Launching a Hands-Off ‘Cash Cow’ Business With Less Than $100K, Step by Step

J:
Welcome to the BiggerPockets Business Podcast show number 61.

Ashley:
The building that I purchased that costs 20,000. It’s actually a four-unit building and we rehab and there are two retail stores downstairs and we’ll keep one is the liquor store. And the liquor store we’ll actually pay $1,000 a month in rent to the building.

Speaker 3:
Welcome to a real world MBA from the school of hard knocks, where entrepreneurs reveal, what it really takes to make it. Whether you’re already in business or you’re on your way there, this show is for you. This is BiggerPockets Business.

J:
How’s it going, everybody? I am J Scott, I’m your co-host for the BiggerPockets Business Podcast. And I am here again this week with my amazing and lovely wife and co-host Mrs. Carol Scott. How’s it going today, Carol?

Carol:
Oh, everything is going super today. And before we get started, I just have to send a big old shout out and thank you to you, J, my amazing baby daddy/husband. It was Father’s Day two days ago and you are by far the most incredible, wonderful, loving, fantastic role model for our two little boys. And I’m so grateful for you, you’re an amazing husband, an amazing father, an amazing business partner, and partner in crime in general so thank you for being you. I love you and appreciate you. And to all you dads out there, I hope you celebrated appropriately and I hope you had a wonderful day. Okay, enough about that. Speaking of parental figures, I’ve got to tell you, my mind is absolutely blown right now. So get this, I just got off the phone with my mom, she is still living in the house I grew up in. So she’s lived there for over 40 years, even though I’m only 29, so I’m not quite sure how the math works there.

Carol:
But she and my stepdad have decided it is time to downsize into something more appropriate for them at this point in their life. And get this, they looked at a house, it was a little rehab and I don’t mean to talk all about real estate, but again, my mind is completely blown right now. It was on the market for three and a half days. They were, ready for this? 78 showings. And out of 78 showings, 48 offers. 48, yes you heard that correctly. She was very happy to hear that they did get the house because they were all cash, over asking price, no contingencies, free rent back, et cetera, et cetera, et cetera. But 48 offers blows my mind. What is happening right now? Can’t even believe it.

J:
Yeah, it is a crazy market. And we’ve been talking all about the economy recently, but that’s not what this show is about, that’s not what this episode is about. But speaking of real estate, on this episode, we have a guest who a lot of our listeners probably know from the real estate world. Her name is Ashley Kehr and she is the co-host of the BiggerPockets Real Estate Rookie Podcast where she interviews real estate guests from all around the country and all around the world who talk about getting into real estate for rookies, new investors. But she’s on our show today not to talk about real estate though we do talk a little bit about real estate, but she’s on our show today to talk about a business that she is in the process of starting. She’s in the process of starting in… She is outside of Buffalo, New York and she’s in the process of starting a liquor store from scratch.

J:
Basically, she’s decided or she decided a couple of years ago, she wanted to start a liquor store, she wanted to own a liquor store. And so over the past six to 12 months, she’s basically made that dream a reality. And on today’s episode, she tells us all about how she went finding the location for the liquor store, everything from figuring out how to build it out, how to get her liquor license, how to get inventory, deal with distributors, deal with employees, she goes in and talks about the numbers a little bit. It’s just a great episode for anybody out there that’s thought about starting a business from scratch, especially a retail business. And it was really illuminating, throughout the entire episode my mind was blown by the fact that somebody that has no experience in this industry can basically from scratch, start a business that’s not very expensive, get through a ton of what you would consider to be a lot of red tape. It’s just a great story and I walked away from this episode thinking, wow, I can do anything in business because it’s really not as hard as I thought it was.

J:
So I need to thank Ashley upfront for really changing my mindset in this episode and giving me the confidence to go after some of those things that in the past I probably wouldn’t even have thought about. So you’re going to love this episode. Please just go with your dreams and listen to this episode and realize that anything you want to do, it’s not that tough. If you want to find out more about Ashley or anything we talk about on this show, check out our show notes at biggerpockets.com/bizshow61. Again, that’s biggerpockets.com/bizshow61. Okay, without any further ado let’s welcome Ashley Kehr to the show. How are you doing today, Ashley?

Ashley:
Good. Thank you so much for having me. I’m excited to talk about something different than just real estate.

Carol:
Oh, my goodness. Go ahead, Jay.

J:
I was going to say-

Carol:
See we’re cutting each other off already.

J:
Already. I was going to say we’re really excited to have you on. So I was on your guy’s show, I guess a month or two ago, and it’s great to have the opportunity to have you on. So I think everybody knows who you are, but for anybody that doesn’t, Ashley is one of the co-hosts of the BiggerPockets Rookie Podcast, where they talk all about real estate for rookies and newer investors. So just thrilled to have you on our podcast, so thanks for being here, Ashley.

Ashley:
Yeah, thank you. And J, I have to mention that I’m now the second person to have the tri-factor. You were the first one to be on the three other podcasts and now it will be me, so I feel honored.

J:
Excellent. Virtual high five.

Carol:
That’s super, I love it. Well, thanks again, Ashley. We are so looking forward to digging into something other than real estate. Although all your real estate ventures, of course, are awesome and we love learning everything you’ve done. Well, guess what listeners, Ashley is starting a brand new liquor store, how cool is that? So Ashley, let’s tell our listeners, can you give us just a tiny bit of information for anyone who might not have come over from the real estate side and is more of a business show listener, give us a little bit of your backstory and just tell us how that got you to decide huh, I think I’m going to open a liquor store in the middle of all these amazing real estate ventures I’ve got going.

Ashley:
Sure. And I’m excited to talk about it because I really haven’t announced it really on my Instagram account. So a lot of people still don’t know, they just know I’m opening a retail business. So this’ll kind of be my big announcement.

Carol:
It’s your coming-out party, that’s great. It’s the debutante ball.

