Episode Summary
Jacob Curtis and Spencer Wright talk about how a better understanding of your quilt store’s cash flow will help you be more successful. Jacob’s work consulting with and running a quilt shop gives him insight into the challenges many retailers face everyday.
Jacob discusses how he helps retailers use the data collected from their systems to keep their business open and running. This improved view of the business enables shop owners to transform their business from a struggle to a joy.
Key Insights
- You need to understand what the true drivers of your business are.
- It’s important to really understand your accounting.
- Understanding your fixed costs will help you make liberating decisions.
- You need real numbers in order to make business decisions.
- You need to understand who your customer is and what they are going to buy.
Episode Highlights
- It clicked on me that we needed a cash management system to really help manage the business.
- And profitable is really a tricky word because there’s profits and then there’s cash flow and sometimes they don’t line up.
- What is my fixed costs? Well, how much do I need to bring in each day just to keep the lights on and keep people employed and customers coming in.
- And that’s one of those things that you really, if you’re, if you haven’t really dug into the numbers very much or know even where to start, that’s where a lot of people struggle. And so that’s one of the things that we help our clients do is figure out what that monthly number is. How much do you need to start? You know, what is that?
- And so one of the very first mistakes I see is they don’t do enough market research. They don’t set up a solid marketing plan.
- If you’re not tracking customer names, like who buys what, how much they’re spending, you need to start doing that. That is invaluable information.
Guest Bio
Jacob Curtis tells the story of how he applied the accounting principles he has learned to help his family-owned quilt store streamlined its business. He also explains how he has built a successful accounting and consulting business tailored to quilt shops.
Website: https://www.curtisaccountingsolutions.com/
Transcript
[00:00:00] Spencer: Okay, well welcome to the Quilt Shop Podcast. I have Jacob Curtis here with me from Nashville, Tennessee. Jacob, how are you doing today?
[00:00:30] Jacob: I’m doing great. How are you doing?
[00:00:31] Spencer: Yeah, I’m doing really well. I mean, you know, we’re kind of right in the thick of summer. And for me, that is like, best case scenario. I know that’s not the case for everyone, but I, you know, I just.
I love the heat. I love kind of just the fun things that happen here in Utah during the summer. And so for me, that’s a lot of fun.
[00:00:52] Jacob: Yeah. Yeah. It’s hot and humid where I’m at here in Tennessee. So.
[00:00:55] Spencer: Yeah, I guess that’s probably true.
All right. Well, Jacob, so I wanted to reach out to you because you are the co-owner of Utah Valley Quilting, which is actually a local quilt shop for us here. But you’re also the founder of Curtis Accounting Solutions. And that’s kind of the main reason why I wanted to have you on here. Even though I think the two of them go together really kind of really beautifully and really, you know, from, you know, for us here.
But at Curtis Accounting Solutions, you help you know, quilt shops work on their financial goals and kind of take them towards, I guess what you would say financial freedom. Is that correct?
[00:01:30] Jacob: Yeah. Yeah. Like you say, we have a quilt shop there in Springville, just down the road from you. but primarily, yeah I originally started my Curtis Accounting Solutions because of my mom’s quilt shop and to help her with her financials.
So I’m a trained CPA by trade and that’s exactly what we do is help people figure out the money part of doing business, of having a quilt store and figuring that out. And so, yeah, that’s exactly what we do is help people with their bookkeeping, payroll, taxes, and helping them piece together financial freedom so they can fulfill their dreams and own the quilt shop that they want and things like that.
[00:02:03] Spencer: Okay. Yeah. No, I mean, for me, this is like super exciting cause you get someone who’s like, I think Jacob’s a specialist in his own right, right, as a CPA, but then he’s even further specialized within our industry is that he works on like taxes and finances for quilt shops all day, every day. Like that’s what he specialized in.
And so I was like, Oh my gosh, we have to have Jacob on the podcast to kind of talk about some of this. I’m sure we’ll hear some anecdotes and just some tips for, you know, the everyday quilt shop owner, right? So why don’t we just go ahead and get into it?
So Jacob, I would say you know, first tell us a little bit about yourself and why you wanted to get into accounting, kind of apart from the quilting side of things, which I’m sure will come later. But you know, what makes your brain tick that you’re like, yeah, I want to be an accountant.
