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question to the business majors or math nerds

pegman's Avatar

If you take your mega-million dollar idea and go into business, lets assume you have enough reserve to tide you over during the start up phase of a couple years and you make the initial investment to have everything you need to operate the business. The first sale is exciting and they cut you a check for $50 your very first month. Let’s assume your monthly operating costs are fixed at $1000. You anticipate 10% growth in sales every month for the 20 year patent and you have a gross profit of 30% on each sale.

How large of nest egg do you need to have and for how many years before you deplete the nest egg? How many years to rebuild the nest egg? Can you grow 10% a month if you only have a 30% margin if your monthly expenses increased when and by how much?

I survived death valley, I should survive this… maybe

The reason I ask is that I’m living it and am always broke, just wonderin…

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kimmyk's Avatargold

You need to call Dave Ramsey! He could definitely advise you on this.

Good luck Scott. It’s hard to always be paddling but not getting anywhere. I know, I’ve been there.

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051263's Avataree_badge

Good call Kim. I love that guy.

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betsykaufman's Avatarg8_badge

I love that guy too! Yep, definitely a 9-11 to Dave. I think he might say to get a 9-5 job….and do your business at night and on weekends. That way you can earn steady $, have health insurance and grow your other business without risk. Only, if and when your business becomes sustainable—-should you quit your job and do it full time.

Dave Ramsey also has a website and best selling books.

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westhompson's Avatar

My first thought is that 10% per month for life of patent (240 months) is not a realistic growth assumption. Do you realize that if your sales were only $1 the first month and this was compounded monthly for 240 periods, then your last month sales would be over $7.8 billion?

It’s the same principle as the old question, “Would you rather have a million dollars a month from now or a penny today and double your balance for 30 days?” (i.e. $5.8 Million)

fun to think about for nerds :)

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pegman's Avatar

I’m searching out Dave now.

Wes, I know that the 10% a month growth starts adding up to phenomenal numbers after about 8 years, but it’s pretty dismal outlook of success the first few years. I’m starting my 8th year and have averaged 11%, I’m pretty sure I’ll finish this year over 10% and at that point I’ll need it to slow down. That’s the reason for the question. healthy growth, and crazy too fast growth. But… currently it’s a multi billion dollar billion industry so you might as well dream big cuz in twenty years a billion dollars ain’t gonna be what it is today. :0)

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pfeiffer's Avatar

Your not running much of a business for $1000. a month. You make $50. dollars your first month. Your $950. short on operating cost your first month. There is no profit. At 10% more the next month your still $945.. short. The start up phase is about 3 years or 36000. in your case just to get your money back. Another 3 to 5 years to consider it a profitable part time job. You don’t stand a chance.

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