Intro to a future penta-millionaire

[CPisHere]

Hey guys,

My name is Chris, I am 26, and I plan to have $6 million in the next 10 years.

Currently I am employed by a Fortune 1000 company outside of New Orleans, Louisiana. My wife recently quit her job and is now running our very first retail store after a $65k SBA loan plus essentially all of our savings which were used for leasehold improvements, equipment, and inventory.

We've been in business for 1 month and are already breaking even (excluding paying her salary).

My plan is to quit my job within a year and half to expand and open more stores. I believe that i can grow to 10 non-franchised stores within 10 years and have the equity in the business exceed $4 million + our savings from the income over that time period bringing us to $6 million after taxes.

Ive followed the slow-lane philosophy till this point in my life - doing all the things people expected me to and achieving their definition of "success". I graduated from college, got a good paying job with benefits, bought a house, and realized that this is not my definition of success.

For me, a nice house in the suburbs with a good job is a worst-case scenario. I want something beyond that, and it's more about being challenged and enjoying what I do than the money, but the money will make it that much sweeter.

 

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[911Carrera]

Welcome to the boards dude.

 

[77startup]

I'll see you in the winners circle

 

[MJ DeMarco]

My plan is to quit my job within a year and half to expand and open more stores. I believe that i can grow to 10 non-franchised stores within 10 years and have the equity in the business exceed $4 million + our savings from the income over that time period bringing us to $6 million after taxes.

Sounds like a plan; defined, reasonable time limits -- if your product/service is strong enough, should be doable. Welcome aboard!

 

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[rexxkai]

Sounds like a plan; defined, reasonable time limits -- if your product/service is strong enough, should be doable. Welcome aboard!

great point, makes me think that i should revise and make my plan more clear

 

[JEdwards]

good going... Break even is the easy part.. paying yourself is the hard part.

Keep it up.

 

[Kak]

Dont pay a salary... pay a distribution!!

 

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[CPisHere]

good going... Break even is the easy part.. paying yourself is the hard part.

Keep it up.

Breaking even in the first month of a completely new concept brick & mortar retail store....

But you are right, that was the easy part. The tough part will be growing large & fast enough successfully. I've just hired a consultant who helped one of his clients go from 1 store to 14 in 7 years, so I'm very excited.

 

[MJ DeMarco]

Dont pay a salary... pay a distribution!!

Careful, if you pay out $100K in distributions and $0K in salary you will be ripe for an audit. You must pay yourself a reasonable salary relative to distributions.

 

[CPisHere]

Breaking even in the first month of a completely new concept brick & mortar retail store....

But you are right, that was the easy part. The tough part will be growing large & fast enough successfully. I've just hired a consultant who helped one of his clients go from 1 store to 14 in 7 years, so I'm very excited.

UPDATE:

So, this is probably not uncommon, but I was underestimating some of our annual expenses. While we broke-even on a cash-flow basis in our very first full month (mid August to mid September), this figure was about $5k/month understated when including all expenditures (like annual Accounting costs, Travel for Trade Shows, additional employee hours, etc).

However, in October we hit our true break-even (without paying my wife a salary). In November, we surpassed it by $4k (leaving $2k profit to take home), and we've already surpassed it by $6k thus far in December (and will likely have $5k profit take home).

Needless to say, it's been a fantastic past few months and the absolute most fun I've ever had.

There's been a few ups & downs - mainly from running a business with my wife, trying to identify our roles, who makes what decisions, and separating our relationship from the business. It's a very tricky situation for sure. We are doing much better at it now, but I'm sure it will continue to evolve. My advice to anyone in a similar situation is to meet weekly for a meal to discuss business - do not discuss it in the evenings.

The next big question is how January is going to go - after the Christmas rush. I expect it to drop off quite a bit, but should be good enough to still break-even. I am looking forward to use this time to implement some new marketing ideas to grow the business even more. We've only tapped about 10% of our small niche target market within a 10 mile radius thus far, so I believe we could ultimately be doing 5X this amount of business (although not in our current location which is < 1,000 sq ft).

My goal is to have the store doing 15% more than what we're doing this month, every month, within 6 months. If we can hit that point, we'll be ready to expand to a new location. Assuming it takes the new location 6 months to get to that level (which shouldn't be hard because it will be in a much larger metropolitan area), I will be able to quit my job and live quite comfortably in a year's time.

 

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[theBiz]

Careful, if you pay out $100K in distributions and $0K in salary you will be ripe for an audit. You must pay yourself a reasonable salary relative to distributions.

can someone elaborate, why must you pay yourself regarding your distribution amount?

 

[healthstatus]

The IRS wants payroll taxes and unemployment to be collected, the assumption is that they have a "S Corporation". My accountant has suggested somewhere in the neighborhood of 50% distributions and 50% salary as a good guidepost. Check with your tax advisor to make sure that works in your situation.

 

[CPisHere]

Correct healthstatus, it comes down to taxes.

