What is the best shop to open in a mall?

[Chip]

While there are many stories of Dominicans running businesses into the ground there are many more where Dominicans have been successful because of a good business sense and frugality.

I have plenty of examples, from a fellow started out renting space for a colmado to now being the owner of a supermarket at 38 to a classmate who was given his inheritance from his father worth RD1,000,000 and bought a concrete block plant in Bonao and still doesn't have a car much less a motorcycle. He spends his time between Santiago and Bonao while he is getting his masters.

 

[belmont]

I hope you aren't using the same math to calculate an ice cream store's business plan that you did when you responded to my post about living costs.

The math I am using says that cost of living has more than doubled in the last 12 years due to inflation (in fact it has more than tripled). Even if I take your statement of much less than $500 in 2000 is lets say, $300. That $300 in 2000 (without housing costs which you didn't have to pay) would be how much in 2012 dollars? Certainly much more than $400. You are entitled to an opinion, not entitled to changing the facts. BTW, as you want to ignore the math, $300 in 2000 equates to $991 in 2012 after annual inflation of 10% annually compounded. Also, as an engineer, are you denying that an ice cream business is not dependant upon rates and availability of electric service. Oh right, labor is cheap. Just hire workers to pedal bicycle driven generators to power the freezers. I take it all back. I agree with you. The OP should set up in the DR, live off $400/month he makes from his ice cream business.

 

[pi2]

The math I am using says that cost of living has more than doubled in the last 12 years due to inflation (in fact it has more than tripled). Even if I take your statement of much less than $500 in 2000 is lets say, $300. That $300 in 2000 (without housing costs which you didn't have to pay) would be how much in 2012 dollars? Certainly much more than $400. You are entitled to an opinion, not entitled to changing the facts. BTW, as you want to ignore the math, $300 in 2000 equates to $991 in 2012 after annual inflation of 10% annually compounded. Also, as an engineer, are you denying that an ice cream business is not dependant upon rates and availability of electric service. Oh right, labor is cheap. Just hire workers to pedal bicycle driven generators to power the freezers. I take it all back. I agree with you. The OP should set up in the DR, live off $400/month he makes from his ice cream business.

Inflation in dolllar terms is not 10% annual compounded. Beer is on offer at a local bar for 2 jumbos for 150 - ; 4 dollars about. This is in El Limon. A room for the night 300 pesos. This is the same as 7 years ago. Restaurant specials and other meals are still about the same in dollar terms as 7 years ago. There was a period before that when the peso was abnormally high and that did make goods in dollar terms very cheap - this period was about 2 years I think when it rose to 55 or 60 to the dollar. But stablity has been restored.




Motorcycles, TV,s and much else are cheaper now than 7 years ago.


pi2

 

[nas]

Exactly, any and all posts that are INFORMATIONALLY AND DETRIMENTALLY MISLEADING should be DELEATED.......
There is no worth with these type of posts....IMO
What was the year you lived on 500 per month......

B in Santiago

That makes a lot sense. The OP should have been deleted from the start.
He openly admitted to submitting a bogus question.

If it wasn?t a prank, why would someone start with misleading question?

 

[belmont]

Inflation in dolllar terms is not 10% annual compounded. Beer is on offer at a local bar for 2 jumbos for 150 - ; 4 dollars about. This is in El Limon. A room for the night 300 pesos. This is the same as 7 years ago. Restaurant specials and other meals are still about the same in dollar terms as 7 years ago. There was a period before that when the peso was abnormally high and that did make goods in dollar terms very cheap - this period was about 2 years I think when it rose to 55 or 60 to the dollar. But stablity has been restored.




Motorcycles, TV,s and much else are cheaper now than 7 years ago.


pi2

Another one who wants to argue even when the facts contradict him. Below are the annual inflation rates for cost of consumer items in the DR. I said the cost more tan doubled from 2000-2012. When you compound these years, in fact they have more than tripled. You are entitled to your own opinion, but not your own facts.

As for the years with high exchange rates for the dollar. Those were the years with high inflation of consumer prices. The peso subsequently stabilized, yet you see there was no deflation in consumer costs along with it.

Year Inflation, average consumer prices

1980 21.664
1981 7.523
1982 7.643
1983 5.629
1984 20.152
1985 45.336
1986 7.639
1987 13.551
1988 43.864
1989 40.658
1990 50.463
1991 47.079
1992 4.259
1993 5.25
1994 8.261
1995 12.536
1996 5.399
1997 8.297
1998 4.832
1999 6.471
2000 7.724
2001 8.883
2002 5.223
2003 27.45
2004 51.461
2005 4.19
2006 7.573
2007 6.143
2008 10.645
2009 1.442
2010 6.33

 

[pi2]

The peso has gone from 28 to 38 to the dollar in the last 7 years. For a cost of living in dollars you need to subtract at least 4% every year for the last 6 years and 2011 from these figures. This would give the dollar inflation rate - varying from - 2.5 up to maximum of 6 %.

