Sigh.... I'm in search of a money tree, any ideas where I can find one?

[BD]

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As most of you guys know, I'm in the tobacco business, and I don't deal with Cigarettes, just Cigars and Hookah related stuff.

When I entered this business in 2004, the only tax I had to deal with in regards my products was a 47% California tobacco tax, which was already one of the highest in the nation. So every time I stock my shelves, I have a 30 days grace period to send the board of equalization my tobacco tax payment. So if I ordered $3k in cigars, I need to have an additional $1500 ready. It wasn't really an issue at the time because the economy was great, and I can find super rare stuff people can't find on the Internet.

Two years ago, an SCHIP tax was added at the Federal level, basically another 10%. Last week when I picked up some hookah supplies, I noticed a new tax by USDA. So if you live in California, and enjoys any form of tobacco product, whether it is cigs, cigars, pipe, or hookah, every $10 you spend, about $6.50 is tax.

Since 2008, my rent, electricity, insurance, water and various city fees all increased by as much as 40% while my business dropped by 45%.

Also since 2008, California increased their tobacco tax auditing field agents by 100 fold. So if they walk into my shop and point their finger on a box of cigar on the shelf, I have to show them the receipt with California Tobac Tax Paid stamp on it. If I can't provide that - Misplacement of a receipt, they will confiscate the entire shelf.

No wonder there is a 25% vacancy rate on shopping centers just on Beach Blvd alone, and it is the biggest street in Orange County with the most none-freeway traffic. A friend of my recently closed his self service coin operated car wash after 30 years. He said the EPA and various other regulations killed it.

I wonder when is all these going to end, always some kind of new regulations, fees, taxes.

I'm in search of a money tree, any ideas where I can find one?

 

[socalx]

Vance

very sorry to hear.

the problem is Ca government. With the bad economy tax revenue down and entitlements continue to go up, so what is a non-economist politician to do, raise taxes. What better taxes to raise then SIN taxes (tobacco and alcohol).

problem is this is at best a temporary fix, as longer term as you mention, businesses can't afford to do business, close or leave the state, families go on welfare or leave the state, and tax revenues go down. (the cycle continues).

As a country our federal income tax is too high, large corporations with the board in the us are locating headquarters outside the us and legally avoiding paying the us federal tax.

so the rich get richer, and everyone else is getting poorer and stories like yours are driving people out of business.

 

[CL65 Captain]

I'm in search of a money tree, any ideas where I can find one?

Did you really expect anything else from me? :biggrin:

 

[Vega$ NSX]

Clearly you need to diversify into crystal meth.

 

[ss_md]

Go here to get your "Money Tree"

I wonder when is all these going to end, always some kind of new regulations, fees, taxes.

Jerry is going to help you and the rest of us small business owners close our businesses with more taxes.

 

[DucTerry]

Sell more Perdomo. I was talking to one of their reps at my local cigar lounge and he said that they're eating SCHIP and expect other distributors will follow suit.

On the note of stupid regulation driving business away. On the island, we have a 1.5% retail tax.........on gross sales.....(even better, they keep insisting that it applies to ALL of my online sales, regardless of order origination/destination) And these idiots wonder why half the businesses have hopped over the bridge...

 

[BD]

Duc, the problem is Perdomo is a standard line, people can just buy them online at any outlest and save at 50% than the California price.

The hookah lounge part is what is holding up the business, but I'm raising my prices as of tomorrow to counter the additional taxes. I have been notifying my customers for months and I think they are mentally ready.

It is tough, for the second year in the roll, I did not get a spring break rush. I ran back to play with my old college band last year (embarrassingly at the age of 38), turn out that most of the kids in the band are helping their parents out financially. They used to come and hang out at my lounge on a weekly basis, and now no more. Usually I can count on spring and summer to make up the differences, but this year so far, is worse than last year by about 10%, which was already down by as much as 40% from 2007.

Another landmark restaurant right next to me Habana Cabana Cuban just shut the door and the owner left devastated after investing $600k into the business and is now shelf clerk at a local super market. Someone replaced it with a sports bar and the new owner was telling me they are slightly negative every months and if that continues, he will have to close the door and just keep his liquor license until the economy gets better and reopen somewhere else. He just dropped in $200k into that business.

It is really scary right now. To be honest, if I didn't get the Fast Five rental, I would have to do something like liquidating bunch of my stuff on ebay to keep my door open.

Time is indeed tough for retail owners.


