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URL:  http://boards.fool.com/note-to-duck-19830028.aspx

Subject:  Note to Duck Date:  11/9/2003  1:15 PM
Author:  sutton Number:  8983 of 14977

Duck:

Here are some late thoughts.

Thought number one: are you after the money, or the prestige, or the self-satisfaction, or is this all for the kids? Or, are you just bored?

Thought number two: if it's the money, “the best work is on your own desk”. What Charlie Munger meant by that is, go with what you know. Yeah, yeah, I know, computers suck. You know what? My field sucks, too. So did my dad's. So does Charlie M's. Look: the NY Times ran an editorial a few years ago that I cut out, and still have around somewhere. The headline was something like 'So, you found your dream job? Stop yawning'. One point was, if you're equipped to do it, and have earned the credentials, then almost by definition it's both easy and boring. The other point was, it's surprisingly hard to earn $100 outside of your field.

So, if it's the money, then your job is to either suck it up and smile – it's for the kids, after all – or learn to live on less (you don't need me to quote the post where you're surrounded by all the computer equipment, do you?). Either way works, but both require you to stop whining.

If it's for the prestige: a self-storage unit doesn't do it.

If it's the self-satisfaction, then that leads us to lots of existential stuff best left between you and Mrs. Duck.

If it's for the kids: fuhgeddaboutit. At their age, they're best served by your being at home. Grilled cheese sandwiches. Trips to the library. Kites at the park. You get the idea.

If it's because you're bored (sigh) here are a few more thoughts (/sigh). Take them for what they're worth. As they say, free advice is about worth what you pay for it.

*****

For no good reason, I've been interested in the economics of self-serve car washes. (It's probably for the same reason that some people like Babylonian pottery). For reasons I'll go into in a minute, I've been thinking about it pragmatically recently, and here is my back-of-the-envelope pro forma (much of which is taken from http://www.magicwandcarwash.com/default.asp?key=startacarwash_carwashtypes )

Presuming a four-bay wash, site fully developed.

Cool stuff:

All cash. No accounts receivable. No bad debts. Customer loyalty. Revenue from day one. Morally impeccable.

Expenses:

Construction of 4-bay property = $108,000 (68K + 40K: see web site)

Property 11,000 sf @ $16 sf = $176,000 (first-rate commercial property around here is $22/sf, so I'm guessing)

Misc nonsense = $16,000

Total: $300,000

Capitalize $50,000, borrow the rest at 7% for 15yr

Monthly on $250,000 for 15yr @7%: $2250

Income:

$4800, minus 20% operating expenses: $3840 (again, see web site).

$3840 income minus $2250 debt service: profit about $1600/mo, plus expenses.

One way to look at it: that's $1600 x 12 = $19,200/yr on a $50K outlay, or 38.4% ROIC. Cowabunga, dude! Roll that over a few iterations and Warren Buffett himself will be looking in the rear-view mirror!

Another way to look at it: that's without labor. Coin-op car washes are low-maintenance, but they aren't free. Someone's gotta fill the soap, count the quarters, rinse the bays, do the books. What's that, 10 hours/week? Hmmm….do the math, but any way it turns out, that runs it down pretty quickly.

Yet another way to look at it: you and I have no idea if these numbers are correct. Broken wands? Jimmied coin slots? Liability for toxic soap? Beats me. Are property taxes included in the web site's sunny prediction of “operating expenses”, or are they just talking about soap? What about depreciation? Insurance? Liability? Beats me II.

A fourth way to look at it, and one of the two reasons I bring it up (the other being that you live a heck of a long way away, so we won't be competitors if I decide to do this): your kids, growing.

Look: my kids respect what do, but they have no idea what it involves. Dad goes off all day, works hard doing x, comes home beat. They sense I learn a lot more than we spend, and that I do a Good Thing, but it's really just a black box. And, despite my best efforts, they have too much free time on their hands. Well, isn't that just great: kids with no sense of what it takes to make and keep an honest buck. Exactly what America needs. My bit for the gene pool.

So, let's say that I build one of these things within biking distance of my house. If your kids are like mine, they grow a bit too rapidly. If you decide to do this, as soon as you're ready to go, your kids are going to be at the age where they want a bit more to do, and a bit more money.

OK, kids, watch daddy do this on Saturday. It's where money comes from.

OK son, it's your turn to wash the bays. Good job; here's $5.

Son, you go do the bays today. Fill the dispensers, empty the vacuums, make it all look nice. Let me know if anything's broken. Here's the key; I'll be by later.

Here's $40. It's your weekly job from now on.

Son, I'm proud of you. You've done a good job. Your mom and I have decided we'd like to sell you the wash for $xxx; we'll finance.

Duck, you get the idea. A final thought (I think I'm up to #4): autistic spectrum kids like repetitive, mechanical stuff.

Good luck. (A final bit of advice: don't let Fred build the wash bays).

--sutton


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