Why do people rush to buy a failing business?

[Dan O]

2 hours ago, Celsius said:

 

Well of course you have to buy a franchise first. What idiot is going to train you for free? The point is with franchise you can get first hand training and knowledge with very little investment. Then you quit and do it by yourself.

The only problem with your thinking is there's something called a contract and they typically include a non compete clause, so it's not quite that easy

[save the frogs]

8 hours ago, Celsius said:

They all have a job and a provident fund and this is just a side hustle to them.

or maybe they think they can run it as a side hustle, not realizing that it's a full-time job to keep a place operating and making profit.

 

[OneMoreFarang]

Tilac, I don't want to work in the bar anymore. You know that I am a smart girl.

I want a coffee shop and then I earn money to support my family.

Please tilac, you can afford this little investment.

 

[creative1000]

Sometimes the business can be spotted in a Thai Business Reseller Facebook group typically with the comment "Must sell fast, already moved to another province to take care of family member" or "I'm too busy with my other business to manage the shop now."

 

I've visited some of the locations out of curiosity and can speculate why the business had to be closed/sold:

1. PARKING: Extremely busy road but no parking anywhere within 500m.

2. COMPETITION: Good location but 10 other similar shops opened within 2 km stretch of road. Maybe even 20 or more within 5km radius.

3. OVERHEAD COSTS: Great location but monthly rent is far too high.

4. LOCATION: Great product, but located too far away from target buyers.

5. PRODUCT COMPARISON: Attempting to sell an inferior product at a similar price to a premium product nearby.

.... just to name a few ideas...
 

Despite this, I still see someone buy it, re-open the same business, and go through the same struggle as the first owners.... 

To be fair, I've also witnessed some shops have amazing success, seen the owners become millionaires after lots of hard work, organic expansion, unique product, maintaining high quality standards, buying old houses and tearing it down to become a parking lot for their shops, etc... It wasn't a case of mafia, corruption, or rich parents, just good business practice.

[Jumbo1968]

There is a good mark up on beer etc, the majority of the cost of a girlie drink goes to the bar, in most cases the girls are told to try and get as many girlie drinks as possible bought for them, most are just coloured water then there is the bar fine which again the majority goes to the bar.

The trick is to order 2 whisky and cokes, when she brings them you take hers, I bet it’s only coke.

Employ some half decent looking girls and you could make some decent money.

[Everyman]

6 hours ago, scubascuba3 said:

is money laundering a factor in these businesses that stay open but appear empty?

I used to wonder about that in regard to the tailor shops. Some shops, in Bangkok I had never seen a single person in there in 10 years. Zero customers.

 

Yet there they were, still open. 

[Alex2554]

Pre covid US statistics

From March 2019 to March 2020, 1 million new U.S. establishments opened while 993,809 closed.

[NoshowJones]

20 hours ago, scubascuba3 said:

is money laundering a factor in these businesses that stay open but appear empty?

Like an Indian Taylors and some gold shops, not in Bangkok though? In my small town/village there are two Gold shops across the road from one another, and I pass them regularly and hardly ever see any customers in them at all.

[Mickeymaus]

20 hours ago, scubascuba3 said:

is money laundering a factor in these businesses that stay open but appear empty?

I think the same. Here in Central Pattaya new bars are opening in numbers I've never seen before. Many of them don't have customers but obviously they don't care.

[Jumbo1968]

1 hour ago, Mickeymaus said:

I think the same. Here in Central Pattaya new bars are opening in numbers I've never seen before. Many of them don't have customers but obviously they don't care.

Not a money expert but how can you launder money when there is none pass through the till ?

[Mickeymaus]

4 minutes ago, Jumbo1968 said:

Not a money expert but how can you launder money when there is none pass through the till ?

Does anyone check this? 

[scubascuba3]

9 minutes ago, Jumbo1968 said:

Not a money expert but how can you launder money when there is none pass through the till ?

Cash passes through and gets banked

[racyrick]

16 hours ago, creative1000 said:

Sometimes the business can be spotted in a Thai Business Reseller Facebook group typically with the comment "Must sell fast, already moved to another province to take care of family member" or "I'm too busy with my other business to manage the shop now."

 

I've visited some of the locations out of curiosity and can speculate why the business had to be closed/sold:

1. PARKING: Extremely busy road but no parking anywhere within 500m.

2. COMPETITION: Good location but 10 other similar shops opened within 2 km stretch of road. Maybe even 20 or more within 5km radius.

3. OVERHEAD COSTS: Great location but monthly rent is far too high.

4. LOCATION: Great product, but located too far away from target buyers.

5. PRODUCT COMPARISON: Attempting to sell an inferior product at a similar price to a premium product nearby.

.... just to name a few ideas...
 

Despite this, I still see someone buy it, re-open the same business, and go through the same struggle as the first owners.... 