[00:02:49] Jacob: Yeah, I think it started probably right at the beginning of college, right at the end of high school. I was in New York City and I realized that there were people that were buying these like 65 inch plasma screen TVs. At the time, those were really big and really expensive. But they were living in, like government housing and I was, it was just so weird to me that, like, they would buy these really nice big TVs and really nice cars that live in these like crappy little shambles. I was like, that’s so weird. Why would people do that?
And so for me, I kind of triggered the idea of, well, let’s study about money because I don’t want to be in that kind of mentality. I don’t want to live like that. So when I enrolled in college, I enrolled to be a finance major. And part of that, going through that initial program was you had to take an accounting class, like accounting one on one and I took the class and loved it. I actually failed the class, but I still loved it. And I retook the class and I did really well. And everything just kind of fell into place after that. And so, ever since then, I’ve been working in accounting.
Post- college, I went on and got my CPA and everything and worked in the corporate land. I didn’t go the traditional route and work at a CPA firm, but I worked in, like, a company’s accounting department for a few years, which was really beneficial for me.
At the same time as I was going through college, my mom had started her quilt store, and so I was doing a little bit of bookkeeping, just kind of like dipping my toes in, like I’d learned something new and then I’d go back and like, see how it would actually work in the real world, you know, using QuickBooks or something and in a real business and vice versa. I had a, I was able to do that really kind of solidified the accounting principles, but also how the quilt shop business runs and operates.
And so, from there, it just kind of grew. And my old corporate job, eventually, they were bought and sold by then a publicly traded company. And so it was perfect timing for me as my CPA didn’t have a job lined up. I always wanted to be my own boss. And I had this desire to really help you know, help people with their money and finances.
And so at the same time. I just dove in headfirst and started Curtis Accounting Solutions and inched down into what I knew business was. I knew that quilt shops and quilt shop owners needed some help and needed that information. And so I just jumped headfirst into that world and helped to provide the expertise that I thought I could provide.
[00:05:04] Spencer: Yeah. No, I can totally see that. And I, yeah, I mean, I think it’s really interesting to identify kind of a niche there, right? Where you were kind of doing general accounting and then obviously your mom starts Utah Valley Quilting and you’re like, okay, I think that there’s more to this, right. I think the things that I’m doing to help my mom potentially would be beneficial for a lot of other stores. Right. I think that’s something that, right. You, I imagine you probably recognized it really early on.
[00:05:34] Jacob: Oh yeah. When we, just to kind of give you a quick story. So a couple of years ago, I didn’t actually co own Utah Valley Quilting until just a couple of years ago.
I had started and everything and she’d gotten kind of in financial trouble. Sales tax was something that she’d gotten behind on and she had all these bills and had taken on debt to expand the store and things like that and she was pretty upset and sad and was like, I don’t know what to do. I’m just, I think my last resort is to close the store. And I was like, hold on, mom. let’s not take the nuclear option here and let’s figure out a way to do that. And so for a year I bought in to get her out of the immediate trouble, paid off some of those immediate trouble debts that were like coming due that week, and then ever since then, I kind of dove in a little more to kind of get an idea of what that is. Instead of just doing the bookkeeping, I started actually participating in the business and helping her make financial decisions, and just talking through that, you know, owning a business looks like.
And so, from that for the first year or so, I kind of just put lipstick on a pig. I did the normal accounting thing and like cleaned up the books and like ran the reports and follow the metrics. But we really hadn’t made any progress towards paying off all that debt that she had accumulated.
We’d made the minimum payments, but we hadn’t grown the business. We hadn’t really done anything other than keep it a little more organized. And that was really beneficial, but then it clicked on, it was right around tax season cause she asked like, well, why do we owe taxes if I don’t have any cash? Like that doesn’t make any sense. And it clicked that, Oh. She thinks that taxes are based on your cash flow, and they’re really not. And that sometimes is surprising to a lot of people to learn that.
And so it clicked on me that we needed a cash management system to really help manage the business, and so that’s when I came across a book by Mike Michalowicz. It’s called Profit First, where it’s basically just a budget. It’s an envelope system for business that uses checking accounts and multiple checking accounts to help you manage the business. And for me, it was just like a no brainer because in corporate land, that’s what we did. We had a payroll account. We had a marketing account, like actual checking accounts set up to help run this multimillion dollar business. And I thought, well, if a big multimillion dollar business needs that. Small business can probably also benefit from it. And so using the methodology by Mike Michalowicz, I became a certified product first professional, and now we use that cash management system in our business and I’ve customized it and for each business that I work with, it uses the system and there it’s. It’s so enlightening, just kind of eye opening, is kind of what I like to see. It just clarifies where your money’s going and how much you need to spend when and where and at the right time and things like that. And it’s been really liberating.
