- Thread starter PICHARDO
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Bella Terra Mall. Santiago.
The money would come from either debt (LOC ot AP) or capital. There are no other alternatives.
But the accounting IS STILL GAAP, which is a reflection of how a business is run.
BTW, I have no interest in the local market, doing a kiosk or anything of the sort. I have no interest in increasing costs or the employee burden. The local market for what we do and how we do it is virtually non existent. The number of Dominicans with actual MSF training or an endoresement on a US, Cananadian or Euro drivers license in nearly zero.
PICHARDO: I want to tell you that I do UNDERSTAND your concept and what you talk about. I understand that the companies you mentioned grew from their home/small offices and now are bigger ones, opened up stores. Even Microsoft did that 
What I fail to understand is the logic of OPERATING a loss-making store for a prolonged period. I understand that store (e.g. in Terra Mall in ST) will bring you more clients or that targeted clients go buy there the merchandise. What I fail to understand in your logic is the reason of continuing operation of that store in the Mall if it does not cover expenses. Why having a store in the Mall when a cheaper store could be opened up elsewhere, to have location for targeted customers to go to and buy things? Why pay exorbitant rent, employees, energy (unless the mall is stealing power like Plaza Central in SD was) if what you end up with at the end of month is balance negative? Now, for prestigious brands I can understand a need to have a representative location (not just cualquiera). BUT, there are hundreds of boutiques and other stores scattered in malls across the country that could well be located elsewhere, IF targeted traffic is the main drive of business. So how do you justify for them to have location in such new expensive structure?
P.S. in one of your previous posts you wanted people to tell you ONE mall that has lots of foot traffic and people loitering by there - I tell you one - Megacentro.
What I fail to understand is the logic of OPERATING a loss-making store for a prolonged period. I understand that store (e.g. in Terra Mall in ST) will bring you more clients or that targeted clients go buy there the merchandise. What I fail to understand in your logic is the reason of continuing operation of that store in the Mall if it does not cover expenses. Why having a store in the Mall when a cheaper store could be opened up elsewhere, to have location for targeted customers to go to and buy things? Why pay exorbitant rent, employees, energy (unless the mall is stealing power like Plaza Central in SD was) if what you end up with at the end of month is balance negative? Now, for prestigious brands I can understand a need to have a representative location (not just cualquiera). BUT, there are hundreds of boutiques and other stores scattered in malls across the country that could well be located elsewhere, IF targeted traffic is the main drive of business. So how do you justify for them to have location in such new expensive structure?P.S. in one of your previous posts you wanted people to tell you ONE mall that has lots of foot traffic and people loitering by there - I tell you one - Megacentro.
Yeah with just one small detail - in the US you can do cash accounting for small biz (limit is US$5 million per year in turnover...http://www.irs.gov/businesses/small/industries/article/0,,id=97986,00.html that's like almost 200 million pesos in the DR). In the DR you are stuck with accrual accounting. And with the payment discipline in the DR as bad as it gets, that is a real problem for a small biz operating legally in the DR. Especially the ITBIS part.
True and agreed.
The problem with ITIBIS is most don't have the discipline to collect and pay it. They just keep it hoping the "Impuestos Hombres" don't catch them. Same with employees.
When a system is in place to collect taxes from ALL businesses you'll see small businesses-as we know them-in the DR die off.
I would say very large part of retail businesses actually collect ITBIS form customers, but don't pay it. That's why DGII is now pushing special cash registers which will communicate directly with DGII, and all businesses that generate majority of sales from retail sale (end customers) will have to install these registers. They started with the biggest companies, but it's a multi-step process which at the end will include small stores as well.
The payment discipline I was talking about has more to do with paying your suppliers on time. When you generate legal invoice with NCF to your customer, you are obliged to pay ITBIS on it by the 20th of the next month. If your customer doesn't pay you the invoice, you still have to pay that ITBIS. The payment discipline in the DR is for customers to pay suppliers 2-3 many times more months than that after receiving invoice. So you actually have two options: "finance" the ITBIS payment to DGII by your own funds/cash flow/outside financing/ITBIS credits or "not pay it" on time (wait for your customers to pay you the invoice) and pay penalties and interest.
