Quote:

---

Originally posted by adamthorat

Quote:

---

Originally posted by chandresh

Adamthorat has given a mixed picture - on one end he says that it is a business controlled by big companies (so obviously quite lucrative), but at the same time the gloomy side is that one has to deal with people who are hand to mouth, or without proper documents and who owe taxes etc.

Any other views on this business which I know has huge profit margins but seemingly not a high capital investment?

---

Banks are also big businesses controlled by big companies & are obviously very lucrative?
So does it mean you can start a bank ? or compete against them ?

Money Mart & these other Big loan sharks, money lending services, pay day loan type of services are NOT any different. Pretty much playing in the same area. Heck they are even worse than banks & even tougher ruthless business than banks, as bank rejects come to them.

Its not some mom-pop organisation , cashing cheques - its a multi billion dollar business, only people with deep pockets can start something like this, not OP who is just a small time guy.

This is NOT a game for some small time guy who wants to start some home type of business.

---

-----------------------------------------------------------------
Chandresh

Advice is free – lessons I charge for!!

Obviously the banks are not in this business, that's what I said, hence the need for pay day loan comapnies like Money Mart, Cash Money etc.

You are truly cluless and misinformed, if you think mom-pops are running this type of business in Canada. Its big players like Money Mart, Cash Money and atleast 10 other chains. They are multi-billion dollar companies with revenue and asset in Billions, with hundreds of locations all across Canada. They also advertise heavily.

Pray tell me why a person won't go to MM, instead of going to some mom-pop business .

Most mom-pop business in this type of business are run by Italian gangsters and other criminal elements , who are loan sharks, thugs and are into money laundering, drug money, black money and stuff like that.

A normal mom-pop is hardly into this business in Canada, its ONLY the big chains and their franchise .

Quote:

---

AT - all I can say is that like most other people, you are misinformed, but truly speaking, more misinformed than others. This business provides a service that banks cannot or do not want to provide and so are run by families/individuals mostly.

All I can say is that I had almost entered this business 10 years ago when I was unemployed, but unfortunately (yes, unfortunately) I got my first job in Canada just when my would be partner found the right location. Today I hear he is "printing money", even bought a motel. I had advised this business to two other persons and while one of them is making nice dough, the other one is making more than what he made in his job with a bank.

And yes, I had got some training in Money Mart - and except that chain, most stores are owned by individuals either on their own or thru franchises (Money Mart is corporate stores, not franchised). Initial investment is less than 100K of which about 35K can be working capital in cash. Margins are good and ROI great.

---

I give up!!

However, if you want one, I can get you one today - my friend is selling one of his outlets. And you might be surprised to know how many Indians/South Asians run this business.

-----------------------------------------------------------------
Chandresh

Advice is free – lessons I charge for!!

Quote:

---

Originally posted by chandresh

I give up!!

However, if you want one, I can get you one today - my friend is selling one of his outlets. And you might be surprised to know how many Indians/South Asians run this business.

---

AT - all I can say is that like most other people, you are misinformed, but truly speaking, more misinformed than others. This business provides a service that banks cannot or do not want to provide and so are run by families/individuals mostly.

To Chandresh :
Can you please tell me what Money mart or shops like MM do? Where does profit come from and what is the profit margin? I want to hear it in your own words.

I am doing an investigative story about such shops in South India. What I would like to tell you is that none can make profit just by commission. True profit comes from converting black money to white, money laundering, financing drugs, hawala tranactions, gold smuggling etc..

In India, the margin is large. The companies get moent from the bank at 9.7 % interest from the banks and charge 24% interest at the minimum.

Murali

-----------------------------------------------------------------
I am a Gents and not a Ladies.

By Adam Thorat :

Lot of businesses, which are going under and/or are sick units are sold by former owners to gullible new comers. So your friend is NOT any different, in passing on his problems and losses to others. Now its their problem !

Lot of belly up restaurants, convenience stores, coffee shops, dollarama type stores, grocery stores etc are also sold by existing desis to foolish new desis after promising them the moon.

