[DoterrFor]

Taxes are NOT PAID BY A BUSINESS!!! They are COLLECTED BY A BUSINESS!

True for sales tax (ITBIS). Not for income tax or local taxes.

Barnabé

[Amerworma]

If you have a basic business background, then you'll know that there are two basic principles to run a successful business anywhere in the world: Expenses VS Profits! You want to stick to maximize profits and minimize expenses in order to have a successful business...


The DR business model is the same as the above basic principle, but then, how do you actually achieve that and what model of business allows for that in the Dominican economy?


For that we take to exploring the innards of the most popular and prevalent business of the Dominican Republic and possibly the most revealing of what model is best to work with here: The Colmado (bodega, convenience store, etc...).

Rent don't buy!

It's something that we are accustomed to hear and follow up on when we venture into any small to large business in the developed world. But, is this true for the Dominican Colmado and local business model it represents?

Facts are that Dominican RE is cheap firstly, location is a non-issue as any place is as good as the business it carries secondly and rent is a thorny issue which can see you in the streets, due to rent control modifiers not applying to commercial property in the country.

So, rent and don't buy is not really true or applicable for the Dominican business model, which is strongly suggestive elsewhere in the region and world.

So our Colmado is fully owned for in terms of RE and leasing terms.

Now we set upon the operational part of the business!

A mechanical scale hangs from the ceiling. A counter big enough to partition the client access area to that of the staff and goods. We have several refrigerators, utensils, lavatory, etc...

Then we have the shelves stocked with the goods for sale, inventory. We have the register and the common things you expect in the line of business like these in the country.

But wait! Didn't we just mention inventory?

How does this relates any different to operating a business model back home, just the same, no?

You estimated the costs, shelf life, demand and value of that inventory just as you do in the US bodega model, so what's there to say they are different models of business at all?

Sure the actual property is different by virtue of looks and development. The inventory also reflects the exotic location. The equipment and furnishings also, but all this is expected from different locations and cultures, right?

NOT!

You see in the US model, you can carry on the business basics as usual when it comes to inventory control and allocations, but in the Dominican Republic prices are not stable for long periods in most of the consumables you carry, nor is the price jumps within a margin you can work around with ease to process your next inventory refill.

You see, the soap bars you got for your inventory last week, and sold with a 100% markup for profit, just went up 125% for the next order to stock your now empty shelve. So even when you made a comfortable and nice profit of 125% for the complete inventory sold, your costs for the next order surpasses the costs of the inventory sold atop the profits you made and still need you to come up with an extra % to cover the new stock!

That's not only a frequent cost of doing business in the DR, but the standard operating procedure each week!

So how can a business model you so understand in USA, be so impossible to carry out here in the DR?

Your model starts to crumble just weeks after having invested into your new Colmado and things don't seem to let up on their rise of costs!

But that's not only inventory! Then we have that the energy costs also have risen along the gasoline spent to get your goods at supply points. The water bill went up!

So how can you survive the Dominican Republic economy using a fit model for all this?

Well, we call it the Dominican business model for a reason: It's made for the DR alone!

Above was just one example of the lowest and simplest type of business in the DR...

PICHARDO issues the following


If you have a basic business background, then you'll know that there are two basic principles to run a successful business anywhere in the world: Expenses VS Profits! You want to stick to maximize profits and minimize expenses in order to have a successful business..

i must be a lot older than you are, PICHARDO. the way i learnt it was Expenses vs Revenues. maybe things have changed dramatically since i studied the subject.

[Amerworma]

PICHARDO issues the following


If you have a basic business background, then you'll know that there are two basic principles to run a successful business anywhere in the world: Expenses VS Profits! You want to stick to maximize profits and minimize expenses in order to have a successful business..

i must be a lot older than you are, PICHARDO. the If you have a basic business background, then you'll know that there are two basic principles to run a successful business anywhere in the world: Expenses VS Profits! You want to stick to maximize profits and minimize expenses in order to have a successful business..way i learnt it was Expenses vs Revenues. maybe things have changed dramatically since i studied the subject.

PICHARDO, can that passage of yours be translated into a language that can easliy be recognized by the average mortal?

