One of the wealthiest families I’ve ever met made their fortune selling Disney tourist trinkets. The items sell for just $3-$5 dollar each out of their multiple locations. Due to their approach to financial management, they have created legacy wealth. My son is friends with the great grandson of the people that started the business and he’s rich and employed by the family business thanks to great grandpa and grandma.
Most of us look at the mega companies and believe that’s the best way to this kind of legacy wealth. This point of view moves us to wish for one of these big homeruns to affluence or get-rich-quick methodologies. Yet, what most doctors, entrepreneurs, and people looking for the American dream should realize is that the most likely way to wealth is called “Good stewardship when the amounts are small.”
Our trinket selling friends run a tight ship, utilized profits to buy the buildings their shops are in, and eventually own the warehouses where the 100s of square foot of knick-knacks are stored. Over the years, they’ve built up dozens of partnerships across the world, buy in massive bulk, and turned what started as very little into much.
For a doctor or small business entrepreneur, you need a trinket-selling approach. On the other hand, most of the doctors and business leaders I consult for spend very, very little time accounting for the pennies until I get ahold of them. Most start out in business through a vision to help people and provide good products or services, but forget that sustainability is tied to profitability and we need money for the future.
When I go in to consult for clinics and businesses, it is often difficult to get ahold of their key financial analytics. Sad because mastering accounting practices, cash flow analysis, profit and loss (P&L) statements, budgets, EBITDA (Earnings before interest, taxes, depreciation, and amortization), and weekly, monthly, quarterly, and annual goals are mature essentials that are irreducible minimums for long-term prosperity. These terms go down like a rat sandwich to most doctors and entrepreneurs, but you need to learn to love them, date them, take them to dinner and a movie, propose, and get married to them.
Unless you are like Bezos, Musk, Buffet, Gates, Branson, or the CEO of Disney or IBM you need a “Trinket-Selling Approach” if you want to generate long-term wealth.
The trinket family explained this approach to me – here are the basic underlying principles.
THE TRINKET SELLING APPROACH
- I sell 100 Mickey Mouse snow globes a day at store 1 for $5 each.
- The raw cost of the globe is $1.
- My overall cost per transaction (CPT) is $3 (raw cost of the globe, including rent, staff, utilities, leases, insurances, and maintenance).
- The gross profit is $2 per sale.
That overall expense is tricky. Many new business owners and most of the staff believe the profit is $4/sale. However, you take the total gross overhead and divide by the number of transactions and you get a cost per transaction – which is the $3 and therefore only $2 in profit per sale. This means if someone steals a globe or a friend or staff member get to buy one for the $1 “cost” then you lose $2-3.
The Weekly Trinket Shop Financial Analysis Should Be:
- I sold 500 globes Monday-Friday.
- I collected $2,500 for the week in sales ($5 x 500).
- My overall profit and loss (P&L) shows $2,500 less $1,500 CPT ($3 X $500)
= $1,000 in profits.
Daily/Weekly Stewardship
This uber-rich knick-knack selling family told me that they review collections daily – and usually find that something is not adding up. This daily/weekly review has made them their millions – by stopping them from losing millions.
The Trinket Selling Approach and “Legacy Money”
It doesn’t end at the P&L. There is a very tight plan for the profits. Early on, they had a vision for where the money would go; eliminate debt, buy their first building, buy their first shopping center, then the warehouses, then using profits to buy 100,000 Donald Duck fire engines at a time so they cost 25 cents each instead of 37 cents.
Good stewardship when the amounts are small
A person with great vision who fail to make the numbers is almost a proverb, and it is a parable (Luke 14:28-30). It’s all about good stewardship when the amounts are small.
Don’t be common – Poor stewardship is common. It’s easy to blow our money on the “trinkets” by not paying attention to the pennies along the way and miss out on the legacy kind of wealth that would’ve come from sound management and a plan. You work hard. If your kids need money one day for some necessity or you wish they could get some inheritance, you don’t want to say, “Sorry kids, I blew it.”
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Be Uncommon
Dr. Ben
