Startup Guide for Beginner Self-Employed People
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Self-employed people...
Just because you are a little older
You entered the market first
You have experienced both failure and success
There are some things you have learned firsthand
For those of you struggling with self-employment
I want to share what I know.
There may be many shortcomings
Just think of it as advice from a senior.
By the way, Baebae
Currently, I am a self-employed person who has been running small businesses for over twenty years
in publishing, space rental, commercial building rental, rural village accommodation business,
food service, educational service, and
scientific technology and service industries.
1. Why self-employment is difficult
I gathered all this knowledge and experience
and put it in one book.
In my book, "The Law of Young Wealth", I also explained why self-employment is difficult.
Let's review it again?
First,
Self-employed saturated market
It's the second highest self-employment rate in OECD countries, only after Mexico.
It's nearly twice as high as the US and Japan.
In other words, competition is fierce, so price-lowering chicken games
are inevitable.
Therefore, the self-employment profitability has to be extremely low.
There are 13 times more coffee shops in Seoul than in New York City,
but the average price of Americano
is less than half of the average price in New York City.
There are many stores with Americano for 1,000 won
Second,
Taxes
If you visit Japan, you'll find out
that most consumers use cash
and there are still many stores that don't accept cards, an analog society.
It's the era of "glass wallets" for office workers, not self-employed people.
It's a case where self-employed people benefited more in the past.
(My father and mother who ran a bookstore
never worried about taxes)
I'm not arguing for cash sales omissions,
but I applaud government policies such as adjusting the simplified tax rate for self-employed people,
and I think the scope of such actual tax exemption and tax benefits should be expanded.
Third,
Sharp increase in labor costs
The 40% increase in labor costs during the last administration
did not match the increase in self-employment revenue, but rather went in the opposite direction.
Artificial increase in labor costs that does not match inflation
and
The only country on Earth
to have a statutory law that pays wages for not working, which has been in effect for half a century,
and the implementation of paid leave after 50 years
has doubled the labor costs for self-employed people in the last five years.
If sales had doubled, profits would have remained the same, but
I don't know.
For reference, Japan's wages have been the same for the past 30 years
and only recently, with the rebound in inflation
have they risen slightly.
The rate of inflation and the minimum wage increase should be the same
to stabilize the self-employment market as well as the national economy.
2. Advice for those who want to start a self-employed business
75% of restaurant owners close down after 4 years of starting their business.
Those 75% of self-employed people say this.
The reasons for closing down are
high rent,
inability to afford labor costs,
inability to afford taxes,
franchise's tyranny,
they say.
Here is some advice for self-employed people who are preparing to start a business.
1. High rent is not an excuse.
You know and agree to the rent.
In other words, it's within a predictable range.
It's because you can't make a profit with that rent, so you can't make excuses about rent.
Self-employed businesses are legally protected for ten years from rent increases of 5% or more per year.
If you don't like high rent, go to the outskirts of a small city
or go to a central area with high rent if you're aiming for a big hit
and do well in business.
2. It's hard to afford labor costs.
Minimizing staff is important.
Hiring staff in advance because you think your business will be successful soon
is a sign of imminent failure.
Don't hire staff recklessly even if your business is doing well.
Consider whether you will make at least an additional 4.8 million won in sales when hiring one more employee (based on a labor cost of 2.4 million won).
Use serving robots, unmanned kiosks, etc. as much as possible.
Local governments provide subsidies of about 75% every year for unmanned business support.
Don't start a business that requires a lot of staff in the first place.
There is a business that I and my friend are trying to take over.
It's a food warehouse wholesale company.
It has monthly sales in the hundreds of millions of won, but only two employees
are currently operating the business,
and the elderly owner, who is almost 80 years old,
is in the process of negotiating the sale due to health reasons.
3. It's hard to afford taxes.
You have a long queue at your bakery, so you're dancing around and going to a foreign car dealership right away.
You play rich early
and six months later you get a value-added tax attack!!
And the following May, you get a corporate tax back-attack!!
Many people get knocked out by this.
Basically, you need to think of 10% of your monthly sales (to be precise, 9.09%)
as not your money...
so you won't be shocked when you file your value-added tax return.
The consumer price includes a value-added tax that corresponds to 10% of the product price,
and you receive it on behalf of the country
and pay it to the country.
But you grab it and run to the department store and go on a spending spree,
so you get hit with a value-added tax first attack and a second time-delayed attack.
Here are some solutions.
- 1. Become a simplified taxpayer by operating on a small scale.
- 2. Start a business in a tax-exempt field.
- (Fruits and vegetables, butcher shops, publishing, educational services, etc. limited value-added tax exemption
- However, corporate tax must be paid)
- 3. Start a business for young people under the age of 34 outside of overpopulated areas.
- (100% corporate tax exemption for 5 years after the date of establishment, 50% tax reduction for 5 years afterwards
- Value-added tax must be paid)
Remember
Unless the above cases apply, you need to keep 20% of your sales
in a separate bank account
to be able to pay value-added tax and corporate tax.
(You need that money to give allowance to those who play and eat)
4. Due to franchise tyranny
You read the contract and signed it yourself, didn't you?
If you are starting a business as a franchisee,
don't be blinded by the revenue they advertise.
Franchisees don't start businesses to get rich,
they start businesses to make enough to get by.
Since one is not enough,
you can think of it as a business where the franchisee operates multiple stores.
(It's not because they have a lot of money to operate multiple stores.
It's because they can't survive with just one)
Franchise fees, royalties, and high-priced food material supply costs
will always be a burden, but
You know it and you're still doing it because you're insecure, so
you have to bear it.
If you are burdened by these costs, study and research on your own
and start a business.
However, the most important thing is this.
Be sure to work
either part-time or full-time
in the industry you want to start a business in for at least three months
before starting a business.
3. It looks like you'll be rich soon because the store is bustling with customers???
Customers are mistaken,
and rookie owners are mistaken.
Remember this picture.
REVENUE
Revenue that is immediately visible
Sales revenue and profits are not proportional.
Don't be fooled by this number that the franchise headquarters tells you.
ADJUSTED EBIDTA
Profit after excluding core expenses such as labor costs and utility bills
EBIDTA
Profit after excluding miscellaneous expenses
NET INCOME
Real profit after excluding taxes, interest, and depreciation
But
The business that Baebae is currently covering in a series on her blog is
REVENUE = NET INCOME
The business is almost converging on the formula.
Semi-retirement life
Let's get together!!
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