Joint Venture In Publishing

[dutchblues]

Hello,

I am a dutchman and thinking of setting up a new (small) publishing house with a Thai partner who owns a business in Bangkok. I will not be working in Thailand (have a publishing house in the Netherlands). I will invest in rights and printing costs. He will have to do translating, marketing, logistics and sales from his own office.

My questions:

What is the best business/organisation form?

How can I trust/check on my partner (I know him just a little, but he makes a very good impression)?

What are the possible problems?

Where do I get a sample joint venture contract?

Thanks from someone who fell in love with Thailand!

[ThaiPauly]

I was in virtually the same situation as you. had a sucessful publishing house in the UK, wanted to replacate it here.

Unmitigated expensive DISASTER.

Thais do not follow the same rules as Westeners. Get yourself the book "Working With Thais" and you may see what I mean.

I was running both businesses at the same time spending a month in each country. As a result of the time I spent trying to make the Thai end work the British end started to suffer badly as I was personally not there everyday.

I closed the Publishing House and then started a different venture with a very intellegent Thai guy, but no matter how much I told him not to make any important decisions without inforing me when I was not in Thailand, he just did what he liked and I had to foot the bill.

In the end because I was desperate to live in Thailand I closed the Thai company, sold the English one and retired. There are some sucessful Foreigners who do business here, but I would guess the ratio from my experience of what I read and hear is that only one in three make it. Many loose the shirts off their back.

I have bought a small business here for my Wife now, that cost me very little and makes a small profit, its just enough to keep here busy and gives her an opportunity to earn her own money.

I will not invest further in Thailand, I have considered many Bussiness Opps, but always came back to the conclusion that although I was sucessful in the UK I, personally just can't cut it here.

I am one of the lucky ones who did not waste a fortune and got out before I lost everything, many others have not been so lucky and I would urge you to give this matter very serious consideration before putting money into it.

If you REALLY want to live here sell up and do nothing. That option could save you a lot of heartache.

This is not "Thai Bashing" but many others will also tell you that Thai Culture is totally different to ours, especilally when it comes do having one as your business partner. Just imagine that for every bad idea you have a Thai will think its good, and vice versa.

Good Luck whatever you decide to do.

This is just my story.

TP

[dutchblues]

I was in virtually the same situation as you. had a sucessful publishing house in the UK, wanted to replacate it here.

Unmitigated expensive DISASTER.

Thais do not follow the same rules as Westeners. Get yourself the book "Working With Thais" and you may see what I mean.

I was running both businesses at the same time spending a month in each country. As a result of the time I spent trying to make the Thai end work the British end started to suffer badly as I was personally not there everyday.

I closed the Publishing House and then started a different venture with a very intellegent Thai guy, but no matter how much I told him not to make any important decisions without inforing me when I was not in Thailand, he just did what he liked and I had to foot the bill.

In the end because I was desperate to live in Thailand I closed the Thai company, sold the English one and retired. There are some sucessful Foreigners who do business here, but I would guess the ratio from my experience of what I read and hear is that only one in three make it. Many loose the shirts off their back.

I have bought a small business here for my Wife now, that cost me very little and makes a small profit, its just enough to keep here busy and gives her an opportunity to earn her own money.

I will not invest further in Thailand, I have considered many Bussiness Opps, but always came back to the conclusion that although I was sucessful in the UK I, personally just can't cut it here.

I am one of the lucky ones who did not waste a fortune and got out before I lost everything, many others have not been so lucky and I would urge you to give this matter very serious consideration before putting money into it.

If you REALLY want to live here sell up and do nothing. That option could save you a lot of heartache.

This is not "Thai Bashing" but many others will also tell you that Thai Culture is totally different to ours, especilally when it comes do having one as your business partner. Just imagine that for every bad idea you have a Thai will think its good, and vice versa.

Good Luck whatever you decide to do.

This is just my story.

