Isn't it ironic...

So here is the irony in all of this - we were seriously contemplating the fate of the business when our "opportunity of a lifetime" came up. Let me give you a little background.

Everyone in the world thinks that running a gift basket business should be a blast. While there is definitely a "fun factor" involved in designing the gifts, it's really a pretty difficult business model. Consider this - the profit margin on a gift basket is roughly 50%, and the average gift is about $50. Don't forget you'll need to deliver and ship the gifts. You can make a small profit on local deliveries and UPS shipping, but you might only break even (especially with the price of gas rising exponentially). Most - if not all - of your gifts will be ordered via phone or internet, so a percentage of your sales right off the top will go to credit card fees, and you will pay a higher rate because the cards are not present. You'll need to carry a generous selection of inventory, and this will change based on holidays, best selling themes and seasons. Add to it the fact that most GB businesses do 1/3 to 3/4 of their annual revenue in the last 6-8 weeks of the year (stop and think about that for a minute!). This means that your sales are not spread out nicely through the year, allowing you to process them with minimal extra help - it means they are crammed into a brief, chaotic holiday season requiring an army of extra help....further cutting into profits. Sounds fun, doesn't it?

We've been in business for 6 years and grown at a steady pace - 20-30% each year. We have a showroom in a very visible location and customers all over the world. Our sales figures put us at middle to high range in the industry - more than most, but definitely not in the big leagues yet. I'm becoming convinced there is no "middle class" in this business. I think you can be profitable when you are small and homebased, keeping your overhead to a minimum. But unless you have a significant portion of your home dedicated to your business (or you're lucky enough to rent space only when you need it) you'll need to relocate when you hit around $100,000 in sales and outgrow your spare bedroom/dining room table/basement. Now you've got rent and everything else that comes with it. After that it's pretty tough going until you approach the half million mark, because you'll need a certain amount of square footage to produce $250,000 in sales, but you're not earning enough to smooth out the seasonality. Obviously everyone's circumstances are different, but it's really hard..... even when you have a clue what you are doing going into it.

So why does everyone think it's a great idea for a business? Even in my economically depressed neck of the woods there are new basket businesses popping up all the time...although it's telling that at least 3 of them closed last year. For one thing, the barriers of entry are really low - you can start one out of your house, for less than $1000, and it doesn't require any special training. For another, it tends to attract right-brain types (and I include myself in this catagory) who think it will be a great use of their creative energy, but don't look too closely at the numbers. You don't get a clear picture of how difficult it is to make living at it until it's too late. (DUH!)

So...we've arrived at year 6 and we're taking stock of the situation. We had sales goals we needed to reach this year, and quite frankly, we just didn't hit them. We are still growing and we've acheived a great reputation in our area. We have an impressive roster of corporate customers we do business with and the feedback we get is amazing. Our clients tell us pretty regularly that we are fantastic and they are so grateful to have a service like ours right here in Syracuse. I get a huge amount of personal satisfaction from creating beautiful gifts that put a smile on people's faces, and owning this business has given me opportunities I couldn't have imagined a few years ago. Still - I'm a single parent with a deadbeat ex. My mother has been divorced for more than 20 years. This isn't a hobby, and neither of us has the luxury of a spouse (I know all my married friends are laughing themselves silly at that phrase) to pick up the slack financially while we struggle through this particular phase of the business.

Unfortunately it just hasn't grown fast enough. We're out of resources and we have to make some hard choices - do we switch to a "Christmas only"model, and close the rest of the year? What would I do for the rest of the year? Do we sell the whole business, or just the inventory? And now we have this crazy-ass wild card in the mix - our MOVIE DEBUT next year! It has the potential to change everything...... or nothing.

We're looking at ways to close the gap between where we are and where we need to be. The Buck Howard project could provide the exposure that will push us to the next level, so we're brainstorming ways to maximize it. We'll be running promotions and specials to tie into the movie and I'm talking to the Palace Theatre about holding a special screening party when the movie is released in July 2007. My very cool pals Kathy Dwyer and Stephanie Salanger of the TAG Group have offered to help with PR, and they are the local gurus of public relations. The national exposure along with our increased online visibility should make us less dependent on the local economy, but that remains to be seen.

In light of the new developments, we're going to stick with it through the holiday season and certainly until the movie is released next summer. If we manage to pull our butts out of the fire, it will make one hell of a come-back story.....stay tuned.