Ad Crucem and a tale of Two Synod Conventions

Ad Crucem was conceived during the 2013 LCMS National Convention in St. Louis, and it's been an incredible decade!

Ad Crucem was one of the exhibitors at the LCMS’s 68th National Convention recently concluded in Milwaukee, WI. Although the company’s official birthday is Good Friday 2014 (first order processing), we count 2013 as Ad Crucem’s conception year.

That year, Tim was a circuit lay delegate to the Convention in St. Louis. As a result of meeting artists in the exhibit hall at the Convention and catalyzed by a trip to Germany earlier in 2013, we decided it was finally time to start Ad Crucem. That fulfilled a dream to start a ‘Romans 4:25 business’ that had been percolating since immigrating in 2000.

Those intervening years were good preparation as we started several unrelated businesses in New Jersey and Missouri before moving to Colorado in 2011.

Ad Crucem in Booth 222 at the 2023 LCMS National Convention

To get underway, we contracted with Jason Hanson and the Watermark agency in Denver to produce 27 unique greeting cards (theological review by Pr. Bryan Wolfmueller) that would be foundational products. They were successful because there was a yawning gap in the market since all the competition produced heterodox, if not heretical, rubbish printed on low-quality paper in China.

The Banks Say No!

Ad Crucem did not become an overnight viral sensation. It is a veritable tortoise of commerce. Indeed, several people cautioned us that it was a bad idea. They were correct because no bank would have loaned against the business plan.

Consider the odds versus the providence:

1. The Lutheran “market” is shrinking rapidly demographically and in purchasing power. Correspondingly, Liberal Lutherans do not and will not buy from Ad Crucem, while evangelicals do not understand or appreciate the products.

2. A monopoly competitor exists with a galaxy size balance sheet and virtually guaranteed order flow.

3. We were adult converts to the evangelical Lutheran church with no network within the church.

4. We refused to go the ‘trinkets from China’ route and committed as much as possible to American-made materials and services.

5. CPH blocks Ad Crucem and other companies from advertising through official Synod channels like the Witness and Reporter and inhibits sales activity even at third-party events.

6. The barriers to entry around the artistic space are quite low, and we have seen many ‘pop-up’ Etsy and Red Bubble stores come and go over the years.

7. Because of the customer purchasing power problem, we rejected traditional pricing models that add enormous retail markups. For example, we had a provisional arrangement with a large publisher for a bulk purchase of products, but it demanded so much margin that Ad Crucem would have had to do the deal below cost or raise retail prices to an absurd level.

8. We gave Ad Crucem three years to become self-sustaining and were only prepared to lose the initial capital invested.

9. The business had to be capitalized and sustained from savings and discretionary income (thereby giving up things that discretionary income can buy, like increased giving to the church, more obvious business investments, portfolio expansion, home improvements, exotic vacations, new cars, etc.).

10. We ruled out any debt financing even though it could have accelerated and grown the business faster. Similarly, we declined to take on any shareholders because of the inevitable conflicts that result from investment and product decisions in this type of business at this stage.

11. Surpluses that did develop have been reinvested in capacity improvements through new machines and equipment, inventory, commissioned artists, and physical space.

12. Not selling through Amazon.com, despite its unbeatable global reach, because of the problem of cloning and intellectual property theft by suppliers in China and India and by Amazon itself.

13. Children still have to be put through college and school.

14. No inheritance, rich uncles, or mystery sugar daddies as a safety net.

15. Consequently, 99% of the labor comes from the family, and there are no paychecks or owner draws, just sweat equity. Fortunately, Tim earns a salary elsewhere that covers health insurance and living expenses.

16. There is little prospect of a “liquidity event” that allows us to exit the business with a meaningful return on investment (see point 1). Nevertheless, the business has a large and growing customer base with repeat shoppers representing a powerful and influential LCMS core among individuals and churches. Additional value continues to accrete in the expanding catalog of unique products.

So, despite the listed negatives and several nay-sayers, Ad Crucem has flourished because it has been developed as an unapologetically orthodox Christian and confessional Lutheran enterprise.

Milestones

There are too many milestones to recount all of them after ten years of business, but here are some highlights:

1. The first ever sale was to Julia Habrecht, then at Immanuel Lutheran Church School in Alexandria, VA.

2. Cultivating and serving a truly wonderful, growing, and unusually loyal customer base; more friends than customers.

3. Building long-term relationships with talented artists and searching out vendors who were prepared to be partners rather than invoice buddies.

4. The support of our home congregation’s pastors and parishioners. On days of panic when orders have overwhelmed us, it has been a blessing to have fellow members volunteer to clear the decks and get us back on track!

5. Gaining the trust of IssuesETC to be able to reach its listenership in a long-term relationship. This has been a huge blessing to us.

6. The business is one of only a handful of 10-year survivors on the merchant platform we use, has average sales three times higher than similar stores, and is in the top 3% of its peer group by revenue.