TP

<{POST_SNAPBACK}>

Hello TP,

Thanks for your story. It will make me even be more carefull. I will only invest a couple of thousend euro´s and it is not my idea of making or investing a fortune there. I will order the book you advised.

Could you tell me some of the specific problems you came across?

[Sunbelt Asia]

There are some sucessful Foreigners who do business here, but I would guess the ratio from my experience of what I read and hear is that only one in three make it.

With conventional thinking it doesn't seem like you are far off the mark. Up to recently, I've often said its more like 70% that fail on a start up. The standard # around the World is a 70% failure. In Thailand, the language barrier is a negative but the low cost of labor evens out the positive, all and all, so before I could not see why it shouldn't be 70% failure rate in Thailand as well. On partnerships, its more like 78% failure compare this to marriage which has a 60% failure rate.

However here are some facts in Thailand as we have a legal division here. Unlike the States where I could just base it on being a Business Advisor for 24 years. Now I can look at some facts here.

We have formed over 500 companies in the last two years but only eight have closed down their operations so far. This flies in the conventional wisdom of a 70% failure rate. The 70% rate is based on a two year track record so the jury is still out but at this rate I can see easily only a 15% failure rate.

The common knowledge is buy an existing business and you get a 80% success rate or invest in a franchise and the success rate is 93%. The difference between this and a start up is a proven business model and you have the cash flow. You are ringing the cash register the first day in a existing business with trained employees versus the unknown construction costs, untrained employees. The big difference is you know what the cost of the business is with a existing business. You are not going to buy a bad business but one that is making money.

How could this be possible with conventional wisdom of a 70% failure rate on a start up versus the fact it seems 15% failure rate will even be too high based on the current 1.5%.

I have the advantage that we have licensed accountants and we do the books for many of these companies. Some are branches of multi International firms so will just work with the Mom and Pop start ups. Has anyone hit the home run? Done much better than they ever dream? In this case, its only a handful that have confined in us they are concerned how much tax they will have to pay cause their company is doing so well. In this case, it is maybe 6 people but of course most people will keep this fact close to their vest. Why? They don't want their accounting fees to go up and they want to fly under the radar, But it seems by the # of increased employees and their expansion that a number of firms that its close to 30% do well to VERY well.

Hence here is why I think the conventional wisdom comes from based on the ones that are expanding. A large # of companies will be statues quo where the owner essentially has bought himself a job that pays reasonably well to just making ends meet.

Facts seem to say, 30% do well. 55% break even to making a small profit and 15% lose the plot. Hence when we say 70% lose the plot, that is not correct.

It is a fact the largest % of multi millionaires came from business ownership. In business you either get it right in a big way, break even or close up shop.

The ones that I know succeeded in a big way in Thailand, what did they do? In most every case, they provided a service that their was a need for. All were big in customer service and treated the customer the way they wanted to be treated. They were in a niche and did not have lot of competition. Be it a Irish pub in a good location to a business service.

The ones that fail?

In the case of 5 different restaurant/bar, every case they were a designation and did not have the staying power to get well known to drive people to their door. A good location will make most owners think he is a genius. As most people know I am a owner and co-owner of 9 restaurants. All are profitable to VERY profitable except one. The one that is breaking even ( some months up 40K some down 20K, I have not visited it in over a year! Why is it just break even with owners discretionary cash? You have to have passion and what is the common instinct to visit the businesses that are winning, I do look at the balance sheet and P/L every month of this restaurant but that is the extent. I will make it a point to get involve with this restaurant soon.

Other cases of failure...A manufacture never open cause the investors never came up with the money hence they needed to close the company.

A client just instructed to close his company after opening it a month ago. His partner and him had a dispute and decided not to invest.

A physical therapist did not make it because of a partnership dispute and bad location.

These are the 8 cases that I know of where the company were closed down.

I would like to point out a number of publishers are not doing well. To be frank only know of one that is making good money...most are struggling. The one publisher that is good is located in Pattaya and going after the real estate market there. Here in Bangkok, lots of competition and to get advertisers is tough. None have closed down but I don't get a good feeling on their long term staying power.

