>> Monday, March 26, 2012

Ever since I read Robert Kiyosaki's book Rich Dad Poor Dad, where he advised people to build assets that could generate income, I have been trying to think of what are the assets that could fit the bill (generate income) outside the usual things that will come to mind when talking about assets for example real property, mutual funds, bonds, shares and the likes. What are the things that are smaller in value, that can be bought with cash, and can generate income? (if you have any answer/idea, please leave a comment!)

Of course, there's a lot of businesses revolving around this concept, which is to purchase assets and rent them out, some easy examples being car rental, lorry/moving services or canopies-for-rent.

Some examples of items with even smaller value:
- books
Example: Q'reazant
- toys
- wedding needs eg dresses/gowns, pelamin
- costumes

Last Saturday, we took the kids to Zoo Melaka. We brought our pushchair for our 1-year-old, but we noticed that there were quite a number of families who were holding their babies in their arms (some are 'wearing' their babies so that's okay too, not as tiring as having to depend solely on your arms!). Don't they get tired? They may intentionally choose to carry their babies, but I imagine a service offering pushchairs for rent in places of attraction would be quite welcomed and an added value to visitors!

This service is already available in certain shopping complexes (the one that I know of is Alamanda, Putrajaya). When we went to Gold Coast, Australia back in 2010, we also rented a stroller when we went to Dreamworld.

This is how I imagine the process would be like. First, the entrepreneur would need to give a proposal to the authority or management of the place of attraction that has been identified as having a potentially significant demand. She would need to sell on the idea that this service will be appreciated by their customers and can even be added as a feature in their brochure/flyer. Then if the management has bought the idea, then she can proceed to negotiate the monthly fee to be paid to the management and what facilities (if any) is expected. Let's say the management is happy with RM1000/month (figure is plucked-from-the-air, no basis hehe).

Capital. Purchase of the pushchairs, of course. Go for a good quality ones, but not necessarily branded. The one I'm using, for example, cost only RM220, and it passed European safety standard. Ok, using Zoo Melaka as an example, I would probably go for 5 units to begin with, though this is probably more on the low side for weekend and peak times. So, total investment is RM1100.

Staff. The entreprenuer would need to hire a worker who will be manning the 'stall'. Expected salary ... my guess is around RM800/month? It's an easy task but very boring. The staff would also need to be relieved during breaks.

Rental. How does RM20 rental per entry with RM30 as deposit sounds? Fair? Let's say the take-up rate is 6 times a day on average (ok, another pluck-from-air figure, no research/survey at all), the the total proceeds is RM3600.

Operation. Ideally, if the exit point is near the entry point, then the staff could watch out for possible theft. (Yes, that's a risk that needs to be mitigated). But if it's not, then it could be quite tricky.

1) Get a good trustworthy staff.
2) Avoid theft. Would a higher deposit help?

So, on a monthly basis, the profit is 3600 - (1000+800) = 1800. This means the entrepreneur could recover the investment cost (1100) in just one month.

And then, of course, repeat this process for other places of attractions :)

Of course, this could also be a direct initiative by the management of the places of attractions, as an added source of income.

(Gosh, writing this makes me feel like an 'armchair entrepreneur' because I just think them out but I don't execute them.)

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