places. Our realtor was really taken with it, but we weren't. So onto the fourth house nearby, which again looked good online, but was a real disappointment when we got in. It smelled of pets and stale fried food and was just not that great. The surprising thing is that it was $230,000 and we were told that an offer would be coming in that day. We told our realtor to "let them have it".

Then we headed into town to the fifth property, which was a beautiful brick appartment building with 3 units. OMG! It was just breathtaking with the most amazing architectural details. At $259,000 it was at the outer limits of our price range, but it was fully rented and with two good rental suites it looked very promising. However, it had no land and the maintenance on the property had the potential to be very, very crippling. So we concluded that we were not ready to be landlords and moved on to the sixth property.

Our realtor needed to meet another client for a few minutes. So we took our time and drove around the neighborhood to get an idea of what was around. It looked very much like East Vancouver in the 1990's: not upscale, but clean and safe. We arrived at the house and were amazed by what we saw. This was a house that had caught our eye at the very beginning of our search, but we had hummed and hawed about it because it had no dishwasher. I'm so glad that we decided to view it, as it was even nicer in person that it appeared online, and seriously, how often does that happen? Steph and I both knew that we had found our house! The price was incredible - $137,900 for a 2,400 square foot house, with 4 bedrooms and 4 bathrooms, situated on a double corner lot in town. So we immediately made an offer and were countered up to $132,000, which we accepted. However, there was a snag: we had to close November 30, 2016. We knew that if we had to put 30% down to qualify for a mortgage, that we would not have the money until sometime between October and January, so there is a chance that we won't have it by November 30. So our challenge now is to come up with some bridge financing until the funds for our down payment become available. However, with two full months to come up with the money, I am confident that we can do it.

 I wanted to post pictures of the house initially, but I don't want to jinx the deal, so I will post them in a separate post, once we are certain the deal will close. However, I was able to get some nice shots of Saint John:

Downtown looking toward the harbour

Downtown looking up from the harbour

The central park downtown, called King's Square. The plaque on the left states that it was established in 1785

Steph standing on the pier near the harbour and looking out. 

Another view of the harbour from the pier.

The pier looking up toward town. 

Another view looking up toward downtown from the pier

Steph standing in front of the lighthouse on the pier. 

After a lovely dinner at the pier, we went back to our B&B and went to bed early. We woke up early Sunday morning and set out for home. I decided to try and drive the entire way just to see if I could do it. All went according to plan until we got to Ontario, where a huge accident shut down both sides of the 401 and we had to detour, which cost us 2 hours. But we made it home by 11pm and both Viktor and Meeko were thrilled to see us. 

This month has seen a huge spike in engagement from readers of the blog, and we have now obtained 3 customers from the blog. A fourth potential customer for Nigeria has surfaced from reading the blog. Finally, we received a major referral yesterday, which may result in thousands of dollars of sales over the next several months. I worked for 2-3 hours on a quote and just sent it to the customer today and am now waiting to hear back. 

So all in all, a very exciting time! My next post will be about the sales statistics that I have complied this month, which will allow us to do a complete analysis of our customers for August-September 2016. 

Tuesday, September 13, 2016

Time For a Shift in Focus

For the past several months, Steph and I have had a fairly set working routine:

  • On Mondays we usually fill the orders that came in on Friday and the weekend and I spend the rest of the day updating the blogs, while Steph lists stamps or writes the posts for the "Stamps Damn It" blog, which is her baby.
  • I usually fill orders from Monday and spend the rest of Tuesday is scanning, while Steph lists modern material. 
  • I usually fill orders from Tuesday and then list what I scanned on Wednesday while Steph scans her material.
  • I usually fill orders from Wednesday and spend Thursday scanning again, while Steph lists her material.
  • On Friday, I fill orders that came in on Thursday and spend the rest of the day listing. 
In this time, there are several things that have fallen by the wayside:

  • Our corporate records are in need of organizing.
  • The minute books have pages that need to be completed.
  • Share certificates need to be issued.
  • Legal agreements need to be properly documented.
  • The Bonanza store is a mess as none of our items are matched to store categories. 
  • We haven't done anything to move Auctiva Commerce and our own website forward.
  • We haven't done anything with Google Adwords.
  • I have a couple of former clients that need bookkeeping help and are willing to pay me for that help. 
  • We haven't got a full grasp of the government programs and incentives available to us when we relocate to New Brunswick.
  • We need to secure the rest of our investor money before our cash reserves run out completely. 
  • We need to acquire a property in New Brunswick and get ready for the move. We have now received word that at least one lender is willing to work with us. 
So with the fact that Steph and I are getting married in just under 3 weeks and all the above, it has become fairly clear that my focus needs to shift away from listing new material and toward dealing with all the above, at least for a while. I have been reluctant to do this because I have noticed that sales tend to suffer unless material is continually listed. However, Steph will continue to list the modern material, so it is not as though nothing will be going up. 

