Doninican Business Model

[PICHARDO]

This wouldn't be a problem if the businesses were generating enough revenues. That has been my point.

And tax collectors in the US do the same, even on 940/941 and sales tax delinquencies. They cut businesses slack all the time, to a point. Unless, of course, they catch you using the $$$ for personal gain and not because of lowered revenues.

They won't, however, cut you any slack on the principle. Maybe, maybe a little on the penalties and interest.

They will lower the boom on fraud.

So, once again, you've shed NO light on this mysterious Dominican business model.

(BTW: you admit that tax collection can hurt the Dominican economy. Why, it seems like just yesterday where you waxed at length about the future of tax collection which will cause evasion to just vanish. Again, you want it both ways: the gubmint wants to help businesses with tax issues because aggressive enforcement hurts economic growth, but they will be implementing policies which will force the HUGE tax-free underground economy into the sunlight with aggressive collections.)

No Robert! This doesn't happen because the businesses fail to generate enough revenues, but because the tax hike implied by the spike on costs, almost instantly eats well into the cushion on appreciated values some business can only afford to pre-set their goods to. These types of business don't have the same flexibility to cushion their inventory price index due to too much competition (think of three to four Colmados in the same block to follow up on the exampled business I picked upon to illustrate the DR model for you guys here), type of goods or if shelf life makes it impractical to attempt to.

As for tax issues? Nice try, but no. The IRS will not let you off because you claim things are tough and you fail to prove that it afflicts your ability to pay them. They will treat you the same as they do business that fail to pay on time!

If you guys took to learn a bit and didn't instantly apply your foreign first world knowledge on business to discredit on the spot, you would learn a lot about the Dominican business model at the heart of it all.

It's late, I need to eat something and walk a few before hitting the sack...

 

[cobraboy]

No Robert! This doesn't happen because the businesses fail to generate enough revenues, but because the tax hike implied by the spike on costs, almost instantly eats well into the cushion on appreciated values some business can only afford to pre-set their goods to. These types of business don't have the same flexibility to cushion their inventory price index due to too much competition (think of three to four Colmados in the same block to follow up on the exampled business I picked upon to illustrate the DR model for you guys here), type of goods or if shelf life makes it impractical to attempt to.

Pure 100% baloney.

Taxes are NOT PAID BY A BUSINESS!!! They are COLLECTED BY A BUSINESS!

If a business COLLECTS THE TAX BUT DOESN'T PAY THE STATE it's because the owner CHOSE to divert the funds to himself BECAUSE he didn't have enough revenue or cash capital reserve to cover his expenses!!!!!!!!!!!!!

That comes from LACK OF REVENUE!!!!!!!

If he didn't collect taxes in the first place and is now required to pay them to the state, he DISCOUNTED the product by the % of taxes to the customer; he STILL, by law, collected the taxes! If he didn't pay them and didn't divert the funds to himself

THAT COMES FROM LACK OF SUFFICIENT GROSS MARGIN TO COVER TAXES AND EXPENSES!

Debits and credits, Pichardo. That is what business LIVES on!

As for tax issues? Nice try, but no. The IRS will not let you off because you claim things are tough and you fail to prove that it afflicts your ability to pay them. They will treat you the same as they do business that fail to pay on time!

Dude, please, just STOP IT!!!!! You have NO idea how many businesses I bought because the owner got into tax problems and the doors were STILL open because the state (FL, PA, DE & NJ) cut them some slack because their AUDIT determined the owners did NOT direct $$$ toward themselves instead of paying taxes. Same with the Feds. I did this for both a public corporation as well as my OWN businesses.

It happened to me! My healthcare business exploded and I grew waaaaaay beyond the ability to pay current taxes with a huge pile of receivables collected in 90-150 days! Both FL as well as the Feds cut me a LOT of slack.

But let me make this caveat: if you are delinquent in taxes and it is determined you LIED to the auditors (either verbally or in withheld documents) they may lower the boom...at their discretion.

That is how the US system works.

Sheesh...there isn't one student in a business school that doesn't understand that Uncle Taxman is the creditor of LAST RESORT! Like the IMF!!!

If you guys took to learn a bit and didn't instantly apply your foreign first world knowledge on business to discredit on the spot, you would learn a lot about the Dominican business model at the heart of it all.

It's late, I need to eat something and walk a few before hitting the sack...

More baloney. Why do you keep this up?????

I actually believe you believe your reconbigulating ostalation transfigulator mind technique will convince people that there IS some mysterious "Dominican Business Model" that is DNA-specific...