We paid off all of our debt in 18 months after using that system. And because it was just so obvious that, oh, this is where our cash needs to be. And this is what we’ve got planned. It was just a super easy, simple cash management system. Now, don’t get me wrong. We still needed to use QuickBooks and use the bookkeeping and things like that, because that’s what taxes and everything’s based on.
But that first line of defense there was cash management, making sure we had a good, healthy cash flow.
[00:08:28] Spencer: Yeah, no, I love that. And I love kind of, I love the story of the arc of, okay, what are our options here? Right. Should I close? I’m sure that there are so many people who listen to this podcast who have gotten to that point, right. And hopefully have, you know, made, you know, the right decision or the correct decision for them. And hopefully, you know, that ends up being, keeping your store open, but. Yeah. I mean, it’s interesting because we talk so much on this podcast about the passion behind owning a quilt shop, right. It really is a passion for so many people. And at the same time of it being a passion, it is a business, right? And so how do you weigh the two things, right? The passion versus the numbers and the financial side of things, right? Because ultimately like it should be, and it is, I think every quote shop owner’s goal to turn a profit of some kind, right?
And not that I do not believe that most people get into it saying, I’m going to become a multimillionaire, right? Like that, I do not believe that’s the case, but it still has to make sense, right. And so how do you prioritize the things and the principles that are going to allow you to keep your shop open, right?
And financially provide for yourself while also kind of partaking in this passion of yours, right. And that’s what I love about quote shops and I mean, really creative shops in general you know, yarn shops, you know, kind of adjacent stores is that, I love both sides of it. And so I don’t know, that’s just kind of what made me your story made me think about that, if that makes sense.
[00:10:00] Jacob: Yeah, it is awesome to work with such passionate people because they love creating new things and they love helping other people like pick out the fabrics or the colors to go with the pattern or whatever they’re working on.
And that’s really exciting, but at the same time, like if you’ve opened a store and you’ve got hundreds of thousands invested in inventory and you’re trying to manage all that, like it, it’s a business at that point. It’s technically a business. As soon as you file paperwork with the state and say, I’m a business, right?
[00:10:24] Spencer: Sure.
[00:10:24] Jacob: Before then there’s probably some idea. But because of that, once you’ve kind of committed to starting this business, even if you don’t mean to go on and make millions and be the next Bill Gates or whatever, or Steve jobs or you know, whoever, you still need to run and operate it like the business, cause there are some real consequences for not doing that.
There’s some IRS laws and things like that. Regulations that say, if you don’t make a profit in three years, like three out of the five years, the IRS has the right to come and say, well, then you’re a hobby and you don’t get to be a business anymore.
Now they typically don’t do that, right? They don’t, especially for small business, because they know that small business really takes a long time to kind of grow, but they can technically and so you just have to justify, well, this is why we’re not profitable.
And profitable is really a tricky word because there’s profits and then there’s cash flow and sometimes they don’t line up. You may be profitable on paper on the tax return, but you may not have any cash in the bank. And so in most quilt shops, most small businesses are actually set up so that you, as the owner, are taxed on the business profits. And so that’s one of the reasons why we’re so keen on making sure we’ve got cash flow right and set up so that we are saving for those taxes, but how do you manage, like, your question of how do you manage like, your priorities?
And that’s where it comes back to, just… I’m going to fall back onto the profit first cash management method is it’s based on a percentage and allocation. So every dollar that comes in, you’re going to allocate it to your profit account, which is like your savings and your emergency funds and your, where you get your quarterly bonus from into your owner’s compensation to make sure that you’re getting paid at least a little bit to help compensate for some of the bills at home.
I know most quilt shop owners probably aren’t paying themselves. If they are, that’s very little. I only know of a handful that are actually paying themselves a living wage. And so part of that is making sure that you get all that set up and allocated properly.
And next piece of that is there’s always a fixed cost to doing business, right? You’ve got monthly fees, you’ve got rents, if not rent, then maybe a mortgage. If not a mortgage, then you’ve got at least employees potentially, or maybe, you know, there’s always a fixed cost to doing that. So part of that is knowing, well. What is my fixed costs? Well, how much do I need to bring in each day just to keep the lights on and keep people employed and customers coming in.