We are now all ready for the wedding now, with the only thing remaining being the rehearsal dinner on the 21st. 

Where we have been the most busy is with the move. We have managed to find one lender who is willing to work with us, and one of my other investors is willing to advance another $50,000, which will be sufficient to cover our down payment on the house. We are still finalizing talks with another investor for an additional $50,000, which should cover our living expenses for the next two years, while we get the rest of our inventory listed. The missing piece to the puzzle is finding a way to secure cost-effective labour, as it is becoming clear that we are going to have a difficult time doing this on our own once we decide to expand beyond Canada and British West Africa. So we have been in discussions with two people at Opportunities New Brunswick, the government agency charged with providing incentives to businesses relocating in New Brunswick. We are waiting to hear back from them as to the next steps and are hopeful that there are incentives available to us. We would expect that there should be, given that we will eventually be creating good jobs for people living there. 

So over the next several weeks we have our work cut out for us. 

Monday, September 5, 2016

August Ends on a Positive Note and September is Off To a Great Start

Although July and the early part of August were slow and lacklustre, our sales performance has picked up considerably in the last half of August and has held firm to today - September 5. We have been reaching our daily goal of $100 sales per day for September so far, and as of August 22, we started tracking the names of the actual customers as well as the date on which they became customers. The subject of this post is a detailed look at the sales for the period August 22 - September 2, 2016 - an 11 day period.

Here is what the statistics reveal:

Total sales from August 22-September 2: $814.12 - so approximately $74.01 per day.

Total number of stamps sold: 97

Average sale: $8.39 -so mostly less expensive stamps.

Total number of unique customers: 39

Total number of completely new customers: 18

Total number of returning customers: 21

Breakdown of returning customers:

  •  1 customer first did business with us in September 2015 - spent $3
  • 1 customer first did business with us in October 2015 - spent $12.85
  • 1 customer first did business with us in November 2015 - spent $14.85
  • 1 customer first did business with us in December 2015 - spent $13.35
  • 2 customers first did business with us in January 2016 - spent $10.45
  • 2 customers first did business with us in February 2016 - spent $7.20
  • 3 customers first did business with us in May 2016 - spent $189.39
  • 3 customers first did business with us in June 2016 - spent $110.55
  • 1 customer first did business with us in July 2016 - spent $117.60
  • 6 customers first did business with us in August 2016 - spent $24.33
So all told, these 18 returning customers spent $503.57 out of the total of $814.12, which translates into 61.8% of the sales for that 11 day period. Most of these repeat sales have come from customers that we first did business with in May, June and July. The earlier customers from this group have spent the most, which is significant, as none of these customers had spent very much before. We have continued to attract sales from customers that we first did business with earlier in 2015, through none of these have spent much. Initially, that suggests the possibility that customers eventually spend less and less after they have peaked. However, after looking at specifically who these customers are, we can rule that out, as none of these returning customers have ever been big spenders. There could be a variety of reasons for this, which could include budget considerations and the specialized focus of the customer in their collecting. It would appear that the most plausible explanation is that many of these earlier customers are older and on limited collecting budgets. We attracted these customers when we had only a very limited range of earlier stamps posted. Now, with over 5,400 items running in the store we are attracting a broader and broader range of customers, including those who are just starting their collections. However, the fact that these collectors who are on a budget are coming back is very encouraging.  

We also obtained our third confirmed customer from social media in this period as well, in addition to three different comments coming from people who have viewed the blog. This development is most exciting because up until now, we have had almost no comments on our posts. Now we are beginning to see regular engagement from our readers, which is really the first step in our content being shared and some of the readers deciding to view our listings and actually purchase some stamps. 

It will be interesting to see what emerges over the next three weeks, once we have a full month of good data to analyze.