Starting a pet sitting service with Mak and G
This episode, Mak and G are getting excited about starting their own pet sitting service but before they begin I talk with them about a few of the essentials they need to work out first…
Before you start a business you need to think about if you can handle the workload, expenses you may run into, how you’re going to market your company, and much more.
Mak and G are getting excited about the prospect of starting their own pet sitting service so we talk through everything they need to get prepared before starting their business…
“Make your customers happy and build trust.” – G
00:15 – Why we want to start a pet sitting service.
00:45 – How to make sure you can handle your business’s workload.
01:30 – The challenges of running a pet sitting business.
02:08 – How to build a positive reputation for your company.
02:29 – The different things you need to do to look after a pet.
03:36 – How to work out your companies expenses.
04:15 – The importance of advertising your company and what goes into a good advertisement.
05:15 – Things you need to successfully start a company.
06:23 – How to build a network for your business.
#1 Where are higher-income families more likely to do most of their Christmas shopping, compared to lower-income families?
#2 What are lower-income families more likely to use to pay for Christmas shopping?
#3 How do 29% of Americans plan to pay off their holiday bills?
#4 How long did we calculate a typical $1500 credit card bill would take to pay off at average interest rates if you only paid the minimum amount?
#5 Prices today are around 50% higher than 20 years ago because of what?
A) 44 months
C) Ten years
MAK: The markets continue their drive upward, as the Dow is over 34,000. All three major indices ended up over 1% this week, and bitcoin shot up about 6%, even though it dropped pretty significantly over the weekend. Dad’s day trading account is now down almost 25%, and it was up almost 100% earlier this year. His experiment in day trading seems to be proving what he already thought he knew, which was that it’s highly probable you’ll LOSE money. As he’s told us, a good education sometimes costs money. Let’s continue on from last week.
GRANT: Nice wrap up Mak. Maybe we should call it “Mak and the Markets”. I like it 🙂 Hey, we talked about Mindset, Assessment and Doing the work. An easy acronym, which is M-A-D, MAD. Super simple. Getting into the mindset, and keeping it is a big part of the first step. From what dad has taught us, it doesn’t have to be super complicated with lots of formulas. It’s easy enough for us to understand it, and we won’t be 13 for another 7 weeks. Ok, I’ll let dad take it from here.
DAD: Thanks G. As we spoke last week, a big part of financial success is your money mindset. I was listening to a book this week called the Psychology of Money by Morgan Housel. It highlighted a couple interesting points. When you think about saving money and planning for retirement, it’s a relatively new concept to us. When people my age were kids we never really thought about our future. Unless we’re thinking about next week, when we wanted to buy some new clothes, a bike or something for ourselves. For kids nowadays, it’s an updated video game skin or some digital currency in their game to upgrade a weapon or something else. So, what does it mean to any of us if this whole retirement and wealth building isn’t new? Saving isn’t really new in the short term. All of us do it and if we can, we save money for a rainy day. But taking that to a whole new level of saving for instance, for a house, maybe a wedding, for having kids and even when we retire when we can’t earn a salary any more is TOTALLY different.
GRANT: So, saving for the long-term takes a very different view. In the Psychology of Money book, dad said it talks about the ways we save for retirement. It depends on how we grew up, along with where and when. If I think about my life, I have a ton of video games I get to play. I was born with computers, game systems and software that made all of this possible. The first iPhone came out the year before Mak & I were born. If we think about Fortnite, Tic Tok, YouTube and the internet, they were here for us to play all the fun games we wanted, and our experience with various apps is unlike what mom and dad had when they grew up. I think they got exposed to the video table tennis game called PONG. Two vertical lines on a screen that moved up and down, and the ball bounced between them. If they were a bit luckier, they got to play with the Atari game system in the early 70’s. That was 50 years ago.
MAK: However, after doing a bit of research, saving money or building wealth for the long-term, especially having money when you’re old and retired is really new. These savings accounts called the 401k and IRA really started in 1981 and are the primary accounts our parents use to save for retirement. They’re ONLY 40 year old. Hey, we’re called Homo Sapiens, which is the most recent version of a human being. We’ve changed over the years. Our current version has been around for about 300,000 years. And, some version of a human being has been around for MILLIONS of years. I can’t imagine how much they thought ahead and planned using investing and the stock market. I bet they got hungry and they would hunt. They would need clothes and they would hunt. It would get cold and they would build a fire. Yes, they were gathering food. But, it wasn’t until about 12,000 years ago, they were thinking far enough ahead to farm. That takes planning and thinking about the future. Plant today and harvest in the future, and save some for when it’s winter. Our ancestors could die of the common cold, being eaten by a Pterodactyl, or accidentally stepped on by a wooly mammoth. Ok, not the Pterodactyl, because that was about 150 million years ago. But, life was a day to day thing, for millions of years and there wasn’t any planning for the future.
