Owning Internet Cafes

[p_brownstone]

Deleted - already mentioned.

Patrick

Edited April 24, 2009 by p_brownstone

[soundman]

Inflamatory post making serious allegations and replies to post have been removed.

[bdw]

You need a work permit if you want to work legally in Thailand. I doubt you can get a work permit for starting a internet cafe business

you won't be WORKING in the café as you'll be the Managing Director of the company set up to run the café

[balo]

You need a work permit if you want to work legally in Thailand. I doubt you can get a work permit for starting a internet cafe business

you won't be WORKING in the café as you'll be the Managing Director of the company set up to run the café

Yes thats what I meant too , owning the business without a work permit (I'm not working , I'm the owner) is fine.

[Penkoprod]

Yes thats what I meant too , owning the business without a work permit (I'm not working , I'm the owner) is fine.

But once you touch something pertaining to that business then you ARE (technically) working

Even moving a plate from a table to the kitchen, or turning on a bank of computers (keeping the thread on topic ) is......work, and needs a work permit.

Take business off someone else who is doing things 100% by the book (or, in the case of a Thai not needing to) could lead them to make a snidy phonecall to relevant authorities and ...........thats yer lot !!!!

Penkoprod

[goodheartman]

Is this business for a thai girl? if it is good god. What is it with thai girls and thinking they can run a business. Im assuming this is a special kind of thai girl of course.

[gbt71fa]

You need a work permit if you want to work legally in Thailand. I doubt you can get a work permit for starting a internet cafe business

you won't be WORKING in the café as you'll be the Managing Director of the company set up to run the café

Yes I would be CEO and any other acronyms I can use to to make myself sound important. I would not be working there, I would hire a "trustworthy and vetted" local to do the job.

[gbt71fa]

Is this business for a thai girl? if it is good god. What is it with thai girls and thinking they can run a business. Im assuming this is a special kind of thai girl of course.

Uhm, no. My wife would be a part of my business but we would have someone else running it.

[gbt71fa]

Make sure you stay legal software wise. For games shops, that's easy... you simply make sure your games are all legal and no one is allowed (this has to be monitored or the kids will bring them in) their own illegal games. Otherwise you can expect to be taxed by the BIB (not an absolute, but I've seen it happen).

For net shops, it's a little more involved, but doable. I have a few tenants with net shops and what they do is set up their computers and networks so that nothing can be installed on the computers by the client. You can keep people from downloading but that will limit your client base a bit. One popular set up is having a daily delete download folder... customers can only download to one specific folder and can't change that and can copy data from that folder onto flashdrives if needed. You probably want to setup a master delete though in case you feel you are being set up by the BIB (that is, your network monitor notices that there are strangers in the shop all downloading MP3s, for example).

That is some good advice. As for as the BIB is concerned, where is the Italian Mafia when you need them....

[torrenova]

OK, you don't need a WP to own any type of business so let's get that illusion out of the way. You would need a WP if you were to work. QED.

I know many of the internet places in Pattaya and not many, if any nowadays, is in a place which could be used for anything else. Most are tiny, some are under the stairs (Tops at Pattaya Klang !) and most are dead. Many don't even make any extra cash from drinks which is easy and very few have any software like Excel or Word as the pirated stuff is what the BiB look for. Some don't even have any additional services.

A concept I first saw in the UK with easynet which I saw again last year in a much better form was cubicle like desks with a flat panel (not that big) and a keyboard. There was not a PC at each station but some small box and the wires. I guess this is a modern version of the dumb terminal where everything is routed through a decent server. Less hardware to replace I suppose.

As for pricing, the Thailand based pricing systems I have seen are:

Straightforward X baht a minute

Straightforward X baht a minute but with a minimum charge

"Membership" which effectively offers up to half price usage versus the per minute charge depending on the amount of prepayment (max about Bt1000).

Per sector payment. X amount for 10, 15 or 30 minutes (they use this one in London).

Reducing price scale. ]Say Bt15 for 0-15 min, Bt20 for 15-30 min, Bt25 for 30-45 min and Bt30 for 45-60 min. Effective Bt60 to Bt30 per hour.

What could you do ? Buy a coffee and get 10 minutes free internet time ? Spend Bt100 and get X minutes free ?

Now with either of these suggestions you can play with human greed. With the coffee, you perhaps don't offer enough time, so they either pay for more or potentially, have another coffee. With the spend and get X, you can give more than enough time and the customer will run out of coffee and cake with minutes left. Either he leaves them but being greedy, he may have some more coffee or another cake just to use up the free minutes.