And that’s one of those things that you really, if you’re, if you haven’t really dug into the numbers very much or know even where to start, that’s where a lot of people struggle. And so that’s one of the things that we help Our clients do is figure out what that monthly number is. How much do you need to start? You know, what is that?
And especially when they’re very first starting out, younger shops, it may be that you may need to be making a monthly investment from your personal finances to kind of supplement the income until you have enough customers and enough sales coming in to support itself. And that’s kind of neat key to kind of look at and follow through. Well, what is that? How long is that plan? And that’s, and just kind of running the numbers out is something that’s really important for quilt shops to actually do, even if they don’t do it themselves, having that number in the back of their head saying, Oh, I know I’ve got to get at least, I know 2, 000 of sales a week just to keep the doors open. Like, that’s something you can hold on to, right.
[00:13:25] Spencer: Yeah, no, I mean, I think that’s really applicable, right. It’s just like a simple principle. Like what is, you know, the bottom line here? Like I have to get to X amount. Like I just, I have to because that’s the fixed cost, right? Like I don’t have any other option. And I think that’s really keen advice.
So I want to ask another question, Jacob. What would you say is the most common mistake that you see quilt shops make, from a financial perspective that you’re like, man, if they just maybe made, you know, took this path instead of this path you know, it would have, you know, worked out a lot better in the long run for them?
[00:13:59] Jacob: Yeah, I think that it’s kind of, it’s actually probably not really a financial mistake so much as it is a marketing mistake, because the marketing all kind of filters into the finances, right? If you don’t have sales coming in the door, then you don’t have money to pay the expenses.
And so one of the very first mistakes I see is they don’t do enough market research. They don’t set up a solid marketing plan and as an accountant, I can’t like, I’m not trained in that, obviously, like I know what it is because I’ve run a business and things like that. And so I rely on other experts to help me figure out what that actually means. I’ve read lots of books on marketing and sales. But the reason I say that is because if you don’t have a good solid marketing plan and strategy to bring customers in, meaning you’re not going to get enough sales and sales is usually the piece that we need to look at.
The second thing that I think the most common mistake is that they invest too much in inventory. They take out huge amounts of loans. You know, I’ve seen loans from anywhere from 10, 000 to 100, 000 just to get inventory. And if you haven’t done your research into your customers and who your potential customers are, you may not be buying the right kinds of fabrics or notions or, you know, machines or something.
And that’s something that’s really key cause one of the very first things is that, when you’re starting out, you need to know who your customer is. You need to have that avatar named, you know. For example, the avatar for my accounting business is Jennifer. And the reason I named my avatar Jennifer is because in that decade range of most quilt shop owners range, Jennifer’s the number one baby girl’s name of that era.
[00:15:30] Spencer: Okay. That’s actually so awesome and also I wonder how many Jennifers are listening to this podcast.
[00:15:36] Jacob: I mean, I have five clients that are all named Jennifer, and they all have, and I know of every store that I work with, except for like two or three has a Jennifer as an employee or like knows Jennifer just. So it’s kind of, yeah that’s one of the reasons because it was the number one baby’s girl for like two decades. It was really interesting. So yeah, that’s where I got there.
But if as a shop, as a quilt store, you need to figure out, like, who are my people? Who comes in the door? What are they buying? And that’s the first thing is figuring out and making sure that you can bring in sales cause once you can get the sales coming in, then we can turn around and look at the expenses and fine tune what you actually need, you know, do you need a Zoom subscription? Do you need a subscription to just, all kinds of things?
Usually, I’ll be honest when we sit down and do our first initial like expense analysis with a lot of our clients, we usually end up finding about five to 10% of their annual spend in things that they forgot about, you know, Oh, I forgot I had that subscription or I forgot I was paying for that and and so we immediately like, well, yeah, this is one of the things that we do is help you kind of identify where that is, but it also helps you save five to 10% right off the bat. And everybody can do that, you just, the way you do it is you just kind of look through your bank statements for the last three to six months. And make sure that every single transaction, you know, what it is and why you purchased it and identify if it’s something that’s actually needed or just wanted cause oftentimes it’s like small business owners, we have shiny object syndrome and we buy courses and we buy subscriptions and we buy things that we think we’re going to use and then we ended up not using. I’m guilty of that. I do it too. So.
