I'm in the market for a new mattress. What kind of mattress do you use?

Wow. Congratulations. You are fabulous and seem to have done everything right. How does it feel to leave your drywall job, take a calculated risk and have it pay off like this??

This is just the beginning. You're onto something here and a business like this can expand into new markets and make you both multi millionaires. The big chains all started off as individual stores. It's how normal people get rich. Not to get ahead of yourself - although I doubt there's any chance of that - but something to keep in the back of your mind.

Such a great story - thanks for the update.

Really glad to hear things are going well. Congrats on taking a risk and doing what it takes to make it work!

Just be aware that there are a new set of challenges as you start to find some success. One that comes to mind is that I would strongly recommend keeping as low-key as possible about how well things are going. Word travels fast, both to competitors and would-be competitors, friends, family, etc. At a minimum it's not good to invite competition, but there can also be some annoying to downright difficult situations that arise from people knowing about your success!

Hi Taylor,

Congrats on your success! I was one of the original members of cardrunners, and know your Aunt Martha really well. You seem like a great young man. You inspired me to start my own business, I am super motivated. Since you are a millionaire now and I contributed to your success and am a family friend, I thought I'd ask if you could invest a small sum of $99,999.

Say hello to Martha and your Mom,
Fred

Yeah discretion is really important. As my wealth grew I had all kinds of cockroaches crawl out the woodwork with all kinds of sob stories and investment ideas, from plausible to ridiculous. They resent it when you don't help even if they're basically trying to scam you. Now I often say business is going "ok" or "not that well" to extended family, they're more sympathetic and they don't bother you. And they actually appreciate when you do help.

Further to that, a lot of people are weirdos with a socialist mindset and resent wealth, no matter how earned and deserved it is or how many serious risks you took or how many 80 hours weeks you pulled while they were enjoying a leisurely life.

Giving competitors ideas of your success is a really bad idea too, particularly when you're on a cash cow with a huge edge. The world is full of morons with zero imagination or problem solving ability (see: your competitors), but perfectly capable of making easy money when a path to success is right in front of them. This is your baby OP, you deserve all of the money from figuring it out and taking a risk, and you need to protect it.

Ever since first reading this thread I walk by the Sleep Country Canada Store after work with a whole new appreciation for the business.

Nothing further to add except please keep the updates coming OP.

Great thread and updates, OP.

Very glad to see you crushing it like this and looking forward to further updates in the future as you make your heroin millions. Super kudos for taking a swing and knocking it out of the park!

If any of these have been answered let me know and I'll find out when I finish reading the thread.

- How large is your showroom?
- Do your manufacturers can any requirements as far as the size of the showroom?
- What kind of terms do you get with the manufacturers? Do you think any of them would offer consignment deals on say, older inventory that they are trying to move?
- What is your marketing program like? Budget (and budget as a percentage of annual sales if you're able to quantify it), what you've tried thus far, etc.

Really interesting thread. Thanks for posting.

Hey Everyone,

So we've recently filed our opening year's tax return, kinda lumped the first month of business in with it as well.

-In our opening 13 months, we did approximately $1.26M in sales.

-Of this, our gross profit was approximately $624 000.

-We had approximately $182 000 expensed out.

-My partner and I chopped approximately $440 000 of net income.

I'd call that a successful year one in business! My life has completely changed- I was essentially at rock bottom before starting this business. If anyone has any questions about details, ask me anything. I'd like to get a conversation started as I have some questions and concerns regarding the future that I'd love to get some advice and start a discussion on as well.

Here are a few tidbits from the year:

-The building we are leasing has sold and changed landlords. Our first landlord was amazing, our second one seems to be a bit of a dick.

-My partner's 24 y.o sister had a brain hemorrhage and died completely unexpectedly out of nowhere sitting on her couch in her living room.

-We definitely spend more money now on advertising and whatnot. We also acquired a 4200 square foot warehouse to compliment our 3500 square foot showroom, so our rent costs have more than doubled. There is approximately $100 000 of paid inventory sitting in there right now. FACEBOOK advertising provides by FAR the best return for dollar spent for the business in our opinion.