In the UK, for example, small biz with turnover up to 1.5 million pounds can elect cash accounting for VAT purposes, so they remit VAT when they get paid form customers.
Also, in many European countries, the VAT cycle for small businesses is 3-months, plus 20-30 days for payment, so you report VAT every quarter and have 20-30 days to pay. You can manage your billing cycle around that.
Robert, the mechanics of a biz are all the same everywhere a currency is employed, but not the so in terms of how biz are carried out in the conceptual "trade" level...
So let me get this straight:
- You consider using a commission sale's based contractor a financial burden to your biz?
- You consider that investing an amount of your operating net into promotional material is detrimental to your biz?
- You consider that the local market is alien to the notion of a motorcycle touring operation based exactly on what?
- You consider that Dominicans NEED a MSF training to carry out your bike tours compared to the highly skilled Motorcycle operators in the U.S/CAN or Europe???
Pichardo, I don't think that's what CB said. What he said was that renting a storefront in this mall would not be financially feasible, exactly as I gave you example above - if the targeted traffic is concerned, he can have a shop anywhere, not in the most expensive piece of real estate in Santiago. And second, the foot traffic in that mall and its respective sales conversion would not warrant the expense of that store there.
He was pointing out to you these two things, based on how you presented the "model" on which those mall stores operate.
1) You said they get targeted traffic. CB says he does not need a storefront there to get a targeted traffic. I say he can get a storefront for targeted traffic anyplace in Santiago for that matter. he does not need a "prestige" of being located in highest $/sq.ft. piece of real estate.
2) You said that how malls and stores in the DR operate - their model - is not based on foot traffic (but rather targeted traffic, point #1 above). Exactly because of low foot traffic, his exposure would be limited, and therefore such store in that mall would result in a limited customer conversion ratio.
...at least this is my understanding what CB wanted to say ...
He was pointing out to you these two things, based on how you presented the "model" on which those mall stores operate.
1) You said they get targeted traffic. CB says he does not need a storefront there to get a targeted traffic. I say he can get a storefront for targeted traffic anyplace in Santiago for that matter. he does not need a "prestige" of being located in highest $/sq.ft. piece of real estate.
2) You said that how malls and stores in the DR operate - their model - is not based on foot traffic (but rather targeted traffic, point #1 above). Exactly because of low foot traffic, his exposure would be limited, and therefore such store in that mall would result in a limited customer conversion ratio.
...at least this is my understanding what CB wanted to say ...
You guys should read Adriano Miguel Tejada's A.M. editorial in today's Diario Libre. It is just the tip of the iceberg. If needs be I could translate it but put it into google and see if it makes sense.
The last sentence is part of a saying that few, if any of you all would recognize, "Chupe usted...." It is from the saying "Chupe usted, y d?jame el cabo." This can be interpreted as meaning, in the sense of the editorial, "you can read this and take what you want, I already know what it is."
Chupe usted, y d?jame el cabo.This can be translated as: "You take a puff and leave me the butt." (Of a t?bano or hand-rolled cigar of olden times)
Read it and then comment here....
HB, planning a photo tour of Bella Terra this afternoon.
The last sentence is part of a saying that few, if any of you all would recognize, "Chupe usted...." It is from the saying "Chupe usted, y d?jame el cabo." This can be interpreted as meaning, in the sense of the editorial, "you can read this and take what you want, I already know what it is."
Chupe usted, y d?jame el cabo.This can be translated as: "You take a puff and leave me the butt." (Of a t?bano or hand-rolled cigar of olden times)
Read it and then comment here....
HB, planning a photo tour of Bella Terra this afternoon.
Robert, FYI tourism has increased sales of over 20 % worldwide per year for the last number of years. The reason is simple, people under stress try to escape this by going on holiday. With the economic crisis they are of course looking for cheap holidays and value for money.
And this is exactly where the DR falters. Yes, generally speaking the DR is a cheap holiday destination, but it goes wron 100 % on all other points.
