Wednesday, July 16, 2014

High retail rental solution

I think all those budding entrepreneurs out there know that there is a big issue in starting a business in Singapore. The high retail rentals kill the business even before they take off. This is akin to teaching a Primary 1 kid calculus and failing the kid at primary 1 even before they have yet to learn algebra.

In the industry sector, there is JTC trying to control the rentals for industrial factories but for retail sector, there is none. However, I do see that HDB can play a role in it but for some reason, they are more concerned on building more HDB flats, and may not know that the areas around the HDB flats can be used for budding retail entrepreneurs.

I remembered back in the old days, the HDB flats always have retail shops below, be it a normal provision shop, coffee shop or hairdresser. Nowadays, all you see is a complicated maze of pillars that do not shelter you much from the rain if you wish to go from block to block, and sometimes you find people sleeping at some of the corners.

This retail space should be revived for the HDB flats because it's an ideal place for a budding retail entrepreneur to kick start their business. You just need a simple business model whereby:
  1. Entrepreneurs with annual revenues of < $100k (e.g.) is eligible
  2. Entrepreneurs bid for the space by promising a fixed percentage of their revenue as rental for a duration of 3 years, renewable yearly depending if the entrepreneur is making full use of the space or is just hogging up the space for some other reason.
  3. Entrepreneurs will pay for the other aspects of the shop space such as power, water, renovation, etc.

This becomes a very good starting ground for retail entrepreneurs to try and kick start their business. They could even bundle in some grants or even providing mentors for such areas. This will also help in the increasing the vibrancy of the housing estates, back to the old days where everyone in the block knows the shop owners downstairs.

Not everything should be measured in dollars and cents. HDB is not using that space optimally anyway. So why can't this model work?

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