Make a Living With a Shabby Business

This is a book review of "Shoboi Kigyou de Ikiteiku" by Erai Tenchou, which translates to "Making a Living with a Shabby Business" (しょぼい企業で生きていく). Incidentally, the author's pen name, えらいてんちょう translates to "admirable shopkeeper", which really captures the essence of the book.

Before we get into what this book is about, I'd like to talk a bit about my brief experience in the Japanese business world. Turns out, Japan only has two types of companies: Massive corporations, and small-medium enterprises that act like massive corporations. Of course, there are also tiny mom-and-pop shops that sell something specific like ramen or whatever, but those don't really count for our purposes since they are usually passed on from parent to child.

How to start a Serious Business™ in Japan

Essentially, when a person wants to start a business in Japan, they follow these simple steps:

1. Figure out what you want to do (Example: I want to start a café)
2. Write a business plan
3. Show the business plan to a bank/investors
4. Borrow a bazillion yennies
5. Work your ass off to make the investment pay off and return the money (and take some money home if you're lucky)

Before you tell me that this is how business works in literally every other country, I'd like to mention that this is how even some puny little mom-and-pop shops work in Japan. Even if it's something like a café or a small restaurant, they just HAVE to borrow some life-crippling amounts of debt because they think it's what makes their business "trustworthy".

So, this whole book is about going against the grain of Japan's strange, hyper-formal business world. Why not skip the formalities and make a crappy, half-baked business instead?

The author's story

The book is split into various sections, some more valuable than others. For the most part, the author rambles on about how he's simultaneously running 4 (!) businesses at a time. A secondhand goods shop (which has multiple branches), a bar, a cram school and something else I can't remember. So the guy was in his early twenties, and he was like, "Man, I just can't stand spending 2 hours a day stuck in a train full of people packed like a can of sardines, imma just start a business even though I'm broke and have no marketable skills". And you know what, the absolute madman actually succeeded!

These are the core points that he talks about:

1) You don't need a lot of money to start a business

To be specific, he says that you only need about 500,000 yen, or around 3500 USD to start a business. You just need to find creative ways to reduce the money that you need in order to get started.

His example of "reducing fixed costs" is from when he started his secondhand goods store: He literally lived inside the store. He paid rent for the place and furnished it with some basic necessities like a futon. Which for a single guy is probably enough. All the other money went to obtaining secondhand goods to sell, which people are usually willing to give away for free (or dirt cheap). And thus his business succeeded wildly, not because he made massive profits, but because his profit margin was massive. Soon enough, he was making enough profit to make new branches, which was also made possible by the low cost of entry.

Another interesting example of reducing fixed costs, is how he used goods that he obtained for free, to start his new shop. People usually splurge when they start a new business, buying all the shiniest newest equipment possible like it'll definitely attract customers, but the reality is that it's a waste of money. So he used all the mega cheap furnishing to start a bar in the same neighbourhood as his secondhand shop, and once again he was successful! Obviously, this is because the bar is set very low. When your fixed costs are minimal, just a few customers are enough to break even.

2) You don't need to hire people to start a business

This one is pretty interesting. I say this because I doubt it would work out very well in the Western world. What it amounts to is: "Find out how to get people to work for free".

Basically, Asian countries, and especially Japan, have this interesting habit of "mutual favours". Surprisingly, I have experienced the same in Argentina, so it might be common to Latino culture as well. The point is: "Money isn't everything". Labour is a form of capital too, and if you can get people to help with your business (for free), then that's a fantastic idea.

Now, you will probably point out how this is such an awful idea, and barely legal at that. It sounds really questionable at first, but it ultimately boils down to your relationship with the person in question, and whether they enjoy doing the work.

Example:

• Acquaintance asks you to do something you don't like for free (BAD)
• Close friend asks you to do something you enjoy as a favour (GOOD)

So the dirty little trick that "Admirable Shopkeeper" recommends, is to use the power of favours to basically hire your friends for free and then in turn help them out with gigs you actually enjoy.

This might seem convoluted and silly, but think about all the tax money that you save by implementing a trade/gig economy rather than actually going through the trouble of hiring. Not to mention that you are 100% guaranteed that people actually like the job, and don't just work for the sake of money. Pretty clever if you ask me.

Apparently, his bar has a volunteer system where random people can get to experience being a bartender for a day (for free!). How cool is that?

3) Create a space that people can freely use

In order to understand this one, let's think about what a crappy store would look like. No customers. Empty. Shopkeeper is idling or not even present.

Basically, what you want to do is create the exact opposite of this "dead-end shop". Make sure that people are coming in and out, even though they aren't buying stuff. Make sure you keep yourself busy in some or other way, make it look like the store is prosperous.

His example of this is also quite interesting: In his secondhand goods shop, he has a "Free Stuff" section where people can just pick stuff up for free. This would be weird if you were a Serious Business™, but for a crappy business, this is actually an excellent way to get activity in your shop. There's gonna be people visiting your shop and browsing around just because they want free stuff. Which incidentally causes passersby to think: "What a lively, bustling shop!"

Another trick he uses is just putting tables, chairs, board games, books, etc. around the shop. And making people tea for free. Now this is pretty unthinkable in most countries, but for a place like Japan, giving people tea and a place to relax is a great way to get them to do favours later on. Which is why this guy does it, and quite successfully too.

This is not just a way to get people to make the store lively, but also a way to recruit volunteers later on. Devilishly clever, if I say so myself!

4) Leverage social media

So this is the point that shows up in every business 101 book, and I won't explain it in detail. However, his example is noteworthy.

Essentially, he mentions how he funded a kid who asked for 10 grand on Twitter so he could start a coffee shop. As if Japan didn't have enough coffee shops already.

If that seems unbelievable, it's because it is. You wouldn't just throw 10K at some random noob looking to do business, even if you were rich. What happened is, the coffee shop kid was an avid follower of the author's Twitter and blog. He always left comments and interacted with the "community" that the author created. So it's not like he was a total nobody, just an honest fan who aligned with the author's vision and agreed with his teachings.

Now that's the interesting point: You can use social media not just to get customers, but also to get funding. So being active online, in some way or another (without wasting your time), can actually be a productive thing to do.

Summary

To wrap it up, Shoboi Kigyou quite an interesting book. There were a few nice and unexpected nuggets of wisdom, unlike the typical regurgitated drivel you see in most "business" books. A pretty worthwhile read for anybody entertaining the thought of running a small business, or really anybody who is tired of the typical 9 to 5 work style and is looking to make some side income.