Bill on Lifestyle and Business

On Jun 9, 2011, at 3:08 PM, Bill wrote:

Hello John,

Thank you greatly for the detailed response. I took some time to think about this email and read it over several times. It does make sense. The numbers you charted out makes sense and it goes a long way to see it all planned out.

When I first read the email, I must admit that I just briefly ran through the numbers. However, I'm glad I actually went through the numbers as it tells an interesting story. 

My questions/ comments are as follows:

Sales Rep: I assume the $200, is the sales rep min. order (much like the supplier's 10 K min.)

***Right....***

1) How much time does it take to get connected to the 12 rep. organizations covering the 50 states? 

9 months? Less?

*** Depends, quick is expensive, slow is cheap... see next..***

And best methods to do so? ( Referral, road trip) 

***Referrals is slow and inexpensive, road cheap fast and expensive...    Most people do a rolling campaign over years to keep within their capacity for a growing company... but 9 months with referrals is not bad...  road trip, 3 days a city, 36 days?***

2) You noted that if you only get 1 min order/ week/ state, the reps. would dump your line. If that is the case, what's a good benchmark? How many orders per week? 

*** I'd say 20% (so twenty) as a minimum (50% is about right) ... so if they show to 50 people, ten is acceptable, as a start with the sense you are responding and ever improving, 50 is about right...***

$200,000 overhead: 

I was a bit surprised when I saw this. And I have a feeling this has a lot to do with expenses v. net income ( and keeping tax liability low).

3) My initial question is, how much of this overhead would go to sales rep. commission? 

***In gift and housewares we pa a 15% commission, so $75,000 to the sales reps.***

I think I now understand your comment about "It is not about the net income, it is about the lifestyle." (Before I didn't think much of it, but now I think I can see a hard reason for it.)

I'm going to theorize that if you manage well here, that $50,000 actually equates to much more. If you control your "costs" well part of that $200,000 overhead could become "lifestyle expenses."

Am I close on this? What are your thoughts? 

***Perzactly!!! And think of "directing costs" more than "controlling costs"***

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***I'll get to the below next...***

John

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