Well, well – not that I am proud about what happened (or is going to happen), but one major part of how I have built my business is apparently right on target and I am happy about that – even though I am losing some income in the shortterm. If you go through this blog back in history I have written in the past of how I have structured my online business and that I’d like to have diversification in place to prevent an incident where one vendor or issue would wipe me out.
The State of Colorado (my home) is going to force online retailers from out of state to collect sales tax soon. It is not yet clear how exactly they want to enforce it across the board, however they mainly seem to target Amazon.com and Overstock.com and maybe a handful of other online retailers. This so-called Amazon tax or online sales drama has happened in New York, Rhode Island, and North Carolina for affiliates like myself this meant to be terminated from many affiliate programs. Now the same thing is going to happen and affiliates like myself will be terminated from many popular affiliate programs.
Over the last 10 days I have written hundreds of emails to lawmakers, I even went up to the State Capitol and testified in front of a committee (after 12 hours of waiting). As expected that did not do anything – especially with larger affiliate companies throwing the smaller affiliates under the bus. There is also that whole political game going on, but that is part of another story (more on that in another post).
Anyway – after coming home at around 11 PM last night I sat down and went through the list of merchants that had terminate NY affiliates from their affiliate programs and did an inventory. There are a few that will probably do the same now here in Colorado and I will feel a hit accordingly because I am in their affiliate programs and on some, not every, I will lose actual income. The damage is there – no doubt. The biggest one will most likely be Amazon.com and that actually will hurt a little bit. However, the good thing is that even though it causes some pain, it will not wipe me out. The really bad thing is however, that I was executing a strategy that involved more Amazon products over time and so this will limit my growth. I will try to replace some Amazon products with products going to Wal-Mart, but I do not know yet how that converts. It also renders several investments useless as I have bought Amazon related software for WordPress (Plugins) or Shopping Carts.
I have thought about incorporating somewhere else, but unless I physically move out of the state that will not be enough and at least right now I am not willing to leave Colorado for more personal reasons.
I was angry last night and did not sleep much because my head was spinning. I got up at 4 AM and started working and by having some breakfast and I am over it. Doing business on the Internet means an always changing environment and you only survive if you adapt. My business is diversified and I could waste a lot of time crying and yelling and fighting the inevitable, but that would not change the fact that I need to adapt to a changed playing again. However, I am happy that even though the situation is bad, it could be much worse. I am happy that my efforts to diversify have proven to be effective. While the lawmakers are screwing many small businesses in Colorado right now, I am ready to show them the virtual finger (you know which one I mean). Go, F..k yourself with your political crap. For one, they will never collect the amount of sales tax they plan for, it will cost them way more to enforce the policy (if they even can), and in the end they shot them self in the foot. Businesses like mine have been paying taxes all along, but now with reduced income it means less tax income for Colorado. And personally I will make it a goal to be less easy* on my tax deductions and will do a better job in regards to that (= less income for the State of Colorado)( *: I am doing my own taxes and I have been not aggressive enough writing off things and to deduct every cost as much as possible. ) The next step will be getting a good tax accountant to make my efforts waterproof and audit-safe and then squeeze as much out of it as possible.
However, the take away lesson from this posting is to diversify your business. Protect yourself from incidents like this one. I did and it is paying off. There will be pain and there will be a loss of income, but your business will still be intact and you can work on something else to make up for it. That’s what I will do.
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