How do they do it?

Business Money
1

hi all,

as i walk the streets here, i often wonder how many small businesses actualy make a living. i’m referring to the small food places, the drink stands and the shops that do goodness knows what but always seem to have people in there watching tv or drinking tea.

do these places pay the high rents that shops pay in the various malls and shopping centres back home? if so, they must have to sell a very high amount of $60 meals in order just to pay their rent - let alone the costs etc? do they also pay insurance costs and electricity costs etc.

does anyone know if the majoroity of shops are owner occupiers or are they renters? likewise, what about the people who have a small food stand on the street? do they pay rent or just set up their stand at any high pedestrain place? To me, if they have to pay rent, then i cannot see how they can make a living - let alone a decent one.

plus, there seems to be a high number of “empty” shops that have people sitting there watching tele and with a formal tea set on show for people and nothign much else. what is the deal with these places - are they legitimate shops or just hang out places for friends of people who own an empty shop?

g

2

Most of those small shops and drinks stands are franchise organization.
The capital of material are controlled under some amount.
It is even less than you own or run it by yourself.
You can see there are many drinks stand here.
But they dont need to be located in the place where people are together.
They still have good selling .

3

I noticed the same thing as you and my conclusion is the business owners also own the shops, thus avoiding the high rents, and only make a small income which they can live on. Its like a retirement thing. You’ll notice that many of the owners are old couples. In many cases this is what keeps prices low around Taipei.

Its the people that spend a fortune fitting a place out and paying high rents that usually go bankrupt…

4

It also got me wondering.

I often have breakfast at a coffee place run by two sisters, with two extra employees, no chain, no franchise.
Because the place is always full around 8 am, my first impression was this place is a success.
But then I started doing the math: about 10 or 12 people there, staying for about half an hour - 8 till 8:30 am, when they have to hurry out to work. Most breakfast sets cost about 80 NT at the most. So that’s 8,000 to 10,000 NT a morning.
I don’t know what kind of business they’re doing at noon and in the evenings, but that doesn’t sound so impressive, if you consider the likely rent - near Nanjing East Road sec 2 - personnel costs, basic food costs, utilities etc.

5

A front for laundering ill-gotten gains.

Or Daddy putting the money in to give his little prince(ss) his/her own business, only to see them fritter it away and close inside 18 months because they have no business acumen.

I’m only half joking…

I think Tyc00n is right for many places, but I suspect there are a good number that fit in the categories I mentioned above.

6

[quote=“enzo+”]It also got me wondering.

I often have breakfast at a coffee place run by two sisters, with two extra employees, no chain, no franchise.
Because the place is always full around 8 am, my first impression was this place is a success.
But then I started doing the math: about 10 or 12 people there, staying for about half an hour - 8 till 8:30 am, when they have to hurry out to work. Most breakfast sets cost about 80 NT at the most. So that’s 8,000 to 10,000 NT a morning.
I don’t know what kind of business they’re doing at noon and in the evenings, but that doesn’t sound so impressive, if you consider the likely rent - near Nanjing East Road sec 2 - personnel costs, basic food costs, utilities etc.[/quote]

Well,dont forget the delivery service .

7

Wisher has a point. Many of the more entrepreneurial places have got some great business through delivery. Its something that really seems to work in Taiwan, but its just not feasible in the West.

Taffy, you are right of course. I’ve never heard of anyone in Taiwan actually writing a business plan. Its all about doing, running into trouble and then patching. I’ve heard lots of stories about someone else who wants to get into the Juice business because everyone is doing it and we’ll all become rich blah blah blah. Never invest in any of this crap.

The key in Taiwan is the right location and the right rental agreement. Well trained staff that have the right incentives comes in at number 3.

8

Even $10k a day they can make decent money. $300k a month total revenue. Rent for a side street shop is usually less than $40k. Energy costs for a small restaurant shouldn’t be more than $30k a month. Their food cost might vary but at that price I’d guess around 50%, so 150k for that. Most places are self run so the labor cost is not counted. That leaves a monthly profit of around $80k. And most small shops like that don’t pay sales tax, rent tax, insurance, income tax, etc (not to mention royalties if it isn’t a franchised shop). That’s a decent profit for a mom and pop operation considering labor costs here.

The ‘no business sense’ part is that they don’t think of paying $20k a month each for a couple of people to run the restaurant and then start up a chain of restaurants netting them $40k a month each. :wink:

9

[quote=“enzo+”]It also got me wondering.

I often have breakfast at a coffee place run by two sisters, with two extra employees, no chain, no franchise.
Because the place is always full around 8 am, my first impression was this place is a success.
But then I started doing the math: about 10 or 12 people there, staying for about half an hour - 8 till 8:30 am, when they have to hurry out to work. Most breakfast sets cost about 80 NT at the most. So that’s 8,000 to 10,000 NT a morning.
I don’t know what kind of business they’re doing at noon and in the evenings, but that doesn’t sound so impressive, if you consider the likely rent - near Nanjing East Road sec 2 - personnel costs, basic food costs, utilities etc.[/quote]

Times 30 = 300,000 a month - 40,000 wages = 260,000 - 30,000 rent = 230,000 - 15,000 utillities = 215,000
foodcost run about 20-25% = 60,000

215,000 - 60,000 = 155,000 - 15,000 misc. costs = 140,000/2 = 70,000 each sister … not bad for a morning work, afternoon off …

All figures are approx. estimates but I’ll be close

And no, not all make that much money or money at all … when they own the place it’s an additional income or retirement as said … Taiwanese don’t calculate as we do, they think 1,000 profit a day is 30 x 1,000 … enough to buy food and put the kids in school and buxiban …

A lot of them close within 3 months to start something different all over again, copying somthing else …

10

I think there’s damn good money in those shops (as long as its in the right place etc). Rent will vary but isnt that much. An ex-gf who just did a single person drink stall (illegal one at night markets, push along the road that kind) said she was making 30k - 40k profit a month and that was just one person selling drinks. Mind you the hours were long but it shows you that there’s money to be made there as long as you have the right location etc. Ive seen plenty of businesses fail here in Kaohsiung tho also, due to being in the wrong spot.

11

Friends of my wife, in the 10 years+ I’m in Taiwan, started and gave up maybe 6 different kind of businesses, Amway, a restaurant, a shoestore and a few other things … now she just opened one of those Italian spaghetti things … cheap and tasteless … she tried to sell her house, moved next door to us in the mountains 4 years, moved back out afetr 6 months to return to her old house she couldn’t sell … I mean some people here are so ‘screwed up’ …