[00:17:08] Spencer: Yeah. No, I mean, I think that this is advice that’s probably transcends even small businesses, right? The, I mean, it is I think that, you know, recurring subscriptions and kind of what you’re referring to is something that’s really surfaced heavily in the last five or 10 years, right?
That like all of a sudden now every business is running on a recurring subscription, you know, even Like Sew, right? Like Sew is a recurring subscription. And it is different because it’s, you know, kind of what we would consider essential for your business and not that everything or anything that’s purchased isn’t.
But I think from a personal level, right? Like I have to go through my bank account and say, okay, is this necessary? Like, do I need Netflix? Do I need HBO? Do I need Hulu? Right. And I think that there’s kind of some adjacency there.
But Jacob, we’re going to go ahead and go to break real quick. And when we come back, I’m super excited to talk a little bit more about consumer behavior and what you’ve seen in the last few years.
Okay. And we’re back from break. Thank you everyone so much for kind of being with us today. I am just having so much fun kind of talking to Jacob about, you know, how finances and how important it is for your business, and how do we apply that to quilt shops specifically, right. And that’s something that’s so, so important to me.
But one thing I wanted to bring up that I kind of mentioned before the break, we know that consumer behavior changed a lot during COVID, right. And I am not one that enjoys talking about COVID as something that’s like enjoyable, but I think that it did change consumer behavior and I just want to talk about from Jacob’s side of things, from the finance side of things and also talking to someone who like actually is involved with a lot of quilt shops. What have you noticed as far as, you know, changes to consumer behavior over the last few years?
[00:19:45] Jacob: Yeah, so it’s been kind of chaotic as we’re all aware, right? COVID hit and everything had to go online somehow. And so there was a lot of shifts of how to do that and then cOVID kind of was starting to dissipate and then we had the supply chain issues and it’s just, it’s been kind of chaotic last few years, but some of the trends that, that I’ve picked up, and I work with shops across the nation from California to Minnesota, to Texas, to Iowa, to Virginia. Just all over the country. I have a lot of them.
One of the big trends is making sure that you know who who your customer is. So I have a couple of clients that we worked through an exercise and we realized that their customer avatar was actually the younger generation, those in their mid forties that have kids that go off to school during the day and they started, they wanted to get into some kind of hobby that they could do, you know, fairly easily. And so, one of our clients noticed that they were, like they were selling out of kits, like left and right, all the time. And they couldn’t make them fast enough. It was kind of crazy what they were doing. And so I kind of looked across all of my clients.
Once I noticed that one, they actually noticed and pointed out to me, I started to look for that. And across the board, that range of mom who has kids in school they’re looking for something that’s pretty easy to do. And so sewing is something that maybe they learned from their grandmother or mom or something, and they just always kind of want to pick it up, but they don’t know too much how to do it. And so picking up patterns and pre cuts and like layer cakes and just doing Simple quilts and simple sewing things is something that They’ve started to pick up and follow those instructions.
And then as you kind of get into those older generations, we’ve noticed that they sell a lot more yardage and things to that generation because they’ve been maybe sewing for years, right? And so they have a little more experience under their belts. And so they usually go for the yardage.
The interesting thing is the online shift. So immediately after COVID, like everything went online. It had to be online or you had to sign an appointment to go to the store. And so, I have a few clients that, those that made the shift really well and like their business just took off and I have a few clients who didn’t quite make that shift as easily and it actually they shrunk a little bit. and then the next couple of years kind of rolled out and it’s kind of actually for a couple of those stores, it’s actually flopped. They used to have tons of sales online right after COVID. And now they have a ton of sales that are in person. And when my clients talk to their customers and figure out why you come to the store versus online. The ones that come in the store are local, obviously or they’re in a touristy area. So they, you know, whether they get on those shop hops and just kind of do the tour across the states or something, or they’re local, something like that.
But those that are buying online are usually buying for a specific purpose. They’re looking for a specific fabric that their local store doesn’t have, or they’re looking for a specific pattern or designer or things like that. And so, the general trend that I’ve mostly seen is that online sales have actually kind of come back down a little bit compared to what they were, you know, just right after COVID, after everybody started opening up again.
