Too Bad Everyone Doesn't Have to Own a Business at Some Point

A local plant nursery near me just announced they are closing.  It's too bad because they were the place you could get the really COOL plants for your yard - not just the standard stuff you can get at any big box store.  They will be missed.

But, the article in the paper had a comment from the owner that made me have flashbacks to the scrapbook industry. The owner said that they were losing money because consumers were buying their plants at the big box stores and then coming to this nursery for advice on planting and caring for them.  The consumers knew the big box store employees didn't know what kind of fertilizer worked best for a Japanese Maple, but they knew that this independent nursery did.  They dragged all their plant issues and dying plants into the nursery for advice but left without spending a dime.  

Shame on consumers.  I really wish that people would but themselves in the shoes of business owners.  If you don't want to shop there and pay a little more for the local retailer's fine products and experience, that's your choice.  But, shame on you for buying "cheap" and then using the expertise of the independent for free.  I have yet to run across a business who can exist by giving out free advice.  

I can't tell you how many times this was an issue in the scrapbook industry - and probably still is.  Consumers would come into their LSS and demo every tool they could get their hands on and then run to the big box store with the 40% off coupon and buy the one they wanted.  Those same people then act shocked when their LSS's started closing all over the country. 

I have often said that a retail business is not a charity.  They can't afford to give you free crop space, free advice, free demonstrations, etc. so you can go spend your money at the store that doesn't really offer any of of that.  

I know everyone is looking to save a buck these days, however, it's unfair to use a small retailer for information you know you can't get where you purchased your products.  Coming in to ask advice for a $200 cutter you bought somewhere else and then feeling "justified" because you walked out with $7 in paper (and therefore bought something, after all) just isn't nice.  

Put yourself in the shoes of that owner who has invested about everything they can give into their LSS before you spend half an hour playing with their tools with a 40% off coupon in your purse.  

Same Tricks, Different Industry....

I was watching Restaurant: Impossible last night.  If you haven't seen it, it's like Kitchen Nightmares that Gordon Ramsey does on BBC.  I love that show, too, and have used it in this blog.  Chef Robert Irvine goes into a failing restaurant and tries to turn it around.  The restaurant last night was a diner in San Diego called TRAILS.  It could have as well been a scrapbook store because I heard pretty much what I listened to for nearly a decade in the scrapbook industry.

Trails had an owner who had worked in a corporate restaurant and therefore decided she was qualified to run her own.  Lacking funds, she got her dad to finance it.  Lacking profit, they later decided expanding it out be the way to increase the cash flow so her dad took out a second mortgage and now he is $600,000 in debt.  

Reminds me of those who think that liking to scrapbook qualified them to run a scrapbook store.  So, they take out a second mortgage on their home to open one without any idea how to.  They think their "passion" will be enough to carry them.  

The decor was cute and the food wasn't bad - something Chef Irvine rarely encounters in these failing restaurants.  But, they will still losing money hand-over-fist so he set about the find out why.  

First, they bought the restaurant from the previous owner at the "Emotional Price".  Dave Ramsey would call that a "Stupid Tax".  Saw it all the time in the scrapbook industry.  An owner, having put all their blood, sweat and tears into their business, believes it is worth MUCH MORE than the sum total of the inventory and  fixtures.  They believe they have a loyal customer base and that their own sweat equity is valuable.  Financials don't matter or aren't offered up or requested.  A buyer, not getting proper advice about how a business is priced, buys into the "this is my baby, take care of it" line and just wants what they want so bad they agree to the ethereal and baseless price.  The owner of Trails paid $240,000 for about $20,000 worth of restaurant equipment in a leased building.  She claimed to have gotten a "customer base" for that price, but how many of us eat at the same restaurant all the time?  As Robert Irvine pointed out, Doctors and Lawyers have valuable customer bases, restaurants don't.  

I consulted with quite a few people who would come to me wanting to buy a scrapbook business.  They most always had the "emotional price".  And, most of the time, the current owner didn't want to release financials to them. I usually said either they didn't have a clue if their business was making money or they were lying to them that it was.  If they based even part of the price on ANYTHING, they usually started with the cost of inventory and fixtures.  How much of that inventory was outdated, though?  You can't expect to recoup 100% of your investment of inventory that no one wants anymore.  I was always surprised at what people thought their little scrapbook business was worth.  I usually told people it would be cheaper just to start their own and build their own reputation.  Sometimes, you're buying a business no one wants to come to anyway.  I cringe when I see "UNDER NEW MANAGEMENT" signs.  To me, that is announcing to the public that, yes, we were awful but come try us now!  It's hard to undo customer attitudes toward a business.   So, unless the business is making the big bucks with a loyal customer base, it's probably better to build your own than buy someone else's albatross that they are eager to get rid of at your expense.  Most of these owners rarely took home a penny while they owned the place, but now will attempt to extract their profit in the sale of it.  I usually told people to walk away.  