DAD: So, we don’t have a million years of having it built into our DNA to save, plan and invest for the future. AND, we’re all affected by the way we view the world. Our past experiences are a huge reason for the way we run our own finances. My grandmother lived through the great depression and would’ve told you the stock market is horrible. NEVER invest your money in it. It was horrible for many. But, not for everyone. Jesse Livermore was a well known stock trader at that time. He was worth about $100 million in today’s money. But, he actually “shorted” the market, which means he thought prices were way too high and bet they would drop. The more they dropped the more money he would make. When the market crashed, he made an equivalent of $3 Billion in today’s dollars, in ONE DAY. His family was actually scared he lost everything like many others. They were thinking he might hurt himself like many others. But, HIS experience was much different from the many who lost everything. After the crash, many didn’t have enough to eat. Almost one in four people didn’t have a job and 2 million people were homeless. My grandmother, who made it through the depression, wouldn’t throw anything away after her experience. I always remember her famous “Bacon grease sandwiches”. Yes, that’s the grease left in the skillet after frying bacon. It would cool down and look a cloudy gray with bits of bacon that would fall off when it cooked. She’d scoop it out and spread it on bread, just like butter and eat it. She said it tasted great and it filled you up when you were hungry. Her actions were based on her experience of living through the depression. So, what are your experiences and feelings about money?
MAK: Now, the author of dad’s book had a comment on his favorite wikipedia page that began like this: “Ronald James Read was an American Philanthropist, investor, janitor and gas station attendant”. Not exactly what you’d think about when thinking about a Philanthropist, who gives away large amounts of money. Does a janitor or gas station attendant make that kind of money to donate a large sum to their favorite charity? Can you really call him a philanthropist? Well, he was the first to graduate from highschool in his family. And, it’s even more impressive that he had to hitchhike every day to and from school. He fixed cars for 25 years, then swept the floors at JCPenney for 17 years. As the author explained, over 2.8 million Americans died in 2014, and fewer than 4,000 were worth over $8 million and our friend Ronald did just that. He saved and invested, and when he died, he gave $2 million to his step kids and over $6 million to the local hospital and library. That’s over $8 million. Kind of sounds like the “Millionaire Next Door”.
GRANT: Then you have a guy named Richard Fuscone from the same book. If Ronald Read was considered Batman, this guy would be the opposite, and possibly named the Joker. He was Harvard educated. He got a Master’s of Business Administration. So, that’s 6 years of college, which was 6 more years of formal education than Ronald. He was an Executive at the well known financial company, Merrill Lynch. Richard probably never fixed a car or swept a floor. He was one of the 40 people under 40 years old who were on the Forbes list of successful business people. That’s impressive. It seems like everything he did was simply impressive and made money. But, in the mid-2000’s he built a huge house. It was 18,000 square feet, which is about the size of 6 of our houses put together. It also had 11 bathrooms. Ok,I have to ask how many places do you need in your home to go to “do your business”? It also had 2 elevators, 2 pools, 7 garages and it cost…..get this….just to maintain ….$90,000/month, and that’s 15 years ago. Then, in 2008 everything fell apart financially in the US. We called it the financial crisis. He wasn’t making any money, and when he couldn’t afford his Palm Beach house, house #2, the bank took it. Then, took his mansion and they sold it in an auction for about 75% less than it was worth. This happened just 5 months before our friend Ronald Read left his $8 million to his family and charities.
DAD: So, I’m an expert, by almost every measure. But, what does that mean? Does that mean I will always beat every non-expert when it comes to investing? No, it doesn’t. Finance and investing are taught as being a complicated exact science, full of math which would be hard for people to understand. But, you don’t have to know everything to invest and a lot of times it gets in the way. A friend of my sister’s once told me they invested in Apple because their kids came home one day from school and said how awesome Apple products were. He had a nice little chunk of money over 15 years ago and decided to invest it and now it’s worth several million dollars. So, what does this all mean? Unlike becoming a doctor, engineer, an NBA, MLB, NFL player, investing isn’t something only for those who are 7 foot tall, or you throw a 100 mile per hour fast ball or run a 4.2 second 40. It also doesn’t mean you have to study 10 years in med school so you can do it. Some of this is honestly luck.