-Our terms have changed with our vendors. We don't pay a single dollar in shipping from anybody anymore. It was a huge cost savings from one company that we were paying approximately $1300 per month for shipping.

-When we started we working 7 days a week, approx. 60 hrs a week, for a few months while working out kinks. We now work approximately 35 hours per week!! One guy gets 2 days off a week, the other guy gets 3, and we kind of alternate that schedule.

-We have one part time employee, who also happens to be my partner's newly acquired girlfriend (been about a year now). This has definitely changed the dynamic of the business, but I understand how valuable she is. She's 100% reliable, and does things like designs our ads (very talented at this), does deliveries (strong woman lol), and helps keep the store and warehouse organized. We pay her very well but she's worth it.

Great update, sorry to hear about your partner's sister.

What are some of your current thoughts on growth and direction?

There are a few things that are certainties I think:

-We will eventually start giving up a bit of control at store level. Right now we deliver approximately twice per week, about 20-25 deliveries a week. I am on the truck with our employee %100 of the time. This will not go on forever I'm sure, but its scary to give up that control to employees, especially in a position such as a delivery driver, which is usually kind of a transient position.

-My partner, who has the majority share, will probably eventually start working less than I do in exchange for renegotiated share in the business. I kind of accepted from the start that I myself will probably be in one way or another working essentially full time at the store for the life of it, unless I decide to part ways or continue down a different road.

-I don't think we will ever franchise or open a new location in a different market. Just doesn't seem like something we'd be interested in doing, and would cause a huge hiccup in our current business model, as most of the reason for our success is having an owner at store level at all times. We do understand at some point you have to give up that control

-We have talked about opening a different store in our current market. We have tons of connections and have started talks with reps for furniture. We do believe that a furniture store would work. If we had the furniture store, we could essentially hire a full-time delivery staff that could deliver for both stores and keep them busy. However, we've now ultimately decided to put it on the back-burner for now. Furniture is different, tons more options and skus than mattresses, lead times are much longer, and the amount of stock you have to order to get reasonable shipping rates is much larger. We're sure would could make a store self-sufficient, but don't think we're ready for it just yet or believe its worth the headache at this time.

-We are entering a trade show this fall, and the plan is participate in both of the major trade shows each year if it goes well. This is gonna be kind of our "first step" at putting together a newish type project and seeing how well it goes. We know of a dealer one market over who does a massive "Arena sale" once every two years for example and clears about 20k in one afternoon.

-I've wondered quite a bit myself lately.. Where do we go from here? Should we be trying to expand and make more money now that we've got a cash flow going? Are we being lazy by not seeking other endeavours given our current success and cash flow? Should we put all of our focus into continuing to make the store we have more successful and efficient? We are on par to do about $100 000 more in sales for our second year thus far. Not huge growth but growth nonetheless, and I think we smashed year one out of the gate. I've got to believe there are other investments other than opening a second retail store that we can delve into which would be a lot less headache and make us money. For example, we're going to be investing in building a condominium that has 3 units with a real estate agent we know who has built and flipped several properties.

Awesome update, I know you've gone over this in the thread but with the additional perspective of another year under your belt what do you think were the biggest factors in succeeding? What would you recommend to someone else trying a similar endeavor?

-Have the right product.
With the store being our sole source of income, I think its huge that our product is a relatively large ticket item with relatively large profit margins. We're very specialized so we definitely don't have as much foot traffic as larger, more diverse stores, but I believe our closing ration must be much higher. We also have a diverse selection, from the cheapest low end stuff up to the most expensive.
I understand that many small businesses are probably not the owner's sole source of income, but sometimes I wonder how some of them are turning a profit. If anyone can clue me in or provide some insight I'd love to hear about it. example: There's an "Asian Store" down the street that specializes in Asian groceries. I don't see a ton of people in there and I often wonder how many cups of noodles do you have to sell to pay rent each month..