Ashley:
Right, yeah. So I went to school for accounting and finance. I lasted for six months at a CPA firm and hated it, quit. And I started working part-time for an investor. I started managing a 40 unit apartment complex. And from there it just grew, he took on another 40 units, I took on some commercial buildings for him. And I approached his son and we became partners and we bought our first duplex. And from there I’ve grown to 33 units by myself and then I have two partners that I use. And then I own a house with my sister and a house with my brother. But this investor, his main business is auto dealerships but then he had a laundromat, I started a property management company for him, we started an insurance agency together. And I just got a lot of exposure to buying businesses, starting businesses, and running businesses just from working for him. And I joke with them that I’ve gotten a lot more experience and benefit than he has and he was paying me, so it’s worked out really well. And he also has a liquor store.

Ashley:
So I’ve thought about it for several years now and I see what a cash cow it is for him. So my big starting point was I took a map of the county that we’re in, and it’s Erie County in Buffalo, New York, and I looked at the areas that I would feel comfortable owning property in or having a business and I marked where all of the liquor stores were. And there were two towns that had the largest radius where there was not a liquor store. And so it just so happened that there was this building that I fell in love with years ago in one of those towns. And so I decided to go after it again and turn it into a liquor store.

J:
I love the fact that you didn’t start by saying, okay, I’m going to go out and look for a business and find the best business, you actually picked up a map. So this is very, I don’t want to say backwards because it makes perfect sense, but very few people do it this way. But you said, “I’m going to start by picking a location and then find a business within that location.” As opposed to saying, “Okay, I’m just going to start looking around and whatever business jumps out at me.” So that’s a really interesting strategy. What led you to the strategy of starting with the location as opposed to starting with the business and deciding then if it was the right location?

Ashley:
Well, first of all, it’s very hard to purchase a liquor store because everyone wants them, at least in our area. It’s very competitive, a lot of people already have a right of first refusal on the business. So I knew that I had to start from scratch, I knew that I’d have to start a new one. And in New York State, they will only let you have one per town unless you’re already grandfathered in. So you have to be within a certain distance from another liquor store, you can’t be right around the corner from each other. So that’s why I started looking at where that large radius was so I knew I had a better chance of getting approved.

Carol:
Very cool. And just for our listeners, because I can tell there are already so many actionable tips since you are starting this from scratch. You’re already talking about the map, the radius, how did you discover that was the case, that you can only have one per town, and so on? What type of resources did you visit to figure that out?

Ashley:
Basically googling how to start a liquor store in New York City.

Carol:
That’s fantastic.

Ashley:
Yeah. And then I also… So when I first… I was buying the building, I had it under contract, I actually hired a liquor broker. So I was paying him a consulting fee and he helped me from A to Z to get my liquor license.

J:
Interesting.

Ashley:
So he was a huge benefit. So we did a consultation call and he gave me just tons of information ahead of time too.

J:
So basically, there are business brokers out there that specialize just in liquor stores. Which I guess makes sense because it is a really niche business and it has a lot of rules and regulations that you don’t see in other businesses. But I never realized that there were people out there that were specifically brokers and educators specifically for liquor stores, that’s interesting.

Ashley:
He does liquor stores and bars, anyone getting any kind of liquor license in New York State.

Carol:
That’s cool. So he’s local to New York State?

Ashley:
Yeah.

Carol:
So it’s a state by state type of brokership?

Ashley:
Yeah.

Carol:
That’s interesting. Very cool.

Ashley:
I was just going to say it was a $1,500 fee for him to do the whole process, but it’s been totally worth it.

J:
And so what did you get for that 1,500? Just for our listeners out there that are thinking, okay, what does it to get these things up and running? What did you spend the 1,500 on for his help? What did he help you do specifically?

Ashley:
So he actually came out to the building and he took pictures, you have to include pictures of the building, you have to include the floor plan of what it’s going to look like when it’s done for when you’re ready to open. Basically, he filled out the whole application for us, we just handed him the documents and he did the whole application for us. And I can’t even tell you how integrate that is because he just took care of it. But we did have to supply him with a lot of financial information, copies of our passports. We had to show proof of funds that we had enough of our own cash available to open a liquor store. And one thing in New York State too, is you can only own one liquor store. So they check and make sure that you’re not getting the money from someone who already owns a liquor store and they’re trying to have ownership in that one.

Carol:
Oh, that’s fascinating. You keep mentioning throughout this, Ashley’s the we. Do you have a partner involved in this venture as well?

Ashley:
Yes. My friend and I, we own a duplex and a triplex together and his father-in-law is actually the investor that I’ve worked for. So we both have always had interest in owning a liquor store from seeing him. And so with the building that I bought, it needed a lot of rehab work. So I offered him if he helped me with the rehab, I would give him 40% ownership in the liquor store and I would pay the startup costs for it. And I had purchased the building.

J:
Got it. And so once the store is up and running, what is the division of responsibilities? What are you going to do? Versus what is he going to do? Versus what are you going to bring in other people to do?

Ashley:
So we want this to be pretty hands-off, we don’t want to work there at all. And so we are in the process right now of hiring a manager and we are actually lucky enough, the investor I work for, his manager is helping us hire someone. And she’s helping us get the admin stuff set and ready so that she can pretty much give her system, that she uses at her liquor store, to the manager we’re hiring. So that’s taking a huge workload off of us having her just give that to us. And then we’re going to have three part-time employees to start. But we are, as of right now, our plan is when we open, which should be by August, is that we’ll be there for a weekly meeting and then slowly decreased to monthly meetings and pretty much we’ll just ask for reports. And we don’t want to be involved with the day-to-day, the inventory, or anything like that. And that’s how it’s set up for the investor that I work for so we want to copy his model.

J:
That’s awesome. Okay so you mentioned a little bit about you’re going to be responsible for the funding of the deal. Can you talk a little bit about what the startup costs are for a business like this?