One common theme on why most people close up or sell. Partnership dispute. Pick your partner VERY closely! I picked a great one in my wife. She is Thai but has two Western master degrees and thinks well on her feet. I owe lots of our success in Thailand to her. It is essential for you as the foreign investor to find a suitable Thai partner you can work effectively with as the Editor must be Thai, in a publishing business.

What is the best business/organisation form?

Thai limited Company using a number of means which can be used to ensure that you as the foreign minority shareholder have effective management and financial control of the company. These include:

Creating different classes of shares with different voting and you being the sole director, preference share structures, shareholder agreements (including share financing arrangements)

How can I trust/check on my partner (I know him just a little, but he makes a very good impression)?

Don't trust no one. Have a good lawyer put the above safeguards in place to help control your interest so if it goes pear shape, you call the shots.

What are the possible problems?

Buying back your own company like one person had to recently. One individual had to do this recently even though it is provided if a foreign shareholder hold or have invested in less than half the share capital, it is currently accepted that vesting the voting and management control of the company in the foreign shareholders, will not of itself violate the Foreign Business Law. No safeguards were in place, he was voted out and it cost him over a million Baht to get his company back.

Where do I get a sample joint venture contract?

Our licensed lawyers can draft a joint venture agreement. Our professional fee is 18,500 Baht plus 7% Vat

www.sunbeltasia.com

www.lawyer.th.com

[ThaiPauly]

HI Dutch,

I think Sunbelt has given you a very in-depth answer to your question.

Hope all goes well for you

It's not as if you are risking that much, I have one maxim that has served many people well when doing business in Thailand

"Never Risk more than you can afford to loose"

[~G~]

This becomes an interesting thread.

Statistics show that 9 out of 10 companies don't last more than 5 years, means closing down. Much worse than if you check only the first 2 years.

But considering those that break even, or make a tiny profit, as "ok", might be a bit misleading. What does "breaking even" actually mean? Is it after deduction of a reasonable, nice salary for the owner? Or does the owner has other sources of income, and does not take a significant salary? In those cases, yes, the company "broke even", but the owner did not get much benefit from the company did he?

When an entrepenuer comes to start a business, breaking even should not be the objective. One should have a way to make at least the same as one can get paid as an employee, for which the risk is much lower. Or to compare to other alternatives, such as investing the money to expand an exisiting successful business.

[Butterfly]

How can I trust/check on my partner (I know him just a little, but he makes a very good impression)?

<{POST_SNAPBACK}>

oh oh, here lies your problem. Thai men can't be trusted even when you know them long time. He is going to take you on an expensive ride. Don't walk, run.

If you need a ride, go with the TG sick buffalo story, at least you get something in return.

[Butterfly]

This becomes an interesting thread.

Statistics show that 9 out of 10 companies don't last more than 5 years, means closing down. Much worse than if you check only the first 2 years.

But considering those that break even, or make a tiny profit, as "ok", might be a bit misleading. What does "breaking even" actually mean? Is it after deduction of a reasonable, nice salary for the owner? Or does the owner has other sources of income, and does not take a significant salary? In those cases, yes, the company "broke even", but the owner did not get much benefit from the company did he? 

When an entrepenuer comes to start a business, breaking even should not be the objective. One should have a way to make at least the same as one can get paid as an employee, for which the risk is much lower. Or to compare to other alternatives, such as investing the money to expand an exisiting successful business.

<{POST_SNAPBACK}>

Right on

Doing business in Thailand is an adventure to say the least. Not only do you have to deal with extreme low margin and "average" revenues (at least in western standards) but you have to deal with the usual scams from you Thai partners, suppliers, clients etc... because you are perceived as a mobile ATM.

Opening a real business here means min 1mil Euro investment to be taken seriously by locals and suppliers.

Edited November 14, 2005 by Butterfly

[dutchblues]

I have to admit that all these kind and willing comments are causing a lot of doubt.