[GoveMoony]

Pure 100% baloney.

Taxes are NOT PAID BY A BUSINESS!!! They are COLLECTED BY A BUSINESS!

If a business COLLECTS THE TAX BUT DOESN'T PAY THE STATE it's because the owner CHOSE to divert the funds to himself BECAUSE he didn't have enough revenue or cash capital reserve to cover his expenses!!!!!!!!!!!!!

That comes from LACK OF REVENUE!!!!!!!

If he didn't collect taxes in the first place and is now required to pay them to the state, he DISCOUNTED the product by the % of taxes to the customer; he STILL, by law, collected the taxes! If he didn't pay them and didn't divert the funds to himself

THAT COMES FROM LACK OF SUFFICIENT GROSS MARGIN TO COVER TAXES AND EXPENSES!

Debits and credits, Pichardo. That is what business LIVES on!

Dude, please, just STOP IT!!!!! You have NO idea how many businesses I bought because the owner got into tax problems and the doors were STILL open because the state (FL, PA, DE & NJ) cut them some slack because their AUDIT determined the owners did NOT direct $$$ toward themselves instead of paying taxes. Same with the Feds. I did this for both a public corporation as well as my OWN businesses.

It happened to me! My healthcare business exploded and I grew waaaaaay beyond the ability to pay current taxes with a huge pile of receivables collected in 90-150 days! Both FL as well as the Feds cut me a LOT of slack.

But let me make this caveat: if you are delinquent in taxes and it is determined you LIED to the auditors (either verbally or in withheld documents) they may lower the boom...at their discretion.

That is how the US system works.

Sheesh...there isn't one student in a business school that doesn't understand that Uncle Taxman is the creditor of LAST RESORT! Like the IMF!!!

More baloney. Why do you keep this up?????

I actually believe you believe your reconbigulating ostalation transfigulator mind technique will convince people that there IS some mysterious "Dominican Business Model" that is DNA-specific...

Yris pre-pays income tax (the school) quarterly based on what they expect her to make. If she makes less she gets a credit and pays less the next year.

[Amerworma]

PICHARDO, what the heck does this mean?

Unlike in your business model, the Dominican business model is pre-active real time and not post-active to trends.

you think that sounds intelligent? you believe that people are going to ooh and aah, and think you are scholarly? it is the biggest pile of horsesh*t i have read , in a long while.how can something be pre active in real time? that is like saying " the future is not what it used to be".

[Amerworma]

PICHARDO, save yourself some time, and effort. you are never going to win an argument over cobraboy when it comes to the matter of business. the guy has forgotten more than you will ever learn.

[Izzy]

PICHARDO, save yourself some time, and effort. you are never going to win an argument over cobraboy when it comes to the matter of business. the guy has forgotten more than you will ever learn.

Sure! I'll keep to my colmadito biz...

[Amerworma]

Sure! I'll keep to my colmadito biz...

a good idea. trying to baffle the readership with bull is a threadbare strategy. most guys in this site are smart enough to see through the inanities.

[cafeviahe]

Sure! I'll keep to my colmadito biz...

Good Morning Pichardo. Okay Dr1 I will finally reveal what I do for a living. I am a District Manager for Nestle USA and my area is the city of Chicago and part of the southern suburbs.

Pichardo I know a little bit about spoils, inventory on hand, delivery schedules, invoices, accounts payable, accounts receivable etc. I can tell being responsible for "big box" stores such as Walmart, Target, Jewel, Safeway(but they are named Dominick's here in Illinios) is not that easy. Pichardo I always believed running a colmado was not that difficult.
Sure everytime you open a business there is a learning curve, but food is one of the safest businesses to get into because you are not dealing with as many trends.

Once you learn your customers everything should fall into place example: perishable items will always be your costly items, so you have to be on top of what is selling the most on a paticular day. This is learned through time and understanding your customers. For instance if I was a vendor and I said to you Pichardo " I have a barrel of chilli peppers and I would sell them to you for 50 pesos" how many would you sell? not many because Dominicans do not enjoy spicy food.