Ashley:
Yeah. So the first was getting the broker, the 1,500, and he helps with the application. And then you also have a hearing in front of the Liquor Authority and usually, you have to go to the hearing where they decide if they’re going to approve your liquor license or not and he just talks for you and walks you through the whole thing. But due to COVID, you didn’t have to attend it. So if there’s any information that they want to request, they asked him directly for it. So for any emails with the Liquor Authority or any letters in the mail, he was always copied onto them and he was their point of contact. And so he just handled all of that correspondence too for us during the whole time. And then there was a fee, I can’t remember offhand, but it was around $2,000, I think, to actually apply for a liquor license. And then we also have to be bonded and that is also part of the $1,500 fee for the consultant, the broker.

Ashley:
So right now we’re looking at starting inventory of $35,000 to start. We’ve partnered with a distributor and that will be what he recommends for us to start our store with is $35,000 of inventory on hand. And then the building that I purchased that costs 20,000, it’s actually a four unit building so it has two residential and two commercial downstairs. And we rehabbed the two retail stores downstairs and we’ll keep one as the liquor store. And the liquor store will actually pay $1,000 a month in rent to the building, LLC.

Carol:
Great.

Ashley:
Yeah. So pretty much that’s… Then also getting utility set, we just got internet put in, so different small costs like that. And then our next big startup cost will be hiring the full-time manager to help us get ready for that opening day.

Carol:
Excellent. My gosh, there are so many great things I want to dig into in there, that is really great information. So let’s start with, when did you start this process? Right now we’re recording this, we’re on June 16th is our recording date. I don’t even know what month it is anymore, COVID has totally thrown me for a loop still. But when did you start this whole process?

Ashley:
So it started in November. I closed on the building in November and I hired the broker in November. And we were told they would take about six months to get our liquor license and due to COVID, it took a little bit longer. So we actually just got approved, let’s see, on the 13th we got conditional approval, we had our hearing. So the only things we have to do now is submit the finished photos, supply, just copies of our insurance, and just a few little things like that, copies of our sales tax, ID. So we should be hopefully within a month have our actual liquor license in hand.

J:
Wow. And so you paid $2,000 as an application fee for the liquor license. Does the liquor license itself cost extra money or a yearly fee?

Ashley:
Nope, that was it. That was the startup costs. But I believe there is a fee every two years, maybe. I don’t know that offhand but I’m pretty sure there’s a continuous fee. But as far as the startup fee, that will cover this first initial license.

J:
That’s crazy because… I don’t know and I guess this is one of those you have these assumptions based on things you hear in your life and just things people talk about. And I’ve always had this impression that with a liquor license, it takes years to get approval, and it costs hundreds of thousands of dollars, and nobody can get them. And so for that reason, it’s one of those, I don’t think I ever would’ve even thought about going after an opportunity like this because I would’ve thought, nah, you have to be some high powered person that knows people in government to get a liquor license from scratch, and it costs hundreds of thousands of dollars, and it’s some crazy process that takes years to happen and that’s actually not true.

J:
And it’s just a good reminder that we have these assumptions about what certain business people and certain industries, what’s involved in getting started in these industries when in reality you’ve never been in the liquor store business before, you’ve never had a liquor license, never owned a liquor store, or anything like that. And here you are six months, you get a liquor license, it looks like you’re spending under $30,000 even if you include your-

Ashley:
Under 100,0000.

J:
Under 100 gets you the building as well.

Ashley:
Right.

J:
And so it’s just a good reminder that we have these preconceived notions of what a lot of these businesses require or what’s involved, but that’s not always the case. And sometimes just doing a little bit of research can really just change our perspective and make you realize that this isn’t rocket science, a lot of this is pretty straightforward and anybody can do it. So that’s awesome.

Ashley:
Thank you. And one thing it took so long, so with COVID, but liquor stores were essential businesses. So we really missed out on the past three months and because we could have done very well. So that does stink that we couldn’t open sooner but well. The next pandemic-

Carol:
But you’re almost there.

Ashley:
Yes. We’ll be essential.

J:
You’re ready.

Ashley:
Yeah.

Carol:
Good to go all the way around. So some more fun details I would love to know about. So you were mentioning a bit… And this is one of those pieces of the real estate business that’s near and dear to my heart but I’m interested in how it translates over to retail. You mentioned when you were applying for your liquor license and so on having to show the plans of what it was going to look like. So how did you even know what a liquor store should look like? And maybe it boils down to starting with, I guess, you bought this building with the two residential, two commercial for $20,000 so I would suspect it needed a whole lot of work, to begin with. So I guess what did the space look like before? How did you go about saying and figuring out this is what the optimal flow is for a retail environment specifically this one?

Ashley:
So what we did with the building was the broker actually came out and he just hand drew a layout of where the counter would go, we were having a sliding barn door to separate just the retail space. And it actually was really nice because it was just one big open storefront already and then it had a big, huge back room with a bathroom and a utility room. And then it also has a connecting garage where we could store more liquor. So our whole idea was that we wanted to start small, it is a super small town, but also have the ability to expand if we wanted.

Ashley:
So we opened up the two rooms and made a sliding barn door so that for now we can keep that backroom closed to use it for storage. But if we ever want to expand, we can just slide the barn door open and use the garage for storage. And the broker helped us walk us through that too just because he’s seen so many liquor stores and he also looks at what the Liquor Authority want. And he also gave us tips on, well, you’re not going to want anything your counter by this window because you want to put display there stuff like that. So he was very helpful with that.

J:
That’s awesome. And again, a great reminder that you spent $1,500 on this broker to help you out and basically he’s helping you get the liquor license, he’s helping you design the retail space. Again, common sense would say, yeah, you’re spending a fortune to do this but it’s actually not necessarily the case. So let’s talk about the inventory so you mentioned about $35,000 worth of inventory. I don’t know in New York how liquor stores work, if it’s beer and wine, or beer and wine and hard alcohol, or food so what does the inventory entail? And then how did you go about finding your suppliers and your distributors? How does that whole back of the peace pack back? I don’t even know what I’m saying. That the whole, the stuff that the customer doesn’t-

Ashley:
Behind the scenes.

J:
The behind the scenes stuff, yeah, exactly. How does that all work when it comes to getting inventory for a liquor store?