First of all, worldwide the DR is known as an incredibly dangerous destination. Apparently tourists here are murdered by the dozen. And sorry, but yes, a number of posters here do not help to contradict this so-called fact.
Secondly you have the value for money, and here the DR is lacking big time. Run down hotels claiming to be 4 or 5 star, tour operators claiming fantastic tours which in reality are pieces of ****, excursions with no insurance, etc...
Should we blame the Dominicans for this? Partially, but please do not forget most of those hotels and tours are run by non- Dominicans (maybe not in name, but in reality)
sorry Chip. This is what is told to the tourists booking a holiday. Go out of your hotel and the first machete will slash your throat.
You and I know this is bull. But people in Europe or the US who contact their travel agent get to hear this, and the majority, unfortunately, believe it.
You and I know this is bull. But people in Europe or the US who contact their travel agent get to hear this, and the majority, unfortunately, believe it.
It's not my market. My market is online and through motorcycle adventure touring agents.
We are able to offer an epic value because we keep out overhead and costs down. Mall space, IMO, would be a huge cash black hole and management nightmare. I'd rather sell fudge or pretzels in a mall.
According to our good pals at the UN, world tourism is growing around 4%. According to some tourism groups we belong to, sales are down almost everywhere, and many operators, airlines and resort companies are cratering and going out of business.
However, the UN does not differentiate between business and pleasure tourism.
Tourism is a function of disposable income and that is under tremendous stress across the planet.
The raw nimbers for the DR may be up (it's hard to get true numbers from any gubmint agency as you know), but the # of beds has grown much more rapidly than the number of fannies in those beds, so the average revenue per room available had dropped considerably.
Additionally, it is very difficult to differentiate Dominican expats coming back to their homeland from Joe and Molly on holiday from Jolly Ol'.
While some resorts remain full, many others are in the crapper and many businesses down the economic food chain from the resorts are suffering or out of business.
Food for thought:
1) According to the SECTUR the passenger arrivals to the DR are growing by the year
2) According to the Caribbean Tourism Association, the Caribbean region as a whole has seen considerable decline in tourism in the last 5 years.
1) According to the SECTUR the passenger arrivals to the DR are growing by the year
2) According to the Caribbean Tourism Association, the Caribbean region as a whole has seen considerable decline in tourism in the last 5 years.
Huge amounts of Canadians go to the DR for vacations, and to live. I can't speak for all, but I know numerous Canadiand that go to the DR, both A1 and off resort adventurers- They do not find the DR dangerous- they find Disneyland more dangerous. In Canada Mexico is considered Dangerous, and Jamaica.
I really don't know what all the fuss is about. If you build a shopping center with very little or no financing from banks or with preferential treatment (very low interest rates that are only available to those the bank has a long and positive relationship), then making money from the project is a non-issue since overhead costs are relatively low.
Most Dominican malls tend to not rent their space, but rather sell; which is why the whole increasing foot traffic ordeal tends to be rather poor in many places, but with the new injection of foreign mall developers and management firms (mostly Venezuelan), the concept of renting the commercial space is beginning to take hold. That changes everything, which is why Blue Mall (one of the very few malls that rents every single commercial space available) has events all the time. When the Sambil mall (also Venezuelan) is inaugurated next year, it will probably have a very similar management style as Blue Mall, although the Sambil will not target exclusively the AB sector as is the case with Blue Mall. Sambil will have 300 stores (no anchor department stores, since the entire mall will function as one large dept store, similar to Blue Mall) targeting the ABC sector, primarily B and C.
And I don't understand this whole ordeal of whether a mall looks empty or not. For of all, the average Dominican mall (whether foreign owned or not) tends to be small. Its obvious it will not have the same constant foot traffic as a large shopping mall would have (as most US malls tend to be). Plus, Dominican malls rarely have a full fledged department store as an anchor, rarely does management control the type of store/office mix. These are different malls that have a different way of operating.
