Thinking Of Buying A Dive Centre In Thailand. Help!

[lnicholas]

Hi Everyone,

I've been looking around the Thai Visa website and am finding it really helpful. I get the impression that there are a lot of ex-pats in Thailand that use this website, so I was just hoping I would be able to get some useful advise from all the knowledgeable people out there who have experience of doing business in Thailand!

A bit about my background; I've been in the dive industry for years, been thinking about setting up or buying a dive centre for a while, and now think I'm ready to take the plunge (no pun intended!). Thailand appeals for a few reasons, the infrastructure is already here and well set up for diving, there are already potential customers that know Thailand is an area set up for diving, the diving is pretty good for the most part, and from my visits here (many times), the people are great.

My major concerns are these, and any advice in any of these areas would be very much appreciated;

1. There seem to be quite a lot of dive centres (and businesses in general) for sale in Thailand. Why is this? My thoughts are; it is either that they have been established for a while, so people are just ready to sell up and retire, or that there are other problems such as the economy, doing business in Thailand, or they just are failing businesses.

2.How easy is it for a foreigner to do business in Thailand compared with other SE Asian countries, such as Malaysia, Philippines ? I know that it is fairly straightforward to set up a business (aside from the mountains of paperwork!), but there seem to be lots of extra costs involved, such as income tax, social funds for the Thai staff, VAT, etc. That seems to mount up to a lot each month.I'm concerned about the extra costs that are involved, just wondering if there were any more surprise ones!

3. Rent. From looking around the forum it seems that one or two people have had landlord problems. I understand that a foreigner can not own land in Thailand, so you are at the mercy of the landlord. I read about people being forced to pay extra rent at the last minute or get out, huge amounts of key money, etc. I hope that I would have enough sense to hammer out all the finer points in good time and not leave any bargaining or anything like that until the last minute of a contract being up for renewal, are contracts honored in Thailand?

4. Bribes/Protection. I have also read about people having to pay bribes to locals, or face consequences such as windows being smashed and reputations being tarnished. I'm pretty sure that if all your paperwork was in order then there would be no one to bribe? Has anyone had experience with this?

5. And finally . . . . . the Economy! Thailand seems to be in the news for one reason or another over the past couple of years; Red Shirts protesting, low exchange rate for European currencies & $, floods, trouble with Cambodia . . . the list goes on! This obviously has and affect on tourism, no getting away from it, but has it had enough of an affect that this is the reason why there are many businesses for sale now? Or could it be a good enough reason not to set up a new one?

I really want to go into this with eyes open as wide as possible, so any help and advice would be very much appreciated!

Thanks for taking the time to read this post and I look forward to (hopefully!) reading some replies soon!

[happyrobert]

You're post is sharp and well-balanced, unlike many. So thank you for momentarily reestablishing a modicum of faith in human intelligence.You have looked at pros and also the cons. Seems like you are indeed going into it with eyes open. Good for you.

Now, don't do it!

But if you insist, since you asked for advice, here's mine.

Come on a long-term, say three month trip, and investigate with the same open eyes. Personally, I would no longer consider a business in Thailand except one of rare opportunity, and a dive shop--as fun as it sounds--is anything but rare. You might find after three months the charm and exoticism of Thailand have worn off and it's time to go home.

Furthermore, nowadays, with the world and the economies in their present states, I'd hesitate to open a business even back in the States, especially if I already had a valid current income stream.

Your points:

1. Yes, too many and more opening even now on Koh Chang--and elsewhere--where the diving is slow and the older shops are dropping like flies, mostly because they now charge more than the rates in the USA, which was not the case a decade ago.

3. Your paperwork being in "order" has little or nothing to do with bribes, threats or extortion.

By the way, don't forget there is an extended low season here--one that seems to get longer each year!--when the diving is for crap in many places and you still need to pay all your overhead.

Good luck.

By the way, I think the diving in LOS is way overated. So many places with more beauty and cleaner water.

