Why do many businesses close down in Ubon Rathchathani?

[BrownShrike]

I moved to Ubon Ratchathani about 7 months ago from Bangkok, I have to say I really like it here and I don't plan on moving anywhere else. I was living in Buriram and in Bangkok before and I didn't like it. Ubon has many things that I love such as nature and the local people are very friendly. It has it's cons and pros and I've definitely had to adapt to many things here. My only complaints about living here is not being able to find a variety of food and for some reason the way people drive here is definitely one for the books.

 

Now being that said, I've noticed it's difficult to find work and many of my neighbors work in different districts or even provinces. I've also noticed many businesses open for a few months and later close down. I can't recall how many times I've seen restaurants close down and people selling food suddenly stop. My first visit to Ubon was 2 years ago and I have to say it was a lot better back then, it's definitely different now, sort of more 'dead' even though that might be a good thing for some living here.

 

Being difficult to find work here, I will have to go work in a different province 4 hours away. My wife was interested in opening a restaurant before but from seeing many businesses close down, she is scared to take that approach. We live not too far from Charoensri Market and Ubon Ratchathani University which we would guess business and work should be easy due to numerous of students and workers living here.

 

Those that have been living here in Ubon for years, what are your thoughts on this? Any feedback is greatly appreciated. I hate the fact that we moved to Ubon for a more quiet and peaceful lifestyle from Bangkok, now that we are content here, we have to find work elsewhere.

[DILLIGAD]

Whilst I do not live in Ubon, but not too far away, I’d say your experiences/observations could be said of any Isaan town.
I am a little surprised that you say you cannot find variety of foods in a huge city like Ubon. I would suggest you never live in a rural village where the highlight might be a 7/11 or Tesco Express being opened!


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[lopburi3]

I do not have personal knowledge of Ubon but believe your observation of foods, if prepared, fits all such Issan areas - there just is not enough demand of food from other areas so it is the local version or go hungry.  As for restaurants failing that is true everywhere - many Thai, as they can all cook a little, feel they can always open such a business on a shoestring budget and customers will come.  In many cases customers eat one time and find it not to there liking; and as most things here will not provide feedback to improve, but just not go again and tell their friends it is not good.  There continues to be movement from rural farming to manufacturing and other paid employment for those qualified so expect without such plants to employ people there will continue to be movement among the younger generation to other areas and cities.  Ubon, being a poor border province with no travel route, is at the end of the line for Thailand.  

[SantiSuk]

Lot's of money around but, mirroring a global trend, it's held in too few hands. Those few hands do at least plough a fair bit of it back into the economy by oversupplying the town with trophy hotel projects and building the few swanky restaurants, some of which do survive but many struggle.

 

If you think it's all 'down-at-heel' you haven't seen the car's stacked up every night outside "The Home" restaurant on the Ring Road or visited the new Italian restaurant opened by those backers "Venezia" Ubon, off the Yasothon Road - looks straight out of the pages of Vogue (from an external viewing - haven't tested the food out yet).

 

I have no problems with the variety of food in Ubon - and I'm a City (London) dweller by adult years background - given the fact it is a small town in the wider scheme of things.  But you will have to pay a bit more than local prices to get it. Here are some I pulled off the top of my head that are not in the standard Thai variety:

 

The Home, Smile, Ricco Caf, Golf House, Outside Inn, Spago, Peppers, Oshinei, Indochine, Feeling, Saloon Cafe & Bar (light meals). Some of the food in the falang bars (N-Joy, Wrong Way and Ubon Irish Pub) are decent examples of pub fare too. At some of these you'll have to wait for a table at weekends.

 

London or Bangkok this is not but it's not far off the range variety/quality you get in equivalent sized (150,000) towns in the UK and most other countries IME. 

[BrownShrike]

3 hours ago, DILLIGAD said:

Whilst I do not live in Ubon, but not too far away, I’d say your experiences/observations could be said of any Isaan town.
I am a little surprised that you say you cannot find variety of foods in a huge city like Ubon. I would suggest you never live in a rural village where the highlight might be a 7/11 or Tesco Express being opened!


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Dilligad: Actually I did, when I worked and lived in Buriram I stayed in a village that was a lot worse than here. Somehow the local food there wasn't too bad  You are right, a variety of food can be found in the city of Ubon but I do not live in the city of Ubon. I live in a different district. I often find myself driving a distance to find food in the city. 

 

I definitely agree Ubon has a lot more to offer than other more poorer provinces, that is why I am surprised. 

[ubonjoe]

56 minutes ago, BrownShrike said:

I definitely agree Ubon has a lot more to offer than other more poorer provinces, that is why I am surprised. 

It's location has a lot to do with. A lot of people come to the city from the 3 neighboring provinces. Plus it is close to the borders with Laos and Cambodia.