Ashley:
So New York State it’s wine and liquor. You can’t buy wine or liquor in grocery stores or anything like that. So it’s just wine and liquor, no beer. And we actually talked with the other liquor store owner and his manager and she gave us two suppliers she uses. And just because we filed our liquor license, we actually had distributors showing up at the rehab project, trying to get us to fill out a credit application with them. So they actually came right to us, we didn’t even have to contact them at all. And we actually just went with the supplier we liked the best. Their prices were pretty comparable, but we liked the one sales-person. So if we are going to have to work with him all the time, we wanted someone we liked and could get along with and have that good relationship.

J:
And how did you figure out exactly, you said $35,000 worth of inventory, how do you decide what does that first purchase look like, how much of this, how much of that, what brands, what types of alcohol, what types of wine, who makes that decision on how you do that original stocking, how do you learn that?

Ashley:
And we are not going to learn that and I don’t know anything about liquor and wine. And that is what we’re relying on the other manager from the other store for. She is helping us through all of that and then that’s what she’s going to train our new manager for. So actually, next week is our first round of interviews. And we’re actually looking for someone who has… It’s very hard to find someone who was a liquor store manager just because there’s really not that many. But we want someone who has bartending experience, who has managed a bar because they do all the ordering for the bar, they know different drinks, they know what goes with what or what dry wine, sweet wine, stuff like that. So that’s how we’re trying to expand our market pool of possible managers is looking for someone that’s managed a bar, which there’s a millions of bars around here. So hopefully that will help us find someone and we would have them handle all the inventory.

Carol:
Very cool. I was going to ask that question too. I was so curious about how you’re going about finding your person, your pool of people. Like you said, have you gotten some good leads or whatever just by talking to different bar owners and bartenders and that locally?

Ashley:
Yeah. There’s actually one guy that I was out to dinner this past winter, so I already had my liquor license pending and he came up to me and he actually recognized me or knew me from being on the BiggerPockets Real Estate podcast. He’s like, “I knew you lived here.” And he’s like, “I’m sorry to interrupt you but I just wanted to meet you.” And he was trying to get into real estate himself and he was actually the manager there at that restaurant. So I’ve actually been trying to get him to come and manage the liquor store. So he’s my number one lead right now but we just listed a week and a half ago online that we’re looking for someone for the position. But we have at least four good applicants that we’re going to interview right now.

Carol:
That’s super. I’m asking this question simply because it’s always a great tip for our listeners just to hear different online tools and resources. Where is it posted online? Of course you’re going to get like 42,000 applications as soon as you tell where it’s posted online, but which site are you using? I’m just curious.

Ashley:
Yeah. So I did on Facebook and just local little groups. And then I did on Indeed, the dealership that I’ve done work for, that’s what they’ve always used. So I used their account and I posted it on Indeed. And then it’s actually posted on Craigslist too.

Carol:
Super. So J I think that’s such a super great tip, right? Is that you have these big online national sites for hiring, but sometimes some of your most powerful people, especially for something like a liquor store where I would assume a big part of the marketing, which we’re going to talk about more in a minute, is just building those local relationships. Sometimes things like Craigslist, like Facebook that are really those smaller venues that are tied into the local community may end up being your best bet so I think that’s a great mix all the way around. Marketing, that’s what I wanted to talk about next. So I know, like you said, and congratulations by the way it sounds like just a few days ago you had everything the stamp of approval to really move forward. So do you have initial marketing plans yet or plans to differentiate yourself? What’s that all looking like?

Ashley:
So the big benefit of not having multiple liquor stores in every town is that you’re the only liquor store in that town. So there are about three others that the people in the area drive to now. So there was one of those liquor stores was going downhill for a while and people would drive that extra 15 minutes to go to a different one because it was cleaner, better service, had better inventory. So that is something where you have to be very careful about, is that if we don’t have that great customer service, people are going to drive to the other ones in the surrounding area. So our biggest thing is going to be a grand opening first to get people in the door. And we want to be not boutique-ish, but we want to be unique. We don’t want to just be the plastic shelving on the walls and the standard liquor store with the neon lights. I spent $1,000 on ceiling tile that looks super nice for this small little space just because I want to make it an experience.

Ashley:
We did a huge countertop, a concrete countertop, and we’re going to do tastings on there, samplings. And I’m lucky enough to have a friend that owns a brewery so opening night we’re going to have him come and do his blueberry vodka that he makes and do samples like that. So we’re really going to try and not spend a lot of marketing dollars per se, advertising in the paper. We’re going to try and push Facebook a lot. And the liquor store in the other town, they actually don’t spend any money on advertising except for they pay for a 10% off coupon placement on one of the local restaurants. So I think that’s very interesting.

Carol:
It is that’s fascinating.

Ashley:
Yeah. But I want to mention too, we’re having a custom builder come in and do a wood shelving for us and displays. He does very unique lumber and so we’re having that all custom made within the store to just give it a more unique feel and people enjoy coming into the store.

Carol:
I love this. And I think you’re touching on something that is just so indicative of the trends and things that are happening with our time. It just seems super smart that instead of being a retail location, you are an inexperienced based retail location. We talk about in the late ’90s, that’s how Starbucks differentiated. It wasn’t somewhere you go and get a cup of coffee, it’s somewhere where you go sit down with your friends and have a conversation while you’re drinking a cup of coffee. And it sounds like you’re doing the same type of concept with your liquor store. And it’s interesting because we lived down in Florida and there’s a liquor store on every corner here and in total wines, the big one. And they do… We joked when we first got down here that it’s crazy, it’s like Costco, it’s Florida’s party town anyway. So it’s like Costco on Saturdays. And at the end of every aisle, instead of getting a free little sample of some new peanut butter at Costco, there’s shots of vodka and there’s wine, it’s ridiculous.

Carol:
So it’s perfect for all these retirees doing their Saturday afternoon drives around town. So are you expecting that as you move forward, even beyond the grand opening, you’ll be creating more of these experiences to get more people engaged and coming back for more and telling their friends?

