Keep Kuroshiro Kawaii's Doors Open!
Donation protected
EDIT: I'm happy to announce that due to a generous donation via PayPal.me, we have surpassed our goal and landed at a generous $5,984!
We are going to keep this GoFundMe open for now. All donations received after the dollar amount listed on our GoFundMe $2,764 will go towards business debt and new inventory.
Kuroshiro Kawaii opened its doors in June, 2020. It's been a rocky road since then, between COVID-19 closing doors and struggling to pay shipping and customs fees after EMS (the cheaper and most common shipping option from Japan to the US) shut down.
Since then, we've faced quite a few financial challenges. I have outlined those challenges below.
Challenges:
Increased Shipping + Customs Fees
With EMS down, we have been forced to ship via FedEx, DHL, or UPS. This can be very expensive--up to $1000 shipping for a small order--even before customs. Customs fees usually average around $300 for a small order. This means that the cost of a smallish order (around $1,150 from a vendor) is often doubled, or nearly so. These numbers really add up and cut into our profit margin, and sometimes we only make a few hundred dollars or so of profit (which is less than can pay for our employees to sell that order). We try to keep our prices reasonable for our communities.
Increased Delay in Communication with Suppliers
For our Japanese brands, COVID-19 has definitely affected their business as well. Sometimes it might take up to two weeks to put in an order, and another one to two weeks to receive it.
For our indie brands, we are at the whim of indie brands and their suppliers and vendors; many manufacturers are having trouble because of COVID-19, and that wasted time has been passed on to us by nature.
Any delay causes significant damage to our bottom line because of time-sensitive bills and obligations (such as rent and payroll). If we have $10,000 to spend on inventory but communications or shipping takes too long, we might only have $6,000 three weeks later after rent, bills, and payroll. Ideally, we would spend that $10,000 immediately so we can make sales for two or three weeks, thereby turning that $10,000 into $15,000 and ending the month with $11,000. In business, you have to spend money to earn money, and the faster you spend money, the faster you can earn it.
COVID-19 Closures
Many people might not realize that we have had our physical space (and therefore have been paying rent on it) since February 2020. Our rent agreement for 2020 had us paying $2,800/mo in rent. We opened in June--which means we had paid roughly $11,000 in rent before we were even able to open (February rent was waived).
In a second closure in August, we decided to only operate via appointments for in-store shopping and online. During this period, we were only able to secure a few appointments. In short, we didn't make enough sales to pay rent or our employees, and we had no inventory to boot.
Luckily, we were able to secure a loan to be able to pay everyone on time. But that just adds to our debt.
No PPP Assistance
The first PPP was only open to those businesses who had employees as of the crisis date--January 31, 2020. Since we did not have any employees until May 25, or a space until February, we were not eligible.
We have filled out the second PPP paperwork and are waiting to submit, but it's unlikely that we will receive a grant.
No Aid Available
Aside from the PPP, there have been several government programs to assist small businesses. Some of these include the Fort Bend County relief program, Harris County relief program, and the city of Houston relief program.
Due to our location (in Harris county but in Katy, TX city), we are ineligible for Fort Bend County and Houston city aid. Harris County aid has long been drained dry.
For non-government grants, most grants that we would apply for are for women- and POC-owned businesses. We are two white transmen, however, so we do not qualify.
All grants for LGBTQ-owned businesses are for businesses whose primary focus is to directly forward LGBTQ human rights in some legal or financial way.
Finally, we are ineligible for a business loan from a bank because of the time we have been in business. We will be eligible beginning in May, 2021.
Air Conditioning/Maintenance Struggles
Since around November we have been having issues with our air conditioning unit. It cuts out and then starts again at random intervals. We have had inspectors come to check it out, but per our lease we are financially responsible for all repairs and upgrades within our 6 walls. We are still waiting on a verdict.
In addition to that, we have been having some roof leakage. Our landlord has come to inspect it, but we suspect that it might be still leaking.
Credit Card/Buildout
We have completely built this business from the ground up--which means we did not receive a small loan of a million dollars to assist with inventory, buildout, or anything else. Because of this, we were forced to build out the store using our credit card. It maxed out at $10,000.
What We've Done so Far:
Increased our Markup on Items
While we try to keep our prices reasonable for our community, there's a fine line between not making enough on our sales and sales not even being made. Compared to other businesses, our markups are surprisingly low (and before anyone tries to call us out on having markups, know that markups are essential to any business and are a common practice.)
