Would you start a new business when the total expenses are 60k a month?

[ubonr1971]

My wife is an experienced dentist and can do all dental procedures. The only weakness is orthodontics but she will be finishing her training this yr. She has already started to do basic orthodontics cases. For more tricky cases we can pay a fee and put the info/ measurements into the software and consult with experts in America. 

 

We are ready to open a clinic and we are moving to a new location that is predominantly a small Thai city with minimal farang. There are numerous clinics in the city but none seem to have the 'wow factor'. There are 2 good ones and the rest are old and ugly looking.

 

We found a new development with 2 rows of shops- some are single size and some are double. A landlord in the building with the slightly better location wanted 35,000 a month / 70,000 (double). They would not negotiate on price. We are now in contact with a different landlord in the other building that is still quite a good location adjacent to the other one. Its not as good but still ok. We said we would pay 35k for a double shop- 3 yrs lease registered at the land office and 2 months deposit. On renewal we said we would increase to 50k and put this in the contract. 

 

He came back and said he wants 40,000 a month for the double. I estimate our general (total) expenses including the rent to be 60,000 baht a month. That equates to 2000 baht a day. 

 

My wife is unknown in this new city. If Im realistic I would expect to lose money in the first 12 months at least. Say that we have no customers for 1 yr I will lose $2400 a month ($30k a yr). 

 

The question is... how/ why would a local change from using their own dentist to a new one (an unknown dentist)

 

Once it starts getting busy a dental clinic has a great business model because other dentists can work in our clinic and we get 50% of their billings. We just pay them cash at the end of their shift for the work they have done. 

 

I dont want to go on about the earning potential but it is huge if the business takes off. 

 

Positive reasons to proceed:

- my wife is jai dee, not money hungry and an excellent dentist. She is constantly told this by other dentists and patients. 

- the building is on a busy road. There are no other clinics in the area

- 7 eleven is moving into this development close by. 

- I can give up teaching and get a WP for the partnership business

- We can live on the 4th floor and thus we are saving 10,000 a month there. Hence one way to look at it is that we are only paying 30k a month for the business. 

- We know a clinic that is in yr 6 and its turning over 500,000 baht a month. The owner is not in the same league as my wife (personality and skills). 

 

Negative

- other clinics are likely to open in this development

- its on govt land and we can be evicted anytime. Unlikely but could happen

- only a 3 yr lease can be legally registered at the land office. after that who knows what could happen. 

- I will probably have to spend up to $200,000 on equipment. We could take this if we move. Our goal is to buy a building one day. 

- my wife has under half a mill in savings and thus I would be more or less covering all losses

 

Ive already told her that I dont want to proceed and think 35k is a fair price. Actually I think the rent should only be 30k. 

 

We have driven around the city and looked at so many ugly old buildings with high rents. This new development is an opportunity but the 2 main risks are 1. Are we under estimating the 1 yr to break even. Will it be longer? What if it takes 3 yrs to breakeven. In the worst case scenario I could lose $90,000.  2. If other dentists move into this development this will be bad. We know that the other landlord in the first building had a call from a dentist. She told us this but obviously it could be fantasy. 

 

Whats your opinion on all this? 2000 baht a day is pennies once we get customers through the door. Orthodontics is the big draw card. Ultimately we want to build up a business from the ground up and provide an excellent service to the local community. We want to work for ourselves and build up equity in the business to provide a good future for our baby. 

 

This is one of the biggest decisions of my life. Our business will add a lot of value to our lives and to the local community but I dont want it to be a cash burn. 

 

cheers and thanks

Edited February 19, 2018 by ubonr1971

[Rc2702]

I think the outlay on premises is too high and will hurt you. There is a dentist by me which is by a 711 which looks like it does well but their premises cannot be more than 10-18k a month. I know this as a smaller premises on the same patch is 9k a month. They are both 30 metres from a 711. Not sure what ugly buildings have to do with it. If your shop window looks clean and inviting it would stand out from the crowd  anyway. Small city in thailand charging rents so high seems odd to me.  New area, no contacts, children to support. I'd be very careful to over expose yourselves and take much smaller steps. The dentist by us is just on a small road nothing special, parking is ok there are three other shops unoccupied on its patch. My kids clinic is the same and when we lived in another city the dentist and clinic for kid was again, nothing special to look at, just clean and inviting and both were busy. One city was kalasin and the current, khon kaen.

 

Good luck with it all.

 

 

 

 

 

 

[TerryLH]

4 hours ago, ubonr1971 said:

I can give up teaching and get a WP for the partnership business

And do what?

 

Terry

[4evermaat]

The other tenants that are paying +35k/month...what kind of businesses are there?

