mikek1

We went through a similar exercise , although the amount was several million .We did not need the finance but thought we would 'test the water' for future reference.The upshot was that the intrest ratess were punitive , and even more punitive the paperwork required was overwhelming. The extent of the paperwork demanded that we supply documentation from the UK, which included accounts from our UK business etc.

Needless to say we declined , and therefore the moral of this is don't borrow money, use your own capital. Personally, I would take the advice of fellow members and not get involved in any small business ventures.Your g/f is running before she walks.

Mike K

Stokkevn

There was one very wise person on one of the topics here said that "If you want to get a return of 1 million from a company here in the Philippines, invest 2 million"

I have set up a couple of family members with their Sari Sari stores but after several hours of explanation they still have no understanding of the difference between takings and profit. So between that and family credit both were no longer in existence after a few months

Philosophical 11

Greetings and thank you for your replies.

Had a cooked breakfast this morning and my lovely lady has changed her name on fb. She has taken my surname. I thought that was quite sweet but I think it came about because I got notified that the Decree Nisi will happen next month. So, its all back to how it should be.

Re the loan. She wanted to borrow 500,000 peso. The interest rate offered was 1.2% per month over 3 years. Unless it is compound interest, I quickly did the sums and it works out at about 16 -17k per month. No idea what it would be with compound interest. We both sat down and made a business plan based on those figures and she reckons there would be no problem. Rent was 5000 peso pm initially and 7500 peso pm after 6 months. Landlord is a respectable doctor here and a friend of the family. Seems that every one here is a friend of the family. She would employ two people from her family at 250 peso per day. Then came the guarantor business. I had to put my foot down on that and she was very disappointed but not angry. She argued that she would work hard to make the business work which I am sure she would. But even with best intentions businesses fail. Trying to explain that fell on stony silence. Interestingly she mooted the idea of borrow a further 500,000 peso which would be for loans. She figured that she could loan to Govt employees here with an ATM card at a low rate of 5%. It took a lot of explaining that you cannot borrow at 14.4% pa to loan out at 5%.!

Anyway, I did feel her disappointment. She has big ideas and plans but I do not like pinay pouts. Why cannot pinays be just disappointed like everyone else? Anyway, I have not told her that once I get my finances sorted I would look at the idea of website(s) for her on-line jewelry and shoes etc. No big capital required there.

So. All is hunky dory again. Anyone know what the APR of 1.2% per month is and what the monthly repayments would be on 500k peso. Just for interest. Excuse pun.

Regards

Raffin

You had a lucky escape there . On the figures you give there's no way you could have even broken even with that shop. Apart from the costs you mention there are utilities and permits to apply and pay for. Time and hassle too.

You say your LL thought there was no problem with that shop idea. That is worth thinking about itself!

Your promised to just consider the online idea. Good, because that should also be looked into very carefully. Jewelry seems to be working out well already, but shoes and accessories are much more problematic, being strictly fashion items. Especially with the shoes, would there be a returns option? Because without that I don't think it would work.

But your LL is showing business nous by putting your name up there on FB. Customers will feel even more reassurance dealing with a foreign backed enterprise!

From what you have told us about your LL, she is what I could describe as a stage 2 Pinay entrepreneur. I would define stage 1 as one who is only good at bargaining in the market and with tradespeople. Stage 2 is where they can develop and run successfully an operation selling to friends,relations,acquaintances, workmates etc. If you like there is a stage 2 upper level where FB etc. is used. Stage 3 is where they can develop and run a profitable shop or food place ie somewhere with premises or carts, or even have a website. My wife is definitely only at stage !, so you're doing well!

What some people do around here is to rent vacant spaces on a short term basis for trainer sales. Sometimes just in the open. For ladies shoes that wouldn't work. But maybe you can temporarily rent some vacant shop?

If you need more batting power to defend against any more expensive plans remember Brexit is still an idea and one that may take even longer to put into effect than Leave campaigners originally reckoned. Apart from the reconciling of Single Market entry and immigration, French Presidential and, particularly, German Federal elections, take place next year, with Germany's towards the end. Sterling may be in the doldrums for quite a while.

Anyway, you're doing well just getting away with pouts with your LL. That is indeed a good sign for your future relationship!

PS I think paying 1.2% a month on a 500,000 loan, without paying off any principal, simply gives an APR of 14.4% pa. Cheap credit here.

quiltman

"PS I think paying 1.2% a month on a 500,000 loan, without paying off any principal, simply gives an APR of 14.4% pa. Cheap credit here.[/QUOTE]"

Just used an online calculator for a loan of 500,000 at 14.4% annual, repaying capital/interest. Just change the £ to Pesos.you are not far adrift at 17K.

Philosophical 11

Greetings!