To be fair, I've also witnessed some shops have amazing success, seen the owners become millionaires after lots of hard work, organic expansion, unique product, maintaining high quality standards, buying old houses and tearing it down to become a parking lot for their shops, etc... It wasn't a case of mafia, corruption, or rich parents, just good business practice.

What unique product/s have you seen that maybe I can sell in Khon Kaen?

[xylophone]

On 5/19/2023 at 10:40 AM, ezzra said:

Either what @Celsius said or that many think that they know better and they can make a go out it where others failed, also, the allure of owning your own business sometimes cloud the cool heads and judgments.

"the allure of owning your own business sometimes cloud the cool heads and judgments".

 

If indeed there was ever a "cool head and judgement" in the first place and I can give you a couple of prime examples.......... 

An ex-girlfriend of mine, who was university educated with a minor degree in accounting, was working at a small hotel here, until it was demolished for redevelopment by the landowner.

 

We split up and as part of the deal I bought her a small laundry business which was going well but she couldn't manage, especially in the art of delegation, so she was doing all of the work and looked quite unwell through overwork.

 

As far as management goes, she had no management or delegation skills and sold the place.

 

She later told me that she was going to open up a little restaurant/food shop near the "tourist elephant camp" even though very few farangs actually came through the place, but that didn't deter her and after paying good money to set up the equipment etc, it made no money at all, so she walked away from it, going to France to work for three years to save some money.

 

She is now back in Bang Rakam and told me she was going to open a little shop, so I asked her what the foot traffic was like (or indeed any traffic) and she didn't have a clue. However she opened it up with the money she had saved and now it is doing absolutely nothing.

 

It is lucky for her that I have vowed to take care of her daughter from the time we split up until now when she is a 22 year old completing her last year of a teaching qualification at university.

 

So in summary there is an intelligent (supposedly) and fairly well-educated Thai woman who hasn't got a clue about business but who was adamant she wanted to own her own business and failed at it three times.

 

I have two other stories like this, but this one has already gone on too long, however it is not only the Thais who get taken in by the "want to be a business owner/boss" as it happened to 2 farang friends of mine who opened a bar which became very popular, and they were offered 12 million baht for it some 10 years ago but said it was worth a lot more – – that is until business started falling off and then the landlord decided to close it and make something different out of it, so they walked away with basically nothing. The dream was gone.

 

[3NUMBAS]

tea money to launder so theyre careless ?

[josephbloggs]

2 hours ago, Jumbo1968 said:

Not a money expert but how can you launder money when there is none pass through the till ?

Because they pass their dirty cash through the till and it comes out clean - they don't need real customers putting real money through the till.

[xylophone]

Following on from my previous posts, I found this on another thread which I had posted a while ago and it encapsulates what has been said here..........

On the subject of restaurants, and one which I have mentioned before, because it closed, the Italian restaurant which was known as, "The Loft Italian Restaurant" (on Nanai) has seen some building activity in the place, and a bar/restaurant would be a good bet – – time will tell. 

 

This is just another small business in the myriad of small businesses in Patong, which has seen its fortunes rise and fall with the tourists and the seasons, and looking back on this particular aspect of Patong, it has been an ongoing occurrence over many years – – one business closes and another one takes its place, and so on. 

 

All too often, the business that replaces the failed business, follows the same pattern of lack of planning and lack of business nous, so is doomed to follow the path of the previous one. Someone is making money out of it, and it's not the folks opening the new small businesses!

 A few of the smaller bars on Nanai are showing signs of a decrease in patronage, even though one in particular has had two or three hopefuls in "wifebeater T-shirts" waiting for it to open at around 11.00 AM in the morning.

 

This is not a one-off though, and I often wonder why people will travel thousands of kilometres from their home to come to a place where they sit on a bar stool all day??
 

[jaideedave]

On 5/19/2023 at 10:40 AM, ezzra said:

Either what @Celsius said or that many think that they know better and they can make a go out it where others failed, also, the allure of owning your own business sometimes cloud the cool heads and judgments.

My stepdaughter falls into that category I think. Years ago I put her thru TCC uni in BKK to get a degree in accounting.Which she did. For what it cost me I could have bought her a 7-11 franchise.Her allowance was 15k per month 13 years ago.I covered tuition. Her monthly salary today is just under 15k/month at King Power. wtf? Thats probably why most Thais want to open their own business. She says she'd like to open a coffee shop. I think she'll have to wait for her inheritance for that one.

[Jumbo1968]

There could be a few more empty shops if and when the incoming government decide what to do with the cannabis law. There were a lot of assumptions wrongly that there was money to be made selling cannabis products, I think they jumped the gun.

A lot of money was invested by farmers expecting a few thousand baht per kilo but it turns out 500 baht as most of the cannabis is being imported.