There is a policy to devalue the peso by about 4% per year it seems against the dollar / euro.

In dollar terms many prices have been quite stable so 300 dollars goes as far nearly as it did 7 years ago.



pi2

 

[belmont]

The peso has gone from 28 to 38 to the dollar in the last 7 years. For a cost of living in dollars you need to subtract at least 4% every year for the last 6 years and 2011 from these figures. This would give the dollar inflation rate - varying from - 2.5 up to maximum of 6 %.

There is a policy to devalue the peso by about 4% per year it seems against the dollar / euro.

In dollar terms many prices have been quite stable so 300 dollars goes as far nearly as it did 7 years ago.



pi2

Convenient that you pick 7 years and leave out the Hippo years of 27% and 51% inflation.
The true computation is $300 in 2000 bought RD$6000 in goods (20:1 exchange in 2000). Products costing RD$6000 in 2000 now cost over RD$20,000 in 2012 (due to compounded inflation). The RD$20,000 in 2012 is equal to US$526. Therefore a person living on $300 in 2000 needs $526 in 2012 taking into account inflation and increase in value of the dollar. But remember, in the OPs scenario, he is earning pesos in the DR, not dollars in the US so he doesn't get to take advantage of the increase in dollar value.

 

[CaptnGlenn]

Starting a Busniess is a RISK a RISK!!! People who start a busniess understands the risk involved. What mall will turn an applicant away because SORRY I don't think you busniess will be around in three months. What Busniess College you attended where you would see a profit in three months?

The problem is a lot of people including Dominicans do not want to see the Dominican Republic have success. Think for a minute if DR was like France do you think so many of would be hoping on a plane finding the long lost love of your life? As long as they are people like you" A STICK IN THE MUD" as one of co workers like to say, Dominicans will always see VIMENCA as a lifeline. Dominicans calling to friends and family living abroad asking to send money, because their economy and job market is so f**dup you see nothing wrong with that?

I know plenty of people from the middle east and Asia , Africa that own little stores and bodegas in some of the most violent part of some cities. If these people listen to individuals like youself" No don't open a store in Harlem, Watts, Little Haiti because they will rob you everyday and kill you everyday, some of these hoods will have no access to a store.

The thing that kills me is this not even your homeland and your telling another person what he can or can't do as far as runnin a business.

Some people are born to run a business and take the risk at opening a business. The days of our parents working 40 years for the MAN!!! are history we would rather be our own boss. Should Pitt go to DR and fill out applications at Pollo Rey or find a chic and take care of her and help him spend his money, or sitting a bar all day long without a shirt talking to people about their 20 something GF or wife.

FIRST OF ALL, I have no idea of what half of what you wrote even means, much less what is has to do with the thread or my post.

With regard to what I COULD understand, nowhere did I say opening a business is not a risk... OF COURSE IT IS. Nowhere did I say he should count on a profit in 3 months. That's ridiculous. WHAT I SAID is the he has to be properly capitalized. He needs to be able to run the business at a loss for an extended time on his invested capital with no profit. 20K won't do it. He'll be out of money to pay the bills before he sees a cent of profit... long before. He will be OUT OF BUSINESS. He will be BANKRUPT. He will be out on the curb of his mall, and his capital investment of equipment, fixtures, and inventory will be lost to his creditors.

The single biggest reason for new businesses to go bankrupt is LACK OF SUFFICIENT CAPITAL.

If you had ever rented any property to a tenant, you would know that it can cost more to have a bad, non paying tenant than to have your property vacant. Tenant turn over is a big expense and pain in the behind. No landlord wants a revolving door property.

All of your vast number of friends with bodegas and stores in whatever hellholes you're talking about have no bearing on the subject. We're talking about opening a store or shop in a mall. This means being a REAL business, with REAL expenses. IN THE REAL WORLD. Not daydreaming or theorizing about small business practices in urban areas.

 

[CaptnGlenn]

I forgot one more thing go ask any manager of any top rated mall, is there any circumstance where a booth should not be filled. A job of the manager of a mall is bringing in people. If there are multiple booths not being used it makes the entire mall look unappealing to shoppers. No mall I have ever worked give a month to month lease. Like I said I have no idea what Business School you attended.

No, you are wrong. The job of ANY manager is to make money for the business. If that can be accomplished more efficiently by having a property vacant for a short time in lieu of having the expense of a bad tenant that will be out of business in a short period of time, then his decision should be to wait for a good tenant.

