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tl;dr: owning a business does funny things to people. Make sure you're one of the ones who can handle it in a healthy manner. Reality is having a couple millio

tl;dr: owning a business does funny things to people. Make sure you're one of the ones who can handle it in a healthy manner. Reality is having a couple million a year business can really lead to a fantastic lifestyle if done properly. Emphasis on the "if done properly." I know a man who own his own american manufacturing company (yes, they still exist). They specialize in electric motors. They do good business despite having fewer than 50 employees and gross about $5M a year. I'm not sure how much of that is profit, but I'm going to guess most of it. The owner is fanatic about keeping costs down. On the other hand, he doesn't have the temperament for business. He's a ball of stress all the time. He's always getting angry over what many here would consider standard business practices. He micromanages his company, especially his IT staff (which is one guy). He's had 4 heart attacks in the past 10 years. He has fewer than 50 employees because he refuses to pass the minimum to qualify for Obamacare (which would raise his costs considerably). He's a good guy, normally, but business ownership has been a net negative on his health and mental status. I knew one other small business owner that was similar. He owned a successful comic book store at the local mall. He did great business and made a lot of money. Then, about 6 month after he opened the store, he noticed that shoplifting was increasing. He then became obsessed about limiting his losses. The idea that somebody could easily steal his merchandise stressed him out beyond measure. Business started going down around then because the changes he made to limit shoplifting also limited his exposure to passers by and made the storefront look unwelcoming. He eventually moved the store to the first floor of a single family home just outside of the city limits. His profits dropped considerably, but so did his losses. His stress also went away; he was no longer worried or obsessed about it. The tradeoff was worth it to him; he literally traded high profit for low stress.

beambot 11y ago
$5M gross is kinda low for 50(ish) employees. That works out to $100k apiece fully-loaded (healthcare, taxes, etc). He would need to be paying them each substantially less than $60k a year.... and that's ignoring all his other costs: materials (it's a physical good), inventory, taxes (property, sales, income), and service fees (attorney, accountant, etc). Only then do you get to his net income. It's likely not very good. Perhaps that's causing all the stress?! Maybe not a fair comparison.... but look at Google, which does $50B in revenues with 50,000 employees -- i.e. $1M in revenue (in a high-margin, software-centric business) per employee.
- danieltillett 11y ago
  People on wages near or just above minimum wage don’t make anywhere near $100,000 a year. There is a reason that manufacturing jobs are coming back from China.
  - beambot 11y ago
    $10/hr workers cost ~$30k fully-loaded per year. That's $1.5M for 50 employees. If we assume 30% margins, then materials costs are $3.3M and "profit" is $1.6M. Subtract off employee salaries, and he's netting $100k/hr. And that's not even accounting for taxes or other fixed costs (eg. realestate). Given the strong competition in the electric motor market... he's living on a razor's edge. If he can eek out higher margins, like 50%, then he's doing $1M pretax. It's not bad, but not great -- especially if there's volatility. Still a razor's edge in that market.
    - danieltillett 11y ago
      I suspect that you are right about the profit margins hence the bosses stressed behaviour. The point I was making is that we should not just apply tech wages to every situation - many people are living on wages at, or not far, from minimum wage.
    - CPLX 11y ago
      Making a million dollars a year on average is, in fact, great, by nearly any non-delusional standard.
      - reitzensteinm 11y ago
        Please don't label those that disagree with you delusional. The guy probably has personally guaranteed loans, and running a low margin business where things can swing against you hard is no fun at all. We are incredibly lucky in the software world. I'd take a steady 200k over the picture painted by op, and given the skills required to build such a business and the time investment, I'd agree that's not great.

beambot 11y ago

$5M gross is kinda low for 50(ish) employees. That works out to $100k apiece fully-loaded (healthcare, taxes, etc). He would need to be paying them each substantially less than $60k a year.... and that's ignoring all his other costs: materials (it's a physical good), inventory, taxes (property, sales, income), and service fees (attorney, accountant, etc). Only then do you get to his net income. It's likely not very good. Perhaps that's causing all the stress?! Maybe not a fair comparison.... but look at Google, which does $50B in revenues with 50,000 employees -- i.e. $1M in revenue (in a high-margin, software-centric business) per employee.

danieltillett 11y ago
People on wages near or just above minimum wage don’t make anywhere near $100,000 a year. There is a reason that manufacturing jobs are coming back from China.
- beambot 11y ago
  $10/hr workers cost ~$30k fully-loaded per year. That's $1.5M for 50 employees. If we assume 30% margins, then materials costs are $3.3M and "profit" is $1.6M. Subtract off employee salaries, and he's netting $100k/hr. And that's not even accounting for taxes or other fixed costs (eg. realestate). Given the strong competition in the electric motor market... he's living on a razor's edge. If he can eek out higher margins, like 50%, then he's doing $1M pretax. It's not bad, but not great -- especially if there's volatility. Still a razor's edge in that market.
  - danieltillett 11y ago
    I suspect that you are right about the profit margins hence the bosses stressed behaviour. The point I was making is that we should not just apply tech wages to every situation - many people are living on wages at, or not far, from minimum wage.
  - CPLX 11y ago
    Making a million dollars a year on average is, in fact, great, by nearly any non-delusional standard.
    - reitzensteinm 11y ago
      Please don't label those that disagree with you delusional. The guy probably has personally guaranteed loans, and running a low margin business where things can swing against you hard is no fun at all. We are incredibly lucky in the software world. I'd take a steady 200k over the picture painted by op, and given the skills required to build such a business and the time investment, I'd agree that's not great.