Let me first open up a little. We are publishing books, not a magazine or paper. So we don´t depent on advertisement. I was willing to invest a couple of thousend euro´s (not a million) and the rights to publish our bookseries in Thailand. Most of the work has already been done. Our books series is pretty successfull in over 15 countries now and to be honest would this investment in Thailand not be more than a toy. It would be enough if the provit would be enough for stays in Thailand and have tax deductable costs. We are making enough money in the other countries and I don´t intent to give this business up. When the series would be successfull in Thailand and can be extented than some real provit can be made.

In my view it would/should be possible to supply the Thai partner with the rights and printed products and let him do the business. He was investigating whether he would be our customer or publisher in thailand but wasn´t able or willing to invest enough money to buy our rights, products and pay for translations, design and setting up distribution.

I would never give them the opportunity to gain cash from me/us. Our investment should never be more than rights and printing (which we already do in large volumes in China).

Will keep you posted!

[~G~]

In my view it would/should be possible to supply the Thai partner with the rights and printed products and let him do the business. He was investigating whether he would be our customer or publisher in thailand but wasn´t able or willing to invest enough money to buy our rights, products and pay for translations, design and setting up distribution.

<{POST_SNAPBACK}>

Your partner is unwilling to invest; whether he will evantually do any marketing or distribution remains unknown. I suggest - find an established publisher that has the distribution channels in place; if your books are successful in other countries, you might be able to work out a reasonable agreement for cooperation. Don't rely on non-experienced partners, especially not on such partners who are unwilling to invest anything.

[dutchblues]

In my view it would/should be possible to supply the Thai partner with the rights and printed products and let him do the business. He was investigating whether he would be our customer or publisher in thailand but wasn´t able or willing to invest enough money to buy our rights, products and pay for translations, design and setting up distribution.

<{POST_SNAPBACK}>

Your partner is unwilling to invest; whether he will evantually do any marketing or distribution remains unknown. I suggest - find an established publisher that has the distribution channels in place; if your books are successful in other countries, you might be able to work out a reasonable agreement for cooperation. Don't rely on non-experienced partners, especially not on such partners who are unwilling to invest anything.

<{POST_SNAPBACK}>

My Partner is willing to invest on translation, adapting design, distribution and marketing and has involved and experienced in the branch we would like to sell our books.

Quite interesting is that I got an email this morning from another publisher willing to publish our books in Thai. We will see how things will go.

Will keep you posted.

[Andrew Mac]

Just out of interest, what kind of books do you publish? If it's not giving away some kind of trade secret, can you give us any titles?

[Sunbelt Asia]

But considering those that break even, or make a tiny profit, as "ok", might be a bit misleading. What does "breaking even" actually mean? Is it after deduction of a reasonable, nice salary for the owner? Or does the owner has other sources of income, and does not take a significant salary? In those cases, yes, the company "broke even", but the owner did not get much benefit from the company did he? 

This is a good question and will require answering in a detailed fashion. A business after rent, labor costs, cost of goods, utilities, advertising and miscellaneous has left over what is called owners discretionary cash. Let’s use an example of a company that has 500,000 Baht left, some owners will take a salary of 480,000 Baht and leave the company making 20,000 Baht. Others don't need a salary and will leave 500,000 in the company. The same company will either make 500,000 Baht or 20,000 Baht for the year. For some people 40,000 Baht salary for a month would leave them personally bankrupt as they can spend that in one night. Others can live comfortably on that. In most cases this is considered “breaking even.”

To complicate matters even more, some owners run the business out of their pocket. They have 25,000 Baht in receipts from that day’s trade. On the way home, they stop for gas and put 1,000 Baht in the tank. At home, the wife needs 2,000 Baht for the air conditioning repair and the daughter hits him up to donate 500 Baht for a charity in the school. The next day at the bank does he deposit 25,000 Baht or 21,500 Baht? Most would deposit 21,500 Baht in the bank. As a business normally makes 10 %- 20% on gross sales, there goes most of the net profit for the day. In his mind he is breaking even but that business made 5,000 Baht not 1,500 Baht for the day after rent, labor, COG, etc. A company in this situation makes 1,825,000 Baht owners discretionary cash in a year or just 547,500 reported (as the next night, the wife needs 2,000 Baht for groceries and little Susie needs her allowance; every day it’s a never ending cycle). Many "main street" small businesses are run this way all over the World, not just in Thailand. They want to minimize their tax bill, while in big business it’s all about stock options and increasing the bottom line.