Because we've been struggling with shipping costs, we've adjusted our markups slightly to compensate. This helps us get a little bit of our money back and helps account for shipping and customs fees.
Added Preorders and Offbrand Items to Our Site and Inventory
This year, we've been participating in several preorders of highly-requested items, such as the Magical Artefact series from Metamorphose temps de fille. In this release in particular, these preorders helped us pay rent and our employees just in time.
However, preorders are risky on our part, especially at the end of the month. Brands and vendors usually have an order minimum (a common minimum is $1,000). If we don't get enough preorder orders to fulfill that minimum, it's unlikely that we would be able to order these items at all--and refunds would have to be sent. If we were counting on those orders for rent payments, we may be stuck issuing refunds from the owners' pockets.
To increase our profit margin overall without raising the markup too high, we've introduced offbrand items into our store: Burlesque and Bewaltz. Both of these brands enable us to have a higher markup while still maintaining a lower price point. The quality of these brands does not hold up to a $300 dress, but they are two of our top sellers. Introducing these two brands has been a huge help for our bottom line.
Cycled Indie Brands and Added More Brands than Expected
When we first formed our business plan, we included slots for only 4 indie brands. Indie brands can choose to either pay a flat fee to us for the month, or work on consignment. This agreement is symbiotic: they sell more items in store and get passive income, and we get a commission fee off every sale. We have no control over the items we receive or the pricing of these items.
Since we've introduced more brands, it has given us the opportunity to sell more indie items (and support more brands in return).
We have also cycled out one of our brands (with more to come), to make room for other brands.
Repaid Loans out of Our Personal Pockets
We as owners are responsible for business debt. As such, to prevent our business from being crippled, we have both chosen to pay off a significant portion of the store' debts from our own pockets. This eliminates a huge financial burden from the store by getting rid of credit card minimums and more. But, there's only so much that both of us can do.
GoFundMe's First Business Support Fundraiser
At the beginning of the lock down, GoFundMe had a small business support initiative where, if a store was able to raise over $500 from the community, they would match that $500. We participated and raised over $2,830, including GoFundMe's $500 match.
Taken out Personal Loans and Borrowed from Family
Since February, we have taken out over $23,800 in loan assistance from personal loans and family (including credit cards, but not including investors). We have yet to pay back $17,093.06 of that amount.
Talked with our Landlord
We spoke with our landlord in September about an inability to pay rent after our lowest-performing month (August) to see if they were willing to waive or postpone rent payments for September and October. The answer?
In short, they were only willing to postpone payments. The $5,600 of rent for those two months are now distributed over the first part of 2021 rent--bringing up our rent payments from $2,800/mo to $3,400/mo. It saved us back then, but it has been rough these first few months of 2021.
No rent was waived.
Cut Hours
From the second or third week we were open back in June, we decided that maintaining our normal operating hours was nearly impossible. We cut back to COVID-19 Reduced hours ever since.
Recently, we (the owners) have also been taking a few shifts here and there to alleviate the payroll burden. This is the last thing we wanted to cut.
Applied for Grants
Over the last few weeks, we have been searching for grants that can help save us right now. We only found one that we qualified for, but all awards had been given. I emailed the organizer and gave him a pitch about our situation, and then asked him if they were willing to help. Unfortunately, that group does not aid LLCs (a type of business).
Our Current Situation
We recently had to pull out all the sales taxes for Q4 to pay our rent at the last second. This was a last resort, and we had no other option at the time.
This leaves is with the following:
>Taxes: 1,300 in sales tax due for Q4 2020
>Rent: 3,400 in rent for February
>CC balance: 8,345
>Payroll: 1,200
>Family Loan 5,000
>Business Loan 3,000
Total Owed: $22,245
Total asking (Taxes, rent, payroll): $5,900
EDIT: I'm happy to announce that due to a generous donation via PayPal.me, we have surpassed our goal and landed at a generous $5,984!
We are going to keep this GoFundMe open for now. All donations received after the dollar amount listed on our GoFundMe $2,764 will go towards business debt and new inventory.
What We'll Use the Funds For
Sales tax, rent, and payroll are our first priorities. This money will go straight to those accounts.