The only Dominican mall that most resembles a US mall is Megacentro. A part from being a large mall (it would be considered a super regional mall in the US, it's that big), it has like 4 or 5 large anchor stores. The place is so big, it has virtually absorbed the entire market for indoor mall retail space east of the Ozama River. That's why in East Santo Domingo, there are hardly any other malls. Megacentro also rents its spaces. This mall looks, feels and functions like a US mall, because it was designed by a US firm.
That's not the case in the National District. Here the market is segmented by mostly small and medium sized malls, that if combined, would had probably created two Megacentros. Most DN malls don't have large anchor stores.
One thing that does speaks volumes is the complete lack of awareness, as I've read through this thread, that most businesses (except if they survive by selling mostly perishable items) can last up to 11 consecutive months with losses and then December arrives with its yearly upsurge in sales, and the sales volume is often enough to pull the businesses out of the red and end up with a nice profit for the year. Christmas, New Years and Three Kings Day has much to do with that.
Go during the last week (people leave everything for the last minute) before Christmas and Three Kings Day to most malls, especially in the Capital, and then come here and say that no one shops there.
And last but not least, I don't know to who rubio_higuey talked to regarding advertisements. A very narrow selection of products in the market are targeted to the D sector, very narrow. The bulk is targeted to the ABC sectors, and that's the emphasis all businesses that survive from advertisement exalt in their media kits. Even in the print media, including the newspapers and magazines, are almost exclusively targeted to the AB or ABC sector. Those sectors accounts for the bulk of consumption in the country.
Most Dominican malls tend to not rent their space, but rather sell; which is why the whole increasing foot traffic ordeal tends to be rather poor in many places, but with the new injection of foreign mall developers and management firms (mostly Venezuelan), the concept of renting the commercial space is beginning to take hold. That changes everything, which is why Blue Mall (one of the very few malls that rents every single commercial space available) has events all the time. When the Sambil mall (also Venezuelan) is inaugurated next year, it will probably have a very similar management style as Blue Mall, although the Sambil will not target exclusively the AB sector as is the case with Blue Mall. Sambil will have 300 stores (no anchor department stores, since the entire mall will function as one large dept store, similar to Blue Mall) targeting the ABC sector, primarily B and C.
And I don't understand this whole ordeal of whether a mall looks empty or not. For of all, the average Dominican mall (whether foreign owned or not) tends to be small. Its obvious it will not have the same constant foot traffic as a large shopping mall would have (as most US malls tend to be). Plus, Dominican malls rarely have a full fledged department store as an anchor, rarely does management control the type of store/office mix. These are different malls that have a different way of operating.
The only Dominican mall that most resembles a US mall is Megacentro. A part from being a large mall (it would be considered a super regional mall in the US, it's that big), it has like 4 or 5 large anchor stores. The place is so big, it has virtually absorbed the entire market for indoor mall retail space east of the Ozama River. That's why in East Santo Domingo, there are hardly any other malls. Megacentro also rents its spaces. This mall looks, feels and functions like a US mall, because it was designed by a US firm.
That's not the case in the National District. Here the market is segmented by mostly small and medium sized malls, that if combined, would had probably created two Megacentros. Most DN malls don't have large anchor stores.
One thing that does speaks volumes is the complete lack of awareness, as I've read through this thread, that most businesses (except if they survive by selling mostly perishable items) can last up to 11 consecutive months with losses and then December arrives with its yearly upsurge in sales, and the sales volume is often enough to pull the businesses out of the red and end up with a nice profit for the year. Christmas, New Years and Three Kings Day has much to do with that.
Go during the last week (people leave everything for the last minute) before Christmas and Three Kings Day to most malls, especially in the Capital, and then come here and say that no one shops there.
And last but not least, I don't know to who rubio_higuey talked to regarding advertisements. A very narrow selection of products in the market are targeted to the D sector, very narrow. The bulk is targeted to the ABC sectors, and that's the emphasis all businesses that survive from advertisement exalt in their media kits. Even in the print media, including the newspapers and magazines, are almost exclusively targeted to the AB or ABC sector. Those sectors accounts for the bulk of consumption in the country.