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Started By
Message
Small family business grossing over 500k/year
Posted on 12/15/18 at 3:04 pm
Posted on 12/15/18 at 3:04 pm
Mother has a small business for the past 15 years that grosses over 500k/year. She still works every day in what she feels to be a stressful environment. She feels the need to be present for "quality control". Shes brought up concerns lately that she is feeling the want to look towards retirement but knows my sister and her family is completely dependent on her income with no signs of anything changing. The business has not grown in the 15 years and never have pursued more work.
I live and work in NYC but have tried going through her finances over the past few months. (I'm not an accountant) Snapshot of what I have found.
Business has contracted around:
Gross- 500k/year + "extra jobs" maybe $100k/year
Overhead - $20k /year
Labor- $150k /year + "25% of any extra jobs"
Salaries- $350k /year
$218k/year to her...which goes towards her personal expenses and investment properties she owns
$130k/year to my sister. House, cars, kids schools, + salary all from the business. She's married, 5 kids, Husband doesn't work, sometimes as a "contractor" for my mother, but hasn't been the best source. She is supposed to be the bookkeeper but has never done much beyond for submitting invoices and payroll.
Profit: ($-25k) /year (without extras)
basically her rental properties and any profit from the "extra jobs" is what keeps her at float.
She just bought my sister's oldest child, 15, a 2019 JK Sahara.
What's your advise?
I live and work in NYC but have tried going through her finances over the past few months. (I'm not an accountant) Snapshot of what I have found.
Business has contracted around:
Gross- 500k/year + "extra jobs" maybe $100k/year
Overhead - $20k /year
Labor- $150k /year + "25% of any extra jobs"
Salaries- $350k /year
$218k/year to her...which goes towards her personal expenses and investment properties she owns
$130k/year to my sister. House, cars, kids schools, + salary all from the business. She's married, 5 kids, Husband doesn't work, sometimes as a "contractor" for my mother, but hasn't been the best source. She is supposed to be the bookkeeper but has never done much beyond for submitting invoices and payroll.
Profit: ($-25k) /year (without extras)
basically her rental properties and any profit from the "extra jobs" is what keeps her at float.
She just bought my sister's oldest child, 15, a 2019 JK Sahara.
What's your advise?
21
Posted on 12/15/18 at 3:13 pm to Papasteve
pretty obvious where the issue in that is, and you see it also.
Posted on 12/15/18 at 3:20 pm to Papasteve
What is the husband doing during the day?
Posted on 12/15/18 at 3:25 pm to GeauxMariners
How do you try to persuade someone that already makes $130k/ year to start working?
She tried "shadowing" my mother about a year ago when she threaten to "sell" the business
That lasted for about a month.
She tried "shadowing" my mother about a year ago when she threaten to "sell" the business
That lasted for about a month.
This post was edited on 12/15/18 at 3:31 pm
Posted on 12/15/18 at 3:29 pm to Papasteve
quote:
What is the husband doing during the day?
Little jobs he finds as a painter or just fixing up their house. He use to work a plant, but that didnt last long.
Most of the capital goes directly to payment of house, car, schools, etc. They get about $2,000/ month for daily expenses.
Posted on 12/15/18 at 3:35 pm to Papasteve
Tell the husband to get a real job and for your sister to quit mooching. Won’t do any good unless your mom is ready to cut them off.
But it sounds like your mom makes bad financial decisions too, so y’all may just be a lost cause.
But it sounds like your mom makes bad financial decisions too, so y’all may just be a lost cause.
Posted on 12/15/18 at 3:44 pm to boosiebadazz
Thats the issue here.
Either my sister wakes up and tries to take over
or
My mom continues to work until she can't anymore.
Ive balanced their account on QuickBooks, made all invoices and payroll ready. Hired a graphic designer to create new branding and submittal packages and currently a website in development.
Tried to make is cookie cutter easy for her, but she just complains that she doesn't have time due to 5 kids and goes back to manually writing checks and invoices
Either my sister wakes up and tries to take over
or
My mom continues to work until she can't anymore.
Ive balanced their account on QuickBooks, made all invoices and payroll ready. Hired a graphic designer to create new branding and submittal packages and currently a website in development.
Tried to make is cookie cutter easy for her, but she just complains that she doesn't have time due to 5 kids and goes back to manually writing checks and invoices
This post was edited on 12/15/18 at 3:45 pm
Posted on 12/15/18 at 3:55 pm to Papasteve
The only thing your sister should get is the salary from the business that she works at. Maybe a car allowance if she travels for work. The mileage can be written off as well if she travels.
