Thursday, December 22, 2011

Efficiency Startles Yarnie Company Owner into Action

Over the past several weeks, I have been in negotiations with two local companies who have warehouse capabilities beyond what I can do.  Both companies have some different services to offer, and I will wind up working with both of them in the end.  This business, Wool2Dye4, has grown quite a bit in the past two years, and this means handling lots more inventory.  We receive it and check it off a list, then lift it and put it in place.  We label the outside of the box, then we open the boxes, take the yarn out and remove the mill labels, and replace them with our Wool2Dye4 labels.  Then, we stock the shelves or close the boxes again, and if there is any need to shuffle placement around, we lift them again and move them around.  Considering that a box of skeins weighs 44 pounds at a minimum, and cones up to 70 pounds ... well, it is a physical job requiring strength as well as attention to detail.

In the eight months since I moved the company the Shenandoah Valley of Virginia, I have had two packers/stockists who both had to be let go.  Oddly, both claimed they had no idea why they didn't last, and one, unfortunately, was a friend whom I kept on as an act of friendship.  Sadly, he didn't seem to think as much of our friendship and it ended badly, I am sorry to say.  This last incident clarified my thoughts about hiring more employees to handle stock and warehousing, and through a circuitous route, I came to consider two different options for both warehousing and the labelling of all stock as a new alternative.  It is wonderful when opportunities fall across your path, and you actually recognize them as such! Advantages include no physical labor for me or my assistant, a freeing up of current space for better use, and paying for this as a service rather than employee wages.  I have had both packers file for unemployment benefits, and here in Virginia, you can receive benefits without having to prove you could perform the job!  Pretty amazing, really, and very disappointing, especially over the one whom I had considered a friend.  I cannot tell you how many conversations I had in my mind, but, of course, can never actually say out loud.

Yesterday I decided on a part of the upcoming change, the warehousing, stock labelling, and sample creation.  I am going with a local sheltered workshop, a non-profit which employs physically and mentally challenged individuals.  Twice I have been to the site and both times been so impressed with the attention to detail and pride in workmanship.  Nothing like what I have just experienced with people who sought out a job and then slouched through the days.  I feel so happy about this decision.  In addition to getting all of this work handled, I am able to give back in a small way to the community.

The efficiency part, though, is fascinating to me.  For years, I have created a process for each of the elements of my business.  Samples, for instance, have undergone quite a change from the original little wound bits of yarn round individual cards printed with the yarn specs.  I think we had 12 yarns at that time.  Today there are 39 yarns in the permanent line, 9 special purchase yarns, and 5 or 6 retirement yarns.  We are about to add 8 new yarns in January 2012, too!

Yesterday I was asked to come over and help revise the process of assembling my wholesale sample pack.  The most recent incarnation of the wholesale sample pack has been a layering process, two columns on the front and two on the back, in a 9x11 bag with a sticky closure.  For me this presentation has been cumbersome, so I absolutely understood the need for a new way to pack all the samples into one bag in a way in which the new packers could accomplish this, and which would be pretty.  (I have a running joke, which is actually quite serious, and I frequently intone, 'Here at Wool2Dye4, Rule Number Two is Make It Pretty!'  If a new employee ever asks what Rule Number One is, I know they were listening.  This former friend, most recently disengaged, never thought to ask that question!)

So, they asked me to create a wholesale sample pack and timed me.  Of course, my fingers were fumbling and it definitely did not look very pretty.  Then the first modification came: using a piece of cardboard as a center sort of spine and glue dots to affix two of the sample baggies at a time.  That worked better, so we tried that.  Again, I was asked to create the entire packet from start to finish, and I didn't do too well. So we three tossed around ideas, until the simplest and most efficient idea of all came to one of them.  The new idea was to draw a single line down the center of a piece of card stock, and, using round clear stickers, affix two sample baggies at a time, working from bottom up.  It made a spectacularly pretty, very neatly arranged set of samples.  All these years, and I had never thought to try this!

They break down all jobs into a process and study the movements and method until they come up with an efficient way to perform the task.  This includes much more than making samples, but in handling a large number of stock boxes and the contents, how to stack and warehouse them for efficiency.  The next study will be about shipping efficiently from other countries, and there are some very exciting possibilties there, including some non-traditional approaches.  More on that later.