7. Purchasing an initial set of about 40 Christmon artwork files in an exclusive arrangement with Ed Riojas in 2018 and expanding it to 100 ornaments by 2020.

8. Getting year-end sales bumps thanks to write-ups from Joy Pullmann at The Federalist, like this one from 2021.

9. Working from the garage in deep winter at sub-zero temperatures and keeping the GlowForge hobby lasers operating by heating them with a hair dryer.

10. Burning out four GlowForges in eighteen months before being able to invest in an industrial laser with 5,000 ornaments/week capacity.

11. Filling every room in the home with inventory, packaging, machines, and activity until we found affordable retail space in February 2021. After every Christmas season, we would scour Denver, Colorado Springs, Pagosa Springs, Longmont, Fort Collins, and even Scottsbluff, NE, and Rapid City, SD, looking for houses with attached workshops/barns or office locations. We nearly closed on premises in Denver in early 2019, only to be declined because one party to the transaction refused to sign off on an exhaust vent for the laser.

12. Taking a month to painstakingly assemble a CNC machine that arrived in thousands of pieces and have it work correctly on first power on. A more professional CNC machine subsequently replaced that one, although it was significantly delayed because of COVID.

13. Funding other Lutheran artists to help them start or grow businesses and not making any demands on them.

14. Only one fraudulent transaction in ten years. Ironically, it was the wife of the president of an evangelical college who did not have permission to use her husband’s credit card. The college treasurer disputed the charge and refused to reinstate it even after it was confirmed to be a legitimate purchase.

15. The product range and overall capacity were expanded by purchasing a UV bed printer in April 2021.

16. Winning some big orders from the Babylon Bee for Christmas ornaments.

17. Assisting several missions.

18. Adding a wide-format roll printer in August 2021 (schlepped from Windsor, CO, with the help of Pastor Adrian Sherrill and two of his strong sons) enabled us to bring nearly all printing needs in-house. That printer was quickly worn out and not worth repairing, so we purchased a new roll printer with a wider color gamut this year.

19. Independently publishing our first book, The Christian Christmas Tree, in October 2021. That was followed this June by The Narrow Way, which pioneered a hybrid copyright model that includes generous reproduction and distribution options for the print version and a free PDF download. Quick on its heels came Why Christians Should Actively Oppose Globalism by Rev. Dr. Maj. Harold Ristau. Ad Crucem is currently finalizing the first volume of The Bible Commentary by Rev. Dr. Adam Koontz. Another new book is on the ticket for 2024, authored by a renowned and revered senior teacher of the Lutheran church, and we are excited to reveal more details in the New Year.

20. Winning the business for LCMS President Matt Harrison’s annual Christmas card distribution for two consecutive years.

21. Creating a light-hearted sub-brand, Chancel Culture, which has taken off in its own right.

22. Acquiring a new retail and workshop space within walking distance of home (March 2023). That was our third business relocation in three years, and we don’t plan on any others for a long time!

23. A small foot in the door in the Roman Catholic and Anglican markets.

Lowlights

1. Inflation has become a significant problem, especially with shipping costs that soared and never retreated, even when oil prices declined off their highs. Significant revenue growth in recent years has enabled us to absorb most of the hit, but the increases will have to be passed on at some point.

2. Tax reporting and payments are a significant burden. Colorado imposes sales taxes on all in-state Internet transactions. Every jurisdiction demands its share, so we must file and pay down to the municipal level on every local sale. In one case, we owed $0.32 to a small town in Northern Colorado. It cost almost $80 to pay that tax after we had plowed through all the accounting rigmarole and paperwork. That is unsustainable, and hopefully, Colorado’s lawmakers will see the risk and burden it creates not having a centralized collection and distribution system. At least there has been some relief with the State agreeing that we may continue to file annually rather than quarterly. A ridiculous delivery tax on every transaction has also been withdrawn.

3. International sales used to be relatively strong and simple, with the buyer dealing with customs controls and import duties. Unfortunately, the EU has closed out to everyone except giant companies, and getting products to Canada, Australia, and New Zealand is becoming difficult. We will probably have to franchise into those areas to maintain and gain sales.

4. Approaching the point where employees will be necessary. Employees add enormous costs and management overheads even as they provide capacity, but this is a problem faced by every small business as it moves through the traditional growth phases.

Ad Crucem has a remarkable customer base, and we are pleased to share its joys and burdens with everyone.

The business exists because God’s remarkable providence sent us from South Africa to America and from fundamentalism to the unadulterated confession of the evangelical Lutheran church. Around that, He packaged the means for us to give back to the visible church in a very small way. May we always remember our reason for doing this: that Jesus our Lord was crucified for our transgressions and raised for our justification.

T☩W

Trailer Tetris! Offloading to exhibit at the 68th LCMS Synod Convention