You might think I’d be buying a yacht after the year that’s been, but after some analysis it’s not really the case. With the popularity of linen increasing over the past decade, prices have steadily been going up. You could assume that as you grow, your costs – particularly for your raw materials – might go down. But in fact it’s quite the opposite. The more you make, the more it seems to cost to make it, particularly if you care how it’s made. As orders get larger you also have more capital tied up in stock.
Prices from my mill have steadily been increasing year on year – somewhere between 5-10% per year. I could try changing mills, but the price doesn’t really change unless you want the quality to change or to move out of Europe. A change of quality to meet a new price point would be very obvious, but it begs the question: why would I do that? I set out to make great linen products.
COVID has seen shipping and lead times from my mill increase exponentially. Requirements for social distancing and exploding demand mean that what used to take 6 weeks is now 12 to15 weeks. Freight is much more expensive, having gone up around 25% for me.
Once the product gets here, I need to ship it to you. Australia Post increases prices on parcels each year. With my volume discount, a small parcel used to cost around $5. Now you don’t get much change from $10. Most bedding parcels cost around $20-$25 to ship.
I guess what I’m trying to say is that everything is steadily becoming more expensive. Even after bumper sales last year, I wasn’t making that much out of it. I’ve always been profitable, and turned a modest profit this year from selling for only 6 months, but for the time and capital required it doesn’t really make a lot of sense. Even extrapolated for a year of steady selling, the return on investment just isn’t there, when you consider the capital you have tied up, and the requirement to always be contactable.
To keep going in a sustainable way, I would need to increase my prices fairly substantially – in some cases even doubling them. That would put my prices on a par with someone like Hale Mercantile, which makes sense. They use a similar quality and weight of linen from Europe and it’s made in Europe. I might yet try going down that path, but for now though, I feel like there are already enough relatively expensive linen brands out there. I started the business with the aim to be more accessible.
To be honest, I feel like some of the fire has gone out of me. I used to love sitting up of a night having a glass of wine and doing customer service emails and admin. During the days I could sew. During busy periods I could work weekends and nights if I had to. It was lots of fun. Turn the music up and make it happen.
I have two little kids now that I want to be there for. I don’t want to tell them to leave me alone so I can work more. I don’t want to rush through bed time stories at night because I have pressing email enquiries. I want to take a long weekend without worrying about the express post order someone has put through on Friday, and the inevitable email I’ll get if it’s not shipped first thing on Monday.
You might ask: Why don’t you just get some help? Get an employee to help you out? I’ve done that in the past and don’t get me wrong, I’ve had some awesome helpers, but I had to sell a LOT more product just to cover the cost. You also need a dedicated workshop for them to work from. Not to mention the admin and insurance side. In short, it adds a lot of ongoing fixed costs and complexity. It only works if you are planning to grow a lot.
So why don’t you just go big? Go all in, yeah? I have or can access the capital to go big. I could take our savings and the equity from our home and scale up big time. I know how to do it. But why would I? What would that achieve apart from me working much harder and taking more time away from my family? There is not an end state where I sell the business and buy a private jet.
I have a lovely family, and want to spend as much time as possible with them. I cannot even comprehend risking our savings or lifestyle for a business just to make more money. To me that’s inconceivable. I have pretty much everything I want right now.
I do get a lot of creative fulfilment from Mr. Draper and satisfaction from building something, but as I get older I find I want to spend my time elsewhere. I want to have the flexibility to spend more time with my kids, doing stuff. As anyone who has worked for themselves will know, the reality of running your own show usually means you have less time, not more.
So that takes me back to the beginning. Something I’ve been enjoying over the last few months has been just working casually for someone. I show up (or in this case log on), do a few hours and then log off. I don’t think about work outside of those hours. I make as much – if not more – and don’t have anything invested. There are no costs associated with doing it. I decide how much I want to work. Just one day this week? Sure. Want to do four days? No worries. (And no. I’m not an Uber driver 😊)
Will there always be work like this available? Maybe not. Will I get bored with it? Almost certainly. Does it meet my needs for the time being, pay the bills and maximise the amount of time I can spend with my family? Yes. Yes. And yes.
So I’ve decided to take a pause in the business for another six months, and just chill out and work for someone else. I’ll reassess in the New Year and see how I’m feeling.
I know this might be a little disappointing for some of you, but it’s always been important for me to be honest with you on where I’m going, and why. This is not good bye. It’s just a measured and thoughtful pause.