[innerspace]

1. There seem to be quite a lot of dive centres (and businesses in general) for sale in Thailand. Why is this? My thoughts are; it is either that they have been established for a while, so people are just ready to sell up and retire, or that there are other problems such as the economy, doing business in Thailand, or they just are failing businesses.

2.How easy is it for a foreigner to do business in Thailand compared with other SE Asian countries, such as Malaysia, Philippines ? I know that it is fairly straightforward to set up a business (aside from the mountains of paperwork!), but there seem to be lots of extra costs involved, such as income tax, social funds for the Thai staff, VAT, etc. That seems to mount up to a lot each month.I'm concerned about the extra costs that are involved, just wondering if there were any more surprise ones!

3. Rent. From looking around the forum it seems that one or two people have had landlord problems. I understand that a foreigner can not own land in Thailand, so you are at the mercy of the landlord. I read about people being forced to pay extra rent at the last minute or get out, huge amounts of key money, etc. I hope that I would have enough sense to hammer out all the finer points in good time and not leave any bargaining or anything like that until the last minute of a contract being up for renewal, are contracts honored in Thailand?

4. Bribes/Protection. I have also read about people having to pay bribes to locals, or face consequences such as windows being smashed and reputations being tarnished. I'm pretty sure that if all your paperwork was in order then there would be no one to bribe? Has anyone had experience with this?

5. And finally . . . . . the Economy! Thailand seems to be in the news for one reason or another over the past couple of years; Red Shirts protesting, low exchange rate for European currencies & $, floods, trouble with Cambodia . . . the list goes on! This obviously has and affect on tourism, no getting away from it, but has it had enough of an affect that this is the reason why there are many businesses for sale now? Or could it be a good enough reason not to set up a new one?

1. A combination of the following.......Too many dive schools and not enough customers. 3-5 consecutive bad years for tourism. Tired of Thailand. Poor management.

2. Relatively easy with a lawyer/accountant you can trust but as you seem aware there are a LOT of hidden fee's licenses and paperwork required.

3. Many places do require key money which you should avoid if possible. Make sure your business is registered before signing a lease so it can all be done correctly. Get several lawyers to check over the lease. Pray.

4. A lot of businesses take the shortcut and pay bribes to avoid hassle, which only results in more and more officials knowing that you are willing to pay. You certainly can do it without bribes if everything is in order. However make sure you avoid annoying your neighbours/competitors too much or officials may come round searching for anything they can fine you on and making up laws if necessary. If you are in the right a judge will rule in your favour, only after you have wasted countless hours and baht in court.

5. Sars. Bird Flu. Tsunami. Political coup. Global economy. Red shirts..... Thailand's tourism has been hit for so many years in a row and each year it is getting worse and worse. General elections coming up and who knows what will happen then.

I would say think very, very hard about investing in Thailand right now when you will be dependent upon Tourism.

Come on an investigative holiday and speak to other local business owners for their opinion.

I would also say the same thing about a dive school.

Great lifestyle (as an instructor), not so fun when you are doing paperwork and managing a shop all day.

I speak from experience, I ran my own dive school for a year, went diving twice in that time and lost a fair bit of money.

[lnicholas]

Hi Guys,

Thanks for your responses, it's very much appreciated.

I think also one of our problems is getting figures from dive centres. It seems like a lot of the owners a divers first, businessmen second, and don't keep any proper accounting books. We've found it hard to get a breakdown of figures, the response we're getting is along the lines of 'well we have around about X amount of income a year, with roughly Y amount of outgoings', but with no breakdown in figures! We'll keep looking into it though and see what we can find out.

I'm also having difficulty finding out about TAT licenses. Some people say it's a deposit and you get your money back when the business closes, some people don't. 'Innerspace', what is your experience of TAT?

I guess the next step will be to meet with some lawyers to get further costs on setting up or taking over a business. We are currently living in Thailand so we can try to get as much info on the ground a poss.

Thanks again