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- #17
Just in case someone stumbles across this....
Here we are 5 years later. My plan was to quit within a year and a half. I haven't quit yet (but 100% will by the end of the year - though it will be to run a different business I recently bought). I wanted 10 stores & $6million within 10 years. I still just have the one store, and certainly nowhere near $6 million.
The single biggest thing that I did not understand 5 years ago was the COST OF GROWTH. In a capital-intensive, inventory-based business like retail - growth is very expensive. I was massively under-capitalized and that substantially impacted the rate of growth we were able to achieve as well as the amount of money we were able to take out of the business.
I also vastly underestimated the seasonality of the gift retail business. 50% of a retailers sales can happen in October-December. January was a somber reality. It took me a lot longer than expected to hit the revenue numbers I was aiming for - in large part due to above, cost of growth.
EDIT: One other point, I was not accounting for inventory write-offs and mark-downs, which eventually hurt my margins quite a bit so that even if revenue had been what I thought the profit wasn't.
And worth noting, my break-even point has consistently gone up each year. We moved to a location twice the size (and more than twice the rent), have added substantial employee hours (we used to have maybe 10 hours/week we had to pay - we now have 60+), etc. I had not figured in any of that originally.
Ultimately, these things are part of a much larger concept I didn't recognize - the general learning curve of entrepreneurship. It takes a few years to really figure out what you are doing.
EDIT 2: Just to clarify, it does take time but simply letting time pass will not help you figure it out. You have to push yourself outside your comfort zone and learn from others. My growth rate has far exceeded most local retail stores, especially the last 2 years when most stores would have plateaued because I AM growing.
EDIT 3: If you are paying attention you will notice that the vehicle I chose (brick & mortar retail) has had a big role in the costs and time it's taken to grow.
I no longer have a goal for a certain net worth or number of stores - I don't know that I want more stores. I'm more concerned with hitting a monthly cash-flow number that is sufficiently above my needs to invest in big new projects. I plan to be there by the end of next year.
Here we are 5 years later. My plan was to quit within a year and a half. I haven't quit yet (but 100% will by the end of the year - though it will be to run a different business I recently bought). I wanted 10 stores & $6million within 10 years. I still just have the one store, and certainly nowhere near $6 million.
The single biggest thing that I did not understand 5 years ago was the COST OF GROWTH. In a capital-intensive, inventory-based business like retail - growth is very expensive. I was massively under-capitalized and that substantially impacted the rate of growth we were able to achieve as well as the amount of money we were able to take out of the business.
I also vastly underestimated the seasonality of the gift retail business. 50% of a retailers sales can happen in October-December. January was a somber reality. It took me a lot longer than expected to hit the revenue numbers I was aiming for - in large part due to above, cost of growth.
EDIT: One other point, I was not accounting for inventory write-offs and mark-downs, which eventually hurt my margins quite a bit so that even if revenue had been what I thought the profit wasn't.
And worth noting, my break-even point has consistently gone up each year. We moved to a location twice the size (and more than twice the rent), have added substantial employee hours (we used to have maybe 10 hours/week we had to pay - we now have 60+), etc. I had not figured in any of that originally.
Ultimately, these things are part of a much larger concept I didn't recognize - the general learning curve of entrepreneurship. It takes a few years to really figure out what you are doing.
EDIT 2: Just to clarify, it does take time but simply letting time pass will not help you figure it out. You have to push yourself outside your comfort zone and learn from others. My growth rate has far exceeded most local retail stores, especially the last 2 years when most stores would have plateaued because I AM growing.
EDIT 3: If you are paying attention you will notice that the vehicle I chose (brick & mortar retail) has had a big role in the costs and time it's taken to grow.
I no longer have a goal for a certain net worth or number of stores - I don't know that I want more stores. I'm more concerned with hitting a monthly cash-flow number that is sufficiently above my needs to invest in big new projects. I plan to be there by the end of next year.
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