When you are dealing with different people from different backgrounds like white, black, asian, hispanic, it can very difficult because they all buy different types of food on different days, but when all of your customers are Dominican or Japanese is not that difficult to run a small store.

Another example is the south side of Chicago is mainly African American so it is not need to keep a large supply of coffee ice cream on hand, because blacks do not like coffee ice cream white people on the other hand enjoy coffee ice cream. Blacks and Hispanics prefer butter pecan and cookies and cream.

btw I learned a lot by your post on the fluxuating prices of inventory in the colmados I did not know that. I think accounts receivable will be the biggest hurdle.

[cafeviahe]

The success of many supermarket ,bodega, colmado, cornerstores, liquor stores is knowing and understanding you customers. The quickest way to run yourself out of business is thinking you know more then the customers.

With the little mom and pop stores and colmado not a lot of forecasting is involved, unless you have been in the business for awhile and you know customers very well, but when first starting out you order your inventory to fill the shelves PERIOD!!!

[Amerworma]

The success of many supermarket ,bodega, colmado, cornerstores, liquor stores is knowing and understanding you customers. The quickest way to run yourself out of business is thinking you know more then the customers.

With the little mom and pop stores and colmado not a lot of forecasting is involved, unless you have been in the business for awhile and you know customers very well, but when first starting out you order your inventory to fill the shelves PERIOD!!!

absolutely, JMB. colmados are not rocket science. the thing they have in their favor, from a business standpoint, is that their clientele is usually local, so the demographics are not difficult to figure out. you know most of your clientele, what they buy, and how much. their spending patterns are something with which you are familiar. there is not a very steep learning curve. big box stores get their clientele from a far wider demographic, and geography. if you check a WalMart, on any given day, it will have rich, poor , and middle class customers. a colmado in some little town off the beaten path is not going to get too many Brugal family members on any given day.

[9rCR9hWL]

because blacks do not like coffee ice cream white people on the other hand enjoy coffee ice cream. Blacks and Hispanics prefer butter pecan and cookies and cream. It all makes sense now. I'm not big on ice cream, but my ideal bowl would be coffee and butter pecan. I've been told I'm a dark-skinned Dominican in a white man's body. This ice cream thing seals it.

[cafeviahe]

It all makes sense now. I'm not big on ice cream, but my ideal bowl would be coffee and butter pecan. I've been told I'm a dark-skinned Dominican in a white man's body. This ice cream thing seals it.

You know we used to be in the Dominican Republic, but they kicked Nestle off the island. I think the government did not want to see what happen in PR to DR. Nestle has a monoply on the ice cream in PR. If you purchase ice cream in PR 9 times out of 10 it will be a Nestle product. Also Dominicans are more loyal to Helados Bon.

I never notice it but does Helados Bon sell coffee ice cream?

[9rCR9hWL]

You know we used to be in the Dominican Republic, but they kicked Nestle off the island. I think the government did not want to see what happen in PR to DR. Nestle has a monoply on the ice cream in PR. If you purchase ice cream in PR 9 times out of 10 it will be a Nestle product. Also Dominicans are more loyal to Helados Bon.

I never notice it but does Helados Bon sell coffee ice cream?

I recall buying Breyer's coffee ice cream at La Sirena in Villa Mella.

[9rCR9hWL]

You know we used to be in the Dominican Republic, but they kicked Nestle off the island. I think the government did not want to see what happen in PR to DR. Nestle has a monoply on the ice cream in PR.
Since when is the Dominican government opposed to monopolies?

[Loxaeed]

I thought the "Dominican Business Model" was lie, cheat, steal, and when caught red handed, blame someone else: "es que no mi faulta!!"

[steerryGritly]

I have been reading there is a different business model in the DR.

I would like to learn more about this model and how it differs from the US/Canada model.

How did this model help/hurt during the past economic mess.

[OWDavid]

The Dominican business model is based on having more capital percentage wise (compared to credit driven economies like the US) as the interest rates here can sink any business plan in short manner especially since there is no such thing as fixed rates here, no matter what the bank manger tells you. The rates are dependent on the pesos value to the dollar from my understanding.

[mazabotman]

Shhhhh...

It's secret...

[Izzy]

Ok! Let's get the ball rolling!