Ashley:
Yeah. So there is a unit next to it that we actually just finished. We have it listed for rent now, but it’s a very nice open space that would actually be good for hosting maybe even just small gatherings or having more availability to do these tastings in that other area. And then my business partner, he loves ice cream and he really wants to open an ice cream shop in that unit. And he’s really trying to sell me on it and I said, “We need to get the liquor store going first.” But he’s like, “You come in, you get your ice cream, you get your liquor.” He’s like, “You can send the kids in to get their ice cream while you go in and shop for your alcohol.” So he wants to make it an experience that way and I don’t know how that will work out but we’ll see.

Ashley:
But yeah, we want to try to incorporate just different little events and stuff. Even have like a guitar solo stand there, a Friday night come and just play guitar in the corner. There’s a local coffee shop here that every Friday night they have an open mic thing. And even though a lot of people don’t tend to drink coffee at night, tons of people still show up just to hear these musicians. And they’re all playing for free and people just come to listen and hang out.

J:
It’s a great strategy. You get them in the door, they’re going to buy something either because they need it or because they feel this obligation for reciprocity. But basically, you’re giving them something, you’re giving them either samples or free music and they’re going to return the favor by buying something. Or even if they don’t that night, they’re now familiar with the store and they’re going to remember every time they drive past. That’s awesome.

J:
So going back a little bit, you had mentioned that there were other liquor stores in the area before you came along or before you do come along, people were driving to various stores that were some distance away. So it sounds to me like you’ve done some market research on where your customers have been going, what they liked and didn’t like about where they were going. And so you knew before you started this process that there was an opportunity in your particular location for this particular business. Can you talk a little bit about how you did that market research, how you found out where your customers, your future customers, where they are going now or previously going and what they liked and didn’t like, how did you find out all that information?

Ashley:
Well, I knew that I wanted to open a liquor store at some point. So even two years ago I was listening and I was watching these liquor stores. And I wasn’t involved with the investor’s liquor store much, but anytime he talked about it, I would ask questions and I would get to know his manager. But he also tried to buy one of the other competing liquor stores at one point. So I helped him vet that liquor store and I found out a lot of information from that as to what its numbers are, what it was doing. And then as far as finding out that people were driving, that I found out from one manager. She just said, “We get tons of people from this other town and they just tell me when they come in. And they buy it by the cases so they don’t have to keep driving back and forth.” But they said that because the prices were better, they had a bigger supply of inventory and everyone was friendlier too when you came into the store, better customer service.

Ashley:
So a lot of it has just been word of mouth. Every time I walk into the building and there’s, especially now that the weather is nicer, if someone stops me, when are you guys opening? When are you going to be open? So there’s just a lot of people hounding us too as they’re sick of driving to these other places, when will we be open? But I haven’t done any paid research or anything like that, this is just what I’ve been hearing and listening for years.

Carol:
And I think that’s just a super tip for our listeners. It’s just like if you’ve got any business ideas that you might want to pursue at some time, just like you said, Ashley, always listen, always watch, always ask the questions, just constantly make that a part of your everyday activities so that when it’s time to do it, when it is time to really venture out there, take that risk and move forward, you are really well prepared. So I think that was really smart that for the past couple of years, you’ve been prepping for what inevitably happens. That’s really neat.

J:
And as host of the BiggerPockets Rookie Podcast, the real estate podcast, I’m sure you know as well as we do that there are a lot of people out there that are doing real estate deals and we learn early on, if we’re in real estate, that you’re constantly pounding the pavement, you’re constantly asking people what they’re doing, you’re constantly looking for deals, talking to people that might be selling or buying, it’s all about network. And I think what a lot of people don’t realize, at least in our network, because we deal with a lot of real estate investors, is that you can do the same exact thing in business. No matter where you are, what you’re doing, talk to people that… People own businesses, people frequent businesses, people invest in businesses.

J:
So just like you do in real estate, constantly talking to buyers, to sellers, to brokers, to agents, to other investors, do the same thing in the business world. Any time you walk into a business, if you think the guy behind the counter or the woman behind the counter might be the owner or the manager, start asking questions and learn about how various businesses work, learn what’s needed in your area, what works, what doesn’t work. It’s just one of those things that if you just spend your time asking questions, being inquisitive, you’re going to find the opportunities.

Ashley:
And I think that I have a great benefit that this investor already had one and I’m learning from him and get to copy his business model. But I’m really going to be a direct competitor of his. It’s not that far away from his but he was still willing to help me and willing to do anything to help us get this started. And if you know anyone that has a business that you’d like to get into, they might be willing to do the same for you. And then you’ll have an even better chance if they’re not direct competitor of have them helping you. And I actually had someone reach out to me on Instagram, he had heard that I was opening the store and he owns one 30 minutes away. And he’s dying for us to come and tour it and how he can help us. And I think that is so great and it’s so worth asking someone or telling them what you want to do. And people are more than willing to help you get started because what goes around, comes around.

Carol:
You got it. It’s funny that you’re mentioning this right now, J and I were just having this conversation yesterday that we were talking about… Especially over these past couple months with all the craziness, it’s become, I think, really clear… I’m going on a bit of a segue tangent a minute here. But it’s become really clear to us that in your life you’ve got a lot of takers and you’ve got a lot of givers. And we’ve discovered it’s really become so very evident, very clear over these past few months who those givers are and who the takers are. And we’ve been just so grateful and fortunate that we are, I think in the BiggerPockets community, surrounded by so many givers. People who really just want to put information out there, help do whatever we can to all lift each other up. And it’s a great reminder, like you said, what comes around, goes around. If you put it out there and give then more people are going to keep giving back more and more. So I don’t know, I just had to throw that out there, it’s just my BiggerPockets happy moment that I’m grateful.

Ashley:
I completely agree.

Carol:
I’m just grateful that we’re all part of this community together because there’s just so much giving and we all want to help each other succeed, it’s supper.