We reckoned on having to make approx. 1100 peso per day to break even. But this is with one employee initially at 5000 peso per month rent. This includes electricity and water. No idea what the permit etc costs but it would come out of the initial start up fund. She makes a profit of 1500 peso on each pair of shoes. So far she has sold a few on-line. The shop would also be a focal point of her on-line jewelry....so there are profits there also. She would obviously be "hands on" whereas my role would be giving sage advice whilst sitting on the balcony having a cold beer. Yes, I agree that unsold designer shoes would be problem with no sale or return policy. But they could be loss leaders for the jewelry if they start collecting dust. There are very few rice outlets here and she could compete pricewise....she has an uncle (one of 100's it seems) who could supply at very competitive rates. Yes, I have full confidence in her business acumen, but trust has to be 100%.

Regards

Stokkevn

there must be a serious amount of money in Sipalay. Sapalay and where I am are both classed as 4th Class municipalities although you have about 3 times the population than here, if you mentioned here just P500 cost for a pair of shoes they would faint.

Seems like GF has done her homework and therefore stands a far better chance than most. Good on her

Philosophical 11

Stokkevn. I don't think there is a serious amount of money here. I didn't think gold would sell when I see the extent of the poverty here and the imported designer shoes are also a surprise. The shoes sell for about 4500 peso. But I think the secret is that the small number of people here who want them have to make a 7 hour return journey to Bacolod where the nearest Mall are.

She is also now selling packaged dried fish from Cadiz. Not the normal cheap stuff you get from the market . I think its class A or something, and they are selling well. Might have a web site later on with Filipino food stuffs such as dried fish for OFW's world wide. But not all her ventures were a success. Some time back documented here she hit on the idea of obtaining large fresh king prawns for the restaurants here. From one of her uncles I dare say. I was right on that one and they didn't sell. So for breakfast, lunch and tea for a few weeks we gorged on king prawns. I used to like king prawns prior to that..... But her gold jewelry seems to be drying up now. As I told her, fb friends are a limited market.

Regards

Stokkevn

I didn't realise that Spain had good dried fish, I always assumed it was Capiz where I live. We have very good dried fish, crabs and prawns here. I am not so partial to the normal prawns here but the tiger prawns are fantastic. I occasionally send then up to friends in Manila on the bus.

Philosophical 11

Stokkevn....think its Capiz...not Cadiz. My error!

Stokkevn

Have just spoken to my wife about P4500 for a pair of shoes, she did not bat an eyelid ( but there again she is from the plant of "Money is no object" ), her other 3 friends all agreed that this was about 2 weeks wages for their husbands and that there was no way they could buy them.

Nearest Mall is about 28Km from here

mikek1

Shoes for PHP4500 ! You have to be joking. There are very few Pinnays who could afford such luxury. In any case most women who could (really) afford this type of shoe and would buy them from a boutique shop. That shop would have to be able to have multiple designs and be kitted out (costly) to attract high end customers. I know this because my wife drags me round these types of shops. The initial capital of PHP500K would not stretch very far considering how many designs of shoe you must stock, let alone how many sizes (500K / 4500 = 111pr assume 100% mark up =222pr) Buying and selling of rice is already 'done to death'. To make any real money you have to be shifting tons of the stuff, which dictates that you need transportation and storage.


The internet is a good tool for selling, but it is also the destroyer of many underfunded small business's. Having experience of the UK bicycle business I have witnessed the demise of the small independent dealer, who cannot compete with the mega mail order companies. These companies buy big and sell cheap. Their IT department would cost serious money to run.


Maybe your LL might want to go into handbags..........................there is clearly a BIG demand. One word of warning our US friend has a bag retail business in the Philippines. His turnover is PHP 1 BILLION (yes that's correct ) however he has outlets in every SM, Robinsons, etc. He told me, if you pay small rent you will have a low footfall, pay high rent for a high footfall. Very true.


One other problem with mail order (website selling) in the Philippines is the lack of reliable courier companies and of course a virtually none existent postal service.


Without wanting to 'rain on your parade' I think that because your L/L cannot even understand the concept of the most basic business principles (borrowing at 14% and lending at 5% !!!!) she will eventfully fail, or will make a very small amount for a lot of headaches and problems.


You should also remember if she was even remotely successful her business model would be copied within a very short space of time, leading to the dilution of such a business.I have no doubt that you personally will end up capitalising her business, love works in mysterious ways

Raffin

I so much agree with everything that mikek1 is saying...and especially his final point about competition. It's a rapidly moving commercial environment here, at all levels, but especially in the small business sector, and I would say a "first mover advantage" here has a lower shelf life than in any other country I have lived in or visited for any length of time.

Guerilla, varied, "hit and run" commercial forays are best if you need or want to engage in small business ventures here.

Stokkevn

I think you will find that small Pay Day type loans here are 5% per month, not year.

Raffin

Well spotted Stokkevn. It is a business that can work, especially if you lend to people you can exercise a degree of control over, and who have an income. That doesn't include family and relatives but can include people who, for example, work alongside you or still work in a place you have retired from.

Otherwise, as mikek1 said there will be headaches and problems, and at the worst one could end up dead in a ditch.