[Michael Hare]

I agree that many businesses do close down only after a few months. I am not talking about restaurants. I have seen coffee shops open and then close only after a few months; Hairdressers, small fix-it shops, mobile phone shops and so on. The problem is for most of these small business owners they never do due diligence. Get an idea and start. Monthly rents in many intercity locations in Ubon are 10,000 baht/month for a shop house. Also extremely difficult to get a loan from the bank if one does not have a credit rating or an extremely large capital percentage. The banks are just not lending to the average small business person. 

[moonseeker]

I think the closing down of small and medium businesses applies to many other places too. Here in Pattaya you can drive around Sois in Central Pattaya where every 3rd shop or so is closed and for rent or sale sign on neglected buildings. This even goes for main roads...Have seen this starting 2 years back.... MS>

[geisha]

Yes, Thais open buisnesses here without any thought . Wherever you go, if it’s Hua Hin, Pattaya, Jomtien, you see all the closed up , for rent, shops, here today, gone tomorrow. Sometimes in the most incredible places too, stranded on a quiet road for example. As with condos , buisness is location location location. A restaurant, for example, with a good location and  good chef, will usually succeed. There again, here in Thailand there is too much choice, dozens of massage salons, hairdressers, manicures/ pedicures, food stalls, small ( most not very good) restaurants, how can you make a decent living. Most don’t. Rent on a good location is expensive, finding staff ( that stay) another big problem. 

[Brunolem]

Things changed a lot in Ubon when the big Central shopping center opened a few years ago, and started attracting almost everybody, killing in the process many retail and food businesses in the city, including the whole SK shopping center which was the previous "rendez-vous point", especially for the students.

 

Go to Central in the week-end and it feels that the whole city is gathering here...the restaurants, mostly Japanese, are all full all day long, while businesses in the city are struggling...I was dining at Spago on Saturday evening a week ago, and there was only one other table occupied.

 

With regards to doing business over there, I tried to deal with Central last year, with a good project which they liked, but it's like everything else in the country, they make the rules according to who they are talking to and maybe the position of the moon or whatever crosses their mind...many things were impossible, because "forbidden by corporate rules", only to discover a few weeks or months later that they were actually possible...for others! 

[Minnehaha]

Two (just two) of the reasons you see Thais open a business at the drop of a hat is because Thais do not work well together. They all want to have their own restaurant or coffeeshop or whatever the hell. They lack some fundamental social skills required for team work. Another is that nobody will tell another why it is a bad idea and even if they did, see point one. (People do not seek advice or listen to it if it is given).

 

Regarding the turnover of small biz here, it is undoubtedly higher than other places. 1. Thais want to be rich and see that business owner is a way to get there. 2. Starting a small biz here is not that expensive (requires small capital) and people readily borrow or gift cash, more so than other cultures. 3. The most commonly failed biz in the world is the restaurant. Thailand has a phenomenal food culture / cuisine. People eat out. This magnifies the number of restaurant ideas. Every Thai woman living in Bangkok between the age of 18 and 45 has dreamed of or started their own coffee shop. 

[NiwPix]

Michael Hare is pretty much spot on.

The biggest problem is, they work on too small margins. They buy something for 10 baht and resell for 20 baht and think they made 10 baht profit. Not realizing they need to sell 30 of the items just to cover their "minimum wage".

Or in a coffeeshop example, they see Amazon "busy" and think they can open up their own shop and sell it 5 baht cheaper or make the coffee a size  bigger and the customers will come to them instead of Amazon. Not realizing how much time and research they put into this. and probably working at a loss before turning profit.

[swissie]

4 hours ago, NiwPix said:

Michael Hare is pretty much spot on.

The biggest problem is, they work on too small margins. They buy something for 10 baht and resell for 20 baht and think they made 10 baht profit. Not realizing they need to sell 30 of the items just to cover their "minimum wage".

Or in a coffeeshop example, they see Amazon "busy" and think they can open up their own shop and sell it 5 baht cheaper or make the coffee a size  bigger and the customers will come to them instead of Amazon. Not realizing how much time and research they put into this. and probably working at a loss before turning profit.

Businesses opening and closing all the time is not limited to Ubon.

A successful business will soon attract "copy-cats". No business plan. Bookkeeping? What is that? Overhead calculations? Part of the profit has to be retained to re-stock? That sucks!
For years, I have conveyed to small enterpreneurs in the sticks such basic things. With little success.
- I had to find out, that the opinion and the advice of the local monks (as far as the success of a business is concerned) is more valued than the opinion of some "stupid Farang".

They were "advise-resistant" in 1996 and they still are today. Nothing has changed.

And nothing will change as long as the "education-gap" between a thin intellectual elite in BKK and the rural-dwellers in the Isaan can not be bridged-over in some sort of way.
Some observers claim, that the closure of the "education-gap" is not on the agenda of "the powers that be".
Cheers.  

