I'm very sorry to hear about Derek's problems.
I wonder if part of the underlying problem is the policy of discounting? If Talon had the extra margin from the last few years of sales, they'd have either (a) a healthy "rainy day" fund, which would allow them to better survive a downturn or personal life difficulties that intrude (and make it easy for them to, say, refund money to customers whose orders they can't easily fill, or otherwise spend money on customer service); or (b) sufficient cash flow to have an employee, even a part-timer, who could step in to do more work when the boss is overwhelmed by other matters?
Game manufacturers face the same issues. For years, publishers were not charging enough, and the result was that they were hanging by a thread -- and it just took a light breeze to throw a small company into a domino-like wave of cascading problems. Lacking a sufficient margin for error, one problem (say, a personal health issue that makes one book late) would lead to another (distributors hold off on paying for old bills because don't have something new that you won't send them until they pay up), would lead to another (a new product can't go to press because you don't have money for the down payment, and your credit never was healthy enough from past profit to have a bank line of credit or net 30 terms from the printer), and another (more late product), and another (unhappy freelancers waiting for payment on publication, whose unhappiness is communicated to other freelancers, who are reluctant to work with you, keeping other projects from completion), and so on. The result is often a business that goes into a coma, if it doesn't simply close.
It's nice to get a cheap price online. However, in most cases I fear people are supporting unviable business plans; getting it cheap today means someone pays the price in the future. Someone will be left holding the bag, sooner or later -- customers, suppliers, banks and creditors, the owner of the business, or most likely all of the above -- when a light breeze of misfortune blows through the neighborhood. There appears to be a high rate of turnover (businesses closing, new ones sprouting up) in the online discount retailer area, probably because an effective discounting model requires huge levels of working capital (in the vein of Amazon.com or Walmart), and the typical discounter is starting from an investment level where capital is almost negligible (and appears unneeded, due to the illusory cheapness of starting a business on the web) -- a situation where you have to have high profit margins in order to fund growth, or build a capital reserve for cyclical downturns, internally. But by discounting, those margins are thrown away, in the belief that the discounting is necessary to attract business.
I don't know anything about Talon's situation other than what I've read in this thread, and I do wish them the best. I'd really be happy, though, if they found that they could charge full retail (or something close to it), rather than discounting, and they could attract and retain customers by means of the sterling customer service for which they so long were known on these boards. And I'd really be happy if not discounting meant that they had a lot more financial stability and security, to help them continue to offer the level of customer service that people need, and to take better care of their own personal financial future (like, a healthy SEP-IRA for retirement, decent health insurance, etc.).