 

[Chip]

Based on what I've learned here in graduate school the tax law is fairly vigorous and requires monthly reporting to II. Also, larger businesses or businesses that have lots of suppliers virtually guarantees that an accountant will need to be hired to keep the books in order. The Dominican tax law is structured around standard economics as taught anywhere else in the world.

However, this doesn't mean people aren't able to have two sets of books like in other places.

Back to the topic at hand - the Dominican business model - I would say it is based on generally on a start up with constraint free capital and minimizing costs and overhead to the maximum which generally means finding the cheapest labor and/or goods which sometimes means compromising the service or deliverable product. A smart businessman here who doesn't let a successful business go to his head and blow it on crap is able to save capital by fairly impressive amounts. I personally know of a few cases.

 

[Barnabe]

Taxes are NOT PAID BY A BUSINESS!!! They are COLLECTED BY A BUSINESS!

True for sales tax (ITBIS). Not for income tax or local taxes.

Barnab?

 

[the gorgon]

If you have a basic business background, then you'll know that there are two basic principles to run a successful business anywhere in the world: Expenses VS Profits! You want to stick to maximize profits and minimize expenses in order to have a successful business...


The DR business model is the same as the above basic principle, but then, how do you actually achieve that and what model of business allows for that in the Dominican economy?


For that we take to exploring the innards of the most popular and prevalent business of the Dominican Republic and possibly the most revealing of what model is best to work with here: The Colmado (bodega, convenience store, etc...).

Rent don't buy!

It's something that we are accustomed to hear and follow up on when we venture into any small to large business in the developed world. But, is this true for the Dominican Colmado and local business model it represents?

Facts are that Dominican RE is cheap firstly, location is a non-issue as any place is as good as the business it carries secondly and rent is a thorny issue which can see you in the streets, due to rent control modifiers not applying to commercial property in the country.

So, rent and don't buy is not really true or applicable for the Dominican business model, which is strongly suggestive elsewhere in the region and world.

So our Colmado is fully owned for in terms of RE and leasing terms.

Now we set upon the operational part of the business!

A mechanical scale hangs from the ceiling. A counter big enough to partition the client access area to that of the staff and goods. We have several refrigerators, utensils, lavatory, etc...

Then we have the shelves stocked with the goods for sale, inventory. We have the register and the common things you expect in the line of business like these in the country.

But wait! Didn't we just mention inventory?

How does this relates any different to operating a business model back home, just the same, no?

You estimated the costs, shelf life, demand and value of that inventory just as you do in the US bodega model, so what's there to say they are different models of business at all?

Sure the actual property is different by virtue of looks and development. The inventory also reflects the exotic location. The equipment and furnishings also, but all this is expected from different locations and cultures, right?

NOT!

You see in the US model, you can carry on the business basics as usual when it comes to inventory control and allocations, but in the Dominican Republic prices are not stable for long periods in most of the consumables you carry, nor is the price jumps within a margin you can work around with ease to process your next inventory refill.

You see, the soap bars you got for your inventory last week, and sold with a 100% markup for profit, just went up 125% for the next order to stock your now empty shelve. So even when you made a comfortable and nice profit of 125% for the complete inventory sold, your costs for the next order surpasses the costs of the inventory sold atop the profits you made and still need you to come up with an extra % to cover the new stock!

That's not only a frequent cost of doing business in the DR, but the standard operating procedure each week!

So how can a business model you so understand in USA, be so impossible to carry out here in the DR?

Your model starts to crumble just weeks after having invested into your new Colmado and things don't seem to let up on their rise of costs!

But that's not only inventory! Then we have that the energy costs also have risen along the gasoline spent to get your goods at supply points. The water bill went up!

So how can you survive the Dominican Republic economy using a fit model for all this?

Well, we call it the Dominican business model for a reason: It's made for the DR alone!

Above was just one example of the lowest and simplest type of business in the DR...

PICHARDO issues the following


If you have a basic business background, then you'll know that there are two basic principles to run a successful business anywhere in the world: Expenses VS Profits! You want to stick to maximize profits and minimize expenses in order to have a successful business..

i must be a lot older than you are, PICHARDO. the way i learnt it was Expenses vs Revenues. maybe things have changed dramatically since i studied the subject.

 

[the gorgon]

PICHARDO issues the following


If you have a basic business background, then you'll know that there are two basic principles to run a successful business anywhere in the world: Expenses VS Profits! You want to stick to maximize profits and minimize expenses in order to have a successful business..

i must be a lot older than you are, PICHARDO. the If you have a basic business background, then you'll know that there are two basic principles to run a successful business anywhere in the world: Expenses VS Profits! You want to stick to maximize profits and minimize expenses in order to have a successful business..way i learnt it was Expenses vs Revenues. maybe things have changed dramatically since i studied the subject.

