What Do You Think Of This Business Idea?

[actiondell4]

Does anyone know the negatives to this business proposition.

I am trying to work out the pitfalls etc.

I have very good Thai friend.,45 yo College educated,he wants to open a Thai style beer bar in a location in Pattaya.

The shophouse is currently for lease and is currently a empty shop.

He wants too open with pool tables,etc marketed at the Lao.Issan customers.

This is where he wants me to come into it.

Because he is financially unable he needs me to Lease out the shophouse for him and he runs his business in there.

The business according to him will be in his name but I have LEASEHOLD of the shop.

Rent is 11,000 baht per month,3 x 3 year lease.

He will pay for furnishings,stock,staff,electrcity etc.

He will pay me every month 13500,which means I have to pay rent of 11,000 baht,I keep 2,500 baht.

However I am a bit scared to go down this road because there maybe legal problems.

Obviously if he cannot afford the 11,000 baht rent a month,then I will have to take it out of my pocket.

Secondly,as I will be legally the leaseholder ,if any illegal activity takes place in the pool hall/bar will i be held responsible ?

Is this a good business idea.

Obviously I will have to have back up plans if he pulls out after 6 months or so.

Is this technically what you would call a sub lease ?

He,my friend,said better I not put my name in the Business registration because BIB will see a farang is involved and ask for more ?

What do others think?

[sarahsbloke]

I have been in many Thai bars (Issan, etc.), not seen any pool tables.

Not saying they don't exist, but I haven't seen them.

Ask how much it will cost without the tables, these are a really high cost item and aren't required for his stated market.

Adding unnecessary big cost items to the start-up ........ hmmmmmm, why would anyone do that?

Anyway start-up cost for a Thai bar.

Key money, rent, security deposit, few crates of beer, some cheap tables.

My friend started up one of these, about 25,000bht was his total start-up costs, but ChiangMai is a bit cheaper than Pattaya.

Edited November 12, 2010 by sarahsbloke

[actiondell4]

Yes Thankyou Sarah.

I may have been a bit vague with my information.

He wants to start a pool hall,with the customers the majority Issan.

Now I looked at the empty double shophouse and the surrounds and it has potential,but thats his "business" so to speak because what he wants me to do,is to have the shophouse owner put the lease into my name.

He /friend ,puts the business into his name .

He pays for electrcity ,has /manages his own staff etc etc.

HE will buy his own pool tables and stock.

He will run/manage the business.

I dont pay anything except legal fees relating to drawing up of the 3 year lease.

However............I will pay the 11,000 baht per month rent to the owner.

Then....................he ,the friend,pays me 13,500 baht.,I make 2,500 baht...........allegedly anyway.

I will NOT be in the Country,Thailand for around 6 months of next year so I will have him pay me thru a bank account and then i pay the shophouse owner the rent.

But my questions are, Do any of you see any pitfulls with this ?

Obviously the electrcity and bills WILL be in his name.

THe only downside I can see is if I sign for the 3 year lease and he buggers off after 6 months or whatever then Im a little stuck.

Edited November 12, 2010 by actiondell4

[Crossy]

Can you afford to lose the 11k per month rent? If not forget it.

Will the landlord allow you to effectively sub-let your leased property. If not forget it.

Will said bar actually turn over sufficient to pay the rent plus your profit. Has any sort of business plan been put in place. If not forget it.

With a rent of 11k can he not afford the deposit to put it in his own name? If he can't how can he afford to set up a bar?

Friend or not, I see a significant risk on your part should the venture fail, you'll be left with the remaining lease likely plus the debts he leaves behind.

[powderpuff]

If your friend can't afford to pay the rent how on earth will he be able to renovate the premises & splash out for pool tables.

You better have a rock solid business plan before you open the wallet.

Fishy.

[thrilled]

if ya can afford to lose the money,then maybe go for it.if your income is tight then maybe ya should forget about it.

[Theo007]

Be very careful.

[Tatsujin]

I have to ask, if you are only making 2,500 baht "profit" on the arrangement, what's the point? If it's to help your friend get going in business and to help him out, then all credit to you. If it's to make some money then I don't see it working.

As has been stated already, if you are fine with potentially laying out 11k rent every month without perhaps anything coming in then not a problem, if you can't afford to do that then I wouldn't get involved personally.

[Khun Jean]

There has to be a reason why he not want his name on a lease. It obviously is not money because buying one pool table less will give him room to pay a few months rent.

Ask this reason, 'criminal past', 'afraid for taxes', 'landlords knows him and will not rent out to him', something else?

I would walk away from it, because i really can not imagine one good reason why he would not take the lease himself.

[MAJIC]

Sounds like your friend has deal in a lifetime here!...enough said?

[HC82]

So you are on the hook for 400,000 THB over three years but your best case scenario is 2,500 THB per month?

A lot easier ways to make 2,500 THB a month than that buddy. Plenty of bars in Pattaya as it is - would take a perfect location to have a great shot at success but if you're paying 11,000 a month - you don't have one of those places...

I would pass.

[coastwise]

If you are going to proceed with this "not to sound idea" set up a joint bank account with your friend and have him deposit the start up money in the account along with your rent and lease money. It may be that the only thing holding up a good business is his being unable to have a lease in his name. If that is so, and he has the capital to start the pool hall up you may be OK. You also need a couple of back up plans, not just one.

[billd766]

Your friend will be paying 11,000 a month rent, water and electricity say, 5,000, staff say 20,000, stock say 20,000 per month.

His monthly running costs may come to 50,000 a month or about 1,500 baht a day which means he has to make a profit of at least that without any "hidden" costs or him taking any salary at all.