Their second mistake for the restaurant was pricing.  They wanted good food at a great price so they priced food based on the cost of the food and nothing else.  The owner had no idea what her daily operating costs were.  She had never calculated them.  She just said, "Let's set our prices at 3 times the cost of food" or some other "sounds like a good idea" strategy.  "Hope" is not a good strategy for a business.  She was shocked to learn that her daily expenses above the cost of the food were $900 - before she even took home a penny for herself or started paying her Dad back.   Her cheap breakfasts meant her core customers were geriatric and on "fixed incomes" so she kept her prices low for them and they sang her praises - right into the poor house.  

I saw poor pricing strategies way too often.  The challenge of the scrapbook industry is that everyone is selling pretty much the same stuff.  So, some would try to be the cheapest by shaving a few cents off the price.  Then, they might heavily discount their shipping if they were online.  Or, they would succumb to customer complaints about the cost of scrapbook products and try to lighten the financial burden in hopes they would sell more.  Rarely did anyone run the math or do any research about the demographics.  

Her third problem was that as a mom, she didn't want to do dinner service - she wanted to be home with her kids.  They had tried dinner service for a while but were losing about $500 a day on it because no one was coming.  Her Chef had the same attitude - she wanted to be home with her kids, too.  So, they were trying to run a restaurant on the two cheapest meals of the day.  

If I had a dollar for every scrapbook store owner who didn't want to work too many hours because they needed/wanted to be home with children, I'd be rich.  A business is the most demanding, needy and naughty child you'll ever have.  It will over-shadow and eclipse all other children until you can afford to pay someone to manage it for you.  Even then, when there is a problem, it's YOU that has to take care of it most of the time.  As one owner who closed her store told me, "When my alarm goes off at 3 am for the third time in a week and I have to get dressed and go down to the store to take care of it, I wonder how much longer I want to work for free."  

A few years ago, Dr. Phil gave some business dreaming moms a reality check on his SHOW.  Basically, if you have kids at home, don't start a business that needs a lot of your time.  Think smaller or go get a job with regular hours.  But, the idea that you can be successful only being open when the kids are at school is unrealistic.  Your customers are probably not available during those hours.  They want to come after work and on weekends - the exact times YOU want to be home with your kids.  

Scrapbook Industry 2010

I'll admit that I have pretty much ceased my scrapbooking.  I cleaned out my studio and have a huge pile of scrapbook paper waiting for me to drive it to the local children's hospital.  My paper crafting is relegated to the occasional card or tag.  I don't see myself doing traditional paper scrapping ever again.  I do most of my memory preservation with digital scrapping and print it out in photobooks.  In fact, I have my own photobook company now.  

I rarely purchase scrapbook supplies anymore.  The largest local scrapbook store in my area went out of business this year after more than a decade.  I stopped by Michaels today because I needed some paper for a project for the teenage girls at my church.  We are making these cute gum advent calendars.  I was saddened by the lack of selection of Christmas papers.  There was about 10 different ones and none of them very interesting.  It was sad that there really wasn't any place else to go for a better selection.  

Is the scrapbook industry dead?  No, it's not.  Has it contracted significantly?  Yes, it has.  The result is being left with whatever you can find in your area rather than the freshest fun stuff hand-picked by an independent scrapbook store owner based on what her customers are telling her they want.  

Does that mean there is room for new scrapbook stores because so many places are left without one?  No, I don't believe that's what it means.  Although I'm sure there are some who are sort of new to the industry who believe that.  It's not that many areas don't have stores because no one has thought to open one.  Many areas don't have stores because there just isn't enough business anymore to support one.  

I have had the occasion in the last month to correspond with two people who were looking into opening or buying a scrapbook business.  Both asked my opinion based on how involved I have been in the industry.  While I don't necessarily participate in a business way in it anymore, I have paid attention to what has been happening to scrapbooking.

I get the feeling that the closing of so many retail stores has helped the ones that survived.  Although their customers are having to come from farther away.  But, as one store closes, another picks up some of those poor scrapbook retail orphans.  But I also get the feeling that the new influx of customers just helps them hold steady.  They don't really grow as a result of someone else closing.  They just replace customers they themselves may have lost.     

