I have for years been a customer of a small, middle class, neighborhood restaurant. It serves good food, large portions and at a reasonable price. I know the manager quite well. Not long ago he mentioned to me the total number of meals this restaurant serves per day. The context in which he told me this was not in passing but was in a serious vein. Based on that, I feel certain the following numbers are reasonably accurate.
He serves over 300 meals a day or little over 2,000 meals a week, which works out to about 100,000 meals a year. His average meal runs, with a recent price increase, between $6&$8. We'll use the $6 price to be conservative. So, $6 a meal times 100,000 meals a year is a gross of about $600,000.
The price of a meal in this type of business generally follows a principle called"thirds". That is;one-third is the cost of the food, one-third is operational expense including labor and rent, and one-third is profit before taxes. So, one-third of $600,000 is about $200,000 profit before taxes, minus say 25% for taxes, which leaves about $150,000 as profit.
His startup costs were meager. Even at new prices, his grill couldn't have cost more than $5,000. Add $2,000 for four stainless steel tables. $500 for assorted kitchenware. $300 for a cash register and $1,000 for an ice machine. For the first few years he used four used($100)home freezers, for a total of $400, instead of a walk-in freezer. His soda equipment was provided free by the vendor. Even with local licenses the total still comes in under $10,000. In other words, an operation like his could be had for an equipment cost of less than $10,000.
Let's say a local eatery such as this was established by your company, for the dual purpose of turning some profit and to generally just start things up and get your feet wet. But you begin to have misgivings because, and this is the scariest part, that the largest expense may not be equipment. The largest expense may be paying the monthly bill for expenses, until you can get enough of a clientèle into your store to savor your culinary wares.
Now, what if you knew for certain, that the day you opened your doors there would be customers. Lots and lots of customers, just waiting to get in. And you knew that all of these same customers would keep coming back time and time again. Would that not be considered a fail-safefeature and would it not preventfailure and forcesuccess. Now I can just hear some of ya'saying:"OK Mr Smarty Pants, so where we gonna get that many'perfect'customers?"
All It Takes Is 1,000 Good Customers
How many customers would we need to sell the same number of meals as the example above, if each ate at your restaurant twice a week?At 2,000 meals a week, you'd need about a thousand people eating at your restaurant, twice a week. Of course you and the other thirty-four owners would all eat there at least twice a week because, well, it's your restaurant, right?So, all you need is another 965 'perfect customers' who share your same enthusiasm and you're in business. But where could you get that many people?
Well, why does only one company have to invest in this new enterprise?What if instead of just one company, say 30 companies invested. Now let's do the math here: 30 companies times 35 company members equals 1050 new'perfect customers'errh, owners who have to eat somewhere. Where are most of, if not all 1050 new owners cum customers going to eat?Well, if I'm one of those owners, I'm gonna eat at the company I own a piece of, wouldn't you?Why would you eat anywhere else, especially if its only two meals a week?
Remember what I said early in the beginning of this essay?Let's read it again:"You see, the plan has built-in to it, a fail-safe feature. This feature will not just preventfailure, but will actually forcesuccess."- Follow my logic here;Businesses fail when not enough customers show up at the business, money in hand, ready to do business, right?The owners of the business then do not bring in enough money to pay the bills and generate a profit, right?But, what happens if the owners and customers are one and the same?Are these customers/owners ever going to allow the business they own to not generate a profit and thus be forced out of business, when all they have to do is eat two meals a week at their own establishment to make it succeed? It's more than reasonable to think that they, the customers/owners, would never let the business fail. So, isn't that to you, a"fail-safe feature"? Isn't that to you, a feature that will actually prevent failure and force success?
If your new company, in conjunction with other companies of an appropriate number, were to invest mostlyin ventures whose products and services are regularly purchased by you and your co-owners anyway, then your chances of success should increase enormously. I am using the word'enormously'here, because I am trying to control my enthusiasm, remain conservative and thus not come under the watchful eye of the SEC for claiming too much.
Sperryism Part 5
The information contained herein is only for the purpose of elucidating and conveying, an entirely new financial strategy for the rescue of America. It should not be considered in any manner an offer to sell, buy or invest in anything, in any way. Always consult a trained financial advisor before considering any financial investment.
© M.J. Sperry - March 2009 - All rights to this work are hereby relinquished to the public domain, but only if republished in its entirety, including this disclaimer. Please distribute widely.
About The Author
M. J. Sperry Pm. is a futurist & writer living in San Diego. He is an "out of the cage" free thinker, who brings to his writing innovation and creativity honed from years in industry in Southern California. There he was as a successful troubleshooter for hire, a troubleshooter of "unsolvable" problems. He left that lucrative work behind eighteen years ago, to devote his time and talents to the unraveling of the most formidable problems he's yet tackled, those of government and society.
Pm. - Peacemaker
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The Sperry Plan (In 5 parts)
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