And I think part of that Is due to because you, you just got to have that in your hand, you got to have the fabric in hand to match your colors, make sure it looks good, but also one of the biggest things is having a sample up on the wall of a kit or a pattern or something. If people can’t see it, a lot of these quilters can’t visualize it, especially the mid 40 year olds, the younger range that may be coming in, they can’t visualize as well and so they need something to look at.
I have a store, a couple of stores, that they make a sample. And as soon as they make a sample and then sell, they sell out of that kit within like three weeks. They’ll make up originally 10 and then 10 more and then 10 more until they stop selling out of those 10 every week and they do them in batches of 10 because one, that’s what they’re Acu-cutter better can handle and the two, it’s easy.
So I think that’s, one of the major trends is the younger generation who has kids still in high school, but are gone during the day. That’s kind of where they’re. That’s where their bread and butter is. They want to get into it and kind of learn how to do it. I have one store who started doing free online tutorials with the kit. So like you get the kit and the QR code you can scan and it’ll take you to their videos of like, okay, now you cut here. Now you sew this and you, this machine, you want to make sure you do this and that it’s really handy. They are so popular. They sell out of those every time there’s a free video tutorial.
[00:23:52] Spencer: That’s a really cool idea. That’s a really fun thing.
[00:23:54] Jacob: And it’s, I asked her how she does it and she says, I literally have my daughter with her cell phone or iPhone pointing the camera down at my sewing machine as I just talk through what I’m doing and how I’m doing it. And she says the demographic that watches that video is like 20, 30 year olds and the 40 year olds, right, because that’s just the generation that, you know, you’re a nice venture generation grew up watching videos and with YouTube and stuff. So, yeah, I think that’s one of the big keys.
The other thing is, the most recent trend is everything seems to be just kind of slowing down, like there’s not as many people coming in. Cart sizes, the average cart size is actually smaller than it was a year ago. In general across board, whether it’s online or in person everything just kind of, everybody just comes to be, you know, pressing the brakes just a little bit and looking to see what’s out there, and so a lot of them, a lot of the comments that the store owners are hearing is as well, I’m just coming to get thread or a needle or a quick pattern because I have all this fabric stashed in my stash and just need to get rid of that and use it.
And so, one of those trends that I’ve seen come through is really all about doing the classes and setting up a time to come in. So there’s a couple of stores that do a sew-a-thon. For 10, you can come in all day, like seven to seven and have a sew-a-thon and sew, and the way that they’ve done this is they’ve gone out to the local guilds and said, Hey, for 10 bucks, I’ll have a sew-a-thon and anybody that’s part of the guild in that day, anything they buy is, you know, 10% off. And they say they get five or six takers every time they do that. They do that about once a month and it just, they have an empty classroom. So they might as well use it with bodies, right? they’re going to pay for the AC and electrical that goes in there anyway, so they might as well get somebody in there.
And on top of that, they notice the days that they do those, their sales are actually a little higher than normal, just to have people in the store. And so if you can do that, if you have a space to that’d be awesome. If you can’t make, you know, figure out a way that you can invite people in there. That’s kinda what I’m noticing to do those things especially to help kind of with that bottom line, because if everybody’s sales are kind of just a little bit slow that’s, you’ve got to figure out a way to keep those up when you either got to increase your pricing, or you’ve got to increase the volume to, to make up for that, to keep your margins there.
So you can continue to keep the doors open, but I think that’s kind of the biggest trends I’ve seen, and yeah.
[00:26:06] Spencer: Yeah. No, I mean, that was an excellent breakdown. I actually, I’ve asked this question to a lot of the stores that I’ve had on the podcast, whether they’re store owners or, you know, we’ve had kind of a variety of different people on the podcast, but, and everyone has a very different take.
And that take was actually pretty different and very nuanced and I figured that it would be to get market trends from an account. Right. I think that just makes sense. so thank you for that one thing. So I’m going to kind of I guess, Take a little bit of what you’ve said and ask maybe a kind of a hard question.
So one thing you said, Jacob, was a lot of what people are hearing about what people want to buy online is like a line of fabric or you know, specialty fabric that they don’t have at their local store, something like that, right?
[00:26:47] Jacob: Yeah.