Hence the synopsis of this overall post, there is a big difference in the group “losing your butt and the shirt off your back” to the main group of “breaking even with a salary” to the group “ having champagne bubble baths”

Certainly “losing your butt and the shirt off your back’ and no monthly salary, will happen much more with new company startups than buying an existing company. It takes much longer to get your name known and the cash register ringing versus an established business. But absolute financial failures on start ups based on what I’ve seen are much lower than 70% and up to recently I always felt that was the case. Now I have some actual numbers to look at on start ups.

When an entrepenuer comes to start a business, breaking even should not be the objective. One should have a way to make at least the same as one can get paid as an employee, for which the risk is much lower. Or to compare to other alternatives, such as investing the money to expand an exisiting successful business.

I must state, over 24 years in the business has taught me over and over again, that for many people its ok to "break even" (the business took care of their household expenses and a medium lifestyle), plus they are their own Boss and they also have pride of ownership. For many other prospective buyers who may never become entrepreneurs, the bottom line is ”do I make more as an employee or more as a Boss?“ and the risk versus "guarantee of a monthly check" The quotations are because that is no guarantee, as you can be fired, while an owner normally won't fire himself. In all forms either as an entrepreneur or as an employee, the basic minimum goal is to obtain a monthly check for personal expenses and savings. It takes a big leap of faith to become an entrepreneur and take the risk based solely on getting rich.

You will probably be surprised how many people invest in a business for "Pride of Ownership" or for "Being their own Boss". These are much more motivating factors in first time owners minds than getting rich.

However, for entrepreneurs that feeling of “Pride of ownership” and “Being your own Boss“ is ok for two or three years for many entrepreneurs, then one day they want to move on because they “did that, done that”. Now they want to upgrade their lifestyle. Do they want to go back to being an employee? Heck no! Not with the small wages paid in Thailand. In most cases they want to move on to another venture so that they can hit the homerun. That group of sellers is basically ”show me the money” and why we at Sunbelt have a majority of these “break even” types of businesses with the seller “looking for another venture” as the reason for sale. They are good businesses but have not even come close to reaching the plateau of being a gold mine, but they have that potential. Previous businesses like this would have been Starbucks, McDonalds or KFC when they were a Mom and Pop shop and sold to an entrepreneur who took them to the next level.

On the other hand, it seems as though failures just close down and become some other name. In Pattaya, the beer bars are a perfect example of this. The top tier of “bubble baths in champagne” are only going to sell if they are motivated by human factors such as divorce, partnership disputes, serious illness, retirement or relocation because of kids or wife. Do we get these type of ”champagne bubble bath” listings? Yes, but as you would expect it is not a large percentage. The main street is listings being “break evens with a salary”

www.sunbeltasia.com

[dutchblues]

Just out of interest, what kind of books do you publish? If it's not giving away some kind of trade secret, can you give us any titles?

<{POST_SNAPBACK}>

This is becomming a extensive topic!

We are publishing pet books. Everyone in our market reading this will know who we are.

More info about us http://www.overdieren.nl/Pages/Engels/countries.htm. We have nothing to hide.

Due to our business model and our large sales volumes we can be the most compatitive party in almost any market.

[~G~]

In my view it would/should be possible to supply the Thai partner with the rights and printed products and let him do the business. He was investigating whether he would be our customer or publisher in thailand but wasn´t able or willing to invest enough money to buy our rights, products and pay for translations, design and setting up distribution.