MAK: You know who had luck, it was Bill Gates. We think he was brilliant, and he did it on his own because he was smart, knew computers were going to be big and learned all the right “formulas”. But, his story may not be like you imagined. Just as we may imagine investing is super complicated. I’m not talking about him as an investor, but it shows that what you think and reality may be a bit different. Bill was extremely lucky, and yes investing is part luck. I’m not sure you know this, but in 1968 there were about 303 million highschool students. 18 million lived in the United states. 270,000 lived in the same state as Bill, which was Washington. About 100,000 lived in the Seattle area at the time, and only about 300 went to Lakeside school where Bill went. The computer that he had access to was due to one retired Navy pilot who was the math and science teacher. He pushed to get a computer in the school, and at that time kids didn’t have access to computers like that. But, it happened. Out of 303 million students, only 300 students had access, and only 3 took it crazy serious. The odds of him being exposed to a computer like that were less than 1 in a million. Even Bill said “If there would have been no Lakeside, there would have been no Microsoft.”
GRANT: So, investing is NOT a science, it doesn’t have these absolute rules like gravity. And, you don’t have to spend years learning mathematical equations. And, there is some luck involved. It’s about how you behave. Let me say that again, since Dad would if I didn’t. It’s how you behave. Do you spend everything you earn? Do you go over the top like our friend Richard Fuscone, or do you live under your means like Ronald Read and have $8 million saved. Dad tells us that there is NEVER a good time to save money and invest. You might hear “the market is too high” or “it’s too scary” or “it’s too low” or “the economy isn’t going well”. There could be lots of reasons or excuses. But, starting early is such a huge key. That’s why we wanted to start money with Mak & G, because starting early is such a HUGE part of investing. I know Dad’s dying to tell you some stuff about Warren Buffet that he just learned and starting early. Warren Buffet is thought by many to be the best investor of all time. But, his partner Charlie Munger even said that out of the 450 or so investments they made, they were lucky and most of their growth in their investment returns came from only about 10 of those investments.
DAD: What Warren Buffet and Charlie Munger have done are incredible. You can’t take that away fro them. Simply put, Warren Buffet is amazing. But, do you know the reason that he’s so amazing? His age. Let me say that again. His age. He’s now 90 years old and he’s worth over $100 Billion. But, did you know that he didn’t hit $1billion until he was 50, and he wasn’t worth $3 Billion until he was 65? That’s a ton of money by anyone’s standard. But the point is that over 99% of his wealth occurred after he was 50, but he’s still going 40 years later. And, that’s how compounding works. So, when did Warren start saving and investing. Anyone? Bueller? Bueller? He was seriously saving and investing by the age of 10. He’s got 80 years of compounding and investing under his belt. But, do you know the arguably best investor in history is Jim Simons, who ran Renaissance Technologies, and since 1988 he compounded his money at 66% annually, while Warren was about ⅓ of that amount at 22%. Simons has about ⅓ of what Warren had at the time, because he didn’t hit his stride until Jim hit 50. If he had hit his stride for as long as Warren, he would’ve been worth Quintillions of dollars, which is past a trillion and past a quadrillion. Almost made up words…
MAK: When we speak about Ronald Read who saved $8 million versus Richard Fuscone who lost everything, you have to stop moving the goalpost. That just means, every time you make more money you increase how much you spend. You get a 10% increase in your pay, so you buy a nicer car. There has to be a point where it’s “enough”. And, this is where the money mindset also comes in.
GRANT: We may introduce something mathematical to highlight a point. Understanding the concept is much more important than how the math works. Dad says most people don’t know that an index fund, which will mimic the Dow, the S&P or the Nasdaq, is only 50 years old. And, many people talk about Hedge Funds, and those are only 25 years old. This whole thing is really brand new, and it continues to change. Benjamin Graham, who is one of the founders of analyzing stocks revised his formulas often, because things changed.
DAD: I personally had to get through college, pay off my school debt and start to build my wealth in my 30’s which was 20 years after Warren Buffet started. Having parents who are interested in teaching their kids about money is a great first step. But, if I would have started when Warren did at the age of 10, I would be about 8 times more wealthy. It’s all about your behavior, time and a little luck. To get that right, you have to know yourself a bit, and how to help your children with their behavior. But, starting early is a huge key to helping your kids reach their goals. Thanks for being here, and don’t forget to like, subscribe and comment on the podcast. We’ll see you next week. Bye!!!