[00:26:49] Spencer: And then at the same time, you also have said that one mistake that people commonly make or that stores commonly make is that they order too much inventory, right. And so in some ways, these are almost conflicting. And I’m not saying that you’re conflicting yourself. I’m just saying, they’re kind of competing suggestions, right? Like, how do you get specialty fabric that no one has, but also not order too much where, you know, that it’s not going to be used, right? How do you weigh that? And, you know, what would you suggest for stores that are trying to, like, you want to be specialty in a way that like, oh, this store knows and carries this, but also not be too specialized because it could, you know, come back to burn you, right.
[00:27:30] Jacob: Yeah. Yeah. And so I, my answer is. There’s two, two ways to approach this.
I’m going to, so if you’re just starting out where you’re within the first couple of years of doing business, the answer is probably going to be different than some of that’s been in business five plus years.
[00:27:45] Spencer: Okay.
[00:27:46] Jacob: And the reason is because new businesses may not have that customer depth or knowledge or experience that another store may have, another store owner.
And so, regardless of whether you’re new or old, the one thing I would say is look over the last year of your sales. If one, if you’re not tracking customer name, like who buys what, how much they’re spending, you need to start doing that. That is invaluable information. You need to know that. so you can do this exact analysis. You can look and see who has spent the most money with you over the last year. Get the top 20 individuals who spent money with you and call them and talk to them. You know, get an idea of what their order history has been, but call and talk to them and ask them. Well, how did you find me? What is it that you’re you’re buying it? Like, look through your order history. It looks like you’re buying a lot of some fabric or you buy mostly kits or whatever it is. But you want to get that information so one, you can tailor the rest of your product offerings to that kind of person to those top 20 look for those as you analyze and ask them questions.
Try to figure out what the trends are between those top 20. Is it geographic? Is it a designer? Is it a certain type of project? You know, is it somebody who’s like, they’re just buying t shirt quilts and are making t shirt quilts and so they need all the supplies to stabilize the backings and do all that kind of stuff. Or is it somebody who’s making quilts for their grandkids or for graduations or all of the above, right? The idea though, is to really specialize and figure out who that customer is. I think that’s the first, like, I think that kind of refers back to one of your first questions is what’s the biggest mistake and that is not doing the market research.
Yeah. And part of that is not knowing, like, they, there is put out the general, this is who the average quilter is. That’s the average quilter across the entire nation and probably including Canada and other parts of the world, right? Like that is a very huge, broad statement. What we want to do is figure out who is your quilter.
I have a store down in New Mexico is in a pretty rural kind of an area. But they’re kind of a touristy location as well. And so they sell a lot of unique custom fabric designs to that area that’s just what they do. They obviously have, they have other things they sell, but what they really want to put the word out, what their messaging is in their marketing and everything is all about, you know, we have these unique fabrics that are, you can only be found here in New Mexico. They’re really awesome. I’m not a very good marketer as you can tell by my words here!
[00:30:03] Spencer: No, no, no! You’re good!
[00:30:04] Jacob: I’m not a copywriter, but yeah, I think that’s the idea though, is you want to be specialized. And so, yeah, when I, it is contradictory, right? I said
[00:30:14] Spencer: I wasn’t saying that you were contradictory. I was just saying, these are like, competing elements that I know are constantly
[00:30:20] Jacob: weighing.
We are. Yeah. And so the way that we figured out how to do that is to just look at who our top customers are, our top 20 and say, who’s buying the most for me, what are they buying? And then talk with them. How did you find me? You know, and a lot of these, you may, you probably know them, like you recognize them as soon as they pull into the parking lot, like, Oh yeah, that’s Sally or that’s Susan or that’s whoever, right? Like, you know who they are. And so. to compete, whether it be specialized or general, it’s always better to specialize until you get to about that half a million to 750, 000 mark in annual sales. Once you hit that mark, then you can start branching out a little bit, but not until you hit that million dollar mark can you really branch out and get a wider range of fabrics without being in too much trouble. from my financial, CPA perspective, right?
[00:31:03] Spencer: Yeah, no, and that’s what we want, right? We want your financial CPA perspective. We want to hear the advice from someone who’s literally talking to stores who are doing this every day. And that’s what I really think. I think that’s really sound advice to say, Hey, look, this is what you do until you get to this point and then expand or then do more or, you know, cause I think trying to do it all at once, especially in the beginning, it may overwhelm, right or, you know, and I think there are all different kinds of quilt shops at different stages, right? Like there are quilt shops that have been open for 40,50, 60 years and then some that opened last month, right. And how do you weigh what your customers need?