 

How many stories are these?  You mentioned something about living on the 4th floor.   What would the other 3 stories be used for?  How many square meters is each floor?  Will you have to customize anything like add bathrooms/walls/etc?

 

Any reason why the lease would only be for 3 years vs 10+ years?  That's a lot of money for only 3 years; landlord can just tell you to take a hike after you refuse to pay double what you were paying earlier (and your lease expired).

Edited February 19, 2018 by 4evermaat

[VocalNeal]

My brother is a dentist and his clinic (not in Thailand) has no frontage as it is upstairs accessible by a single door and some stairs. He does OK, to understate the obvious.

I do know that for conventional dentistry it costs a sh1t load of money to equip the surgery. It is by far the largest cost. about $60,000 min. 

Maybe if you only do orthodontics then you only need the chair and not x-ray, drilling, instruments etc. 

 

I would say it doesn't have to have a frontage as most people will search on FaceBook. So you need a good site and pay someone to keep it up to date and at the top. That is 6000-10000 a month? 

 

Premises it needs to be neat and bright etc. I'm thinking a conventional 4m wide shop house  Reception waiting and 2  surgeries on the ground floor as you'll need a hygienist first?  

 

 

[crazykopite]

You need to do your market research it is not expensive if you have good family or friends who will assist you . Or you and your good lady could do it yourself . Many years ago I and my wife had the same predicament as you face we had found what we thought was the right location but were unsure if the service we were providing was suitable to those around us . We decided that we would target 1,000 potential customers by stopping and asking there opinion this was over a 5 day period thankfully we had enough information that persuaded us to take the risk .11 years later we sold our business as a going concern and retired to Thailand . The most important thing for me was Location Location Location . Good luck to you and your good lady on your venture ??

[FritsSikkink]

"I estimate our general (total) expenses including the rent to be 60,000 baht a month. That equates to 2000 baht a day. "  this is not true because  "- I will probably have to spend up to $200,000 on equipment".

Your equipment won't stay good forever and will be out dated after a while too.

Say 200000 USD @ 31 THB = 6200000 THB.

I don't know the lifetime of dental equipment but let's say 5 years. this will add another 103333 depreciation costs per month on your general expenses (3444 THB per day). This doesn't include any repairs needed in those 5 years.

There will be other costs too, so I don't think you have got the total picture yet. 

[steven100]

Well it also depends on if you can afford the 200,000 that it may cost you for the first year including setting up.

Obviously, you will make good money some months but lose alot other months.

It boils down to the amount of risk your prepared to take and if it all goes haywire can you absorb the lose ?

Not saying it will go wrong .  as if you look into it properly and do your research then chances are it will be a success.

Way up the pros & cons ....  

good luck.

[mstevens]

It's important to control expenses in a business but you seem to be concentrating almost entirely on that while not commenting on the potential income the business you could bring in.  What you've covered in your original post is good and clear and shows a great understanding of the fixed expenses - but that is just one part of a business.  I think now you need to do your market research - check out who the opposition is, who the target customers are, whether there's demand for a new dentist in town, whether you can offer a differentiated / better / more affordable service etc.  Then consider things like promotions / advertising etc as well.  I'd look at the competition and the market in general and then hopefully you will be in a better situation to make a decision on how / whether to proceed.

Edited February 20, 2018 by mstevens

[jackdd]

I can totally understand you that you want to have your own business as fast as possible, but maybe you start a bit different:

She starts to work in an existing clinic for a year or two. This way you get an insight on how the business in this city is. You get clients that would probably be willing to "move" once you open your own clinic and don't start with zero clients then. You can save up some money to do the necessary investments.

[BEVUP]

I know you wanted a work permit to help but as another poster said " & do what "

 

So lets look at it as to when you walk in the door of another Dentistry

 

* you have paid for all the set up - Waiting room / Receptionist desk / clinic rooms with equipment / aircon- tv's / ect ect

 

* Then I'm sure your wife would want an assistant / along with a receptionist & someone to keep the place clean & sterile. This was the area no doubt you were looking at savings  & maybe still can as  It's a one person show

[ubonr1971]

14 minutes ago, BEVUP said:

I know you wanted a work permit to help but as another poster said " & do what "

 

So lets look at it as to when you walk in the door of another Dentistry

 

* you have paid for all the set up - Waiting room / Receptionist desk / clinic rooms with equipment / aircon- tv's / ect ect

 

* Then I'm sure your wife would want an assistant / along with a receptionist & someone to keep the place clean & sterile. This was the area no doubt you were looking at savings  & maybe still can as  It's a one person show

The 60k a month includes 1 assistant 10,000 baht a month salary

[ubonr1971]

7 hours ago, TerryLH said:

And do what?