Ideally, we need funds by February 12th to cover rent, sales tax, and payroll.
We are going to keep this GoFundMe open for now. All donations received after the dollar amount listed on our GoFundMe $2,764 will go towards business debt and new inventory.
Kuroshiro Kawaii opened its doors in June, 2020. It's been a rocky road since then, between COVID-19 closing doors and struggling to pay shipping and customs fees after EMS (the cheaper and most common shipping option from Japan to the US) shut down.
Since then, we've faced quite a few financial challenges. I have outlined those challenges below.
Challenges:
Increased Shipping + Customs Fees
With EMS down, we have been forced to ship via FedEx, DHL, or UPS. This can be very expensive--up to $1000 shipping for a small order--even before customs. Customs fees usually average around $300 for a small order. This means that the cost of a smallish order (around $1,150 from a vendor) is often doubled, or nearly so. These numbers really add up and cut into our profit margin, and sometimes we only make a few hundred dollars or so of profit (which is less than can pay for our employees to sell that order). We try to keep our prices reasonable for our communities.
Increased Delay in Communication with Suppliers
For our Japanese brands, COVID-19 has definitely affected their business as well. Sometimes it might take up to two weeks to put in an order, and another one to two weeks to receive it.
For our indie brands, we are at the whim of indie brands and their suppliers and vendors; many manufacturers are having trouble because of COVID-19, and that wasted time has been passed on to us by nature.
Any delay causes significant damage to our bottom line because of time-sensitive bills and obligations (such as rent and payroll). If we have $10,000 to spend on inventory but communications or shipping takes too long, we might only have $6,000 three weeks later after rent, bills, and payroll. Ideally, we would spend that $10,000 immediately so we can make sales for two or three weeks, thereby turning that $10,000 into $15,000 and ending the month with $11,000. In business, you have to spend money to earn money, and the faster you spend money, the faster you can earn it.
COVID-19 Closures
Many people might not realize that we have had our physical space (and therefore have been paying rent on it) since February 2020. Our rent agreement for 2020 had us paying $2,800/mo in rent. We opened in June--which means we had paid roughly $11,000 in rent before we were even able to open (February rent was waived).
In a second closure in August, we decided to only operate via appointments for in-store shopping and online. During this period, we were only able to secure a few appointments. In short, we didn't make enough sales to pay rent or our employees, and we had no inventory to boot.
Luckily, we were able to secure a loan to be able to pay everyone on time. But that just adds to our debt.
No PPP Assistance
The first PPP was only open to those businesses who had employees as of the crisis date--January 31, 2020. Since we did not have any employees until May 25, or a space until February, we were not eligible.
We have filled out the second PPP paperwork and are waiting to submit, but it's unlikely that we will receive a grant.
No Aid Available
Aside from the PPP, there have been several government programs to assist small businesses. Some of these include the Fort Bend County relief program, Harris County relief program, and the city of Houston relief program.
Due to our location (in Harris county but in Katy, TX city), we are ineligible for Fort Bend County and Houston city aid. Harris County aid has long been drained dry.
For non-government grants, most grants that we would apply for are for women- and POC-owned businesses. We are two white transmen, however, so we do not qualify.
All grants for LGBTQ-owned businesses are for businesses whose primary focus is to directly forward LGBTQ human rights in some legal or financial way.
Finally, we are ineligible for a business loan from a bank because of the time we have been in business. We will be eligible beginning in May, 2021.
Air Conditioning/Maintenance Struggles
Since around November we have been having issues with our air conditioning unit. It cuts out and then starts again at random intervals. We have had inspectors come to check it out, but per our lease we are financially responsible for all repairs and upgrades within our 6 walls. We are still waiting on a verdict.
In addition to that, we have been having some roof leakage. Our landlord has come to inspect it, but we suspect that it might be still leaking.
Credit Card/Buildout
We have completely built this business from the ground up--which means we did not receive a small loan of a million dollars to assist with inventory, buildout, or anything else. Because of this, we were forced to build out the store using our credit card. It maxed out at $10,000.
What We've Done so Far:
Increased our Markup on Items
While we try to keep our prices reasonable for our community, there's a fine line between not making enough on our sales and sales not even being made. Compared to other businesses, our markups are surprisingly low (and before anyone tries to call us out on having markups, know that markups are essential to any business and are a common practice.)
