How Is Business In Phuket?

[outofoz]

My TGF wants to open a hair salon in Phuket. (I know there are hair salons on every corner in Thailand!). atm it is a business she says she will fund herself, though I'm expecting more lobbying re my financial involvement as time goes by. She currently runs her own salon in bkk, and has run this one by herself for 3 years, and one before that with a few staff for 4 years. She has also owned her own mini mart. So she does have some business experience and seems fairly business savy. She works hard, but has been finding business in bkk not good the last 12 months or so. (i guess it doesnt help having 8 other salons on your Soi). I own my own retail/wholesale business over here, but have no idea how business is done in Thailand and was interested for my own sake in some local opinions.

i guess my questions are:

1. I was wondering what business condtions are like in Phuket.

2. Has anyone any thoughts as to which areas might be good for this type of business?

3. Has anyone a rough idea of the set up costs in phuket of this type of business?

4. What are shop rents like in phuket

I'd like to be able to spend 3-6 months a year or more in Thailand and it'd be good if she had a business that gave her a living with little or no capital input from me

[LivinginKata]

Phuket is flooded with beauty salons. The ones that survive are usually supported by boyfriend(s)/husband or have an established customer base. New start businesses in Phuket fail at a high rate.

[outofoz]

Phuket is flooded with beauty salons. The ones that survive are usually supported by boyfriend(s)/husband or have an established customer base. New start businesses in Phuket fail at a high rate.

Thanks for that feedback. Are there any general reasons for the high fail rate?

[LivinginKata]

Phuket is flooded with beauty salons. The ones that survive are usually supported by boyfriend(s)/husband or have an established customer base. New start businesses in Phuket fail at a high rate.

Thanks for that feedback. Are there any general reasons for the high fail rate?

Usually no business plan ... at all. Coupled with high rental rates for busy areas. Once the seed money runs out, can't pay the rent & utilities. Move on ... We see this happen all the time. Business opens, business closes, or is up for sale a few months later.

[DougLee]

Phuket is flooded with beauty salons. The ones that survive are usually supported by boyfriend(s)/husband or have an established customer base. New start businesses in Phuket fail at a high rate.

Thanks for that feedback. Are there any general reasons for the high fail rate?

They invest everything in opening and forget to offer better quality/atmosphere than the other 50 people doing the same thing on their street.

On my street, there's a new restaurant that fails every couple weeks, most of the time they only last because the farang boyfriend is dumb enough to fund it with his retirement funds. Every one of those restaurants looks exactly like the next one.

So what did i do? i opened one, good decoration, everything high quality. Healthy no-msg food and great taste(dont save $ on cheap ingredient).. we're one of the only restaurants making a real profit on one of the most busy street.

So if your gf (why do you specify thai?) has something new to offer the world, go ahead.. but if she has no imagination like the average thai.. you'll just fund it to keep her busy. on the km long street there's 17 hair salon and most of them can hardly afford a bottle of redbull (9 of them in 3000 baht a month shops)

[outofoz]

So if your gf (why do you specify thai?) has something new to offer the world, go ahead.. but if she has no imagination like the average thai.. you'll just fund it to keep her busy. on the km long street there's 17 hair salon and most of them can hardly afford a bottle of redbull (9 of them in 3000 baht a month shops)

That's a depressing fact if they only pay 3000 Baht a month in shop rent and they arent making much money. and 17 is a lot...i think my GF (aka TGF) pays about 10,000 a month in bkk plus outgoings and she still makes money. maybe the bsuiness ther eisnt as bad as she thinks...

It's a good point about the differentiation. No point in having the same same. I dont know what her plans for that are so I would have to ask

[stevenl]

They fail because of high key money and high rent. Find a spot with walk in trade and reasonable rent/key money and it might succeed.

[DougLee]

If you leave a bar area by about.. 5 meters. There is no key money. our shop's rent is 15k baht, nothing more and its a lot more busy than any road in kata/patong/karon/rawai

Edited December 30, 2010 by DougLee

[outofoz]

Usually no business plan ... at all. Coupled with high rental rates for busy areas. Once the seed money runs out, can't pay the rent & utilities. Move on ... We see this happen all the time. Business opens, business closes, or is up for sale a few months later.

They fail because of high key money and high rent. Find a spot with walk in trade and reasonable rent/key money and it might succeed.