The house/cars/school should be her responsibility and your brother in laws responsibility.
Does your sister have no knowledge or guilt about what she’s doing to the family business or her mother?
Deadbeat BIL needs a job and some tough lives needs to be given to your sister.
The house/cars/school should be her responsibility and your brother in laws responsibility.
Does your sister have no knowledge or guilt about what she’s doing to the family business or her mother?
Deadbeat BIL needs a job and some tough lives needs to be given to your sister.
Posted on 12/15/18 at 4:22 pm to Papasteve
I dunno, if your Mom bought her niece a brand new car, I’d say she’s making her choices loud and clear. For whatever reason, she’s choosing to bestow material things on her sister’s family. You may not like it, but if no one is coercing Moms to buy things/keep Sis on the payroll, then she’s entitled to throw her money away however she likes. If she has the mental capacity to understand how much she makes, and how much of it goes to propping up her sister’s lifestyle, then it truly is her choice.
Family dynamics are difficult. Is she providing her own children (you & any others) with as much support as her sister’s family? Why does she think her niece needs a brand new car?
Has she told her sister, point blank, that she plans to retire in X months/years and asked her what her plans are to assume the business? Or has she offered to sell the business to them?
Family dynamics are difficult. Is she providing her own children (you & any others) with as much support as her sister’s family? Why does she think her niece needs a brand new car?
Has she told her sister, point blank, that she plans to retire in X months/years and asked her what her plans are to assume the business? Or has she offered to sell the business to them?
Posted on 12/15/18 at 4:50 pm to Papasteve
I'm confused about this part:
Are you telling us that this is self-salary, legitimate business expenses, or owner's profit?
She could always just sell the business to more efficient owners, and set up annuities for herself and for the sister.
It's unclear what your mom is even asking you to do. If she's just expressing concerns, then it's not really your duty to do anything about it. Since it's your mom, you can gently nudge her toward the benefits of selling the business, but ultimately it's her decision. Maybe she likes the idea of being present as quality control because she doesn't know what else she would do with herself. Maybe she likes the idea of your sister being involved in the business because she doesn't know what else your sister would be doing otherwise. So my advice would be to give your mom reasonable options if she asks for them, but otherwise to just let it go. It's not your call.
FWIW, it sounds like a nice business, whatever it is, despite the lack of growth.
quote:
$218k/year to her...which goes towards her personal expenses and investment properties she owns
Are you telling us that this is self-salary, legitimate business expenses, or owner's profit?
quote:
Shes brought up concerns lately that she is feeling the want to look towards retirement but knows my sister and her family is completely dependent on her income with no signs of anything changing.
She could always just sell the business to more efficient owners, and set up annuities for herself and for the sister.
quote:
What's your advise?
It's unclear what your mom is even asking you to do. If she's just expressing concerns, then it's not really your duty to do anything about it. Since it's your mom, you can gently nudge her toward the benefits of selling the business, but ultimately it's her decision. Maybe she likes the idea of being present as quality control because she doesn't know what else she would do with herself. Maybe she likes the idea of your sister being involved in the business because she doesn't know what else your sister would be doing otherwise. So my advice would be to give your mom reasonable options if she asks for them, but otherwise to just let it go. It's not your call.
FWIW, it sounds like a nice business, whatever it is, despite the lack of growth.
Posted on 12/15/18 at 5:01 pm to hungryone
quote:
I dunno, if your Mom bought her niece a brand new car, I’d say she’s making her choices loud and clear. For whatever reason, she’s choosing to bestow material things on her sister’s family. You may not like it, but if no one is coercing Moms to buy things/keep Sis on the payroll, then she’s entitled to throw her money away however she likes. If she has the mental capacity to understand how much she makes, and how much of it goes to propping up her sister’s lifestyle, then it truly is her choice. Family dynamics are difficult. Is she providing her own children (you & any others) with as much support as her sister’s family? Why does she think her niece needs a brand new car? Has she told her sister, point blank, that she plans to retire in X months/years and asked her what her plans are to assume the business? Or has she offered to sell the business to them?
My mother wants to give them the world. She lives a lifestyle as if she doesn't have many days left on this earth and acts like her life insurance policies will come to the rescue after she's gone.
I am soon to be married and have no kids. I myself am allocated $2k a month from the business.
