Millionaire Story #3
Russ 61, Beth 58
The Schomps’ net worth exceeded $1 Million in 1991
Russ Schomp – B.S., University of Delaware Beth Schomp – B.S., Southern Methodist University
I suspect that those who know me would agree that I’m not overly “intellectual” or exceptionally astute in the world of complex economics. I believe, however, that whatever limitations I have in those areas are at least partially offset by a mindset of striving to adhere to a handful of simple, basic financial principles.
Like a Hall of Fame pitcher who continuously drills in the basics of fielding, I believe in the basics of building a strong and sustainable financial portfolio. To me that lineup of basics includes spending in proportion to one’s income, recognizing and employing the power of compounding, always striving to do one’s best at the task at hand, looking at financial decisions from the viewpoint of the worst-case scenario, and having the resolve to do what you say you’re going to do. Those attributes were instilled in me through the blessings of having a father who invested long, hard hours at work in order to give his family the opportunity to live out their dreams and a mother who likewise sacrificed much to ensure that her family was lovingly provided for.
That heritage didn’t stop me from wasting much of my college years—too much foosball and intramural anything, skipping classes and lectures, partying more than studying. As a result, I found myself about to graduate with little or no marketable skills. I was fortunate to land a job as department manager with Gimbels department stores. The stark reality of having received just that one job offer filled me with a new urgency to perform. Drawing on the work ethic modeled by my parents, I invested many hours in building a menswear department that broke all sales records. Those results were noticed at corporate and I was soon promoted to the position of menswear buyer for the chain. Unfortunately, the position did not pay very well. Even as a buyer for a multimillion-dollar department, I was earning less than $20,000. That meant peanut butter sandwiches or pasta with butter for dinner most nights and scouring through drawers for spare coins for twenty-five-cent-beer happy hours. My one credit card was maxed out. I had zero savings. And I had no clear vision of how to grow my net worth other than by continuing to be thrifty and striving to outperform at work.
Eventually that philosophy paid off. One day, a vendor from a billion-dollar international clothing company that I had bought from for Gimbels shared some news. A commissionable sales position was open at his company. I grabbed the opportunity. The first and most valuable blessing of my new job was meeting the woman who would become my wife and soulmate, going on thirty-five years now. Little did Beth know that our dinner dates would be McDonald’s burgers (no cheese—that was an extra dime),that my romantic gestures would include picking a flower from a neighbor’s garden instead of the florist’s shop, or that in order to remain fully aware of my spending, I walked around with an elastic band wrapped around my wallet to remind myself to ask if an expenditure was truly necessary. Some might call me cheap. I called it filling our financial “tub,” versus opening the “drain” with increased spending as our incomes rose. Sure enough, over time we could pay off the debt on our cars and credit cards and build a modest savings of a few thousand dollars.
A few years into our marriage, Beth and I became aware that one of the products manufactured by my employer might sell well in a certain chain of consignment stores. That chain’s business model was to remit seventy-five cents on the dollar to its suppliers for any product sold, keeping the remaining 25 percent for operating expenses and profit. Seizing the opportunity, we began our first company, American Wholesale, and over the next two to three years, shipped to the consignment store chain, adding other products that we thought would sell. Our income was growing, but we were becoming wary that our increasing inventory might continue to turn. Not wanting to get caught in the position of having inventory we couldn’t sell—and with our inclination to always look at business with an eye on the downside—we wound the company down.
Using the Rule of 72, and with interest rates around 10 percent at the time, we discovered that our modest savings had begun to double every seven years. Those few thousand dollars had become nearly $25,000 in the bank. When a new opportunity came along, we were ready to fund it. My employer was discontinuing a garment line with relatively limited sales. Beth and I knew there were still a good number of customers who would be interested in purchasing that niche item. Capitalism 101—find a need and fill it. If we could locate a mill to manufacture and drop ship that item for us, we could essentially turn paper rather than inventory, earning a small profit for ourselves.
To confirm that there was a viable market,we spent many nights licking stamps, addressing thousands upon thousands of envelopes to stores we’d identified from SIC targeted mailing lists. The message in our mailing went something like, ‘If we were to manufacture this garment, would you purchase it, and if so, approximately what would your potential usage be?” To induce prospective customers to reply, we offered a dozen free garments once the item was available for sale.
That strategy enabled us to generate a list of approximately two hundred prospects. The downside, in our opinion, was low. We set to work locating a mill in Vermont and began our second venture together, R&B Industries, Inc.
Soon after, our continuing efforts to solicit customers through mailers yielded a call from a buyer from King Size Catalog. At that time our sole product was a nylon silhouette. The caller was looking for cotton underwear and apparel. Time to source a new mill with the machinery and capacity to manufacture a new niche product. Over the next several years, that product line grew and grew, eventually reaching sales that surpassed the $30 million mark.
As blessed as we were with the growth in our business, we were not immune to the economic downturn that hit the U.S. in 2008. Many of the retailers that we had sold to were closing their doors. Along with the harsh economic climate, the face of retail was changing as consumers increasingly shopped online instead of at brick and mortar stores. Instead of simply managing the decline, we decided to embrace the challenge by selling through Amazon and other online portals, including a company-owned website. That direct-to-consumer sales channel is currently the healthiest leg to our stool, and it is a primary reason why our company is healthy enough to begin a transition to our children.
But as dream-fulling to me and mine as my financial story may have become, Beth’s side of our coin is perhaps going to eventually become the most valuable ingredient to our financial success. Beth has also been building her own unrelated business, again incorporating the business model of direct consumer marketing.
The success of the company she works with is based on a simple business model—manufacturing products such as toothpaste, vitamins, household cleaning items, and healthy food items that everyone needs, with a higher quality than can be found through traditional retail channels, and by selling those products direct to the consumer, be able to offer customers world-class products at extremely attractive values.
She invests in people and her payoff has been huge, not only financially but also emotionally. She delights in helping others become healthier consumers and, for those who want to build their own businesses, providing the opportunity to earn life-changing incomes. Her joy is in growing a business with a company whose motto is to “enhance the lives of those we touch by helping people reach their goals.”
As historically successful as R&B may have become, her endeavors simply have a greater potential for having a positive effect in people’s lives than mine has had, and for that I am very thankful.
Our financial life has turned out to be a wonderful microcosm of our personal life. Full of appreciation for the joy of having time with our incredible daughter Taylor, who lives in Nashville, and our daughter and her family of four who live nearby us in Southern Florida, we relish times investing in what’s most important now—our family.
Over time, we’ve strived to manage our spending as our income grew, to squirrel away money when we could so that time could be our friend in compounding those savings, to live debt free in order to avoid the trap of servicing borrowings, and to be wary of taking risks in our decision making. However, above these basic tenants, we humbly recognize and profess the certain truth that all of the success we’ve been afforded is a direct result of God’s grace in our lives and a blessing that comes from our Lord and Savior.
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