Suffice it to say that coming into contact with these people has made an impact on my thinking.  I realized that I no longer have to have total control over every aspect of the business and can learn to use the expertise of others, and to to trust the people whom I hire to handle that.  This was brought home very suddenly on the day of their visit to look over the business.  I was interrupted for about fifteen minutes, and when I returned, the President of the company asked me, 'What would you do with your time if we took away all the responsibilities of the warehouse?'  I started to stutter, and couldn't form a complete sentence.  Those who know me well will surely not believe that, but it is true.  My mind was racing with flashes of marketing ideas I have stewing around in there but no time to turn into reality, of the new website almost ready to go but caught in a limbo where I just cannot move it forward, of the letters unwritten to customers in response to theirs to me, or just the very time to consider new ideas.  The eMails alone used to take up three or four hours of each day, and in the past month, I have been distracted and my attention sidelined.  So there I was looking like a dummy, unable to answer that simple question, but this guy recognized that my mind was busy, busy, busy with the possibilities.  That was the moment I knew they were onto something which would help me and allow the business to grow.  It would mean that I would have to give up micro management!  I am very good at that, but in my own defense, I do feel that without control of the processes, the business could never have grown as it has.  Oddly, though, I felt a sense of relief come over me, and that was one of those Bingo! moments in life when you know that a good idea has just occurred and it is time to act and act well.  So, I moved forward and it is all about to come to fruition.I had another Bingo! moment seven years ago when I started Wool2Dye4.  I just paused to reflect on that realization that hit me, and immediately turned my thinking towards how I could make the idea work.
Through my life, many opportunities have fallen across my path, and I've followed a lot of them.  While all were not good, I have learned how to let the bad ones go.  Right now, though, I am sure I am onto something which will allow my business to grow in a healthy way, and allow me to enjoy it much more.
It's a good time to be coming to a new realization, isn't it, with the new year approaching.  I am corny and like making resolutions and writing lists, and taking care, and for anyone who is reading this right now, I've got to say that these little oddball preferences for order are key to growing a successful business.  You have to like what you do and how you do it.  You have to be happy with your choices, have the guts to look hard at how things have always been and take the chance to make a few changes.  That is where I am just now, and I feel it is the right place to be. 

Friday, December 02, 2011

Sales tax for internet merchants? Could happen soon!

Sales Tax measures ‘to Cost Us Big’ … December 1, 2011 WSJ
By ANGUS LOTEN wants to bring order to the way online retailers collect state and local taxes. And that has Web entrepreneur Stacy Strawn feeling anxious.
Under a 1992 Supreme Court ruling, online retailers including her aren't required to collect sales tax for purchases made in states where they do not have a physical presence.

Stacey Strawn says proposed online sales-tax rules would hurt her Silver Gallery: 'The big retailers will eventually take over online shopping.'

Amazon is backing new sales-tax proposals but some small businesses are worried it may hurt them in the end, Stu Woo reports on digits.
But Ms. Strawn, and others like her who operate with just a dozen or so employees, would have to begin collecting and remitting taxes for the more than 40 states that currently charge sales and use taxes, along with thousands of cities and counties across the country, as set forth by a Senate proposal unveiled last month.

That proposal, which has the support of Amazon, includes an exception for small-business retailers with less than $500,000 in annual "remote" sales—a sum so low that it wouldn't even cover Ms. Strawn's employees' wages.

"These are the most small-business-unfriendly measures I've seen in years," said Ms. Strawn, whose Waynesboro, Va., store, Silver Gallery, sells sterling-silver bowls, cups and jewelry. "This is going to cost us big."
Ms. Strawn isn't entirely sure what the cost to her business would be. A 2006 PriceWaterhouseCoopers study found local and state tax compliance costs small retailers 13.47% of all sales tax collected, compared to 2.17% for large retailers.

The concerns voiced by Ms. Strawn and other small online retailers highlight a new point of contention in the debate over taxing Internet sales—the so-called small-business exemption in federal proposals is now so small that even many small fry aren't protected.

"The Internet is the only place where someone like us can be next door to an Amazon," Ms. Strawn said. "If they don't do something, the big retailers will eventually take over online shopping. And that would be a huge loss."

Nearly all of the Silver Gallery's $3 million in revenue last year came from online sales. The store currently has seven full-time employees, but she may have to cut some jobs as a way to deal with the added costs.

Legislation that would require online retailers to collect state taxes has been proposed in each of the past seven Congresses, including House and Senate bills in 2007 that set the small-business exemption at a much more generous $5 million in annual sales.

Amazon's willingness to get behind the proposals—combined with pressure from states for new sources of tax revenue, and bipartisan efforts in the House and Senate—has given the movement more traction this year.