These examples of marketing examples really only work with westerners and mostly with tourists unless you can tap an area with affluent Thais who would somehow need internet access and can pay for a decent coffee.

With Thais it is hopeless. 20 machines occupied an hour or two a day at Bt30 an hour gives you 20*30*2*350 (trading days) = Bt420,000 a year. Aircon alone will eat at least half of that, even one salary will eat another quarter and rent and bills will eat the remainder. Nothing left for depreciation, repairs, to employee someone who actually knows their way around a computer etc.

Now make another 0.5 to 1m from ancillary services and it becomes viable, even with some cross subsidy but your poor Thais can't afford the extras and giving people free water means they don't buy a drink ! A sign on the door saying only goods purchased inside may be consumed is the order of the day !

[loong]

These examples of marketing examples really only work with westerners and mostly with tourists unless you can tap an area with affluent Thais who would somehow need internet access and can pay for a decent coffee.

More and more affluent Thais have their own computer and internet access at home, so that target market is reducing all the time.

[Heng]

I made a similar call about 15 years ago when I couldn't find a net cafe in Austin on a short trip home and didn't feel like turning on service at my house for only one month. "The net cafe will eventually die out in Thailand as well." Hasn't happened yet. One thing keeping them in business (despite cheaper computers and more affluent Thais) is that the poor Thais are still and will likely always increase at a greater rate.

The same reason why so many property owners choose to build 100 unit x 2,500 Baht a month apartment blocks instead of 10 unit x 25,000 Baht a month serviced apartment blocks, despite the 100+ hassles that come with 100 different tenants.

Edited April 26, 2009 by Heng

[loong]

I made a similar call about 15 years ago when I couldn't find a net cafe in Austin on a short trip home and didn't feel like turning on service at my house for only one month. "The net cafe will eventually die out in Thailand as well." Hasn't happened yet. One thing keeping them in business (despite cheaper computers and more affluent Thais) is that the poor Thais are still and will likely always increase at a greater rate.

The same reason why so many property owners choose to build 100 unit x 2,500 Baht a month apartment blocks instead of 10 unit x 25,000 Baht a month serviced apartment blocks, despite the 100+ hassles that come with 100 different tenants.

Is that Austin, Texas?

Certainly in the west there are much fewer internet cafes as there is so little profit potential in most areas, and unlike Thailand, people start a business with the intention of making a profit. It's beyond me why so many people here want to start a business almost with the actual intention to lose money?

Your example of building 100 apartment units instead of 10 more expensive units is good. It's an example of the investor/builder actually looking at the target market and forming a business plan accordingly.

One of my ex girlfriends wanted to open a restaurant. When I asked her about her business plan, she had no idea. She would sell an average meal for 20 Baht, that was her total plan. I asked her about the actual cost per meal, she had no idea. Why 20 Baht per plated meal? Because that's what everybody else charges and nobody in the area would pay more. I pointed out that the other people who sold food in the area drove clapped out motorbikes and there was no indication that they actually made anything like a reasonable profit....Silent treatment.

I think that the Op is planning to open a business without doing any research and without the necessary skills/knowledge. He calls himself a capitalist, well that determines how you define a capitalist. A capitalist believes in free market forces and competition in a free market (not subsidised).

From his posts, it appears that he intends to operate in an environment of unfair competition, with no concern that because he can afford to lose money, he will possibly deprive others of their livelihood.

He is the opposite side of the coin to economic immigrants working in his own country for less money and depriving the locals of jobs.

Luckily I've never heard of an internet cafe mafia, so maybe he wont get a bomb through the window. (only joking, of course nothing like that happens)

[Heng]

Is that Austin, Texas?

Certainly in the west there are much fewer internet cafes as there is so little profit potential in most areas, and unlike Thailand, people start a business with the intention of making a profit. It's beyond me why so many people here want to start a business almost with the actual intention to lose money?

Right, Texas.

I don't see that 'so many people here wanting to start a business almost with the intention to lose money' thing though. Lack of planning, sure. Overconfidence in one's abilities, of course. But I think there's plenty of that everywhere.

One of my ex girlfriends wanted to open a restaurant. When I asked her about her business plan, she had no idea. She would sell an average meal for 20 Baht, that was her total plan. I asked her about the actual cost per meal, she had no idea. Why 20 Baht per plated meal? Because that's what everybody else charges and nobody in the area would pay more. I pointed out that the other people who sold food in the area drove clapped out motorbikes and there was no indication that they actually made anything like a reasonable profit....Silent treatment.