And I think for new quilt shops, right, like we just talked to, you know, I talked to Sandy on the podcast last month and, you know, she literally just opened up in like March or something like that and I imagine she has a lot less history, right? She does have a lot less history on her customers behavior than stores that have been open for a decade or two, right. And so some of it’s learning that customer behavior slowly, right? Like that you can’t. automatically assume what your customers are going to want to buy if you’ve only been open for two months.
And so if you’re just opening up a quilt shop, you kind of have to slow play a little bit of the market analysis and say, Hey, look, Let’s do what we think is smart now and try to figure out how consumer behavior is going to affect the way that we drive our business moving forward.
[00:32:29] Jacob: Yeah, and there’s one strategy that you can actually, that this works really well with, is pre selling like kits or a fabric.
So before you even buy it from the vendor, you know, from your distributor, whoever it comes from make up a sample, make up a… You know, and say we’re, we want to sell this. It’s on pre-order and one that’ll drive interest to see who’s actually interested in it. If somebody’s interested in it, you know, they can sign up on a list. But the biggest thing is to have people put their dollars where their mouth is. Cause everybody may say, Oh yeah, that’s so cute. I want one. And then based on just that information alone, you may buy something expecting to get a hundred people to buy it and ten do.
[00:33:03] Spencer: Sure.
[00:33:04] Jacob: Right, and so when you pre sell, you’re actually asking people to vote for it. I know a couple of stores that have done this with kits and things like that to kind of get an idea of what kits their customers want and they were surprised a couple of times. They thought this one kit was going to go gangbuster and they did their presale on it. And like two people ordered it. And so they contacted those two and said, unfortunately, we didn’t get enough interest and we’re not going to, we’re not do that. Here’s a refund. And other times they thought, Oh, this isn’t going to work. And they just, it went huge. And so it kind of depends.
So if you’re just in that, I mean, you’re like, I’m not sure what’s going to work, do a pre sale and this is where it’s really important to. To get a list of customers, get their emails, get their texts and their phone numbers, get their addresses as people come in. So every time somebody makes a sale, I can’t hound on this enough, but you need to collect some way to contact them, preferably an email because most people have that right.
but also realize that’s a big trust factor, right? If somebody gives you their email, you don’t want to abuse it. You don’t want to, like, spam out every little thing because as soon as you do that, you get unsubscribed and I’ll be honest, I unsubscribe from things all the time. I’ll sign up to get the free something or other, and then I’ll unsubscribe. And that’s actually beneficial for you as a business owner to have people unsubscribe because if they’re unsubscribing, that means they’re not your customer. You didn’t wanna talk to ’em anyway, like you’re just cluttering their inbox. And vice versa, like if you’re not interested in something, then unsubscribe and encourage people who have subscribed to unsubscribe if they’re not interested in what you’re saying or doing. That really does help, one, the store owner know who’s interested in what they want.
But yeah, I would highly recommend trying that pre-sale idea. If you’ve got something you think will work, pre-sell it. See if you can get enough interest to actually drum up the business to buy the fabric and make the kits or to do whatever it is, whether it’s a class, maybe even cause I know that some people will do classes cause that one’s pretty easy to pre sell that, but try to do actual physical products too.
[00:34:53] Spencer: Yeah, no, I think that the, I think that’s a really, like, really fun piece of advice for like a way to gauge interest in a product or a product line, right.
All right, Jacob, well, I just want to say thank you so much for being on the podcast with us today. You know, before we kind of wrap up, tell us, you know, where people can find you, how they could contact you and, you know, just tell us about that.
[00:35:16] Jacob: Yep. You can find me at Curtis accounting solutions. com. I also have a Facebook and Pinterest and YouTube channel. And what’s the other one, Instagram. So I’m on all of those main ones. So just find me Curtis Accounting Solutions. You can schedule a call right on my website at Curtis Accounting Solutions, if you want to contact me. So please do that. There’s a big button that says schedule a call. Click it and you’ll get in contact with me to ask questions. Yeah, I think that overall the quilt industry is not going away. It’s gonna be there for a while. It has its ups and downs like every industry does, but I think that it is something that people really like to do and care about.
[00:35:51] Spencer: I love that. Perfect. Well, thank you so much for being on the podcast.
[00:35:55] Jacob: Yep. Thanks!
[00:35:56] Spencer: Okay, buh bye.