Nikonomics - The Economics of Small Business
00:22:23 · Nikolas Hulewsky, Peter Lohmann
[00:22:23] S1: Because you're learning from other people. It's not necessarily, I am Peter here to distill all of my knowledge onto this community. Like, they're... I'm assuming, I don't know Crane, but most communities are like, hey, what are you doing in this market? How does this work? Would anybody talk to a lawyer who's done a, you know, transaction before? Exactly. I said, like, those, they're just invaluable as you're trying to get up and running. [00:22:42] S0: Yeah, and there's actually a bunch of these groups on Facebook too, and they're really valuable as well, but on Facebook, first of all, it's super noisy, right? And you have all different skill levels, you have vendors mixed in there, you never know what you're getting. And then the other thing with Facebook is that because it's it's not really private, there's no vetting. People are not comfortable sharing sort of what's really going on. What I like about a paid private community is you you... Is everyone who joins is highly vetted by myself and my cofounder. And then once you're inside, everyone agrees to a a code of conduct where what happens inside there stays in there. So you get people sharing very transparently and very, very raw experiences. And then that's really kind of where the magic happens, where the real juice is. But... [00:23:27] S1: Yeah. [00:23:28] S0: So anyway, so that's 100 doors, and once you reach 100 doors, it's sort of like you can make a living off this, you're not going have to go back to your normal job if this is something you start on the side or whatever.
00:23:28 · Peter Lohmann, Nikolas Hulewsky
[00:23:28] S0: So anyway, so that's 100 doors, and once you reach 100 doors, it's sort of like you can make a living off this, you're not going have to go back to your normal job if this is something you start on the side or whatever. [00:23:39] S1: Because theoretically at a 100 doors, I'm doing anywhere between 15,000 and 30,000 a month. Right. In top line revenue. [00:23:48] S0: Yep. [00:23:49] S1: And I'm netting, let's just call it 15%. To like... [00:23:54] S0: You're probably netting more actually as a percentage when you're [00:23:57] S1: Because you're small doing everything yourself. [00:23:59] S0: You're doing everything yourself. You haven't reached the point where you have to buy a bunch of heavy SaaS products and you don't have an office really, or you have a tiny one. So like your overhead is still small. [00:24:11] S1: Okay. That makes sense. All right. So when you hit a 100 doors is like, oh, this is a proper business. It's not, it's no longer, you're just a solo entrepreneur trying to figure out how hire your first employee. What's the next?
00:24:11 · Nikolas Hulewsky, Peter Lohmann
[00:24:11] S1: Okay. That makes sense. All right. So when you hit a 100 doors is like, oh, this is a proper business. It's not, it's no longer, you're just a solo entrepreneur trying to figure out how hire your first employee. What's the next? [00:24:23] S0: Yeah. So the next break point is probably in the 200 to 300 door range. That's where a lot, a lot, a lot of property management companies get to. That's like super common size. I would say that's kind of like the median size. And at that point, you're gonna have a handful of employees. You're gonna have a small office. You're gonna have very predictable revenue every month. You're going to have a set of customers coming in the door every month because you've probably been around a little while. You've got a brand in your local area of some sort. And you could compare that size to, like, of like any old main street business, or it might be similar in size to like a franchise, like if you went out and bought a Smoothie King or something like... Yeah. [00:25:08] S1: At at 300 doors and and I'll just say 200 per door per month, you're at $60 a month, you're doing 700,800 thousand dollars a year in top line revenue. Exactly. And your margins are probably in the 20% range. It's a good business, but it's still, you know, it's not a business that you can necessarily unplug from. Right. And you're like, oh, I got I got an operator in there and I handed it off to them. Like, own that. You're probably also running it in the weeds.
00:25:08 · Nikolas Hulewsky, Peter Lohmann
[00:25:08] S1: At at 300 doors and and I'll just say 200 per door per month, you're at $60 a month, you're doing 700,800 thousand dollars a year in top line revenue. Exactly. And your margins are probably in the 20% range. It's a good business, but it's still, you know, it's not a business that you can necessarily unplug from. Right. And you're like, oh, I got I got an operator in there and I handed it off to them. Like, own that. You're probably also running it in the weeds. [00:25:37] S0: Exactly right. You're not big enough yet to have, like, a whole leadership team where you could step away and and things like that. Yeah. [00:25:43] S1: Let's say at the 700, Mark, is that big enough to have a leadership team where you can step away? [00:25:47] S0: Absolutely. Yes. And so we've got a full full leadership team here at RL, and I actually take a month off every year where I fully disconnect from the business. Yeah. [00:25:55] S1: Not just the business. You're off social media too. I don't know how you do that. I'm addicted. My dopamine receptors would go... Would freak out.
00:25:55 · Nikolas Hulewsky, Peter Lohmann
[00:25:55] S1: Not just the business. You're off social media too. I don't know how you do that. I'm addicted. My dopamine receptors would go... Would freak out. [00:26:02] S0: It's interesting, and this is... This will be coming up here. It'll be my fourth year doing it, I think. It started to become sort of like something I'm known for, but I view that as sort of the goal. It's like you start your own company. That's great. And once you're making some good money, that's awesome too. But until you can really step away from it and come back and you've added doors and someone's been hired and someone's been fired and, like, things are still going good, that's when you really know you've got a true business and you don't... You know, the the sort of derogatory thing that people say here is, like, you bought a job. Right? You don't wanna do that. So
00:26:02 · Peter Lohmann, Nikolas Hulewsky
[00:26:02] S0: It's interesting, and this is... This will be coming up here. It'll be my fourth year doing it, I think. It started to become sort of like something I'm known for, but I view that as sort of the goal. It's like you start your own company. That's great. And once you're making some good money, that's awesome too. But until you can really step away from it and come back and you've added doors and someone's been hired and someone's been fired and, like, things are still going good, that's when you really know you've got a true business and you don't... You know, the the sort of derogatory thing that people say here is, like, you bought a job. Right? You don't wanna do that. So [00:26:38] S1: It's like, yeah. It... But I bought a job that I'm the only person I could fire myself from. So Yeah. I... I'm in control. That's that's a massive deal. So I have a friend of mine who, when he goes into something like YouTube or a business, he looks at, alright, what's the minimum threshold that I wanna get to and how do I get there? And how much money do I need to spend to get there in order to get there quickly? So... And I think that's an interesting framework. That's not how I think, but he's kind of changed my mind on it. If I was sitting at home and I was like, alright, a 100 doors, how can I get there within six months? And and let's say money is no object. What would you do? How would you go and get a 100 doors within six months? [00:27:16] S0: 100 doors in six months would be a big challenge. I'll say that. I would probably allow for like one year to eighteen months.