I am also convinced that digital scrapbooking and photobooks continue to take a tremendous bite out of the traditional industry.  I was walking through Michaels today and heard two women discussing how no one makes scrapbooks anymore because they don't have to print their photos.  They were just a couple of shoppers - no one special.  I was sort of amazed at their insight.  They are on the right track.  There's no compulsion to take care of that roll of film sitting on your kitchen counter.  And, for me, printing THEN scrapping was more time consuming than scrapping THEN printing as I do in digital scrapbooking.  

So, as I corresponded with these women who came to me, some thoughts emerged regarding the industry and how you can tell that it's probably not a good idea in most cases to dump a lot of money into starting a business.  Does that mean you shouldn't start a business?  No.  But, you should proceed with caution and with money you can afford to lose.  It's advice I've actually been handing out since 2002.  

Martha Steward said that if you only seek the advice of friends when you're about to launch an expensive business, you're on the wrong track.  Of course your friends will agree that it's a great idea.  What else are they going to say?  They have no skin in the game so they are totally supportive of whatever you want to do with YOUR time and YOUR money.  I daresay, though, that most wouldn't give you a minute of their own time or money to help you.  Suddenly, it may not seem like that good of an idea if they have to put something up.  And, despite what they say, your own friends will often never spend much in your place of business.  I've seen that time and time again.  They sort of expect the big discount more than they want to help you pay the bills.  You simply can't build a business on the promises of friends.  

Seeking the advice of someone who will challenge your idea is the best thing you can do.  I will challenge your idea to enter the scrapbook industry.  I figure one of two things will happen.  I'll either make you SO ANGRY that you set out to prove me wrong and you'll work your rear off to make sure I see that YOU can be successful (which may actually result in your success), OR, you'll get scared and walk away.  Either way, you'll probably win.   Retailing of any sort isn't for wimps and the scrapbook industry is an especially challenging place.

Consider the following:  

• There was once probably a dozen consumer magazines in the scrapbook industry.  There are now only a few left and they are very thin due to a lack of ads
• At one point, there was a dedicated tradeshow for the industry.  Now, there is only CHA and the scrapbook portion of it seems to be shrinking in size of booths, number of exhibitors and attendees.
• There have been instances of companies debuting products at CHA and then cancelling all orders immediately after the show and closing their business.  That's not good when you can get enough orders at the biggest show there is to move forward.  
• There were 4-5 trade magazines at the highpoint.  There is now one and it's not that good.
• When I started ScrapBiz in 2002, I worked with probably half a dozen distributors.  About half of them have now closed.  
• Support organizations like ScrapBiz have all but disappeared with just a few left
• Once popular Creating Keepsakes University is non-existent as are many of the expos in many markets
• The big box retailers, who carry what's selling, have down-sized their scrapbook sections or now offer very generic, cheap products in their aisles.
• Most of the direct sales companies dedicated to scrapbooking have disappeared.  I get the feeling the ones left are limping along.  
• Lots of very popular names in the industry have added digital scrapping to their offerings.  Most retailers "pooh-poohed" the idea of digital scrapbooking and paid a price as lots of their customers left to pursue it and never darkened their door again.  

You can't blame the economy.  The scrapbook industry started to decline in about 2006 - well before the economy started to tank.  Do I see it roaring back?  Not really.  Do I see it continuing to exist?  Yes.  It's just peaked.  

Therefore, I caution anyone looking to start a business in it to do their homework (as I always have).  Don't ask your scrapbooking friends if they think opening a business is a good idea.  Instead, hunt down former store owners in your area and have an honest chat with them about why they closed their doors.   Run the numbers with a realistic look at how much patterned paper you'd have to sell to break even.  Look at your finances and decide of you can afford to lose the money you put into your business.  

Then, either proceed with your plans to prove me wrong or walk away and save yourself the headache.  

PTA Fundraiser Idea

I know that many Parent Teacher Associations (PTA) and Booster clubs (band boosters, etc) look for no-brainer, no-work ways to raise funds that work for families. I know my kids have sold their share of donuts, chocolate, wrapping paper and Entertainment books. But, those usually mean lots of work behind the scenes placing and sorting orders. Even eScrip cards are pretty labor intensive. So, lots of groups have turned to things like Goodsearch.com where they don't have to do anything but direct parents or supporters to a site where they can purchase things they already need or use.

PhotoBooks{etc} has launched a new fundraising opportunity for your non-profit group.  You get your own account to send your supporters to and photobooks will have your group's name and logo on it to remind them they supported a cause important to them.  