Why don't you approach a mall with the proposal of renting a store based on your theory and see what they say. The first thing that they will want is a credit report and your bank references to insure that they will get their rent. Go ahead... give it a whirl and see what happens. You can post your letter of refusal online.

 

[belmont]

No, you are wrong. The job of ANY manager is to make money for the business. If that can be accomplished more efficiently by having a property vacant for a short time in lieu of having the expense of a bad tenant that will be out of business in a short period of time, then his decision should be to wait for a good tenant.

Why don't you approach a mall with the proposal of renting a store based on your theory and see what they say. The first thing that they will want is a credit report and your bank references to insure that they will get their rent. Go ahead... give it a whirl and see what happens. You can post your letter of refusal online.

And many time in addition to my corporate financials I had to sign a personal guarantee of the lease. If I went bad, I couldn't hide behind the corporate shield. So unless the corporation has assets of many multiples the annual rent, they will want either a personal guarantee or bank letter of credit for the entire lease value.

 

[cobraboy]

And many time in addition to my corporate financials I had to sign a personal guarantee of the lease. If I went bad, I couldn't hide behind the corporate shield. So unless the corporation has assets of many multiples the annual rent, they will want either a personal guarantee or bank letter of credit for the entire lease value.

That's been my experience also.

I had personal guarantees everywhere...

 

[DRob]

I will NEVER NEVER understand Dominicans and the DR. You are Dominican right? Tell me I could be wrong, but the people who own and manage the mall it would benefit them having ANY booth that has a renter. Do you think it is good that so many of the malls have EMPTY booths? Nothing is worst then walking in a mall on a the weekend and passing empty booth after empty booth.

Pitt could open a store and sell only bath towels and call it " I LOVE BATH TOWELS" I know it sounds stupid but if I managed a mall I would take his store rather then a dark empty booth.

Years back I worked in a mall for Foot Locker and we had 4 stores that sold the exact same thing, and had the same name.

World Foot Locker, Kids Foot Locker, Ladies Foot Locker, and just Foot Locker.

Wouldn't it benefit the mall to give him a break on some of his expenses for the first 6 months?

If you shop a many of the malls in USA it is a lot of pointless stores, but the mall has to fill these booths because a lot of empty booths = DEAD MALL and and no mall wants that title.

Lastly that is 20,000USD Pitt is trying to put into the DR economy. If another person comes from lets say Chicago and open up a store and only sold Bulls, Cubs, White Sox, and Bears appareal, and poster of Chicago and coffee mugs T- shirts, hats, and called it CHI-TOWN, once again I know it stupid selling this stuff in Santo Domingo, but it is a filled booth.

Next thing you know the mall has a 95% of its booth filled by people who just want to start a busniess in DR. Now that 20,000USD turns into 200,000USD invested in DR economy. I know you love your country by all the photos you take and they are really GOOD my favorite is "Meet Santo Domigo", but the DR needs a lot of help with its economy this could be a start. There is never any reason why a person should sour another person for investing in their country or city.

That's actually a very good description of how type A commercial property rapidly declines into type C property (also known as the "Swap Meet Death Spiral.")

Unfortunately, asset management in any country is a difficult matter, and involves much more than making space available for people selling towels, "Tupac is Alive" t-shirts, and cellphone accessories. A bad tenant, defined as a) a credit risk, b) someone selling an undesirable product, or c)selling to an undesirable clientele (think bong shop) is anathema to a property manager.

Pi2's initial advice was actually helpful. While I agree that renting a space would be a disaster for anyone who only had up to 20k, he might - might - get away with a small kiosk selling ice cream, or something that appeals to young women and isn't readily available at every other open store.

It's still a VERY long shot as being undercapitalized will kill you faster than anything else, but at least that way, he'd have an outside chance.

 

[DRob]

That's been my experience also.

I had personal guarantees everywhere...

Same here. When we opened up the firm, I couldn't get bottled water service without a personal guarantee.

 

[pi2]

Convenient that you pick 7 years and leave out the Hippo years of 27% and 51% inflation.
The true computation is $300 in 2000 bought RD$6000 in goods (20:1 exchange in 2000). Products costing RD$6000 in 2000 now cost over RD$20,000 in 2012 (due to compounded inflation). The RD$20,000 in 2012 is equal to US$526. Therefore a person living on $300 in 2000 needs $526 in 2012 taking into account inflation and increase in value of the dollar. But remember, in the OPs scenario, he is earning pesos in the DR, not dollars in the US so he doesn't get to take advantage of the increase in dollar value.

I have not checked the figures but that seems more sensible.
Many people of course have dollar accounts and those that do not buy government bonds yeilding up to 15% in pesos - 10 % above the rate of inflation over the last 7 years. So if the businesss goes well and he puts money by chances are inflation protection will take place. Also he can increase prices by rate of inflation.
DR economy is far stronger now than in the hippo years.

pi2.