 

Terry

Im an ex I.T guy and can look after marketing and do the finances each day. I think there will be plenty for me to do.

[ubonr1971]

7 hours ago, 4evermaat said:

The other tenants that are paying +35k/month...what kind of businesses are there?

 

How many stories are these?  You mentioned something about living on the 4th floor.   What would the other 3 stories be used for?  How many square meters is each floor?  Will you have to customize anything like add bathrooms/walls/etc?

 

Any reason why the lease would only be for 3 years vs 10+ years?  That's a lot of money for only 3 years; landlord can just tell you to take a hike after you refuse to pay double what you were paying earlier (and your lease expired).

We are trying to find out what the other businesses will be. So far we know 1 will be a pharmacist and 1 will be 7eleven. 

 

Actually the double sized (width) shop we are thinking about has the ground floor and 3 upper floors. We would live on the top floor. The other 2 levels would comprise of an xray room. Another consultation room for another dentist working for us. Staff eating room. 

 

Because the buildings are on government land its only legal to have 3 yrs registered lease at the land office. Anything longer than 3 yrs is a null and void contract. Its the main reason why we didnt buy it ourselves. 

 

The question is can we have a water tight contract to agree on the subsequent 3 yrs at xxx rent per month. Can this be agreed on in the contract and is it legal

[ubonr1971]

5 hours ago, VocalNeal said:

My brother is a dentist and his clinic (not in Thailand) has no frontage as it is upstairs accessible by a single door and some stairs. He does OK, to understate the obvious.

I do know that for conventional dentistry it costs a sh1t load of money to equip the surgery. It is by far the largest cost. about $60,000 min. 

Maybe if you only do orthodontics then you only need the chair and not x-ray, drilling, instruments etc. 

 

I would say it doesn't have to have a frontage as most people will search on FaceBook. So you need a good site and pay someone to keep it up to date and at the top. That is 6000-10000 a month? 

 

Premises it needs to be neat and bright etc. I'm thinking a conventional 4m wide shop house  Reception waiting and 2  surgeries on the ground floor as you'll need a hygienist first?  

 

 

The shop we are looking at is light and bright. We think it would be a real winner. 

 

I can do all the I.T stuff myself. 

 

There is ample parking as well

[ubonr1971]

34 minutes ago, jackdd said:

I can totally understand you that you want to have your own business as fast as possible, but maybe you start a bit different:

She starts to work in an existing clinic for a year or two. This way you get an insight on how the business in this city is. You get clients that would probably be willing to "move" once you open your own clinic and don't start with zero clients then. You can save up some money to do the necessary investments.

This was my idea as well to be honest. I totally agree with your comment. 

 

However we see this building as a real opportunity due to the fact that its new and good location

[ubonr1971]

51 minutes ago, mstevens said:

It's important to control expenses in a business but you seem to be concentrating almost entirely on that while not commenting on the potential income the business you could bring in.  What you've covered in your original post is good and clear and shows a great understanding of the fixed expenses - but that is just one part of a business.  I think now you need to do your market research - check out who the opposition is, who the target customers are, whether there's demand for a new dentist in town, whether you can offer a differentiated / better / more affordable service etc.  Then consider things like promotions / advertising etc as well.  I'd look at the competition and the market in general and then hopefully you will be in a better situation to make a decision on how / whether to proceed.

I agree with your comments. 

 

I forgot to mention above that there's a new scheme that came into effect last yr. Its the 900 baht scheme and dental clinics can now accept thai's who show an insurance health card and they dont have to pay us. We simply take all the receipts and claim back the money from the govt. In our existing town there are 2 clinics advertising this and doing it. In the new location we noticed none of the clinics are advertising this

[cornishcarlos]

12 hours ago, ubonr1971 said:

We know a clinic that is in yr 6 and its turning over 500,000 baht a month.

 

How do you know this to be true ?? In my experience, Thais are prone to exaggeration when it comes to income. Plus what is their "profit" each month ?? Good luck.

My sister in law opened up a physio practice a year ago, she does nothing to promote the business, uses tried and tested (equals dated) practices and she has maybe 4-7 patients a day. Granted we are not in a small city, just a little town about 40km outside the city.

Edited February 20, 2018 by cornishcarlos

[ubonr1971]

14 minutes ago, cornishcarlos said:

 

How do you know this to be true ?? In my experience, Thais are prone to exaggeration when it comes to income.

Good luck. My sister in law opened up a physio practice a year ago, she does nothing to promote the business, uses tried and tested (equals dated) practices and she has maybe 4-7 patients a day.

Granted we are not in a small city, just a little town about 40km outside the city.

We think its true bc the clinic is extremely busy and she said she has over 500 orthodontics patients alone. She has 3 dentists working at her clinic. 

