What Makes A Successful Business?

[mogoso]

I've a service business in the US in a competitive market. Clients are weekly serviced and they expect a good job at a competive price. I keep the same number of clients yearly. I know how much time it takes me to accomblish my task and how much time to budget for upgrades and repairs. I haven't advertised in any media for over 25 years and continuously turn down new clients including a senior VP at Coke pro sports players etc as their locations don't meet my service area, which I keep small.

I must admit tio being quite lazy and work a 5 hour day 6 days a week during my busy season.

I do lose clients from time to time as they move and I won't accept or drop after a trial period the new owners. Some might call it arrogance, but I want the cream of the crop, and I want to be able like whom I'm working for. Not everyone is my cup of tea, as I am not theirs. My customers are extremely loyal as I am to them. They know if theres a problem I'll be there the next day, no matter what.

Some will bring me back stuff from their travels as I will do the same. Its a good relationship I provided, with trust ( since I bill twice yearly or seasonally or once a year trust works both ways) and competence. So for me

good work

competitive pricing

good relationships

trust

competence

[FarangCravings]

Hey Solent

wanke_rs dont just drink in crummy bars I know a few wanke_rs that drink in the N1 bar too

Edited February 24, 2008 by FarangCravings

[Ulysses G.]

I think if you want to run a successful business here you definitely need to be ruled by your head and not your emotions. Even amongst the Thais there is a big streak of eternal optimism when it comes to running businesses. A lot of people will pump in more and more cash with little thought to rate of return.

Where a lot of people fall flat on their face would be to pump in more cash to keep up with their "successful" competitors, who have invested so much that their rate of return is minimal.

As always in business, the numbers don't lie.

All true.

Actually, I'm pretty sure that many businesses that don't make any money, don't even realize it. They didn't do their homework in the beginning and figure out how much each item costs - they just made up a price that sounded good at the time - and they probably don't know how much they spend each month on the business and other costs and how that relates to what they charge. They just make sure to keep cashing that check from overseas every month.

[cmsally]

But often to a potential buyer the books do. sad.gif

Are there people that would believe "the books" ?

How quaint!

One thing it would be interesting to know is, for people moving here and opening businesses, what is the percentage of people who have been business owners before (home country) and what is the percentage of people who have been employees.

From what I can see amongst people I know and those I talk to (located anywhere), it is a totally different mindset.

[Ricardo]

I don't own a bar, but this year I really fell sorry for people who do. So many days lost when income is down to start with.

That doesn't even address the fact that so many tourists come here every year to drink and party and often find that everything is shut down way too early and way too frequently.

Some day, I'm afraid, Thailand will wake up and find that the Golden Goose has moved to Cambodia and is not interested in coming back!

I thought that the Golden Goose had caught bird-flu ?

Or was it the bar, which had the best burgers/hot-dogs/pizzas/full-english-breakfast/som-tam I've tasted, for some time .... ?

But seriously, wouldn't it be a great name, for a new drinking-establishment ? !

[Crow Boy]

I'm not sure I understand this use of the term, "legitimate" in some of these posts. To me, it seems it is being used inappropriately.

It has negative connotations that really shouldn't be used to describe a business... because when it's applied as "hobby business or legitimate business" it truly implies that the hobby business are "illegitimate." Now if they actually are illegitimate or illegally run, that's a different ballgame, but that's not what is being implied.

When it's used as an "either/or" like that it besmirches any business, hobby included, that in reality, actually IS legitimate.

I agree with your comment and for the same reasons. The implication is that a business that is being subsidised by a person's savings or borrowings is somehow "not a real business".

The salient point is that in my opinion ANY business that is being run legally and selling a legal product irrespective of whether the business is self funded, profit making or running at a loss is a legitimate business and should be regarded as such. By calling businesses that are supported by the owner and may be making little or no profit "illegitimate" implies that they are somehow illegal which is wrong.

CB

[solent01]

Hey Solent

wanke_rs dont just drink in crummy bars I know a few wanke_rs that drink in the N1 bar too

Yeah, guess your right, but the percentage of mongers is nearly always in the minority as opposed to the majority in bars such as No.1, so it makes for a pleasent atmosphere for couples.

[naka]

With real interest I read all the messages.

I want to open e new restaurant in Farham (Chiangmai) So not in the centre. Not exisiting, build from scratch. I have about 20 years of experience in bar/restaurant in Holland.

