(05-20-2016 10:47 AM)Redwingtom Wrote: (05-20-2016 10:20 AM)Hambone10 Wrote: (05-19-2016 03:56 PM)Redwingtom Wrote: He said their net income is $100,000 a month. That's after expenses...you know...like salaries and wages. 
Investors don't earn salaries or wages.
How much have the invested and/or not earned or even lost for how long so that they can now be earning this money?
If they're in year 9 and have not made a dime until this year and have invested say $20mm, they're still in a DEEP hole. I'm not saying that's the case... I'm saying you don't know. All you know is they APPEAR to be making more money than the workers do THIS year, without considering what they had to do without and for how long.
This is the lesson so many don't get... Investors CAN lose money. They in fact often do. They certainly have numerous negative months and even years. WORKERS can not. your employer can steal your time (just like they can from investors) but they cannot take money from your pocket... and you get paid whether or not the investor makes money. In exchange for this security, you have far less potential.
If you want to change that, then become and investor. One easy way... tell your boss that you will forego salary next year in exchange for stock/some ownership in the company. If you won't do this, then why?
I think you need to go back and read the flow of reply's that I was addressing. You're commenting on something no one is even discussing. UofM was trying to claim that Niner's company didn't have a "cash mountain" because he was likely thinking they only had gross income of $100,000 a month. Niner clearly said net...which would of course be after salaries, wages and commissions.
UofMstateU Wrote:A company that has more than a handful of employees making $30-$40K that is only generating $100K per month isnt sitting on a cash mountain. Things are tight.
I don't know what you think I've missed.
Investors don't earn commissions either.
All I see is that Niner is ignoring the cost in capital of generating that revenue... and while stateU may or may not have addressed his comment properly, I certainly have. If you were merely correcting that small point, no problem... but you still haven't addressed the issue of whether or not they are sitting on a cash mountain.
Simple example...
Year one, company buys $1.5mm in equipment, generates 500,000 in sales but invests another 500,000 in expenses, including salaries etc. They're $2mm 'in'.
Year two, company is generating net cash flow (in excess of all expenses) of 100,000/month.
At the end of year two, despite earning 100,000/month in NET income for a total of 1.2mm, the company is still $800,000 'in the hole' and investors haven't yet earned a dime.
at the end of year three with the same math, the investors have their money back and have now 'earned' 400,000 on their $2mm investment for a rate of return of 20% which sounds great, until you remember that their money was out there for 3 years so their REAL rate was only something like 6%. Not bad, but hardly a home run...en they EASILY could have lost $2mm.
Obviously that's being overly simplistic, but the point is that you can't simply look at net income and assume that things aren't tight... or that investors are 'cleaning up'.
It seems to me that someone being asked to risk $2mm (and if things were slower, it could have taken far more) would have an expected return of AT LEAST that much (why would you accept more downside than up?) with the only question being how long until you stop being negative (putting more money at risk) and how long it takes to recoup.
Meanwhile, the 'worker' is collecting a paycheck every two weeks.