My understanding is that the law merely says the salary must be "reasonable", which leaves a lot of room for interpretation. Per my consultant, a lot of owners pay themselves something like a fresh college grad ($30 to $40k) in salary, and keep it in this range until the profit (after many 'personal' expenses have been run through) of the business is ~4X this high. At that point they keep the salary in the 1/4th of profit range.

This is NOT tax advice, just what I've heard.

 

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[healthstatus]

Be careful putting too many "personal" expenses through the company, it destroys the personal liability protection that a corporation normally provides. We had dealings with a shady character, when we were forced to go to court to get several hundred thousand dollars of resolution, he bankrupted the company. We showed how he had used the company as his personal bank (legal term is piercing the corporate veil), and were able to go after his personal assets.

 

[CPisHere]

Be careful putting too many "personal" expenses through the company, it destroys the personal liability protection that a corporation normally provides. We had dealings with a shady character, when we were forced to go to court to get several hundred thousand dollars of resolution, he bankrupted the company. We showed how he had used the company as his personal bank (legal term is piercing the corporate veil), and were able to go after his personal assets.

By 'personal' expenses, I mean the things you are legally allowed to run through the business - your car, your cellphone, home office, etc. I should have specified.

 

[healthstatus]

I figured, but just wanted to keep some people from getting confused so they don't start buying clothes and cable subscriptions and that sort of thing through their company (although I think some businesses could pull off a cable subscription as necessary business expense)

 

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[CPisHere]

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.

 

[nradam123]

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.

Ultimately, these two 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.

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.

I plan to be there by the end of next year? OR I will be there by the end of next year?
You have to be certain about your decision, you need to have the hunger to make it happen. Otherwise your dream will never materialize.

This is a tough road with a lot of competition. If you make the wrong choices you wont make it. If you did not work hard enough you wont make it. If takes a lot of trial, error and field testing to get the recipe right.

How many books have you read this year? How many people did you meet this year to share your progress and get feedback?

I suggest you to check this video by Tony Robbins - LINK
Here is a video beak down - LINK

 

[CPisHere]

I plan to be there by the end of next year? OR I will be there by the end of next year?
You have to be certain about your decision, you need to have the hunger to make it happen. Otherwise your dream will never materialize.

This is a tough road with a lot of competition. If you make the wrong choices you wont make it. If you did not work hard enough you wont make it. If takes a lot of trial, error and field testing to get the recipe right.

How many books have you read this year? How many people did you meet this year to share your progress and get feedback?

I don't want to be rude, but are you in a position to be giving me advice?

 

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[LightHouse]

I don't want to be rude, but are you in a position to be giving me advice?

Wtf....

 

[CPisHere]

Wtf....

Guess I failed.

 

[devine]

This thread is hilarious.

2OP, don't F*cking settle. You'll make it.

 

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[Ricardo's]

Guess I failed.

Everything unfolds as it should.

It's awesome that you update this 5 years later, much appreciated. Any advice in terms of human resources that you accumulated over the last 5 years? Retaining good employees and grooming managers?

 

[CPisHere]

It's awesome that you update this 5 years later, much appreciated. Any advice in terms of human resources that you accumulated over the last 5 years? Retaining good employees and grooming managers?

People don't appreciate more money or presents for very long. They remember being appreciated. But you can't forget that they are EMPLOYEES and as much as we like to pretend otherwise, it is an inherently adversarial relationship.

 

[LightHouse]

Guess I failed.

Don't play the victim...

That has nothing to do with it. The guy is posting a useful response to your thread, and you are just being a dick to him. He wasn't telling you how to run your business.

A little humility can go a long way. Try to learn something from everyone, and also see peoples good intentions some times.

 

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[CPisHere]

Don't play the victim...

That has nothing to do with it. The guy is posting a useful response to your thread, and you are just being a dick to him. He wasn't telling you how to run your business.

A little humility can go a long way. Try to learn something from everyone, and also see peoples good intentions some times.

I have the humility to not give people more successful than me advice on how to be successful.

 

[BlakeRVA]

One of the blatant signs of arrogance is the refusal to accept advice from anyone apart from a select group. Sometimes, great advice comes from unlikely places.

 

[CPisHere]

One of the blatant signs of arrogance is the refusal to accept advice from anyone apart from a select group. Sometimes, great advice comes from unlikely places.

I realize I'm being a dick, but whatever...

Do you take dieting advice from fat people?

 

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[mayana]

I have the humility to not give people more successful than me advice on how to be successful.

This is a cool thread, and thanks for coming back to update it.

That said, unless you know something about the forum members that the rest of us don't know, how do you know that you are more successful than someone else? Additionally, what is your definition of success?

There are a lot of people on here that are very successful in different ways and add tons of value to the forum. It's cool to listen. And if you think the advice is crap, well, you are an adult and don't have to follow it

 

[BlakeRVA]

I realize I'm being a dick, but whatever...

Do you take dieting advice from fat people?

It depends. He might be someone who has been studying health and fitness for the past few months and is implementing positive changes in his life. He might have some valuable information to share with me and it would be foolish to completely discredit him because he's not what I consider 'fit'. Again, great advice can come from unlikely places.