Captain, I actually looked into it because one of my cigar customer is a doctor who writes the prescriptions. He asked me to help him set up a dispensary with my retail experience but after dig in deeper with him, it is almost a monopoly and new comers cannot break in unless millions are invested.

 

[jond]

I'm in search of a money tree, any ideas where I can find one?

Move to Northern Virgina(super nice area), and supplement with an online shop.

 

[ilya]

Did you really expect anything else from me? :biggrin:

Ton of truth to this statement. Friend and co-worker of mine got into this business less than a couple years ago and is making a killing. He could care less about the product personally, he doesn't ever even use it. But instead of running it like a stoner/pothead, he runs it like a real business and is killing all the shops around him. Just opened 2 more locations recently and is doing very well. Their shops are as busy as an Apple store almost daily, it's like a zoo. On weekends it's a madhouse. They even do delivery.

And when the local authorities start shutting down locations in that area, they just close up shop and start over somewhere else... don't even bother fighting them. Six months later they are back making money somewhere else.

 

[omega2]

The pinch you are feeling is pretty much every where in Southern California, not just in you Orange county. I inspect businesses in LA county and everyone is hurting. Some gas stations don't have enough money to have fuel deliveries, so they effectively put themselves out of business for every gallon they sell. I have noticed a ton of change of ownership situations. It's pretty rare to see the new owner last over 2 years. A lot of people will blame government regulations and permit fees, but the same weak trend among many different types of businesses with different regulations (i.e. retail, warehousing/distribution, and manufacturing) suggests it's more complicated than government regulations alone.

 

[SilverStone05]

A lot of people will blame government regulations and permit fees, but the same weak trend among many different types of businesses with different regulations (i.e. retail, warehousing/distribution, and manufacturing) suggests it's more complicated than government regulations alone.

Yea..no. While consumption may be slightly down.

It is government regulation that is ridiculous.

It's killing business...not only in California but everywhere.

It's getting out of control.

I'm not sure why people defend this type of theft.

 

[Cairo94507]

Taxation has gone crazy! The government is taxing the working man, small business owner to death to try to support the rest of the non-working population and out of control government spending. I feel your pain as a business owner. Every time we have family dinners I have to listen to my unemployed or retired (government worker) brother-in-laws and sister-in-law spout off about how the small business owner needs to pay more. Idiots!

 

[docjohn]

sorry your business is that tough.Unfortunatly you sell a product the government deems unhealthy and thus there is incentive to kill supply by taxation.You just have to figure out if there is any niche product/market that you can sell or expand your market by offering other complimentary services at your location.

 

[BD]

Unfortunatly you sell a product the government deems unhealthy and thus there is incentive to kill supply by taxation.

You are kidding, right? What about alcohol or 2 lbs burgers. Forgive me for being blunt, you either failed to understand the post, or you didn't read it carefully.

Do you understand the difference between failure to compete, and the government picking winners and losers through policies?

When a person invest his life savings and years into a business, should the government have the right to change the nature of the business because they feel like it - by picking winners and losers as they pleased? It is a complete different deal if the business failed to compete. Like they did in Washington State, taxing candies because certain type in ingridience are bad for you.

the bottom line is, if they lower the California tobacco tax, they can actually generate more revenue and requires much less auditing agents. They are not only killing the small biz in this state, but making interstate venders wealthier - and they don't have to pay state taxes at all.

They are legalizing Cubans through a pilot program. If you read between the line, it clearly says "seeking more tax revenue through a pilot programs.".

 

[docjohn]

You are kidding, right? What about alcohol or 2 lbs burgers. Forgive me for being blunt, you either failed to understand the post, or you didn't read it carefully.

Do you understand the difference between failure to compete, and the government picking winners and losers through policies?

When a person invest his life savings and years into a business, should the government have the right to change the nature of the business because they feel like it - by picking winners and losers as they pleased? It is a complete different deal if the business failed to compete. Like they did in Washington State, taxing candies because certain type in ingridience are bad for you.

the bottom line is, if they lower the California tobacco tax, they can actually generate more revenue and requires much less auditing agents. They are not only killing the small biz in this state, but making interstate venders wealthier - and they don't have to pay state taxes at all.