Ashley:
Yeah, I agree with that. I started my Instagram account one year ago and I just did it to try to help other people get started and show what I was doing and actually provide valuable content. And it does take me some time, I do these whiteboard posts and I put a lot of thought into them and it takes me a lot longer than it looks. But I never would have been on the Real Estate Rookie Podcasts if it hadn’t been for providing this content on Instagram. No one would have known from BiggerPockets who I was. And I see that as a huge value that I’m part of the BiggerPockets community and that I took the time to post this stuff on Instagram and tried to show how other people can do it. So it definitely has come around for me in that fact, for sure.

J:
That’s awesome. So I know we didn’t talk about this before the show and I know that you haven’t yet started the business, but I have to imagine you’ve at least thought about the numbers. So in terms of what do the margins look like in a business like this? And I don’t know what level of detail you’re comfortable talking about that or what you thought about that, but can you talk at all about the numbers that you expect to see in this business in terms of margins, in terms of what the opportunity is, et cetera?

Ashley:
Yeah. So our first year, which actually were we… When we first started, we planned to be open by June. So we figured within six months we could have a profit of $40,000 going forward with that. And we expect to see within the first three years we can do an 8% to 12% increase from that going forward. It’s really going to depend on a lot of trial and error going forward because we don’t know what we’re doing. And we’re having our manager but we were very fortunate to get the last three years of financial statements from this other liquor store. And so we looked what they did and to put together our proforma, we basically said, okay, so this is the population in this town, this is the business they’re doing, we think we can do a third of that.

Ashley:
And we took their sales, took a third of that. We took their inventory, took a third of that. And then we took what the utilities would be off the building, built all of our expenses. But for anything that wasn’t utility cost, or insurance or stuff, we just took it from the liquor store and cut it by a third. Their payroll, cut that down to a third. And then as we started growing and building the business, we realized, okay, you know what, we actually need less employees than what they have as we started to put together a flow chart of responsibilities, how many employees we need, how many hours we’re going to be open. And we did a lot of just pen and paper, just scribbling down and writing out these different scenarios. And we came up with our… I’m a licensed insurance agent so I was able to easily get us a quote on what our insurance costs would be.

J:
I think you’ve hit the nail on the head that a lot of it is… And again, we have a lot of real estate investors I know in our audience. And I’m sure a lot that are listening that know you that are real estate investors. And we know that with, let’s say, you’re talking about a rental property, the way you run the numbers, you put together a profit and loss statement. So you have at the top, here’s our income, here’s the rent that we’re going to charge. And then you subtract out your major expenses, taxes, insurance, maintenance, property management, those sorts of things. And in the business world, it’s very, very similar. You figure out how much income you’re going to make and it sounds like you did that because you actually saw a competing business or a complementary business to yours, you saw how much income they were making in a town of their size. So you said, okay, our town is this size, I think we can make a third of that. So there’s your income.

J:
And then in a business, just like in real estate, there are these certain expenses that every business is going to incur. You’re going to have insurance costs, you’re going to have payroll costs, you’re going to have utility costs, and rent, and all these things. And really it’s very much the way you do a rental property proforma, a business is the same. The expenses are a little bit different, the revenue might be a little bit different, but at the end of the day, it’s all your income minus your expenses, that’s how much money you make. And so I think a lot of us like to over complicate things and think that there’s some magic formula for a business. But if you know how to analyze a rental property, you can pretty much analyze a business with just some minor changes. So sounds like that’s exactly what you did.

Ashley:
And that’s a great point because I don’t know a ton about…I have a coach now who’s helping me through building systems for businesses and I really want to diversify my portfolio and just my business income in general, I want to have different streams of income. So right now I’m trying to learn a lot about building a business and I basically started it, like you had said, just the proforma. If I was looking at a property, this is how I would analyze if it would be a good investment. And that’s basically what I did with this liquor store business.

Ashley:
And now I’m learning about KPIs and flowcharts and different stuff like that so I can continue building these businesses. But I feel like if I would have… And I know this is probably bad to say, but if I would’ve started digging into all these things and figuring all these business analytical stuff first, I probably would have waited a lot longer and I probably would have got stuck in analysis paralysis or I just would’ve gotten bored with figuring out all these systems. And I do know they are 100% important that you shouldn’t know them but I’m glad that I at least got started. And I’m learning it now but I’m glad that I took that first jump, just knowing what I knew of business from working for that investor and managing my rental properties and having that business.

Carol:
I think that’s great. And like you said you just went ahead and did it and you got started. So before we jump to four more, I’m just wondering Ashley, are there any specific tips or any specific learnings throughout this process that you would love to pass on to any maybe new business owners, someone who’s wanting to own a business for the first time, someone who wants to be an entrepreneur and just hasn’t quite made that jump or is just starting. Is there anything in particular, some advice or tip that you would like to share with them?

Ashley:
Yeah. Well, one thing is I think if hate your job and you don’t know what you want to do, look and see if maybe you are an entrepreneur. I never really thought that I would ever be an entrepreneur. I went to school for accounting, I thought I would sit in an accounting desk all day and analyze other people’s businesses and tax returns and proformas. But now that I look back on it, when I was in middle school, I painted rocks and sold them on the side of the road. When I was pregnant with my first child and right after I had him, I sewed baby clothes in my spare bedroom and sold them online and made $16,000 in one year selling them on Instagram. And it never even hit me that it took me so long to realize that I like being my own… I like to work for myself, I like to build different businesses, and then I like to get rid of them. I don’t like to manage the day-to-day.

Ashley:
So I think, really think about yourself and do you want to be like me where you want to build the business? And that’s the fun, exciting part. And then once it’s done, someone else runs it for you or you sell it. Or do you want to be the person, the day to day and you want to buy a turnkey property and manage it day-to-day? So I think in business, there’s so many different opportunities, just like real estate, as to how you can be an owner of that business. And I think take a look at yourself, take a look at your past history, what have you tried to do? And my baby clothing business failed because I did not like being in a sweatshop all day while my baby is sleeping, sewing these little baby clothes. So I should have figured out sooner that I did not like doing the day to day stuff and maybe I should have hired all that out and just grown the online presence. But I think just take a look at yourself and see what might be a good fit for you.