I sourced used Jeeps to give my mother a different option for the 15 yo kid who turns 16 at the end of the month, but he kept assisting that he wanted a new Jeep because of the convertible roof.
But you are completely right. I'm just beyond frustrated and annoyed of how much she is willing to accept from her without much effort in return. My mom's "retirement" seemed to be a phase as she now is back to working everyday as always
Posted on 12/15/18 at 5:13 pm to Papasteve
Do you like your sister? If not then get involved, but if you do like her then you probably just need to reccomended selling
Posted on 12/15/18 at 5:17 pm to Doc Fenton
quote:
Are you telling us that this is self-salary, legitimate business expenses, or owner's profit?
She pays herself $7k month salary and rest is mostly personal expenses and mortgage payments of multiple properties.
quote:
FWIW, it sounds like a nice business, whatever it is, despite the lack of growth.
That's the thing. I'm always so tempted to leave NYC and try to help her grow this thing, but I have unfinished business here in NYC and not really sure thats the path I really want to dedicate years to.
This post was edited on 12/15/18 at 5:19 pm
Posted on 12/15/18 at 5:24 pm to Papasteve
What type of business is this? Is she able to sell her portfolio/book of business?
If the circumstances were right, I’d look to sell the business and negotiate to keep mom on staff as consultant for a transition period. If buyer thinks they can improve margins and do more with the same company, negotiate for Mom to earn some agreeable % of revenue for first year or two. Keeps her employed and money coming into the door for a bit while sister gets weaned off the teet.
If the circumstances were right, I’d look to sell the business and negotiate to keep mom on staff as consultant for a transition period. If buyer thinks they can improve margins and do more with the same company, negotiate for Mom to earn some agreeable % of revenue for first year or two. Keeps her employed and money coming into the door for a bit while sister gets weaned off the teet.
Posted on 12/15/18 at 5:40 pm to Papasteve
quote:
Profit: ($-25k) /year (without extras)
This is kind of disengenous. IF she's taking $218k and sis is getting $130k, then that's the profit. You fix the -25k by Mom taking less. She's clearly choosing to work until she dies.
If she really wants out and doesn't just "feel" like she wants to retire (women, right?), then she needs to sell the business to your sister. Basically, flip the script - sis buys the business for $1 million. Mom holds the note, gives a reasonable interest rate and takes roughly $125k for 10 years (doing nothing, mind you). She takes that and the investment properties and makes it work.
Sis gets all the work and double the income. Or she can bring in a junior partner to help at say, $60k and makes a little more until she sorts it all out.
Posted on 12/15/18 at 5:42 pm to CalcuttaTigah
She wouldn't. Her goal isnt for my sister to become independent. She has no issue of how much is allocated to her.
I guess I am the only one here that has an issue with it. Maybe thats because I'm not making $130k a year. Moms always thought I can be independently successful. It helps to move away and not being around the temptations of easy living.
I guess I am the only one here that has an issue with it. Maybe thats because I'm not making $130k a year. Moms always thought I can be independently successful. It helps to move away and not being around the temptations of easy living.
Posted on 12/15/18 at 6:24 pm to Papasteve
quote:
I am soon to be married and have no kids. I myself am allocated $2k a month from the business.
So you're bitching that your sister mooches off the business she works at (she does) while you are taking $25k a year from it to do absolutely nothing. Sounds like you all just want shite to fall in your lap
This post was edited on 12/15/18 at 6:59 pm
Posted on 12/15/18 at 6:47 pm to Mingo Was His NameO
exactly
Posted on 12/15/18 at 9:29 pm to Papasteve
So they could double their profit if they cut your monthly allowance that you don't earn in the first place? Seems like that's a good place for them to start
Or does your mom basically admit that the biz is paying for you to live in NYC with the 2 grand per month?
you say you don't make $130k yet NYC is expensive as hell so that seems to be pretty straightforward
Or does your mom basically admit that the biz is paying for you to live in NYC with the 2 grand per month?
you say you don't make $130k yet NYC is expensive as hell so that seems to be pretty straightforward
This post was edited on 12/15/18 at 9:33 pm
Posted on 12/15/18 at 9:31 pm to Mingo Was His NameO
I think there is a little more to the story than that tidbit you just quoted.
But regardless the OP needs a come to Jesus meeting with his family. Either allocate the funds appropriately or continue as business as usual and your mom will drop dead at work.
But regardless the OP needs a come to Jesus meeting with his family. Either allocate the funds appropriately or continue as business as usual and your mom will drop dead at work.
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