They are legalizing Cubans through a pilot program. If you read between the line, it clearly says "seeking more tax revenue through a pilot programs.".

hold on there Vance...I'm on your side....I understand exactly what "they" are doing and I'm wishing you good luck in trying to overcome it.In my business gov. regulations on reimbursement has declined and the overall hit to me is 20%...so we just tighten the belts and cut expenses to the bone,just as you are having to do...I feel your pain and fustration,but don't go all sonny on me

 

[BD]

Is the government driving away your customers or trying to force you out of biz? In my case, instead of having a smart policy, they are actually trying to force the revenue out of the state. Regardless, another biz by me just closed shop. EPA went into a dry cleaning and told them to up grade the equipment or close the door. They can't effort to buy new equipment. The lady was in tears.

 

[Ko-nsx]

Since 2008, my rent, electricity, insurance, water and various city fees all increased by as much as 40% while my business dropped by 45%.

I understand the government taxation, can you explain 40% increase in rent, electricity, water and various city fee's? It may help to move out of the state.

Im looking for a money tree as well, but i just want a Zonda.:biggrin:

 

[docjohn]

health care is cyclical.In the 80-90"s and early 2000's providers payed for out patient procedures as well of better than the same done in hospitals,so doctors and entrepeneurs started to build full service outpt facilities.Obviously hospitals were put in a tough place with lots of revenue leaving the hospital,but the hospital getting stuck with the indigent and uninsured,this has left non profits to flounder,the result is for profits buying the nons and some hospitals closing.The kicker is that now the government and payers feel the need to bolster the hospital reimbursement such that the same procedure performed in a hospital nets the hospital 20-40% more than the same one done in an outpatient setting.So the pendulum swings the other the way.

 

[nsxlover]

Did you really expect anything else from me? :biggrin:

You are my favorite prime member.....

 

[NsXMas]

Internet Porn. That Scottsdale Veyron owner, Rob, is rich from it.

Jealous...

 

[BD]

Internet Porn. That Scottsdale Veyron owner, Rob, is rich from it.

Jealous...

My friend owns wantedlist.com, he is hurting...

 

[BD]

I understand the government taxation, can you explain 40% increase in rent, electricity, water and various city fee's? It may help to move out of the state.

Im looking for a money tree as well, but i just want a Zonda.:biggrin:

California DWP made a deal with the city of LA and next I know, my electricity bill is up by about $30 a month during winter and my shop does not have heating. City licence fees went up from $71 a year to $127. My insurance is up from $1200 to $1600. Want more?

 

[nsxlover]

California DWP made a deal with the city of LA and next I know, my electricity bill is up by about $30 a month during winter and my shop does not have heating. City licence fees went up from $71 a year to $127. My insurance is up from $1200 to $1600. Want more?

That is what happens when you have an ultra liberal state like California that has so many entitlement programs. They have to get the minority to pay for the majority. It sucks and is part of the reason I moved out of Maryland.

 

[Keahistight]

I'm really sorry to hear your story. Things like that really piss me off, especially when our state cant even provide a budget. Everywhere I go I see small business owners hurting which, IMO, they are the ones the state should protect above and beyond large business. When a small business fails so does a family. When a big business fails there are payouts, golden parachutes and the taxpayers foot the bill.
Are there any other products you could diversify into out of the store? Lotto Machines? Internet offered to draw customers? Heck, even Boba? Anything like that to draw an additional revenue stream?

 

[SOURCE 1]

Cost rising is a huge part of my business right now ( auto sales) Used cars are at their highest value in a long time. I am paying double to get some cars ( mostly cheaper sub $4000 cars ) meaning a car that used to cost me 1000 is now 2000 and so on. They are next to impossible to get. We do On lot financing ( buy here pay here ) and do not take advantage of people with super high 24% interest rates but we had to raise it to help cover some of the cost.
I used to get say 4-500 down on a car that costs me 1000 now I get 3-400 down on a car that cost me 2000. Meaning if I sell and finance 30 cars in a month at that cost it now costs me another $30000.00 to do business. THAT is a HUGE increase. And we have felt it.

However any good business person will tell you that you have to adjust to times that are changing. I believe in the MSI ( multiple streams of income ) method..

In order to try to offset the rise in cost to do business I analyzed what we spent the most money on. I came up with the repossession end of the business. We spend A LOT of money on repo's. So I then formed a new company and started a repo business in mid Feb. Since then I not only do my own repo's I have gained at least 10 clients sending me an average of 15 new repo's a day. At $250 a pop that adds up quick. It covers the additional and is actually already a profitable business.

My advice ( not that you really asked for it) is to branch your business out. Look for (MSI) opportunities and take advantages of them.

My.02