Anyone who can give me some advice? Just asking this because I think there is a lot of knowledge in this forum.

JMM

You better not be planning a Hobby business JMM

Naka.

Edited February 25, 2008 by naka

[Crow Boy]

Others have never made ANY profit or actually lose money month after month (which they make up from their own bank accounts). To me, - unless they are charitys - these are pretend business, not real ones and I strongly suspect that the owners are raving idiots or what they call mentally challenged for lack of a better term. Why pay money to work when someone will pay you for it?

I had several customers who offered to by my bar. I said ok here is a deal for you - give me 100% of the purchase price and sit on the bar stool for the next 12 months. After you have drunk 1/3 of the money in booze I will let you know and sell back the business to you. I will give you a 1/3 of what you paid for it and call the other 1/3 a fair loss to you and being grateful to get out before you lost all your money. With that remaining 1/3 of the money keep sitting on the bar stool until your drink all of it and have to go back to home to get some more money. I figured if I sold the business this way a couple of times a year I could retire for life after 3 years.

CB

[Ulysses G.]

By calling businesses that are supported by the owner and may be making little or no profit "illegitimate" implies that they are somehow illegal which is wrong.

CB

They are not illegal, but often (not always) a waste of space.

These places make it very difficult for very worthwhile ventures like Tuskers and The Elizabethan Restaurant to make a go of it, and if they leave town, we ALL lose!

[Crow Boy]

With real interest I read all the messages.

I want to open e new restaurant in Farham (Chiangmai) So not in the centre. Not exisiting, build from scratch. I have about 20 years of experience in bar/restaurant in Holland.

Anyone who can give me some advice? Just asking this because I think there is a lot of knowledge in this forum.

I would strongly advise you to think very carefully about what you want to do and why. You need to be in the area for a while to get a feel for the place. You have to decide if being out of the city centre will add to or detract from the clientele likely to visit. Out of the city in which direction? If it is in the opposite direction across town from your likely clientele you will have a much harder job getting them to visit and more importantly to return.

What sort of food are you offering? Dutch, generic European, Asian? something different or something that people will know and like already?

How to get there? Car? Tuk Tuk? Do you have (sufficient) parking space?

How will you advertise?

Where will you source your ingredients? If you are going to serve fine European food will you need to source things like black truffles or can you get your ingredients locally at the markets? Everything you buy from a specialist store or supermarket will cost you much more than at the local open air markets. Do you need specialist equipment - copper pans, electronic temperature controlled ovens? These are expensive to buy and to repair/maintain.

Do you have sufficient capital to rent, stock, furbish your restaurant and for how long can you do it without making any profit?

This is the beginning of a list for you and better believe it these are very important questions that you must know and only the tip of the ice berg.

Good luck with your venture

CB

[Crow Boy]

By calling businesses that are supported by the owner and may be making little or no profit "illegitimate" implies that they are somehow illegal which is wrong.

CB

They are not illegal, but often (not always) a waste of space.

These places make it very difficult for very worthwhile ventures like Tuskers and The Elizabethan Restaurant to make a go of it, and if they leave town, we ALL lose!

But your opening post also includes Tuskers and The Elizabethan Restaurant, both of which are relatively new. Tuskers is a touch over 1 year and the Elizabethan Room just opened. I don't know the details of either place but when you consider that Chas and Rachael (Tuskers) and the Owners of the Elizabethan Restraurant have put a substantial proportion of their own money into their business it is a serious gamble on their part. Being forced to close for three days will definitely have a serious effect on their ability to survive. I think both places are excellent additions to Chiang Mai but they do it tough against the odds and losing three days trade in a single month is not helping.

CB

[sriracha john]

Just asking this because I think there is a lot of knowledge in this forum.

We'll do our best to prove you wrong.

[sriracha john]

ok, ok... I'll add a to the end of that....

[Ulysses G.]

By calling businesses that are supported by the owner and may be making little or no profit "illegitimate" implies that they are somehow illegal which is wrong.

CB

They are not illegal, but often (not always) a waste of space.

These places make it very difficult for very worthwhile ventures like Tuskers and The Elizabethan Restaurant to make a go of it, and if they leave town, we ALL lose!