<{POST_SNAPBACK}>

Your partner is unwilling to invest; whether he will evantually do any marketing or distribution remains unknown. I suggest - find an established publisher that has the distribution channels in place; if your books are successful in other countries, you might be able to work out a reasonable agreement for cooperation. Don't rely on non-experienced partners, especially not on such partners who are unwilling to invest anything.

<{POST_SNAPBACK}>

My Partner is willing to invest on translation, adapting design, distribution and marketing and has involved and experienced in the branch we would like to sell our books.

Quite interesting is that I got an email this morning from another publisher willing to publish our books in Thai. We will see how things will go.

Will keep you posted.

<{POST_SNAPBACK}>

Sounds good, best of luck.

[~G~]

But considering those that break even, or make a tiny profit, as "ok", might be a bit misleading. What does "breaking even" actually mean? Is it after deduction of a reasonable, nice salary for the owner? Or does the owner has other sources of income, and does not take a significant salary? In those cases, yes, the company "broke even", but the owner did not get much benefit from the company did he? 

This is a good question and will require answering in a detailed fashion. A business after rent, labor costs, cost of goods, utilities, advertising and miscellaneous has left over what is called owners discretionary cash. Let’s use an example of a company that has 500,000 Baht left, some owners will take a salary of 480,000 Baht and leave the company making 20,000 Baht. Others don't need a salary and will leave 500,000 in the company. The same company will either make 500,000 Baht or 20,000 Baht for the year. For some people 40,000 Baht salary for a month would leave them personally bankrupt as they can spend that in one night. Others can live comfortably on that. In most cases this is considered “breaking even.”

To complicate matters even more, some owners run the business out of their pocket. They have 25,000 Baht in receipts from that day’s trade. On the way home, they stop for gas and put 1,000 Baht in the tank. At home, the wife needs 2,000 Baht for the air conditioning repair and the daughter hits him up to donate 500 Baht for a charity in the school. The next day at the bank does he deposit 25,000 Baht or 21,500 Baht? Most would deposit 21,500 Baht in the bank. As a business normally makes 10 %- 20% on gross sales, there goes most of the net profit for the day. In his mind he is breaking even but that business made 5,000 Baht not 1,500 Baht for the day after rent, labor, COG, etc. A company in this situation makes 1,825,000 Baht owners discretionary cash in a year or just 547,500 reported (as the next night, the wife needs 2,000 Baht for groceries and little Susie needs her allowance; every day it’s a never ending cycle). Many "main street" small businesses are run this way all over the World, not just in Thailand. They want to minimize their tax bill, while in big business it’s all about stock options and increasing the bottom line.

Hence the synopsis of this overall post, there is a big difference in the group “losing your butt and the shirt off your back” to the main group of “breaking even with a salary” to the group “ having champagne bubble baths”

Certainly “losing your butt and the shirt off your back’ and no monthly salary, will happen much more with new company startups than buying an existing company. It takes much longer to get your name known and the cash register ringing versus an established business. But absolute financial failures on start ups based on what I’ve seen are much lower than 70% and up to recently I always felt that was the case. Now I have some actual numbers to look at on start ups.

When an entrepenuer comes to start a business, breaking even should not be the objective. One should have a way to make at least the same as one can get paid as an employee, for which the risk is much lower. Or to compare to other alternatives, such as investing the money to expand an exisiting successful business.

I must state, over 24 years in the business has taught me over and over again, that for many people its ok to "break even" (the business took care of their household expenses and a medium lifestyle), plus they are their own Boss and they also have pride of ownership. For many other prospective buyers who may never become entrepreneurs, the bottom line is ”do I make more as an employee or more as a Boss?“ and the risk versus "guarantee of a monthly check" The quotations are because that is no guarantee, as you can be fired, while an owner normally won't fire himself. In all forms either as an entrepreneur or as an employee, the basic minimum goal is to obtain a monthly check for personal expenses and savings. It takes a big leap of faith to become an entrepreneur and take the risk based solely on getting rich.