J:
That’s a great point. Just like real estate, it’s really easy to build yourself a job if you’re going in and you’re painting your own houses, doing your own rehab work, managing your own properties. Absolutely nothing wrong with that, don’t get me wrong, I’m not saying that’s a bad thing to do. But if you don’t want to create a job, if you don’t want to be working in the business day in and day out, there are ways that you don’t have to be doing that.

J:
And you can create systems, you can create processes, you can put people in place that can run those businesses so you can go off. You spend six or 12 months building this business, creating the systems and processes, getting great people in place, and then you go do the next one. And now you have this residual income coming in that you’re working, you’re probably still involved in the business a few hours a week, but now you have time to go do the second business and the third business and the fourth business. And again, very much like real estate, if you want to be hands on, you can be hands on, but if you want to be hands off, there are opportunities to do that as well. And so that’s a really good reminder.

Ashley:
And I do have that shiny object syndrome really, really bad. So that’s one thing I’m trying to focus on now because I want to buy a laundromat too. I want to build up my essential businesses but I know that I need to focus on the liquor store too. So that would be another piece of advice, is focus on what you’re doing and build that first and then move on to the next thing instead of trying to build all these different things. Like I got my real estate business going that’s pretty hands off, I’m involved as much as I want to be right now and then now I’ve got the liquor store. And it’s also motivating to get it done because then I know I can go and find that next shiny object to do.

J:
And it’s not either, or. You look at big names like Elon Musk, 10 years ago, 15 years ago he had started PayPal and now he’s sending private rockets into space. That’s a big departure but for him he spent years building this business and then he said, “Okay, I now want to go build the next one.” That was Tesla. And then he said, “Now I’m going to go build the next one.” It SpaceX. And so I know a lot of people out there have shiny object syndrome, I have shiny object syndrome. And we often think of it as a bad thing and it is bad if you get distracted before you hit your goals. But if you can focus long enough to get things autonomous and running on their own, and then move on to the next shiny object, get that running and generate a stream of income, then move on to the next one, shiny object syndrome isn’t necessarily a bad thing. It’s just important that you focus till you get to some endpoint before you move on. So there’s always that balance, it’s not necessarily good or bad, it’s how you implement it.

Ashley:
You just don’t want to be pulled in so many different directions that nothing is succeeding because you’re just going everywhere and you can’t focus on that one thing. My last piece of advice would be if you are going to start a business, you don’t have to learn everything about it. I’m a prime example of that, I am leaning on so many people to get this going and hiring out as much as I can. So don’t let that deter you from starting into a business.

J:
Absolutely, love that. Okay, well, I think we’re now ready to jump into the final segment of the show that we call four more. And that’s where we ask you the same four questions that we ask all of our guests. And then at the end, we jump into the more part where you can tell us a little bit more about how we can get in touch with you, how we can learn more about your businesses, and learn more about your awesome podcasts. Sound good?

Ashley:
Yeah.

J:
Okay. So I’m going to ask the first question, is that okay, Carol?

Carol:
Of cause. Go for it.

J:
Okay. So Ashley, what was your very first or your very worst job? And what lessons did you take from it that you’re still using today?

Ashley:
Well, my very first job, I was a hostess and it was a restaurant. It was like a dive bar, but on Monday nights they had buck night where they had a dozen clams, crab leg clusters for a dollar. So the line would just be packed out the door and it was from 9:00 PM to midnight, they would offer this. So here I am, 15 years old, staying out late, hostessing at this place. And there would be crowds of people and I would have to scream people’s names to get their attention to seat them. And then it grew into me waitressing there and I’ve worked there all through high school. And it was probably my best job ever, just great people and I just learned a lot about hard work working there. We had to do a lot of the cleaning, we had to do a lot of the stuff ourselves there it wasn’t like we had busboys or anything like that.

Ashley:
And then my worst job was another waitressing job when I was home from college one summer. And for some reason I don’t even remember, I wasn’t working that other restaurant. And I applied at more franchised restaurant, I guess you could say. And it was very different than working at this laid back dive bar. But they did a two week trial period with me and I did not make it. They said that I did not smile enough. And I got… So that was the worst job. And I told my husband, he was my boyfriend back then, I said, “Yeah, I can’t blame them, I did not smile, I was miserable, I hated it.”

Carol:
That is just crazy. It had to be a bad spot because I can’t imagine you not smiling ever. So we know that must’ve been like the pit, for sure.

J:
And that’s my favorite part of being an entrepreneur, I don’t have to smile if I don’t want to. Nobody can make me smile.

Carol:
Not happening. Okay, Ashley, I’m going to take the second question. And when we first started doing this show, I don’t know about a year, it’s been more than a year ago. We used to ask this question, haven’t asked it in a while, but I want to ask you this one specifically because you mentioned that you have shiny object syndrome like we do. So we’re curious if there is a business opportunity along the way that you passed on and you were like, that was the best decision ever or darn, I wish I wouldn’t have passed on that because we’re the same way, we’re opportunists. We’re like, there’s something let’s go after it. So have there been any along the way that you said no to and you were either glad or sad that you didn’t go for it?

Ashley:
Yeah, there is. In the same town that I’m buying the liquor store, there was a laundromat for sale about three years ago. And I really wish I would have bought it. It was so cheap and at the time I had actually… The investor that I worked for, he owned one at the time and I had actually been helping him get it turned around because it was not doing well, he was dumping money into it. So I had some experience on it and I was working so much and haze that I thought that mine would be that much work. But then I realized too late that it was just short term work just once it got turned around it runs very passive now. And I wish that I would have jumped on the opportunity. And someone ended up buying it, turning it into a car rental place. So now there is no laundromat in town at all. So maybe I’ll just have to start one from scratch.

Carol:
There you go, feeling it’s coming next.

J:
There you go. And we had a good episode on that a few weeks ago with Dave Menz.

Ashley:
I did listen to it, yes. Because my partner in the liquor store, he actually bought the laundromat from his father-in-law. And so we were listening to it while we did the rehab and there’s definitely some great tips in there.

Carol:
That’s awesome.