If you leave a bar area by about.. 5 meters. There is no key money. our shop's rent is 15k baht, nothing more and its a lot more busy than any road in kata/patong/karon/rawai

I hadn't thought about key money (not a term we use here but i understand it). My GF wants to start small, which is good. She is always telling me people try and start off too big and don't understand business. Is there any area of the island that would be better for year round business? I know patong, kata have high tourist numbers. How is Phuket Town? Where is your restaurant DougLee?

[BillR]

Listen, Don't do it. End of story. There are so many farang muppets in Phuket already invested in stupid over done businesses just to keep their TGF busy while there away. Hardly any of them are successful, and guess who ends paying the rent because these girls now have some sort of delusional fantasy of being the big boss and a huge loss of face if they shut down.

These "hair salons" are usually just a dumb excuse to sit on your ass all day chit chatting with your friends while every once in a while someone actually pays 300B for a haircut, which she'll have to split with the stylist. Do the math.

Edited December 31, 2010 by BillR

[LivinLOS]

As Bill Hints.. The problems you face (along with over priced rents, key money in high foot traffic areas, huge competition in a field where everyone tries the same trade) is that she will be competing with people who are not doing this to make money.

So many guys want their Gf / wife to have a 'real job' that they pay the startup, and keep paying in drips and drabs, all along the process to keep her 'business' afloat.. Its then a vanity biz.. And if it just breaks even or only loses a little bit, its succeeding in its job of giving the GF / Wife a respectable job title and claim that shes a 'good girl' etc, as well as keep her out of his hair while he heads off to a rub and tug or bar with his mates.

When your competing against businesses which are set up not to turn a profit but for other motivating factors, its a hard row to hoe. I have seen this over and over, where normally smart enough guys, who have made money in the west, seem to lose any business sense and keep throwing money into a vanity project which costs 10x more than any projected gains.

[LivinLOS]

Hardly any of them are successful, and guess who ends paying the rent because these girls now have some sort of delusional fantasy of being the big boss and a huge loss of face if they shut down.

Your edit says it even better than I managed..

I know one woman (nice enough woman if your not her partner) who maintains the idea shes a Patong business woman (tho your not unlikely to find her in Tai pan in the small hours !!) and in the 5 or 6 years I have known her shes has flushed literally millions of baht into front businesses, not small money, but million baht key money on this one, multi million baht money into that one.. Deposits on Condos lost as she failed to flip them etc etc...

Each time this comes from some new off the plane muppet, who falls for the 'shes not a bar girl' fantasy.. And gets sold that this is a solid biz plan and hands over proper decent sums of money into these ventures. Once its burnt through in a matter of months or year hes gone and theres some other guy paying the next one. Of course the entire time she can afford a car and all the girls call her 'Pee'. To meet her on the street you would think theres someone with their head together making money in Patong. Yet I have watched millions go into maybe 5 or more businesses each time with a new fella covering the startup.

[katabeachbum]

If you leave a bar area by about.. 5 meters. There is no key money. our shop's rent is 15k baht, nothing more and its a lot more busy than any road in kata/patong/karon/rawai

where would that be and what kind of shop?

The only beautysalons I know making any money, are the ones focusing on lady boys. Since the lady boys have their working hours, beauty-business is 2pm to midnight. walking distance to their accomodation is a must

[Scabo]

Listen to Bill and LivinLos...

Unless you are going to stay in Thai and account for every baht then

the chances are that the B/salon will fail....

[petercallen]

If you leave a bar area by about.. 5 meters. There is no key money. our shop's rent is 15k baht, nothing more and its a lot more busy than any road in kata/patong/karon/rawai

where would that be and what kind of shop?

The only beautysalons I know making any money, are the ones focusing on lady boys. Since the lady boys have their working hours, beauty-business is 2pm to midnight. walking distance to their accomodation is a must

DougLee opened a restaurant, but he did his foot work first, he says so in his first post.

I think the OP has had good advice and it applies to Bars, restaurants, massage shops and beauty salons.

I have only spent one week in Bangkok and it is not the same as here, much less competition where we stayed

[BillR]

If she really is into the beauty business, why not suggest that she buys wholesale beauty supplies from Bangkok and sell them to the salons. If she is outgoing and can dress and act the part (look hi so) she will have no problem persuading salon owners to buy her supplies. This is another important business point in Thailand, if someone who seems important is selling or demanding something the immediate impulse is to win their favor by buying. Get her an official looking name tag, business cards, and nice business suits etc. You may think i'm kidding but I am being serious.