Good example, although if she's never owned a business before, didn't grow up around business, then there's your answer.

I think that the Op is planning to open a business without doing any research and without the necessary skills/knowledge. He calls himself a capitalist, well that determines how you define a capitalist. A capitalist believes in free market forces and competition in a free market (not subsidised).

From his posts, it appears that he intends to operate in an environment of unfair competition, with no concern that because he can afford to lose money, he will possibly deprive others of their livelihood.

He is the opposite side of the coin to economic immigrants working in his own country for less money and depriving the locals of jobs.

Luckily I've never heard of an internet cafe mafia, so maybe he wont get a bomb through the window. (only joking, of course nothing like that happens)

Nothing wrong with that IMO. I've always believed that the less able business should be shaken out.

[loong]

Is that Austin, Texas?

Certainly in the west there are much fewer internet cafes as there is so little profit potential in most areas, and unlike Thailand, people start a business with the intention of making a profit. It's beyond me why so many people here want to start a business almost with the actual intention to lose money?

Right, Texas.

I don't see that 'so many people here wanting to start a business almost with the intention to lose money' thing though. Lack of planning, sure. Overconfidence in one's abilities, of course. But I think there's plenty of that everywhere.

One of my ex girlfriends wanted to open a restaurant. When I asked her about her business plan, she had no idea. She would sell an average meal for 20 Baht, that was her total plan. I asked her about the actual cost per meal, she had no idea. Why 20 Baht per plated meal? Because that's what everybody else charges and nobody in the area would pay more. I pointed out that the other people who sold food in the area drove clapped out motorbikes and there was no indication that they actually made anything like a reasonable profit....Silent treatment.

Good example, although if she's never owned a business before, didn't grow up around business, then there's your answer.

I think that the Op is planning to open a business without doing any research and without the necessary skills/knowledge. He calls himself a capitalist, well that determines how you define a capitalist. A capitalist believes in free market forces and competition in a free market (not subsidised).

From his posts, it appears that he intends to operate in an environment of unfair competition, with no concern that because he can afford to lose money, he will possibly deprive others of their livelihood.

He is the opposite side of the coin to economic immigrants working in his own country for less money and depriving the locals of jobs.

Luckily I've never heard of an internet cafe mafia, so maybe he wont get a bomb through the window. (only joking, of course nothing like that happens)

Nothing wrong with that IMO. I've always believed that the less able business should be shaken out.

Heng, I'm surprised that you can get Thaivisa to accept your posts with so many quotes. I often get a board message saying that I've exceeded the number even if there are only 3!

You, my friend are a businessman, not a wannabee businessman, that is obvious from your other posts. You probably associate with businessmen who operate to make profit.

I have met many Farang who come to Thailand with the intention to start a business and I am amazed at how many state that they don't care if they make a profit or not as they have their pension. A friend of mine said the same thing and started a business with his wife. After 3 years of subsidising the "business" he actually took another 3 year lease with a 50% increase in rent (when taking the key money into account). Now his pension is worth 30% less in Baht than it was and he's trying to sell the business as he cannot keep throwing money into a hole and getting nothing back.

You may have not seen 'so many people here wanting to start a business almost with the intention to lose money', but believe me there are plenty of them. Ok, maybe not intending to lose money, but with no real concern that the business will generate profits.

You say, Good example, although if she's never owned a business before, didn't grow up around business, then there's your answer.

The same is true of many Farang wannabee businessmen. They don't have the knowledge and experience to do the necessary research.

You say, Nothing wrong with that IMO. I've always believed that the less able business should be shaken out.

I totally agree with you. A business should be able to stand on it's own 2 feet. It is a problem for a business when in an environment of unfair competition though.

You have some Pharmacies and I hope that they are successful. What would happen if somebody opened a new pharmacy next to yours and sold everything at below cost? I dont know what the profit margin is, but for example if your Pharmacy sold cough medicine at 100 Baht and next door was selling it for 50. I'm quite sure that you would lose customers especially if the Pharmacist was as competent as yours.

Eventually, you may be forced to close because of losing too much money.

You wouldn't be closing because you are a less able business, but because you are trying to compete in an unfair competition environment.

Edit, number of quotes accepted this time - there's no consitancy

Edited April 26, 2009 by loong

[goodheartman]

Is this business for a thai girl? if it is good god. What is it with thai girls and thinking they can run a business. Im assuming this is a special kind of thai girl of course.