But your opening post also includes Tuskers and The Elizabethan Restaurant, both of which are relatively new. Tuskers is a touch over 1 year and the Elizabethan Room just opened. I don't know the details of either place but when you consider that Chas and Rachael (Tuskers) and the Owners of the Elizabethan Restraurant have put a substantial proportion of their own money into their business it is a serious gamble on their part. Being forced to close for three days will definitely have a serious effect on their ability to survive. I think both places are excellent additions to Chiang Mai but they do it tough against the odds and losing three days trade in a single month is not helping.

CB

If you look back at the old posts, you will find that I was complaining about businesses being forced to close regularly. I am against it. You are confusing my posts with Blinky Bill's.

I don't own a bar, but this year I really fell sorry for people who do. So many days lost when income is down to start with.

That doesn't even address the fact that so many tourists come here every year to drink and party and often find that everything is shut down way too early and way too frequently.

My pet peeve is with places that just copy existing businesses without any improvements or innovations. They don't add much to the town, usually don't make any money and take away from businesses that do both.

Edited February 25, 2008 by Ulysses G.

[Blinky Bill]

As I told already, I have 20 years experience. So about the where and how is known to me. Luckily I have a very good lawyer who can assist me with the necessary paperwork.

That is the information I need.

But Chad from Tuskers already invited me.

It is not a venture.. It is a plan!

Lawyers are very good at paperwork and .......taking your money.

Chas is from Tuskers...............not Chad.

[bggg]

I think if you want to run a successful business here you definitely need to be ruled by your head and not your emotions. Even amongst the Thais there is a big streak of eternal optimism when it comes to running businesses. A lot of people will pump in more and more cash with little thought to rate of return.

Where a lot of people fall flat on their face would be to pump in more cash to keep up with their "successful" competitors, who have invested so much that their rate of return is minimal.

As always in business, the numbers don't lie.

All true.

Actually, I'm pretty sure that many businesses that don't make any money, don't even realize it. They didn't do their homework in the beginning and figure out how much each item costs - they just made up a price that sounded good at the time - and they probably don't know how much they spend each month on the business and other costs and how that relates to what they charge. They just make sure to keep cashing that check from overseas every month.

You are absolutely right here Ulysses, a few years back I toyed with starting a small catering/food company. I was curing corned beef as part of it. I made up brochures and went around town stopping in pubs/restaurants talking with owners. I was amazed at how many had absolutely no idea of their food costs, or even the amount of food that went into a serving. How do you arrive at a selling price if you don't have a clue what it costs you to produce the product

[Crow Boy]

You are absolutely right here Ulysses, a few years back I toyed with starting a small catering/food company. I was curing corned beef as part of it. I made up brochures and went around town stopping in pubs/restaurants talking with owners. I was amazed at how many had absolutely no idea of their food costs, or even the amount of food that went into a serving. How do you arrive at a selling price if you don't have a clue what it costs you to produce the product

That is correct and not limited to small farung business such as bars and restaurants. There are many large companies that fall foul of that. Currently I am working with someone and everything we are doing is being costed out per unit. This means we look at the ingredients and preparation costs to determine if it is a viable option. Especially with food there are many recipes that work in the home or in an overseas market but not here. The cost of an imported ingredient may make the difference between being worth while or not. Sometimes you can use substitute ingredients but have to be careful in case the result is "not the same as at home" better not to try than to do it badly.

CB

[altman]

the people who work at these establishments, whether supported by actual customers buying moderately priced but highly desirable goods or supported by rich farangs with nothing better to do in their declining years than to live their dream, appreciate your support.

suggestions of downsizing the staff to increase profits may be desirable to bean counters, but the families of those employed and given a new opportunity, otherwise unavailable, would be hard pressed to understand or appreciate the implications of increased profits for one while others go hungry.

so maybe a hobby business that damages the local economy isn't really such a bad thing after all. for the local economy.

[altman]

the people who work at these establishments, whether supported by actual customers buying moderately priced but highly desirable goods or supported by rich farangs with nothing better to do in their declining years than to live their dream, appreciate your support.

suggestions of downsizing the staff to increase profits may be desirable to bean counters, but the families of those employed and given a new opportunity, otherwise unavailable, would be hard pressed to understand or appreciate the implications of increased profits for one while others go hungry.

so maybe a hobby business that damages the local economy isn't really such a bad thing after all. for the local economy.

As for yourself!