 

[Conchman]

In my opinion, you need to have a business idea first, then figure how out where to put it.

The OP is pulling the cart in front of the horses.

 

[DRob]

Well, a little perspective would help.

The OP is, most likely, doing the "Margaritaville" daydreaming that so many of us tend to engage in. The reality is, he's just the latest in a long line of dudes who have come down here, enjoyed the sun, sand, cervezas and endless supply of winsome companions, and is looking for a way to subsidize a (in his mind) permanent move to paradise.

Some turn it into a viable business (for example, Jimmy Buffett's "Margaritaville" businesses). Others, not so much.

It's fun to dream, but if you're going to make a real go at turning fantasy to reality, it's equally if not more important to ensure the information you have when you wake up is accurate.

 

[PeterInBrat]

One of my first ventures(not in the DR) was a cookie business that was just a bit more than $2500 start up costs. Now, I expect it would be about $4000-$5000. I used a Holman Mini conveyor oven($1500), a 5qt Kitchen Aid($350), a small dorm fridge($150) for eggs and margarine, and then counters and paper supplies.

I was baking 200 cookies an hour for 10 hours every other day then distributing to stores who would retail them. In a mall you would have the bonus that people could smell the cookies baking. You could either sell them by the piece or use a digital scale to sell them by the pound. I was baking 4000 cookies a week and netting 7 cents a cookie wholesale. For retail, I could at least double that. People love to watch the cookies come out of the oven:

http://star.gobidigital.us/media/pdf/holman-miniveyor.pdf

 

[JMB773]

The point isn't to dump 20k in the D.R., it's to start a business. If he wanted to put 20k into the economy, he could stand on a street corner with a bag full of $20 bills and accomplish that in one day... no effort at all.

A mall is a real estate business. They don't just want stored filled... they want stored filled with GOOD TENANTS that will pay their rent, and will be in business for more than 3 months. To let some hair brained person try to open a shop totally undercapitalized does no one any good at all. If you walk past an empty store, yea.. it doesn't look good... but it looks WORSE to walk by a store one day, and the next day it's closed, or if a store is constantly turned over. Then it looks like no business in that mall will be successful. OK... let's say they let Pi Ice Cream Inc. open, and only charge half price rent. What do you think the rest of the business owners will want???? They'll want half price rent too... or maybe less, given that they are long term, successful tenants. We can see where THAT'S going... a long spiral right down the old pooper. It's a losing proposition.

AND WILL BE IN BUSINESS FOR MORE THAN 3 MONTHS. Your words not mine. We are not talking about stores like GAP, Apple, William and Sonoma or Banana Republic. The people of DR cannot afford this type of store on a everyday basis.
Have any of you walked in Mega Centro and you think this is a upscale mall on a world scale. I am not talking about Penetagon City mall in D.C. or Woodfield Mall in Schamburg, but Mega Centro in Santo Domingo.

Businesses do not do well in DR because you have to BRIBE a lot of people, then after that more people then more people.

You know what you are right a person needs 2,000,000USD a least to start a successful business in DR. I forgot you OWN the DR.

 

[DRob]

One of my first ventures(not in the DR) was a cookie business that was just a bit more than $2500 start up costs. Now, I expect it would be about $4000-$5000. I used a Holman Mini conveyor oven($1500), a 5qt Kitchen Aid($350), a small dorm fridge($150) for eggs and margarine, and then counters and paper supplies.

I was baking 200 cookies an hour for 10 hours every other day then distributing to stores who would retail them. In a mall you would have the bonus that people could smell the cookies baking. You could either sell them by the piece or use a digital scale to sell them by the pound. I was baking 4000 cookies a week and netting 7 cents a cookie wholesale. For retail, I could at least double that. People love to watch the cookies come out of the oven:

http://star.gobidigital.us/media/pdf/holman-miniveyor.pdf

A very good idea. Just about everyone can afford a freshly baked cookie.

Along those lines (very low CoGS), a Chinese food spot (with late hours) would probably do very well in Sosua....

 

[PeterInBrat]

I've always thought that if you could get one or two of these to the island, it would be a real money maker:

They have a hopper for ice in the top and you put in fruit/premix and booze in the blended. Push a button and it dispenses and exact amount of ice, pulses the blender and makes frozen margaritas, pina coladas, fruit batidas, etc etc. Most bars in the US get $7-$10 a drink. The nice thing is it's all automated for one touch operation. They make most of their money on selling the premixes. If the power goes out, it's no big deal. You can have it make up to four drinks at once with perfect portion control.

https://secure.islandoasis.com/store/st_item_detail.aspx?iid=58