I forgot I need to write a blog today, that why it is now then I get to post my blog!
Today I shall write about rental. I believe rental or the landlord is the killer for most retails, F & B, and whatever it is around the world. Recently, I saw a banner hanged on the hoarding of a construction site, near finishing stage, was stated to complete by 31 March 2017. But it is still finishing its work. It is a hub.
I have an idea, to open a franchise for a bakery shop, space needed between 200 to 500 sqft. The net profit is about 45% according to the website, but after consulting a friend who is in this franchise say the net profit is about 35% of the gross sale, and still need to less off the overheads and I only have half the capital needed to start the franchise, therefore I need some investment from others.
We call up the lease management company and was told that there is an 2nd round tender for the space. And we receive the notification and ask if we would like to tender. We wrote back to say we are interested and they forwarded us the tender information. Oh well.
They gave us the estimate guide rent per month plus the services and conservancy fees plus central aircon fee (TBA) and government tax. Even if I were to tender for say $3000 per month for rent, and say I was awarded, the total amount I need to pay to the landlord is around $4500-$4800, for a space of 300 plus sqft. The guided rent is more than double the amount I wish to tender.
After much calculation, we decided we will not proceed with the tendering. The net profit from Gross sale is about 35%, and we still have to pay rent and salary, how much is left? However, I personally feel that the risk can try, if all the capital is my own money, I lose it I can start all over again, but if I own other people money, I will take longer to start all over again.
Although I know property is one of the best profit, but I just can't help to think from the point of consumers and tenants. Even they know that retails are going down hill, they still want to command high rent, and occupation rate is low, will it be one day, there is no more shopping malls, or the shopping malls have got no shop that is occupied.
How to do business and be our own boss?
