Tuesday, April 28, 2015

Letters to Daniel: Is it difficult to Start a Business in Korea

A special thanks to the production team from the BBC to come to our little bar, Brew 3.15 in Seoul to interview me about being a young entrepreneur in Korea. Thanks! 
A question that I am asked frequently is, "Daniel, is it difficult to start a business in Korea?"

I have to say, "yes and no." It first depends on the type of business you are trying to start and your visa status. I won't go into all the different visas and such. I mean you can find that out here: http://southkorea.angloinfo.com/working/starting-a-business/ Apparently, now if you are trying to get a foreign investor visa you need to invest 100 million into the country. But I have heard this figure change from 50 million to 250 million.

I have an F-4 visa which means I am an overseas Korean. If I was married to a Korean, I could get an F-2, or I could get an F-5 visa (permanent resident) visa and I could easily do business here.

So...if you have a visa that will let you work here then the answer is, "yes." Now keep in mind, that I do startups. I like to start small to figure out the market and keep overhead low. I also plan on working at my companies for a while until I can get it to scale and then I decide if I will sell or hire staff and scale it. In the past, I have invested in small companies, been a partner and owner. Some have worked out and some have not.

Overall, the speed of setting up and doing a business here is very fast. For example, for our bar, Brew 3.14 was set up in a matter of days. I think about 5 actually working days once the lease for the previous owner was over and passed over to us.

Day 1: Take a restaurant training class at a government office.
Day 2: Health Inspection from the government office
Day 3: Check to sign over all the paperwork and inspect the space (the previous owner had it gutted and cleaned in 2 days).
Day 4: Sign over all the leases and licenses from the previous owner to new owner
Day 5: Retrieve Health Inspection, pay rent and deposits and start renovations.

Construction took about 2 and a half weeks and we were open in three. Keep in mine that my first place was a very little craft beer bar. I'm sure that a bigger place would have taken a lot more time.

However, the things to keep in mind is that in order to do a business, it is important to get the proper zoning and licensing to do the work you would like. I had an associate of mine want to start an English academy in Korea. He got initial permissions and found out about the rules and regulations about the size, number of classrooms, teaching rooms, bathrooms, etc to be classified as an English academy. However, during construction the space was reduced by the addition of walls and other constructions. In the end, the space was just short of meeting the qualification requirements by 10 centimeters. Because of this he was only able to be classified as a private classroom where he would be required to teach the classes himself and he couldn't hire others. His business failed soon after.

In the case of my restaurant (and this is why restaurants cost more) the licenses for food, zoning and liquor transferred over. Be sure that you do due diligence to find out about the previous establishment and sign over all debts and bills. You don't want to start a new business with a large overdue electricity bill after all.

Also, if you are starting a business with partners, be sure to get contracts. If you are setting up a corporation, there are some costs involved with legal help plus for foreigners, you would need to get a special stamp or signature set up at your government office. This gets a bit hairy so I would recommend you get an expert for that.

Well, I hope that was helpful. I have to admit that it is much easier and faster to set up a business here than in America (I don't know about the rest of the world). Maintaining it and profiting from it, that's another story.

Dan