PICHARDO, can that passage of yours be translated into a language that can easliy be recognized by the average mortal?

 

[bob saunders]

Pure 100% baloney.

Taxes are NOT PAID BY A BUSINESS!!! They are COLLECTED BY A BUSINESS!

If a business COLLECTS THE TAX BUT DOESN'T PAY THE STATE it's because the owner CHOSE to divert the funds to himself BECAUSE he didn't have enough revenue or cash capital reserve to cover his expenses!!!!!!!!!!!!!

That comes from LACK OF REVENUE!!!!!!!

If he didn't collect taxes in the first place and is now required to pay them to the state, he DISCOUNTED the product by the % of taxes to the customer; he STILL, by law, collected the taxes! If he didn't pay them and didn't divert the funds to himself

THAT COMES FROM LACK OF SUFFICIENT GROSS MARGIN TO COVER TAXES AND EXPENSES!

Debits and credits, Pichardo. That is what business LIVES on!

Dude, please, just STOP IT!!!!! You have NO idea how many businesses I bought because the owner got into tax problems and the doors were STILL open because the state (FL, PA, DE & NJ) cut them some slack because their AUDIT determined the owners did NOT direct $$$ toward themselves instead of paying taxes. Same with the Feds. I did this for both a public corporation as well as my OWN businesses.

It happened to me! My healthcare business exploded and I grew waaaaaay beyond the ability to pay current taxes with a huge pile of receivables collected in 90-150 days! Both FL as well as the Feds cut me a LOT of slack.

But let me make this caveat: if you are delinquent in taxes and it is determined you LIED to the auditors (either verbally or in withheld documents) they may lower the boom...at their discretion.

That is how the US system works.

Sheesh...there isn't one student in a business school that doesn't understand that Uncle Taxman is the creditor of LAST RESORT! Like the IMF!!!

More baloney. Why do you keep this up?????

I actually believe you believe your reconbigulating ostalation transfigulator mind technique will convince people that there IS some mysterious "Dominican Business Model" that is DNA-specific...

Yris pre-pays income tax (the school) quarterly based on what they expect her to make. If she makes less she gets a credit and pays less the next year.

 

[the gorgon]

PICHARDO, what the heck does this mean?

Unlike in your business model, the Dominican business model is pre-active real time and not post-active to trends.

you think that sounds intelligent? you believe that people are going to ooh and aah, and think you are scholarly? it is the biggest pile of horsesh*t i have read , in a long while.how can something be pre active in real time? that is like saying " the future is not what it used to be".

 

[the gorgon]

PICHARDO, save yourself some time, and effort. you are never going to win an argument over cobraboy when it comes to the matter of business. the guy has forgotten more than you will ever learn.

 

[PICHARDO]

PICHARDO, save yourself some time, and effort. you are never going to win an argument over cobraboy when it comes to the matter of business. the guy has forgotten more than you will ever learn.

Sure! I'll keep to my colmadito biz...

 

[the gorgon]

Sure! I'll keep to my colmadito biz...

a good idea. trying to baffle the readership with bull is a threadbare strategy. most guys in this site are smart enough to see through the inanities.

 

[JMB773]

Sure! I'll keep to my colmadito biz...

Good Morning Pichardo. Okay Dr1 I will finally reveal what I do for a living. I am a District Manager for Nestle USA and my area is the city of Chicago and part of the southern suburbs.

Pichardo I know a little bit about spoils, inventory on hand, delivery schedules, invoices, accounts payable, accounts receivable etc. I can tell being responsible for "big box" stores such as Walmart, Target, Jewel, Safeway(but they are named Dominick's here in Illinios) is not that easy. Pichardo I always believed running a colmado was not that difficult.
Sure everytime you open a business there is a learning curve, but food is one of the safest businesses to get into because you are not dealing with as many trends.

Once you learn your customers everything should fall into place example: perishable items will always be your costly items, so you have to be on top of what is selling the most on a paticular day. This is learned through time and understanding your customers. For instance if I was a vendor and I said to you Pichardo " I have a barrel of chilli peppers and I would sell them to you for 50 pesos" how many would you sell? not many because Dominicans do not enjoy spicy food.

When you are dealing with different people from different backgrounds like white, black, asian, hispanic, it can very difficult because they all buy different types of food on different days, but when all of your customers are Dominican or Japanese is not that difficult to run a small store.

Another example is the south side of Chicago is mainly African American so it is not need to keep a large supply of coffee ice cream on hand, because blacks do not like coffee ice cream white people on the other hand enjoy coffee ice cream. Blacks and Hispanics prefer butter pecan and cookies and cream.

btw I learned a lot by your post on the fluxuating prices of inventory in the colmados I did not know that. I think accounts receivable will be the biggest hurdle.