• Do we have to take orders? Nope, it's all done through your site - the customer does it all through the link!
• Do we have to deliver anything? Nope, we take care of it. The order is shipped directly to the customer's home.
• Do we have to deal with payments? Nope. The credit card processing is done by US! You just get a check the following month for your sales (less 3% fee for credit card processing)
• Does it cost our organization anything to join? Yes, it's just $49/year.  You can perhaps get a sponsor to take care of that cost for you.   
• Do we have to have a website? No, you can pass the link along to your supporters through email or in your newsletter. The link will be a self-contained store they can create and buy from.  You don't need to build a website for it.  
• How much do we make?  You can set your own prices so you control how much you make.  But, if you leave them at the MSRP, you'll USUALLY make between 20-25% on the photobooks.  Some products will be less (like prints) and some will be more.  It usually averages out in the 20's, though.  Not bad for just sending out a link and encouraging them to choose your site when they make their photo books and gifts.  

Our free photo program is award-winning for ease of use and works nearly like MAGIC! The quality is top-notch and our prices are competitive with other programs like Shutterfly. Photo books are extremely popular ways to print photos and preserve memories and photo products like key tags, mugs, mouse pads, puzzles, etc. make GREAT gifts! Your supporters can even order prints, enlargements and posters at competitive prices and support your organization doing it!

If you have any more questions or you are ready to join and want the link, please email us.  

The End of an Era

I got a postcard in the mail today telling me that the 14 year old scrapbook store north of Seattle is closing.  My gut tells me that if they can't make it, no one can with a bricks and mortar store.  They are in a great location - right next to the huge regional mall and they have tripled in size in the last 9 years or so.  The owners say they are retiring - which I believe because they are in the right stage of their life to want more freedom.  Honestly, though, if you have a "cash cow", you either sell it to retire or hire a really good manager so you hardly have to be there.  Closing is a last resort since you don't get any financial benefit from doing that.  

About a year ago, just before CHA, they sent out a bizarre email to all their customers defending the store from a comment made by a customer.  It was odd because, of course, 99.99% of the people who received this email didn't hear the comment.  Maybe they thought OTHERS were thinking what this customer said.  Apparently, a customer came in just weeks before CHA and pronounced the store, "EMPTY" and walked out.  The owner got upset and sent out this email telling everyone that the store wasn't empty on purpose - they were gearing up to order a bunch of new products at the upcoming CHA show.  It might have sounded reasonable to the average scrapper but it sounded like "spin" to me.  Knowing what I know now, I believe it WAS "spin" for a store that was limping along.  In all the years I have lived her, I have never seen that store feel like it was empty.  But, the last few times I have been in there, it felt that way.  

They really gave it a good run and I'm sorry they're closing.  I have been very critical of LSS's over the years but this one always seemed to shine while others failed.  They added some digital elements.  They added a scanner for photos.  They had great classes and fresh products.  The staff was friendly and helpful.  I never had any criticism for this particular store.  In fact, I believe it was the reason so many other smaller stores in the area failed.  No one else could match their selection so scrappers would often just head there first.  

But, their closing also re-affirms my belief that a bricks and mortar scrapbook store is not for the faint of heart.  Even the strong can't always survive.  

We love Social Media!

Do you follow PhotoBooks{etc} on Twitter or are you a fan on Facebook?   We love social media!  It's so fun to get to talk to our customers more often than our monthly newsletter.  We love the feedback we get from the new age of instant communication!

Check out THIS ARTICLE about how our new businesses use Social Media to grow and keep in touch. 

Still looking for info on running a Scrapbook Business?

Did you miss out on the sale of our remaining ScrapBiz Business Start-Up Guides?  Well, take heart!  It's being revised and updated and a newer version at a lower price will be available later this year.  If you want to get notification of when it's ready to order, sign up for our email list in the left column.  

But, for now, I was cleaning out my office and came across TEN of our "Best of ScrapBiz" books.  This book is a collection of some of the best articles taken from our very popular members-only monthly newsletter called "ScrapBizness".   They are full of tips, tricks and ideas for helping you run your scrapbook business!  It's a great resource if you need a little inspiration!

Normally, we were selling this book at over $20, but I'm going to let the rest of these go for half that - just $9.99 each.  Shipping $4.90 (Priority Mail).  I am only shipping in the U.S.  If you REALLY want it and live outside the U.S., email me and I can calculate international shipping for you and send you a Paypal invoice for the full amount with shipping.  

Click the button below if you want one of the last copies of The Best of ScrapBiz.  We won't be having any more of these printed - when they're gone, they're gone!