J:
That’s awesome. Okay, I’m going to give you a softball question here, but what is your favorite business book or we can also say real estate book since I know you’re heavily into real estate. What’s your favorite book that our listeners probably haven’t read yet?

Ashley:
Well, I honestly don’t read that many real estate books surprisingly. I don’t know, maybe I just got sick of them because I used to read so many, but I really love personal finance books. And so I love the Automatic Millionaire and the Simple Path to Wealth. And they’re not really business books, but I think it’s very important to have your own personal finances in order and build that foundation before you get into starting a business. Because you’re going to have to manage the money in that business so make sure you can manage your own money. So I like to recommend personal finance books and even if you already have a business going, they can help you in your business too.

J:
Love it.

Carol:
Awesome. And this is my favorite question, it’s always a fun one, what Ashley is something that you have splurged on along the way, either in your home life or your work life, however, wherever that was totally worth it?

Ashley:
Let me see. I don’t know. I almost did splurge last week on a brand new expedition. I took it for a test drive all day, but I didn’t do it. I couldn’t spend the money. But one thing I’d have to… I guess I would have to say our outdoor patio. It took us about three years to actually complete it. But it’s a huge concrete stamped patio and then my husband built a shelter on there. And last summer we spent a lot of money to have it all vinyl wrapped and a ceiling fan, and even the inside of the roof vinyl wraps so that we never had to stain it or maintain it at all. So I guess that’s like one big thing we splurged on that we absolutely did not need to do. But we just didn’t want to have to deal with staining the woods.

Carol:
You probably spent so much time out there. I would assume all summer, you were out there all the time.

Ashley:
And that’s like it gives us so much value. Yeah, we spend so much time out there, so it was definitely worth it.

Carol:
Definitely worthwhile splurge for sure.

J:
Awesome. Okay, Ashley. That was before, now let’s jump into the more part of the four more. Can you tell our listeners where they can find out more about you, where they can find out more about what you’re doing, maybe where they can listen to your awesome podcasts and maybe a link to your Instagram because I know you put in a lot of work there and provide a ton of value there, anything else you want to tell our listeners at the end of the show?

Ashley:
Yeah, thank you. So you can find me every Wednesday on the Real Estate Rookie Podcast and we’ve been having great guest on the show, just people who have just gotten started into real estate. And then we also have some professionals on who tailor to meet the needs of rookies and help you find out what you need to look for to find a professional just like them. So that’s every Wednesday we release a new episode. And then I’m also on BiggerPockets if you just search my name. And then on Instagram, you can find me @wealthfromrentals.

J:
Awesome. Actually, this was absolutely fantastic. I am really excited to have you back in six to 12 months to hear how the opening of the liquor store went. Do you have a name for it by the way?

Ashley:
It is actually just the name of the town.

J:
Okay, awesome.

Ashley:
Yeah. The guy that I work for, he’s very picky about… He doesn’t understand how Google searches work and so he thinks if you Google search that town and liquor, your name will only come up if your liquor store is named that. So we did it almost like a joke to him. Like we knew you would not approve and would not help us unless we named it the town. But yeah, he’s so funny. Thinks Google, it will only come up on Google if it’s the name of the town.

Carol:
That’s okay though. [crosstalk 00:59:07].

J:
That’s awesome.

Ashley:
Does help but yeah.

J:
Well, we’re really excited. I can’t wait to have you back in six or 12 months to hear how the launch and the opening went and how everything is going, but thank you so much for being here, sharing just the story of how you’re making this. And I’m really excited because again, and I’m going to say this one more time, this is one of those businesses that an hour ago before we started this interview, I would have just assumed that normal people like you and me don’t get into this type of business because there are so many hurdles, it’s so expensive, there so many intricacies in the industry. But you’ve dispelled that myth and it really gets me excited about what other opportunities are out there that I’m not considering because I have this mental block thinking it’s too tough or I can’t do it. And so it’s just a great piece of motivation to go out and don’t let preconceived notion stop you from making progress.

Ashley:
And really the startup costs, I don’t think have been that large. Especially if I were to rent the space and not even do have the rehab cost and the building purchase. And even the inventory, you can get a line of credit with the distributor. So it’s not even like you have to if you don’t want to pay that fully out of pocket at first. But it is very interesting to me to watch it all unfold.

J:
That’s awesome. Ashley, thank you so much. And we will be checking you out tomorrow on the newest episode of the BiggerPockets Real Estate Rookie Podcast.

Ashley:
Thank you guys so much for having me.

J:
That was an amazing episode. And like I said in the intro, and I’m still thinking about now, I love the fact that Ashley was willing to take on a challenge that a lot of us just would assume is out of our reach. Getting a liquor license, doing it quickly, doing it inexpensively, starting a retail store from a building that she bought from scratch, having to design the layout. Basically, she started from nothing with this business and in the last six months is pretty close to getting ready to launch a liquor store. That’s just crazy.

Carol:
It’s really crazy. But I’ve got to tell you, Ashley is so focused and realizes the value of multiple streams of income and really satisfying that bright, shiny object syndrome. She likes to build those businesses and get them out of the way and just keep bringing in more money. So, that woman can do anything and guess what everyone, listeners you can too. Like she said, “Just get out there, listen, and ask the questions, and be looking for those new opportunities. And then when the time is right, jump on it and make it happen.” So major kudos to Ashley and you, our listeners each and every one of you can do this too.

J:
Absolutely. So anyway, thank you, everybody, for tuning in this week. For all you real estate investors, or want to be real estate investors, please go check out Ashley’s BiggerPockets Real Estate Rookie Podcast every Wednesday. And we hope to have her back here in six to 12 months and see how the liquor store is going. So everybody thank you so much for tuning in. I hope you have an amazing week. Stay happy, stay healthy, and we will talk to you soon. She’s Carol I’m J.

Carol:
Keep watching, keep listening, keep asking questions today. Good, huh?

J:
Love it.

Carol:
So awesome. Everybody have a super week, we’ll see you soon.

J:
Thanks, everybody.