[isaanbanhou]

  Thai's for the most part have no idea what a business plan is and as others have said love to copycat. It's like those that have money have little understanding of how to work and earn it and unfortunately those that don t have money only know work. Being pale skinned and Thainese seems to be the only qualification to being a business owner.

 

Hotels and resorts also seem to be bottomless money pits with no possible return on your money when the max you can charge for a room is 750 baht.  Sisaket has more modern hiso coffee shops than can ever possibly be profitable. 

 

   I am sure business was better a couple of years ago in most of Isaan, commodity  prices were higher and a government that was more responsive to Isaan's needs was in power.  Around my village there is Uncle Tu to blame for the current economic stagnation.

[Brunolem]

Generally speaking, small businesses are disappearing the world over, because they simply can't fight against...big business.

This is the extinction of the "mom and pop's shop" that has been going on for quite some time, including in Asia (see my previous post above).

To make things worse, people are constantly brainwashed by advertising, so that they are attracted by brands, wrongly thinking that it is a guarantee of quality.

If you apply for renting some space in a shopping center in Thailand, the first question you will always be asked is: what brand do you represent?

 

Having said that, things get even more complicated in Thailand because of the incredible competition coming from people who can't do basic arithmetics.

If you ask any of these small sellers, on the street or at the market, how much money they make, they will invariably give you the (wrong) amount of their daily sales, as if sales and profit were one and the same.

They are totally unable to calculate their cost of doing business.

On top of that, they largely overestimate their sales, which they never bother to check.

For example, they will tell you that they sell for 5,000 baht per day of items, food or whatever, sold at 20 baht per unit.

A quick calculation shows that 5,000 baht of sales would require 250 customers per day, or 25 per hour, providing a 10 hour working day, or about 1 customer every 2 minutes!

And yet, when you observe the activity going on, you see that they regularly stay for 20 or 30 minutes without seing a customer.

Thus, in the end, reality wins and they go under, without having any idea why!

And some guy...there is always one...who has heard that it was "possible" to make 5,000 baht a day will immediately fill the void.

And since there is an unlimited supply of would be entrepreneurs, the wheels keep on turning...

 

[sanemax]

From what I have seen , new restaurants open up and they do not stay open long enough to get repeat customers .

  Many customers eat at the same place regularly , they find a place that they like and become frequent visitors , restaurants build up a clientele over a period of time .

   A new restaurant will open  , and they will close soon after , not giving it enough time to build any regular clientele .

  Also , what I have noticed quite frequently is that when a new restaurant opens , gradually, week by week, they make cut backs , reducing the menu and the food portions or half the items on the menu are "not have, finished" .

[SantiSuk]

Everyone seems to be violently agreeing here. Makes a change so you might as well all keep piling in!

[sanemax]

12 minutes ago, SantiSuk said:

Everyone seems to be violently agreeing here. Makes a change so you might as well all keep piling in!

And the second page and no one has even mentioned the Red Bull heir or Donald Trump yet .

Long may it continue..............

[ubonjoe]

3 minutes ago, sanemax said:

And the second page and no one has even mentioned the Red Bull heir or Donald Trump yet .

If somebody did post them they would be immediately removed for being off topic troll posts.

[transam]

It is a well known fact that one of the best farang...........voices lives in Ubon........Well worth the wait for the encounter....

[DUNROAMIN]

I have not lived here that long either, about 2 years now, travelled a bit around Thailand, and generally speaking what I've seen businesses and restaurants come and go everywhere in a short period. The main reason is the average Thais  don't have any business sense, as in, a business plan, market research and a risk analysis. They borrow money from loan sharks and then can't repay it so consequently the whole extended family has bail them out at a cost to their lively hood. Those who survive end up working 7 days a week for peanuts.

My wife admitted to me that in her younger days before I came along, that she tried the same thing, barely lasted six months. She was throwing more food out than she could sell.

If you wife wants a restaurant be prepared to loose everything that you put into it. Look at it as a hobby for your wife.

I have learnt from other farangs here, don't buy into anything in Thailand. If your retired like I am relax and enjoy yourself, socialize, travel, do some gardening or get a hobby.

My thoughts.

[Brunolem]

3 hours ago, SantiSuk said:

Everyone seems to be violently agreeing here. Makes a change so you might as well all keep piling in!

That may be because when it comes to Isaan topics, more "leveled" minds prevail, while other, more agitated spirits, are busy commenting on car fatalities...

[JLCrab]

3 hours ago, transam said:

It is a well known fact that one of the best farang...........voices lives in Ubon........Well worth the wait for the encounter....

 

... And what happens in Ubon (hopefully) stays in Ubon.

[Gonsalviz]

I was gonna say that they are lousy business people.