Korean Job Discussion Forums

[south pacific]

Hi all,

Employer relations vs. business sideline

I appreciate that to undertake private teaching outside of school hours, a documentation process is required, which legalizes privates and provides transparency. But I'd be interested in hearing views from those who have investigated going beyond privates, to their own business sideline, and how employers reacted (assuming transparency with the employer).

This needn't be limited to teaching. I'm interested in the tension between employment and the entrepreneurial spirit, e.g., in respect of an idea such as the one below. I appreciate the red-tape aspect, but I assume this can be overcome (a bit like privates, except this is more like foreign direct investment).

For those interested, I hope you won't mind me sharing thoughts on a business concept, inspired by a poster's offer of a small loan to me.

Scenario: Dragon Finance

A Seoul-based ESL professional starts 'Dragon Finance' - a micro-loan facility for ESL teachers in SK.

They advertise on Dave's, and schedule appointments around their teaching schedule, which luckily has sufficient flexibility to accommodate this. Loan application interviews are conducted in the local Starbucks.

Dragon Finance starts small, issuing two 1-month loans of US$500, to two stranded ESL teachers in Seoul. Interest is charged at 10% per month, to cover time, expenses (e.g., advertising, documentation, etc.), and risk.

It turns out that demand is consistent, and after 10 months, and a steady stream of borrowers, the initial US$1,000 outlay has grown to $2,000, due to 10 months worth of interest (@ 2 x US$50 per month).

Dragon is then able to grow its loan book to 4 x $500 loans the following year. That doubles again, and so-on.

On paper, this means it would take Dragon 10 years to turn $1,000 into $1 m.

But if the founder had started by putting $6,000 at risk (i.e., 12 x $500 loans), it would have $6 m after 10 years. By then, the company would have expanded into other geographical ESL markets (as the loan-book would out-grow the SK market).

I only float this idea as an example. I'm interested in comments from those who are balancing employment with a business sideline. Thanks.

[Wangja]

10% a month?????

[south pacific]

I only used that figure as an example

But when you think about it, it might be a fair rate when you take into account: a) online advertising; b) documentation (e.g., stationery, consented photocopying of applicant employment contracts, manila folders, etc.); c) time taken to process applications, consented phone calls to employers, to confirm employment, etc.; d) the risk factor - e.g., that, say, 1 in 10 borrowers may not make good on their loan; and, e) the face value of the loan amount is not a lot in the scheme of things - $500 @ 10% is still only $50, which should be affordable.

If conducted legally, and ethically, i.e., no hidden costs, then I don't think this is unscrupulous or predatory. It's just market forces for a finance product, not too dissimilar to a bank loan.

An alternative to this level of interest is a lower interest rate combined with a compulsory loan protection insurance premium, but this would still have to be $55 if we assume that for every 10 loans, one borrower will default or do a disappearing act. So you may as well keep it at 10% interest, for the sake of simplicity. Those are my thoughts anyway.

But I'm interested really in any feedback on the employment vs. need to try some sort of business venture tension, and experiences people have had.

[Ya-ta Boy]

Have you taken into consideration that many ESLers make no bones about skipping out on their last month phone bill, etc?

It's one thing to make a loan to a person who is a member of a stable community. It's something else to loan money to a member of a transient community.

[Unposter]

I'll praise your entrepunerial (sp? -- why doesn't Dave's have a spell check?) spirit.

But, you can be a loan shark back home too. You can even get some muscle and break people's knee caps if they don't pay. You could be the Godfather of Korean loan sharks.

Many first time teachers can get advances on their pay from their hakwons so I am not so sure this is going to work.

But, I have a suggestion for you: Become a certified financial planner and help cash-laden ESLers invest their money and prepare for retirement. Now, this is a side-line with great potential for the right sort.

[south pacific]

Hi Ya-ta boy. Yes, and I think the argument for a 10% monthly rate (maybe even 15%?) finds support in this. In reality, I'm not sure the numbers of ESL teachers in need of a micro-loan would be that great. So, whether the concept is worth trying to operationalize would be up to individual entrepreneur aspirants. I don't think there would be an easy way of doing market research either. Could one send questionnaires out to language departments / schools and expect them to be returned? It's unlikely many would be.

On a different note, and so as not to get bogged down in a finance venture scenario, here is another example.

A lady called Donna Awatere-Huata, formerly a New Zealand psychologist and MP, invented a four minute method to help kids read.

[south pacific]

Thanks Unposter. You beat me to the observation that this is a niche market that may be limited. Also, I didn't include my source: http://tvnz.co.nz/view/page/411416/927754

On the topic of financial planning, I may have a worthwhile suggestion.

For $1,000 set up an account with CMC markets http://cmcmarkets.com (reputable)

Using only $100 of the thou, you could buy 5 x $20 S&P 500 index contracts, and "go long" - in other words, stay in the market. Over a period of time, as illustrated by the chart (see URL below), the market goes up. So it's like a big gravy train, and all you have to do is get on it. In a year, if the market goes up 200 points, you would make 200 x 2 (allowing for two increments per point) x .30 cents each increment (per $20 contract) = $400 x .30 = $120 x 5 contracts = $600. Not a bad return on $100. If you had invested 1000, in contrast to 100, you would make 6,000. If you had invested 10,000, the yield is US$60,000, which would mean finanical independence for most people.

http://quote.barchart.com/chart.asp?sym=$INX&code=$INX

Sorry to get into heavy stuff.

[Wangja]

Or go short?

Now THAT's living ....

[south pacific]

Wangja, check out the Hong Kong 33 index.

[Juregen]

[Juregen]

I love the way people ALWAYS asume the market to go up....

[Wangja]

[TheUrbanMyth]

[Novernae]

Wouldn't you have to have about 12,000 'customers' that last month to maintain that growth at that size?

[Captain Corea]

While on an E2 I set up a business here in korea - it was approved by the tax office and gu but eventually (read: strongly) rejected by Immigration as a violation of my E2.

I have since set up my own company while on an F2 visa.
No Immigration hassles so far.