4 ms·

$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 substa

by 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.
      - CPLX 11y ago
        Believing that having more than twice what it takes to make it in the top 1% of U.S. income is "not great" and that a major lifestyle compromise is to make 5x the average U.S. income for a family of four both strike me as symptoms of a delusional view of wealth and income in the society you presumably are a member of.
        reitzensteinm 11y ago
        I reject your premise. The situation is nothing like having a million dollar salary. You are discounting risk, past and present. It's all fun and games until a financial crisis makes you bankrupt via your personally guaranteed loans. Plenty of people on this site can make 200k contracting, and in terms of risk and return on investment, that's a way way way better position to shoot for. Now, do those people having 200k have it great? In my view they do. But you are doing simplistic analysis of the situation and labeling dissent as delusional. That's cheap and why I replied.
- deleted 11y ago
  [deleted]
PopeOfNope 11y ago
I said less than 50 employees. This is also in a place where cost of living is low and employee turnover is high. To say they make substantially less than $60k a year is accurate, but they still make enough to live on (unlike double that amount in SF). You're also assuming all 50 of those employees are salaried and/or full time. Not all of them are. He's making a healthy profit. That has nothing to do with the stress. Some people just don't deal well with the risk and unknowns that come with owning a business. These are only two of many stories I know of people doing very odd things under the stress of business ownership. I'm sure people here can provide more.

by beambot 11y ago

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.
    - CPLX 11y ago
      Believing that having more than twice what it takes to make it in the top 1% of U.S. income is "not great" and that a major lifestyle compromise is to make 5x the average U.S. income for a family of four both strike me as symptoms of a delusional view of wealth and income in the society you presumably are a member of.
      - reitzensteinm 11y ago
        I reject your premise. The situation is nothing like having a million dollar salary. You are discounting risk, past and present. It's all fun and games until a financial crisis makes you bankrupt via your personally guaranteed loans. Plenty of people on this site can make 200k contracting, and in terms of risk and return on investment, that's a way way way better position to shoot for. Now, do those people having 200k have it great? In my view they do. But you are doing simplistic analysis of the situation and labeling dissent as delusional. That's cheap and why I replied.
deleted 11y ago
[deleted]

PopeOfNope 11y ago

I said less than 50 employees. This is also in a place where cost of living is low and employee turnover is high. To say they make substantially less than $60k a year is accurate, but they still make enough to live on (unlike double that amount in SF). You're also assuming all 50 of those employees are salaried and/or full time. Not all of them are. He's making a healthy profit. That has nothing to do with the stress. Some people just don't deal well with the risk and unknowns that come with owning a business. These are only two of many stories I know of people doing very odd things under the stress of business ownership. I'm sure people here can provide more.