Because we've been struggling with shipping costs, we've adjusted our markups slightly to compensate. This helps us get a little bit of our money back and helps account for shipping and customs fees.
Added Preorders and Offbrand Items to Our Site and Inventory
This year, we've been participating in several preorders of highly-requested items, such as the Magical Artefact series from Metamorphose temps de fille. In this release in particular, these preorders helped us pay rent and our employees just in time.
However, preorders are risky on our part, especially at the end of the month. Brands and vendors usually have an order minimum (a common minimum is $1,000). If we don't get enough preorder orders to fulfill that minimum, it's unlikely that we would be able to order these items at all--and refunds would have to be sent. If we were counting on those orders for rent payments, we may be stuck issuing refunds from the owners' pockets.
To increase our profit margin overall without raising the markup too high, we've introduced offbrand items into our store: Burlesque and Bewaltz. Both of these brands enable us to have a higher markup while still maintaining a lower price point. The quality of these brands does not hold up to a $300 dress, but they are two of our top sellers. Introducing these two brands has been a huge help for our bottom line.
Cycled Indie Brands and Added More Brands than Expected
When we first formed our business plan, we included slots for only 4 indie brands. Indie brands can choose to either pay a flat fee to us for the month, or work on consignment. This agreement is symbiotic: they sell more items in store and get passive income, and we get a commission fee off every sale. We have no control over the items we receive or the pricing of these items.
Since we've introduced more brands, it has given us the opportunity to sell more indie items (and support more brands in return).
We have also cycled out one of our brands (with more to come), to make room for other brands.
Repaid Loans out of Our Personal Pockets
We as owners are responsible for business debt. As such, to prevent our business from being crippled, we have both chosen to pay off a significant portion of the store' debts from our own pockets. This eliminates a huge financial burden from the store by getting rid of credit card minimums and more. But, there's only so much that both of us can do.
GoFundMe's First Business Support Fundraiser
At the beginning of the lock down, GoFundMe had a small business support initiative where, if a store was able to raise over $500 from the community, they would match that $500. We participated and raised over $2,830, including GoFundMe's $500 match.
Taken out Personal Loans and Borrowed from Family
Since February, we have taken out over $23,800 in loan assistance from personal loans and family (including credit cards, but not including investors). We have yet to pay back $17,093.06 of that amount.
Talked with our Landlord
We spoke with our landlord in September about an inability to pay rent after our lowest-performing month (August) to see if they were willing to waive or postpone rent payments for September and October. The answer?
In short, they were only willing to postpone payments. The $5,600 of rent for those two months are now distributed over the first part of 2021 rent--bringing up our rent payments from $2,800/mo to $3,400/mo. It saved us back then, but it has been rough these first few months of 2021.
No rent was waived.
Cut Hours
From the second or third week we were open back in June, we decided that maintaining our normal operating hours was nearly impossible. We cut back to COVID-19 Reduced hours ever since.
Recently, we (the owners) have also been taking a few shifts here and there to alleviate the payroll burden. This is the last thing we wanted to cut.
Applied for Grants
Over the last few weeks, we have been searching for grants that can help save us right now. We only found one that we qualified for, but all awards had been given. I emailed the organizer and gave him a pitch about our situation, and then asked him if they were willing to help. Unfortunately, that group does not aid LLCs (a type of business).
Our Current Situation
We recently had to pull out all the sales taxes for Q4 to pay our rent at the last second. This was a last resort, and we had no other option at the time.
This leaves is with the following:
>Taxes: 1,300 in sales tax due for Q4 2020
>Rent: 3,400 in rent for February
>CC balance: 8,345
>Payroll: 1,200
>Family Loan 5,000
>Business Loan 3,000
Total Owed: $22,245
Total asking (Taxes, rent, payroll): $5,900
EDIT: I'm happy to announce that due to a generous donation via PayPal.me, we have surpassed our goal and landed at a generous $5,984!
We are going to keep this GoFundMe open for now. All donations received after the dollar amount listed on our GoFundMe $2,764 will go towards business debt and new inventory.
What We'll Use the Funds For
Sales tax, rent, and payroll are our first priorities. This money will go straight to those accounts.
Ideally, we need funds by February 12th to cover rent, sales tax, and payroll.
Organizer
Collin Quinlan
Organizer
Alief, TX