Edited December 31, 2010 by BillR

[outofoz]

I thank everyone for their comments and post. There is a lot of good advice here and not much in the way of positive outcomes for salons.

I should reiterate, as per my initial post, that my gf has had experience in running salons, likes to keep it small, and says she will fund this new salon venture...... However, i have my doubts about the funding and can see myself being asked to contribute in a variety of financial ways...which i would be happy to do if i thought the business could make money.

Having read the posts here I am also more doubtful of the business environment for another salon on Phuket than I was before...It has made me think about it all a bit more and ask if i would support such a venture here where I live? Not without knowing the local business environment and doing research, that's for sure! I guess also, if someone knows they don't have to make a profit or cover costs as they have a possible get of jail free card, the incentive to run the business properly diminishes.

If she really is into the beauty business, why not suggest that she buys wholesale beauty supplies from Bangkok and sell them to the salons. If she is outgoing and can dress and act the part (look hi so) she will have no problem persuading salon owners to buy her supplies. This is another important business point in Thailand, if someone who seems important is selling or demanding something the immediate impulse is to win their favor by buying. Get her an official looking name tag, business cards, and nice business suits etc. You may think i'm kidding but I am being serious.

IMO that's a great idea. It certainly reduces the initial risk of rent/key money/fit out etc. and at worst case you should be able to sell enough product to cover your initial purchasing. With the high turnover of salons as stated , there would always be more salons/new owners to sell to.

[katabeachbum]

I thank everyone for their comments and post. There is a lot of good advice here and not much in the way of positive outcomes for salons.

I should reiterate, as per my initial post, that my gf has had experience in running salons, likes to keep it small, and says she will fund this new salon venture...... However, i have my doubts about the funding and can see myself being asked to contribute in a variety of financial ways...which i would be happy to do if i thought the business could make money.

Having read the posts here I am also more doubtful of the business environment for another salon on Phuket than I was before...It has made me think about it all a bit more and ask if i would support such a venture here where I live? Not without knowing the local business environment and doing research, that's for sure! I guess also, if someone knows they don't have to make a profit or cover costs as they have a possible get of jail free card, the incentive to run the business properly diminishes.

If she really is into the beauty business, why not suggest that she buys wholesale beauty supplies from Bangkok and sell them to the salons. If she is outgoing and can dress and act the part (look hi so) she will have no problem persuading salon owners to buy her supplies. This is another important business point in Thailand, if someone who seems important is selling or demanding something the immediate impulse is to win their favor by buying. Get her an official looking name tag, business cards, and nice business suits etc. You may think i'm kidding but I am being serious.

IMO that's a great idea. It certainly reduces the initial risk of rent/key money/fit out etc. and at worst case you should be able to sell enough product to cover your initial purchasing. With the high turnover of salons as stated , there would always be more salons/new owners to sell to.

buying hair in China/Laos/Cambodia and selling it in Phuket for hair extensions makes money

[grumpyoldman]

Hardly any of them are successful, and guess who ends paying the rent because these girls now have some sort of delusional fantasy of being the big boss and a huge loss of face if they shut down.

I know one woman (nice enough woman if your not her partner) who maintains the idea shes a Patong business woman (tho your not unlikely to find her in Tai pan in the small hours !!) and in the 5 or 6 years I have known her shes has flushed literally millions of baht into front businesses, not small money, but million baht key money on this one, multi million baht money into that one..

Is she about 64 cent. tall, black hair, brown eyes?

I know her !

[markg]

I know one woman (nice enough woman if your not her partner) who maintains the idea shes a Patong business woman (tho your not unlikely to find her in Tai pan in the small hours !!) and in the 5 or 6 years I have known her shes has flushed literally millions of baht into front businesses, not small money, but million baht key money on this one, multi million baht money into that one.. Deposits on Condos lost as she failed to flip them etc etc...

Each time this comes from some new off the plane muppet, who falls for the 'shes not a bar girl' fantasy.. And gets sold that this is a solid biz plan and hands over proper decent sums of money into these ventures. Once its burnt through in a matter of months or year hes gone and theres some other guy paying the next one. Of course the entire time she can afford a car and all the girls call her 'Pee'. To meet her on the street you would think theres someone with their head together making money in Patong. Yet I have watched millions go into maybe 5 or more businesses each time with a new fella covering the startup.