The profit on a bottle of beer is less than 10 baht, on lao khao probably 40 or 50 baht if you are lucky.

He will want to make about 20,000 baht a month for himself AND free drinks all the time.

IF it all goes tits up and he goes broke with outstanding bills to pay take a guess at who will be stuck with them.

Clue, it won't be him.

You can sign a 3 x 3 year lease but at how much deposit and who much will you have to pay if the business goes bust.

IMHO this is not worth 2,500 baht a month especially if you will not be there for at least 6 months.

I suggest that you save your money and politely explain that much as you would like to help him the exchange rate is very bad for you.

[101734]

Stick to what you know as it is apparent that business is not your strong point.

[Spoonman]

Obviously the electrcity and bills WILL be in his name.

Obviously your name is on the lease so the utility bills are also in your name.

[Wavefloater]

Let me see if I've got this right.

A Thai person you know wants you to risk 11,000 baht a month to cover the the rent for a new business - the type of business that has a very high rate of failure in Pattaya . On top of that, he wants you to put your name on legal documents related to that business. In return he's promising to give you profit of a measly 2,500 baht a month. Are you seriously considering this? Is this a troll post?

If you accept his offer, can I interest you in some swamp land in Florida?

[raro]

don't walk, run!

And yes, if there are any illegal activities in the place, the leasholder is also in the loop...

[CWMcMurray]

I am with many of the other posters... if the Best case scenario is you make 2,500 THB per month that is not really a great deal for you. If you just want to help out a good friend that is another story. As others have said, I can't think of any good reason why he would need to use your name as the lease holder...

The only reason I can think of, it to protect himself if things go wrong.... if the business doesn't work out, he can then run away and not face any repercussions other than loosing you as a friend, you on the other hand will be stuck with making payments until the lease expires.

You mentioned that you have a Plan B for the building if needed.... not sure what that is, but it may very well be better than this idea... maybe your plan B should be your plan A

[wolf5370]

All the risk is yours! If he fails, he will have sold the furniture, stock, pool tables et al and you will be left with 11k plus bills every month until the end of your lease. He can run with cash in his pocket and be clear - you are left holding the baby. If you look at it from a purely investment point of view, the higher the risk, the greater the ROI has to be - there is just no way the risk you are taking financially (let alone legally) stacks up. Its not even a good business idea for him as he is entering into a saturated market at a time that many of the places which have survivied until now are struggling; a game that is infamous in its ability to separate those that try from their money. Golden rule of investing, invest in what you know and understand, and only play the risks that you can afford and that stack up against the ROI.

As Raro said - run!

[TheVinylMan]

As well as all the above your on the lease............ your name will be required to get the licences for beer and whisky and cigarettes and music licence........... you aint got a hope in hell in getting licences in your name for a bar being a farang......it aint gonna happen. unless you get a non imm visa and work permit....... to do that you got to set up a company etc etc........... Run very fast in the opposite direction,.

As well as that............ since when do people from Isaan play pool........ cant think i have ever seen a pool table in a bar up in the north east............. and the girls that come from that way cant play pool for shit!!!!!!!!!!!!!! until they have been shown the ropes.!!!!!!!!!!!!

[saakura]

For 2500 Baht a month???? Thats about what 60? 70?? usd??? Are you trolling or are you really so hard up to take such a big risk for such a small amount??

[damo]

If he doesn't want use his name why doesn't he take the company route. It's essentially what he's trying to do already. Have fun in life, don't fuc_k about with pointless shit, it will just bring you down. Sounds like yr mate is going into this on a whim himself. If had what it took to ultimately become successful he wouldn't need you. He's more than likely destined for failure and doesn't want to go by himself.

[bbradsby]

Guaranteed to fail, for the reasons others have stated, plus the fact that you won't be around to check in on the actual activity of said business for which you have substantial risk & liabilities. Bad idea anywhere in the world, and for THB 2500/month! He's college educated, and is destitute. He wants your name on all liabilities-related elements of the business, and you're not around so have no way of checking his actual activities nor accounting.... not to be harsh, but is it possible this guy figures you for an easy mark, or that you actually have really bad business radar.

Put your money in a commodity, mutual fund, heck, go to Vegas, with any of these you'll have better odds of an actual ROI.

[jimbeam1]

Have you ever heard the expression about a barge pole and don't touch.

To be perfectly honest, I can't believe that you are even asking for advice.

jb1

[JimShortz]

Don't listen to all of this negativity. You must realise that this is a fantastic opportunity that is clearly too good to pass up. Everyone else on here is just jealous that they have not been offered this opportunity. They are encouraging you to pass it up so that they can nip in and take on this lease opportunity.

Just think about it 30,000 Baht a year for doing nothing; with what is surely a tiny weeny risk of losing a few hundred thousand Baht. Nothing ventured, nothing gained - I say GO FOR IT!

[onnut]

all this risk for just 2,500 baht per month!

thats not even a night out for yourself.

dont do it,

I cant believe somebody is even thinking about this!

[David006]

Interesting how a bar /restaurant/pool hall can have a specific target market of regional ethnic background clientele ??? We are not talking "Irish pub" here ...Just post his business plan and then we can pick holes in it ....lol

As other posters have indicated perhaps you may be the "target+safety net" If something looks "too good to be true" in the way of passive income whatever the amount...... can you join the dots??? Having an interest in a bar in lotus land sounds great to tell your mates back home don't it...

...it's you're call...

[chooch7]

me too

[KwaTime]

I'm curious about the answer to his second question about if he has liability if something happens in the bar.

If you're doing this for 2,500 a month then obviously it sucks, if you're doing this to help a friend then I'd still be very careful. These arrangements usually go in a bad direction.