[baansgr]

For me and many others a upmarket clinic crys out..... Expensive, its more about the quality of work provided than a flashy reception.... I now get all my work done  in Phillipines as the work is superior and a fraction of the cost. I found all you get here is extract and implant when a root canal or crown is sufficient 

[meechai]

My simple formula for any new venture is 1 year expenses

 

Meaning you should have enough funds to run the business for a year without income.

 

Of course you will have income but as a buffer allow yourself one year to become established before trying to consider

if you can break even or profit etc.

 

[alwaysrainsinUK]

Why dont you look for a house to buy in a good location with frontage big enough and build on and open the shop there,no more rents to pay.

 

[mrfaroukh]

May be you can consider moving back to your country I am sure a dentist earn much better in Europe than here. You can try that for couple of years and save your money. If still think you would like to move back to Thailand you can use your saved money instead of loosing what you have now.

 

The risk I think is too high at this moment. No one know you and it take time to develop trust, your rent is high, you may be thrown out of the place as you mentioned, there are other competitions ,.

 

You should never leave your job as if anything goes wrong you don't starve. If you have to pay so much rent may be you can consider to loan money and buy the building.

[smutcakes]

Is the 200,000 dollars or THB for equipment? Surely 200,000 THB is very low to kit out a decent dentist which will stand out from competitors.  i presume many of the dentist scanning machines, scrapers, suckers and blowers would run into the millions of baht.

[Lacessit]

Get your wife to work at one of the clinics to establish a good reputation AFTER she has finished the orthodontics training.

$200,000 is a limited investment in dental equipment - the most sophisticated stuff is $500,000 plus.

Have you really studied your market? If it's somewhere that does not have a high farang population, your return on investment may be a lot lower than you are projecting. A government refund of 900 baht on patients means your wife would have to generate high volumes just to pay the rent, let alone generate a return on the capital invested.

My advice would be to hasten slowly.

[KKr]

if the concern is whether to spend 35k or 40k per month on rent, i.e. a difference of 60.000 before tax per annum, personally I think I would pass on the business. not sufficient security margin to survive a bad year,
(p.e. a slower than expected customer acquisition rate.)

Another remark: will this be a Dental Clinic or an Orthodontist clinic?
I guess an Orthodontist is way overqualified to work as a regular Dentist.
(and moreover Orthodontics is a full specialisation, so I do not understand what kind of training the good doctor is going to )
Maybe better to get a job at one of the better paying Hospitals, and run a private practice after hours.

Edited February 20, 2018 by KKr

[MaeJoMTB]

15 hours ago, ubonr1971 said:

This is one of the biggest decisions of my life. Our business will add a lot of value to our lives and to the local community but I dont want it to be a cash burn. 

Plenty of dentists in CM with ZERO customers.

One on Moonmuang Soy 2 corner (been running 4 years), you can walk in any time with no appointment, never seen another customer in there, does good work.

One by MaeJo traffic lights, huge place (been running 6 months), never seen any customers and I drive by every day.

 

Good luck making money from this.

[ubonr1971]

26 minutes ago, KKr said:

if the concern is whether to spend 35k or 40k per month on rent, i.e. a difference of 60.000 before tax per annum, personally I think I would pass on the business. not sufficient security margin to survive a bad year,
(p.e. a slower than expected customer acquisition rate.)

Another remark: will this be a Dental Clinic or an Orthodontist clinic?
I guess an Orthodontist is way overqualified to work as a regular Dentist.
(and moreover Orthodontics is a full specialisation, so I do not understand what kind of training the good doctor is going to )
Maybe better to get a job at one of the better paying Hospitals, and run a private practice after hours.

Our clinic will offer all services as most do in Thailand. Currently she's a general practitioner dentist but this time next year she will be a specialist Orthodontics dentist and we will be legally allowed to advertise this. She is in the 2nd yr of her general orthodontics training and has recently started a Masters degree in orthodontics (from Europe) which will finish March next year. We have to fly to Europe this yr and twice next yr. 

 

I agree with you that she should work in one of the private hospitals and run our clinic 4pm onwards

[MaeJoMTB]

10 minutes ago, ubonr1971 said:

I agree with you that she should work in one of the private hospitals and run our clinic 4pm onwards

Here is a little bit of advice I have learned to use after nearly 10 years in Thailand.

Do not use YOUR money to finance HER business.

If she has the ability to run a business of her own, a Thai bank will finance her.

If a Thai bank considers her too risky to invest their money, you should as well.

 

Better not to mix love and business, unless you are too wealthy to care about loss.

[gamesgplayemail]

I am not sure about your specific cases but dentists all are millionaire driving 5/10 millions German cars, so I guess that sooner or later you will also be !