Journey 1995:Non-Stop

Chapter 158 Compound Interest
Yan Hui called out to Brother Lü, not only because he needed a follower, but also because he wanted a witness.

Witness his strength.

If he could, Yan Hui would even like to hire the captains of all four moving teams, that would make him look more impressive. But that would seem like swindling and deception, which is not advisable.

Once Brother Lü returns today, and word spreads, Yan Hui's fame will grow even greater.

Aside from negotiating prices, Yan Hui let Brother Lü listen to everything else, so that Brother Lü could broaden his horizons.

On one hand, it's also to give Brother Lü some benefits. You see, this information is very valuable. Since Brother Lü also wants to do timber retail, this information and network are things he can't buy even if he wanted to.

On the other hand, Brother Lü will go out to promote it. His entire circle of friends is in this market, so his reach is very wide.

Reputation is definitely useful, because the most important thing in doing business is trust, and a good reputation leads to word-of-mouth, which in turn generates trust.

As for how valuable trust really is, broadly speaking, the reason why national currencies are not worthless is entirely due to the trust provided by comprehensive national strength.

In one morning, Yan Hui met two clients like Mr. Zheng, and they had pleasant conversations with both of them.

You really can't force yourself to integrate if you're not in the same circle. Yan Hui simply couldn't communicate with some small business owners. The ones he could talk to for twenty minutes were at least bosses who could afford to rent half a train car.

Clients at Mr. Teng's level, due to their large demand, previously had several regular suppliers who could supply at least 70% of his needs. In fact, there aren't many suppliers like Yan Hui, because Yan Hui is very stable; he previously devoted himself wholeheartedly to Mr. Teng's business and was always responsive to his requests.

Other suppliers also need to arrange goods, communicate, etc., and sometimes there will be temporary shortages. At this time, Mr. Teng also needs to come to the market to find suitable goods.

The share of demand that Yan Hui took from General Manager Teng mainly came from the original bulk goods suppliers.

Customers like Mr. Zheng don't actually have fixed suppliers. They just buy from whoever has the best products and the lowest prices.

If you were to buy materials that have already arrived and are piled up at Jianye's storage yard, the price would definitely be higher.

Buyers of these spot goods bear risks, cash flow pressures, and rent—all costs that inevitably drive up prices. The best approach is to order directly from suppliers like Yan Hui.

This is where the difference between spot and futures trading comes in.

Many people don't understand why futures can be so much cheaper than spot. In reality, risk and rent are minor issues; the key factor is the speed of capital turnover.

As long as the cash flow is fast, even a 1% profit is a good business!

For example, a jade dealer bought a piece of jade for 1 yuan from a fellow dealer. Just as he got it, someone came to him and offered to take it for 1.1 yuan, making a 10% profit. If this dealer had access to equally good sources of jade, he could sell it immediately.

After he sold it, the person who bought the jade for 1.1 yuan took it to his own stall and sold it for a good price of 1.4 yuan within a week.

These two vendors, the first with a 10% profit margin and the second with nearly 30%, many laymen would think the first vendor was foolish to sell at such a low price. But insiders know how important high turnover is. Examples like this happen all the time.

For example, in 2025, there was a supermarket in Xinxiang that, due to its excellent corporate trust, could make a daily profit from Hetian jade. They officially announced that their profit margin was maintained at less than 15%, and after deducting labor and other expenses, the profit margin was less than 10%.

Many outsiders think this is too unbelievable, wondering how one could make money this way. In reality, this is more profitable than anything else. What does 10% per day mean?

Without increasing sales volume, assuming a capital of only 100 million, 3000 million worth of goods can be sold in a month, resulting in a total profit of 300 million. The annual profit could reach 3650 million, theoretically yielding an annual profit margin of 3650%.

This isn't compound interest; compound interest is far more terrifying than this.

Compound interest means that all the money earned is reinvested in goods. Compound interest leads to exponential growth. If you get a 10% return every day, and compound interest is applied for a year, your assets can increase by 370 trillion times, enough to buy the entire solar system.

In order to maintain quality and reputation, the supermarket mentioned above did not rashly expand its purchase and sales volume, which is a correct long-term strategy for maintaining credibility.

This confirms the earlier statement that a company's reputation is priceless.

Sustained compound interest is rare in reality. Any businessman who has the chance to seize a short-term compound interest opportunity once in his life will quickly rise to prominence. If he has the chance three times in his life, he will become a tycoon.

At this moment, Yan Hui is in the rising phase of a compound interest business. He is trying to find ways to increase sales and invest all the money he earns.

If Yan Hui were to be stuck with two train cars of stock, his business would come to a complete standstill. Therefore, if there were no orders, he would absolutely refuse to charter a train car to Jianye to sell the stock. As long as he wasn't stuck with inventory and could keep things running, his income would steadily increase. Yan Hui had a slight understanding of this at the moment, based entirely on his intuition.

At noon, Yan Hui took Brother Lü to a noodle shop for lunch. Brother Lü finally had a chance to chat with Yan Hui alone. He said with some admiration, "Mr. Yan, I had only heard your brother mention those things before, and I didn't really understand them. Honestly, even if I didn't get paid this morning, I would have made a profit just by coming here! I've learned so much! You're truly an extraordinary person!"

"So, Brother Lü, let me assume that if I were to ask you to invest in my business right now, how much money would you be willing to give me?" Yan Hui asked casually.

"I wouldn't dare say more, but I can come up with ten thousand today!" Brother Lü also has a net worth of thirty to fifty thousand, but he became a foreman because he has more courage than others.

"Haha, I was just kidding, Brother Lü. I don't lack funds, but the way you said it makes me feel like you trust me a lot." Yan Hui nodded happily.

“Of course,” Brother Lü said immediately. “I wouldn’t say I’m good at judging people, but I sensed something from you. Anyway, I can’t quite put my finger on it. I’m not well-educated, so don’t laugh at me.”

"No, that's not true. I owe a lot to Brother Lü today, otherwise I wouldn't know many of these people." Yan Hui felt that spending 200 yuan to find Brother Lü today was really worth it.

"No way, no way. I don't know any big boss."

"As we agreed, Brother Lü, you only need to spend half a day with me. I'll wander around by myself in the afternoon. I've already walked around twice this morning, and I recognize most of the familiar faces. Now I'll see if there are any new faces." Yan Hui didn't need Brother Lü for too long; half a day was enough for Brother Lü to get to know him and promote him.

And this kind of propaganda doesn't need Yan Hui to tell Brother Lü at all. As long as he has a mouth, he'll say it himself.

(This chapter touches on some basic business thinking. I've noticed many readers are already in business, so they'll definitely understand this. This section is for new readers; I'm worried they might not grasp why doing business during favorable times is so profitable. Experienced readers, please forgive me.)
(End of this chapter)