Uhm, no. My wife would be a part of my business but we would have someone else running it.

to even have a snowballs chance in hel_l your wife has to run it! no way you can make it paying others to run it.

[TheWalkingMan]

Uhm, no. My wife would be a part of my business but we would have someone else running it.

If you are serious about this have the wife draw up a plan including costs, pricing, area analysis, competition analysis etc. If she is not sure on how to proceed, have her head to the bookstore and purchase a book on running a small business. And if you guys go forward, tell her that she must manage the shop for at least a year to understand the business and provide you with some sort of periodic reports letting you know what is happening. If she is unwilling or unable to do this then forget it as she is not ready to own a business. Simple.

Of course you can put the business in her name, but if you are paying for the assets... keep the assets in your name.

[Cuban]

....you won't be WORKING in the café as you'll be the Managing Director of the company set up to run the café

If you sign the company accounts as your only action for the company as MD you require a WP4.

If you are computer aware and wish to tinker with the workstations you will attract the attention of Immigration (Care of local competition that will wish to run you out of business if you are successful.) so you will need at least four staff to support your WP.

Work out the running costs (air con etc.) and salaries, you will need to run the opperation 24/7 ?

I'm in a internet cafe now and pay 15 Baht an hour.

I also would try to outdo the other internet cafes. I would have free water as that is rather cheap,

Stupid idea to give away water free, most places make their profit by selling coffee and snacks. Or offering photo, copying etc services. If you wish to do that you require staff with an ID - that means higher salary. With this type of business localtion is everything, and if you are fronting the company expect that your landlord will seek a higher rent due to the farang factor and probably key money.

Do the numbers and see how many users you require an hour to meet your operating costs.

I recall going into greater detail some months ago in this forum.

There is also the MP3 copyrighted music issue as well.

[Naam]

If you sign the company accounts as your only action for the company as MD you require a WP4.

-if you poke your nose you need a work permit.

-if you speak to your gardener in a foreign language you need a teacher's work permit.

-if you shave you need a barber's license and a work permit.

-if you open a bottle of beer you need a liquor license and a work permit.

joke aside. when i heard the first time (from a TV-sponsoring law office) that signing company papers require a work permit i did my own research. result = utter bullshit

[Cuban]

Legal milage varies.

In this particular case, many visitors to Thailand with some computer awareness see playing with computers in Thailand as an easy fix to living here.

[Heng]

Heng, I'm surprised that you can get Thaivisa to accept your posts with so many quotes. I often get a board message saying that I've exceeded the number even if there are only 3!

Yeah, it's one of my minor super powers.

You, my friend are a businessman, not a wannabee businessman, that is obvious from your other posts. You probably associate with businessmen who operate to make profit.

I have met many Farang who come to Thailand with the intention to start a business and I am amazed at how many state that they don't care if they make a profit or not as they have their pension. A friend of mine said the same thing and started a business with his wife. After 3 years of subsidising the "business" he actually took another 3 year lease with a 50% increase in rent (when taking the key money into account). Now his pension is worth 30% less in Baht than it was and he's trying to sell the business as he cannot keep throwing money into a hole and getting nothing back.

That does sound unfortunate. I'd put that one in the lack of foresight and forethought category.

The same is true of many Farang wannabee businessmen. They don't have the knowledge and experience to do the necessary research.

IMO the %'s are probably the same across the entire population. Business failure rates for new businesses is fairly high (I've heard all kinds of numbers, but it tends to be 90% and up), no matter where you're from.

You say, Nothing wrong with that IMO. I've always believed that the less able business should be shaken out.

I totally agree with you. A business should be able to stand on it's own 2 feet. It is a problem for a business when in an environment of unfair competition though.

You have some Pharmacies and I hope that they are successful. What would happen if somebody opened a new pharmacy next to yours and sold everything at below cost? I dont know what the profit margin is, but for example if your Pharmacy sold cough medicine at 100 Baht and next door was selling it for 50. I'm quite sure that you would lose customers especially if the Pharmacist was as competent as yours.

Eventually, you may be forced to close because of losing too much money.

You wouldn't be closing because you are a less able business, but because you are trying to compete in an unfair competition environment.

That would actually be fair play in my book. If that competing business had the resources to put me out of business, it's my fault for not having the resources to compete and/or outlast them. As a family, we've lost plenty of *skirmishes* like that over the years. Personally, I've had all kinds of businesses concepts crash and burn (usually I'll pull the plug and let it coast to a nice belly landing actually... as opposed to the hellish fireball that some people prefer), but I've been fortunate that I've had just a few more good ones than bad ones.