-Put service above all else.
Sometimes we have people who have complained about there mattress doing this or doing that- I'm sinking in too much, I feel like I'm rolling to the middle, the material has bunch up etc.., things that obviously aren't warranty issues. Instead of shutting down the customer and saying tough luck, we work with them. Exchange their bed, heavily discount another purchase, etc. Just make them happy. It goes leaps and bounds, and we have this power because we are a small business and privately owned. Sometimes we lose some money making a customer happy, but we've gained a lifetime client, and then next month their neighbour has come in and spent $3000 with us because they were given such a good recommendation.

-Communicate.
My partner and I are open books. If I'm pissed off, I tell him why, we discuss it, we solve the issue, we move on, and can still have beers or a toke after work and carry on. Nothing is left on the table, nobody is ever walking on eggshells. Sometimes when he wants to do something that I'm leery about and he knows, I put faith in him and take that risk and vice-versa.

-Sell.
This is by FAR the most important. We do everything in our power to convince people to buy. Sometimes you sacrifice some margin, sometimes you come off as aggressive, sometimes you make mistakes. Learn from them and don't make the same ones again. Remember each customer is different. Some people need to have decisions made for them, some people need more space than others. Every dollar counts, the sale is everything

Wow congrats, and sorry about the loss.

Question: Why mattresses? What did you know about mattresses prior to going into business?

Can you talk more about the Facebook ads? How are you measuring their effectiveness? Do they direct people to your FB page, offsite, or are they general branding?

Congrats on your success.

My partner managed for a large retail chain in a much larger city for about 6 years and saw the potential.



Basically, with the facebook ads, we will run ads that are promoting whatever sale we have happening at that time, maybe feature a couple beds at attractive looking price points, or a buy 1 get 1 free pillow promotion or something like that to get people in the store. Facebook seems the best because you can literally choose what age, gender, and location of people you'd like the ad to reach, its fantastic.

We'll spend say, $500, on facebook and it gets planted into the news feeds of like 15 000 people in our area. People come in and say "I saw your ad on facebook about such and such..." quite frequently.

We can spend $5k on radio for like 150 ads and I'm sure its not near as effective, I'm so on the fence about radio advertising..

Pretty cool. Do you see merit in tying promotions together with Facebook, like "mention our ad and receive a pillow with purchase of X or above" etc. Or do you feel that it just brings in people looking for freebies, and those who hear the ad and enter your store are already money in the bank and don't need extra incentives?

one of Buffett's points is that many businesses are not scalable and don't need to retain earnings. so it may not make sense to open a second store and you don't need to worry about not doing that, you can just use the profits to invest in something else.

Right now mattress stores are a good business. That's why there are so ****ing many of them. 50% margins and no inventory costs? Yes please.

Do mattress vendors front you the inventory? In a previous post he said he got a 2nd warehouse and has 100k inventory so this seems contrary to what you are saying. Hell if vendors front me inventory for an extended time I'll go into this business also.

"For example, we're going to be investing in building a condominium that has 3 units with a real estate agent we know who has built and flipped several properties."

This doesn't make sense to me. Why pivot away from mattresses?

Most mattress stores you see out in the world are franchises or owned by large mattress chains. They usually don't store any inventory at all in their retail locations which is ****ing sick.

This is why the OP wants to open a second store so badly. It won't change his inventory costs at all. That being said even if you have one warehouse and one store your inventory costs are going to be VERY low relative to other types of retail establishments because your margins are absurd.

This why OP should want to open a second store so badly. They have an excellent business model that could easily scale into a regional business generating millions. But instead he wants to invest in building a condominium? Weird.

"-I don't think we will ever franchise or open a new location in a different market."

"-We have talked about opening a different store in our current market. We have tons of connections and have started talks with reps for furniture. We do believe that a furniture store would work. However, we've now ultimately decided to put it on the back-burner for now"

Yikes. Why on earth would he invest in real estate before he'd scaled the store out?