 

[JMB773]

The success of many supermarket ,bodega, colmado, cornerstores, liquor stores is knowing and understanding you customers. The quickest way to run yourself out of business is thinking you know more then the customers.

With the little mom and pop stores and colmado not a lot of forecasting is involved, unless you have been in the business for awhile and you know customers very well, but when first starting out you order your inventory to fill the shelves PERIOD!!!

 

[the gorgon]

The success of many supermarket ,bodega, colmado, cornerstores, liquor stores is knowing and understanding you customers. The quickest way to run yourself out of business is thinking you know more then the customers.

With the little mom and pop stores and colmado not a lot of forecasting is involved, unless you have been in the business for awhile and you know customers very well, but when first starting out you order your inventory to fill the shelves PERIOD!!!

absolutely, JMB. colmados are not rocket science. the thing they have in their favor, from a business standpoint, is that their clientele is usually local, so the demographics are not difficult to figure out. you know most of your clientele, what they buy, and how much. their spending patterns are something with which you are familiar. there is not a very steep learning curve. big box stores get their clientele from a far wider demographic, and geography. if you check a WalMart, on any given day, it will have rich, poor , and middle class customers. a colmado in some little town off the beaten path is not going to get too many Brugal family members on any given day.

 

[pollogringo]

because blacks do not like coffee ice cream white people on the other hand enjoy coffee ice cream. Blacks and Hispanics prefer butter pecan and cookies and cream.

It all makes sense now. I'm not big on ice cream, but my ideal bowl would be coffee and butter pecan. I've been told I'm a dark-skinned Dominican in a white man's body. This ice cream thing seals it.

 

[JMB773]

It all makes sense now. I'm not big on ice cream, but my ideal bowl would be coffee and butter pecan. I've been told I'm a dark-skinned Dominican in a white man's body. This ice cream thing seals it.

You know we used to be in the Dominican Republic, but they kicked Nestle off the island. I think the government did not want to see what happen in PR to DR. Nestle has a monoply on the ice cream in PR. If you purchase ice cream in PR 9 times out of 10 it will be a Nestle product. Also Dominicans are more loyal to Helados Bon.

I never notice it but does Helados Bon sell coffee ice cream?

 

[pollogringo]

You know we used to be in the Dominican Republic, but they kicked Nestle off the island. I think the government did not want to see what happen in PR to DR. Nestle has a monoply on the ice cream in PR. If you purchase ice cream in PR 9 times out of 10 it will be a Nestle product. Also Dominicans are more loyal to Helados Bon.

I never notice it but does Helados Bon sell coffee ice cream?

I recall buying Breyer's coffee ice cream at La Sirena in Villa Mella.

 

[pollogringo]

You know we used to be in the Dominican Republic, but they kicked Nestle off the island. I think the government did not want to see what happen in <acronym title="Page Ranking" style="border-width: 0px 0px 1px; border-bottom-style: dotted; border-bottom-color: rgb(0, 0, 0); cursor: help; color: rgb(51, 51, 51); font-family: Verdana, Arial, Tahoma, Calibri, Geneva, sans-serif; font-size: 14.666666984558105px; background-color: rgb(250, 250, 250); ">PR</acronym> to DR. Nestle has a monoply on the ice cream in <acronym title="Page Ranking" style="border-width: 0px 0px 1px; border-bottom-style: dotted; border-bottom-color: rgb(0, 0, 0); cursor: help; color: rgb(51, 51, 51); font-family: Verdana, Arial, Tahoma, Calibri, Geneva, sans-serif; font-size: 14.666666984558105px; background-color: rgb(250, 250, 250); ">PR</acronym>.

Since when is the Dominican government opposed to monopolies?

 

[kimbjorkland]

I thought the "Dominican Business Model" was lie, cheat, steal, and when caught red handed, blame someone else: "es que no mi faulta!!"

 

[JMB773]

Since when is the Dominican government opposed to monopolies?

I think when it comes down to their kids like Brugal, Presidente, and Helados Bon they will protect these guys at all cost. Going into every colmado and seeing a Presidente cooler is a bit of an overkill. I have never saw a Coors Light cooler in the DR. I applaud the DR for protecting its own brands before allowing a giant like Nestle to come in a manipulate the market like they have done in other markets.

You want read something really funny? If you buy Cheerios in Chicago is made by General Mills, but in Santo Domingo its by Nestle. If you buy Haagen Dazs in Chicago its produce by Nestle and in Santo Domingo its produce by General Mills.