Last month, the world's largest online retailer expressed support for a Senate bill calling for standardized federal rules that would require online retailers to collect out-of-state sales taxes—with a $500,000 exemption for small retailers. Paul Misener, Amazon's vice president of public policy, said at a House Judicial Committee hearing Wednesday that any small-business exemption must be kept low to protect states' rights to collect taxes, while leveling the playing field between online retailers and their brick-and-mortar competitors that already collect state taxes—typically reflected as higher sticker prices. "No one should want these online sellers to take advantage of a newly created un-level playing field over small Main Street businesses, and no one should want government to pick business-model winners and losers this way," Mr. Misener said.
"Amazon is prepared to make its technology available as a service to help sellers by collecting sales tax for them," he added.
Other supporters of the proposals include brick-and-mortar-only retailers who believe the standardization will help create a more level playing field overall in the retail industry. Without a state sales tax, online retailers "have nearly a 10% discount automatically," contends Maggie Jetter, owner of Tweed Baby Outfitters, a baby goods and apparel store in Nashville, Tenn., that doesn't sell its wares online. "We're doing the same thing, offering the same products, so the law needs to be reformed and updated," she says.
Online retail sales in the U.S. grew 13% to $176 billion last year, and are expected to grow by 12% to $197 billion in 2011, according to Forrester Research.

The University of Tennessee estimates that states and local governments will lose up to about $12 billion in 2012 from uncollected sales taxes.

Tod Cohen, vice president, eBay Government Relations, said in testimony Wednesday that the company believes the U.S. Small Business Administration should be the one to determine which small business retailers would be exempt. Forcing small businesses to take on the same costs and tax burdens as national retail businesses is unrealistic, unfair and will "unbalance the playing field" between giant retailers and small-business retailers on the Internet, Mr. Cohen said at Wednesday's hearing.

The SBA defines most small retailers as those making less than $7 million in annual revenue. In some categories, businesses such as women's clothing, book and games stores are considered small businesses if they have revenue of less than $25 million, according to the agency.

Some small and midsize retailers argue they may have to raise their prices to cover the costs of complying with a slew of new state taxes, under the proposed standardized federal rules. The risk is that shoppers looking for the best prices may then move their purchasing to larger sites that can absorb the added costs, said Joe Sponholz, president of, a Wilkes-Barre, Pa.-based online baby products retailer with 29 full-time employees.

"It's not the start-ups or the Amazons of the world you have to worry about here. It's all the guys in the middle," said Mr. Sponholz, whose company recently built a distribution center in Nevada rather than California, to avoid paying state sales taxes. He says the $500,000 sales limit will only help very small retailers who have yet to develop a truly national reach.

A House bill introduced in October is also limited in the number of small businesses it would exempt. It makes an exception for those whose out-of-state sales are less than $100,000 in any one state, or a total of $1 million nationwide.
—Stu Woo contributed to this article.

Thursday, December 01, 2011

Next Re-Stocking on Monday, Dec 5, 2011

New yarn in the incoming shipment, don't forget!  It's Donegal Sock, and I, for one, will probably knit something out of it in the natural state.  It's just so different looking and pretty!  Ask for a sample if you do not yet have one!

The re-stocking shipment is definitely scheduled for delivery on Monday.  We will spend all day settling it in and may get some of the orders out Monday afternoon.  Tuesday, though, we'll be at 100% shipping capacity, and as usual, we ship in the chronological order in which your order was received.

Tomorrow is Friday, and I will send out the invoices for private orders, and then release the newsletter.  By the time you receive the newsletter, the inventory on the website will have been updated to reflect the incoming stock.  So, when you get the newsletter, you are free to browse the website and shop from everything that is coming in.  What we have been waiting for is the new Donegal Sock, of course, and also the yarns wiht Stellina sparkly stuff in them:  Sheila's Glitter, Sheila's Sparkle and Sparkle Select Lace.  We even had most of the sparkly yarns up until last week, and I'm very happy about that change.  Holding larger stock levels has definitely reduced the frantic factor around order time.  Still, here we are at the holiday when everyone really wants to wear something sparkly, right?  And we've got it coming on Monday, I assure you.

Here is a list of what is in this shipment.  (skeins, unless otherwise noted)
Angel Select
Cash Aran MCN
Cash Sock MCN
Crazy Eight, skeins & cones
Donegal Sock
Platinum Sock
Sheila's Glitter *
Sheila's Gold
Sheila's Sock
Sheila's Sparkle *
Silk DK 50/50
Silk Sock 50/50
Sparkle Select Lace
W2D4 Merino DK-SW, skeins & cones
W2D4 Merino Worsted
* returning to stock