Baically like selling your used car ( lemon ) to unsuspecting buyers. Why is your friend selling, if its so lucrative ?

True. Many sick units / going under business will be sold with false book of accounts. Some may want to cut their losses and move on.

As HW36 said in a previous post, walk around and ask the neighbouring stores about what caused the previous store to be sold. In one case HW 36 said that the owner said that his loved one got Cancer and that he wanted to spend more time with the patient while the real reason was that a competetor had opened a store nearby and that about 40-50% of business failed for the original store to be sold.

A sucessful businessman will never sell his original store, unless something is wrong. If he has good profit, he will open a next and a bigger store at the area of his location and concentrate on the new store while allowing the original (old store) to remain and bring him the money.

Murali

-----------------------------------------------------------------
I am a Gents and not a Ladies.

I said I give up.......it is foolish to explain to a person who is not ready to understand and has pre-conceived notions. However, since I started it, I will end it with some explanation.

First, why my could be partner selling his stores (he already sold one and selling another, after having sold his motel too)? His wife who is now at middle management level, has moved with a multinational company to Florida (internal transfer), and his daughter is already in NYU. He has already started getting into real estate business in Florida so makes sense to shift his base there and dispose off his business here. (and I am seriously considering buying it since in any case, it was supposed to be a partnership store - only thing is I am not very sure of getting into retail business at this stage of my life, and will definitely not do it till I get a partner to run it with, may be a working partner only).

What does this business do?

1. It provides pay day loans to people who are in regular jobs but are always running hand to mouth, and we find such people in all societies, including Indians (that is why we have such stores even in Brampton). For them, life is worth living today, not to save for future, which they might never see. It is a different philosophy and to an extent I follow it too - just that I save about 10% of my income for a rainy day so am never hand to mouth. And by the way, people who are not employed cannot get pay day loans - since they do not get pay!!! Before lending, the shop owner verifies that the borrowers are in regular jobs (they have to provide last two pay stubs etc.). I have seen nice but lower middle class persons coming into the shop with family, including nice looking children, to get loans, simply because their needs are greater than their incomes sometimes!

2. It provides check cashing - and there are different kinds of people cashing those checks - the bulk is those getting govt checks who do not want to wait, and believe it or not, just want to go to such shops to "talk to someone", which banks will not do. In Banks, even the govt checks are "held" for sometime. I have seen people giving away tips of $20 after cashing their checks, simply because it was one of their bright days where they were able to talk to someone for half hour and who was willing to hear their stories (yes we were trained in MM to do this - even if there is a line up, since this is what brings many people to your shop)

The other kind is those private contractors who get paid in checks - for them it is easier to hide the money that way, including the HST billed by them (yes, they are cheating the system, but hey, who am I to teach them morals)

The third kind is - divorced people - including private contractors of any kind - plumbers/carpenters/IT guys etc. The charges they pay for cashing their checks is much less compared to the alimony they have to pay if they disclose their income. Have seen people driving up to the shop in nice cars and immaculately dressed, but cashing their checks.

3. Then their is Western Union - thousands of people who are immigrants in Canada use this mode of transfer of money, instead of banks, since as you would know that such transfers are not only easy to collect, but almost instant too! While the shop owner does not get much out of this transaction as most is eaten by Western Union, they get a "cash float" for 2-3 days which finance people will understand how lucrative that can be to run your regular lending business.

4. Lately, most of these shops have added buying of gold for people who want to sell it - for various reasons. They buy it at almost 70% of market price, sell it to bigger dealer at about 90% so make a clean 20% ( in ROI terms 20/70 = 28.5%)

I guess I have given you some insight into the business and people will have better knowledge. It is just that even after knowing all this and having got some training in such a business (which was just to get first hand knowledge - in the MM at Keele and Finch which used to be a 24 hr shop), somehow it was not in my fate to get into it. My friends did, and they have made good money.

By the way, by law, in Canada, a lender is allowed to charge a maximum of 59.9% p.a. interest!!

-----------------------------------------------------------------
Chandresh

Advice is free – lessons I charge for!!