I know this woman !

Oh..........it's just one of many doing the exact same thing.

The one i know has a nice car, a nice house (chalong) which she lives in plus another that she rents out (Phuket town). Plus a couple of hair salons. She walks the walk and dresses to impress, but the whole house of cards is underwritten by SEVERAL farangs, the visits of whom she assiduously juggles. I had a huge row with my GF that what she was doing was almost prostitution.........

Back on topic. The trouble with a Thai hair salon is that a wash and blow dry is about 70 baht.........that's a lot of work to do before the rent is covered.

Do some serious homework before you 'invest' in this business because they really are a dime-a-dozen. Your GF will also have to work almost every day because (according to my TGF) the staff will just rip you off if you are not in the shop counting the pennies.

Trying to open a salon in a hotel resort might be a better prospect if you can cut a good deal with the management about rent / profits.

Personally, i'd stay away from it ! Too much headache with not enough returns.

[LivinginKata]

I know one woman (nice enough woman if your not her partner) who maintains the idea shes a Patong business woman (tho your not unlikely to find her in Tai pan in the small hours !!) and in the 5 or 6 years I have known her shes has flushed literally millions of baht into front businesses, not small money, but million baht key money on this one, multi million baht money into that one..

I know a few that fit that description. Always have a 'rich husband' in tow to maintain the illusion of sucessful business lady, and pay the bills. Mai pen rai, up to them ...

[steelepulse]

Good idea Bill but OP's gf will have to have the sell mentality which most people do not have.

[BillR]

and to answer the original question "how is business in Phuket" I posted a business for sale about a year ago for a thai friend that was turning 20k baht monthly profit and my phone would not stop ringing from farang and it was sold the same day, so that would indicate to me that if its making ANY profit you are doing very well in Phuket.

[BillR]

Good idea Bill but OP's gf will have to have the sell mentality which most people do not have.

Or the "my policeman brother will mess with your business if you do not buy my beauty supplies" mentality

[phuketrichard]

tourism down 25% this high season.

Most business fail because there is not enough money to get thru the low season.

If she ( or YOU ) have enough money to cover the business for 6 months going on the assumption that there will be ZERO income for 6 months you have a chance.

OR if she knows lots of lady boys :-)

[grumpyoldman]

Good idea Bill but OP's gf will have to have the sell mentality which most people do not have.

Or the "my policeman brother will mess with your business if you do not buy my beauty supplies" mentality

or the salon does do well, and the landlord decides to triple the rent, so that you'll leave and his family can take over the shop.............

[stevenl]

tourism down 25% this high season.

Most business fail because there is not enough money to get thru the low season.

If she ( or YOU ) have enough money to cover the business for 6 months going on the assumption that there will be ZERO income for 6 months you have a chance.

OR if she knows lots of lady boys :-)

And it is only 25% because the number of mainly Chinese tourists is increasing. And besides paying extremely reduced hotel prices, they are spending nothing outside of the hotels.

[logbags]

And it is only 25% because the number of mainly Chinese tourists is increasing. And besides paying extremely reduced hotel prices, they are spending nothing outside of the hotels.

Frugal Chinese? Who would of ever thought............

[LivinLOS]

tourism down 25% this high season.

Most business fail because there is not enough money to get thru the low season.

If she ( or YOU ) have enough money to cover the business for 6 months going on the assumption that there will be ZERO income for 6 months you have a chance.

OR if she knows lots of lady boys :-)

And it is only 25% because the number of mainly Chinese tourists is increasing. And besides paying extremely reduced hotel prices, they are spending nothing outside of the hotels.

I agree that from what I hear businesses (bars esp) are struggling..

But did I read record arrivals numbers for 2010 ?? How can record arrivals be down 25 % (or did you mean spending down 25%) ??

Lots more Aussies and Russians.. Lot less Euros and big spending single guys.

[stevenl]

I agree that from what I hear businesses (bars esp) are struggling..

But did I read record arrivals numbers for 2010 ?? How can record arrivals be down 25 % (or did you mean spending down 25%) ??

Lots more Aussies and Russians.. Lot less Euros and big spending single guys.

See this link. Judging from the numbers I agree with his assessment. Also take into account 2009 was already not what it used to be, in spite of official numbers.