Having a hobby that cost nothing at the end can revive your life.

to the original point:

cost nothing to whom?

for 500 baht per month would you be willing to cause a family to go hungry?

what about 5,000 baht per month?

50,000 baht per month?

what if it were your family?

does this really seem to be the best that mankind could aspire to?

are all your choices to be defined by how they will effect the bottom line?

Edited February 25, 2008 by altman

[Crow Boy]

Also to inform other people.. My lawyer is khun Akharawat. The best in CM!

Akharawat is also my lawyer and I agree he is very good.

CB

[altman]

as the discussion seemed to be headed towards defining a successful business as one which made a profit, and that several suggestions seemed to be indicating that downsizing the staff would be one way to make a business profitable, i suggest that discharging an employee is not in the best interests of the local economy. and that ultimately it will be the local economy which allows a business to survive, either through patronage or government intervention.

now if you were to say that a successful business were one which provided employment for people, tax revenue for governments, goods and services for customers and were to do this in a manner that was not concerned with the bottom line, then i might agree with you.

[Crow Boy]

as the discussion seemed to be headed towards defining a successful business as one which made a profit, and that several suggestions seemed to be indicating that downsizing the staff would be one way to make a business profitable, i suggest that discharging an employee is not in the best interests of the local economy. and that ultimately it will be the local economy which allows a business to survive, either through patronage or government intervention.

If the employee or the family of the employee directly purchased goods or services from the business then yes keeping that employee would have some benefit - not to the extent of the cost though. If the business required purchases of goods and services in a closed system and the overall amount of money was reduced to that system resulting in a flow on effect to the business then you have some theoretical validity to your argument. However reality is not the same as theory and keeping a bad or excess employee will not benefit the business or the community.

now if you were to say that a successful business were one which provided employment for people, tax revenue for governments, goods and services for customers and were to do this in a manner that was not concerned with the bottom line, then i might agree with you.

In an altruistic or theoretical model then this is correct but commercial reality dictates that a business must make a sustainable profit to succeed else have additional resources (ie cash reserves) to keep it afloat. If the owner enjoys running a small business and is not concerned with making a profit or even breaking even on costs then your model will work until his reserves are depleted. The basic rule of thumb is that the profit should be at least 200% of the amount of money generated at premium interest on the capital to be deemed worth doing IF the motive is to make a profit and not to maintain a hobby business.

CB

[cmsally]

I think ultimately you will find that most business owners are taking a risk, investing their capital as well as putting in long hours.

If they are not concerned with the bottom line, there will be no money to pay the employees, the taxman and not to mention satisfy their customers, which means reinvesting continually in their business.

The idea of having only enough to pay staff, satisfy customers and even the taxman (most altruistic!) and not be concerned with the bottom line seems to be following the lines of a hobby business. It will need some outside help just to keep it going.

So I suppose you could say that this model is a business but definitely not a successful or sustainable business. It will be the amount of available outside funds that determine how long it can keep going.

I would also argue that employing staff that are not productive or concerned with the success of the business, is in itself not in the interests of the local economy. Staff that are trained even with the most basic of skills in a successful business environment and develop the right attitude towards working will in the long run be a much better contribution towards the society as a whole. Paying people to do nothing or showing them examples of unsustainable business models is of no help to them whatsoever.

[altman]

a useless employee is not the issue.

an employee who could be removed in order to make the other employees work harder so that the owner can show a profit is.

if a business cares only about how much money the owner can put into his pocket, then that business will fail. it may fail because the customers find they are unwilling to support it since it does not address the needs of the community, or it will fail because the government will step in to regulate and control it so that it becomes a benefit to the community rather than solely a benefit for the owner.

while an owner may have every reason to hope for some return on his investment that return should include the intangible returns to the community at large.

when an employee, who is otherwise doing the work expected of him and for which he was hired initially, is removed from the payroll that cash money will be removed from the local economy. and more specifically from that employee's family income. that employee's family will suffer so that the owner will be able to say he has 'made money'.

this thread seems to be a discussion of whether a hobby business has any reason to exist. i say it does.

that there is some doubt that a business can exist which supplies employment, taxes, and goods and services while placing the income of the owner secondary to that of the community says more about the failure of the market model than of what makes a business successful.

were the market model truly accurate, then it would accommodate this scenario as well as that of the owner as feudal lord. as it exists and is practiced, a market economy is simply greed exemplar.

[realthaideal]

People are being silly now. I just thought I'd check to see where the thread is at and ppl are debating while speaking of apples and oranges - each person right in their own sense. CB and other businesspeople have great points in that if you don't make a profit, you can't sustain yourself let alone others. Altman I think is speaking of how the community might win, and even how to really be a great businessperson while going about running your place. Altman's concerns are not necessary to actually running a profitable business, however if an owner wants to really strive to contribute to the lives of his/her workers, and their families and the communities, they can (and not be a Scrooge who nobody ever roots for). And in that they ultimately win in a greater sense with richer lives for themselves and their employees in addition to fostering a better-off community. But it still can't be forgotten that unless a business is run to make a profit and to take care of the owner first and foremost, all of the other good stuff and well-meant intentions go poof! Not to mention giving poor modeling for the theoretical Thais who are learning theoretical business practices to enrich their lives. All happy and no practicality just teaches the slow decline. And nobody enjoys that ride.... I know there're a few out here in our community who've been thru it and could tell some stories...

[Crow Boy]

that there is some doubt that a business can exist which supplies employment, taxes, and goods and services while placing the income of the owner secondary to that of the community says more about the failure of the market model than of what makes a business successful.

were the market model truly accurate, then it would accommodate this scenario as well as that of the owner as feudal lord. as it exists and is practiced, a market economy is simply greed exemplar.

Your model exists and operates in large numbers - it is called communism. It works but is not necessarily the best model nor the most efficient.

CB

[funfun]

"this thread seems to be a discussion of whether a hobby business has any reason to exist. i say it does"

id agree with you, for you, it has personal reasons,

for me any form of business No 1 is to make money, looking after staff, customers the village is all secondary!

chris

[cmsally]

that there is some doubt that a business can exist which supplies employment, taxes, and goods and services while placing the income of the owner secondary to that of the community says more about the failure of the market model than of what makes a business successful.

were the market model truly accurate, then it would accommodate this scenario as well as that of the owner as feudal lord. as it exists and is practiced, a market economy is simply greed exemplar.

Your model exists and operates in large numbers - it is called communism. It works but is not necessarily the best model nor the most efficient.

CB

More or less along the lines of communism of course, and businesses in communist countries not normally terribly efficient, mostly requiring injections of capital from the state.

The other model would be as a cooperative but this requires an input from all members with no employees as such. Your "staff" will be getting the benefits but only through investment and commitment by them to the project.

For one person (or maybe more than one) to invest a sum of money, time and expertise into a venture and have only the requirement that it benefits the community raises the question of why bother. Why not just give them the money and have done with it.

Bringing the discussion back to reality. I think you will find that finding a job in Chiang Mai is not exactly hard, but if you talk to business owners finding good staff is very difficult. Staff with the right attitude, right skills, reliable, trustworthy etc will easily find a job. So to say that dismissing staff makes them without income is not true. But if you are willing to employ the staff that no one else will take, then it might just be true after all, but then who's fault is that.

[anonymouse]

that there is some doubt that a business can exist which supplies employment, taxes, and goods and services while placing the income of the owner secondary to that of the community says more about the failure of the market model than of what makes a business successful.

were the market model truly accurate, then it would accommodate this scenario as well as that of the owner as feudal lord. as it exists and is practiced, a market economy is simply greed exemplar.

Your model exists and operates in large numbers - it is called communism. It works but is not necessarily the best model nor the most efficient.

CB

More or less along the lines of communism of course, and businesses in communist countries not normally terribly efficient, mostly requiring injections of capital from the state.

The other model would be as a cooperative but this requires an input from all members with no employees as such. Your "staff" will be getting the benefits but only through investment and commitment by them to the project.

For one person (or maybe more than one) to invest a sum of money, time and expertise into a venture and have only the requirement that it benefits the community raises the question of why bother. Why not just give them the money and have done with it.

Bringing the discussion back to reality. I think you will find that finding a job in Chiang Mai is not exactly hard, but if you talk to business owners finding good staff is very difficult. Staff with the right attitude, right skills, reliable, trustworthy etc will easily find a job. So to say that dismissing staff makes them without income is not true. But if you are willing to employ the staff that no one else will take, then it might just be true after all, but then who's fault is that.

spot on