You will probably be surprised how many people invest in a business for "Pride of Ownership" or for "Being their own Boss". These are much more motivating factors in first time owners minds than getting rich.

However, for entrepreneurs that feeling of “Pride of ownership” and “Being your own Boss“ is ok for two or three years for many entrepreneurs, then one day they want to move on because they “did that, done that”. Now they want to upgrade their lifestyle. Do they want to go back to being an employee? Heck no! Not with the small wages paid in Thailand. In most cases they want to move on to another venture so that they can hit the homerun. That group of sellers is basically ”show me the money” and why we at Sunbelt have a majority of these “break even” types of businesses with the seller “looking for another venture” as the reason for sale. They are good businesses but have not even come close to reaching the plateau of being a gold mine, but they have that potential. Previous businesses like this would have been Starbucks, McDonalds or KFC when they were a Mom and Pop shop and sold to an entrepreneur who took them to the next level.

On the other hand, it seems as though failures just close down and become some other name. In Pattaya, the beer bars are a perfect example of this. The top tier of “bubble baths in champagne” are only going to sell if they are motivated by human factors such as divorce, partnership disputes, serious illness, retirement or relocation because of kids or wife. Do we get these type of ”champagne bubble bath” listings? Yes, but as you would expect it is not a large percentage. The main street is listings being “break evens with a salary”

www.sunbeltasia.com

<{POST_SNAPBACK}>

Thanks for the infromative post, Sunbelt. I am not questioning the facts behind your listings, my post is directed to entrepreneurs that prepare a business plan with merely "breaking even" (without a salary for themselves!) as a probable result and pay little attention to the lack of strength of a business of that kind.

So what happens? Starting a biz is exciting. Many people rush into it without considering everything, and soon later, for lack of proper financial considerations, are forced to close down. May be they "broke even" without taking any salaries. They kept the business as an expensive hobby. My view is that if you start a buisness it should pay for you rather than you ending up paying for it ! Sounds trivial but, as you mentioned, many just start one to improve their self-image, regardless of finances.

No boss? hel_l yes. Every client is your boss! You trade one boss with a 10, 100, or million (if you're lucky) bosses..

I am saying all that not as an employee - but rather as as an entrepeneur that does enjoy the flexiblity and freedom that come with that - I simply want to make the point that altough this kind of freedom is good, and should be encouraged - financial considerations should be of the utmost importance. Without those, no entrepeneur can last long!

And - if there was any doubt - none of the above is directed to the OP, who seem to be experienced enough to know that already.

[Sunbelt Asia]

my post is directed to entrepreneurs that prepare a business plan with merely "breaking even" (without a salary for themselves!) as a probable result and pay little attention to the lack of strength of a business of that kind.

As for business plan, put twenty people around a table and have them come up with a plan. Not one in their business plan will show red after 3 years. I have seen thousands and never saw one that wasn’t profitable in 3 years or VERY profitable in 5 years.

Fast forward three years and see reality and then you will find on average, 6 that have done very well, 11 that are breaking even and 3 that are closed. Everyone of them had a dream and thought their idea would work VERY well. Not one plan thought they were just going to get a salary or just break even.

Buying a business however is different with the personality…I met a client this afternoon, who had been searching for a business with one of our Thai advisors. He had owned businesses before in his home country and was set for life. One of the companies had gone public. He right away told me, “I could care less about the cash flow except that it’s positive and to put the valuation on the business. “I’ve lived in Thailand for three years and am bored stiff climbing the walls. 12 million is a good number I like to invest” If I put a number to how many people are like this, around 25% of our potential buyers are like this.

The point is no one wants to loose money but at least to break even. Breaking even after salary and household expenses or no salary is the main difference. This is acceptable to people looking to buy a business. They know what they are getting, and its not making a fortune they are after, just a salary.

Starting a business up has certainly more risk takers and hence you will see the dreams of riches in their eyes. A business plan will do that as its just speculation on the numbers and the market share you’ll get. In reality, you’ll find most business plans were way off in certain areas and they did much better in other areas. A good businessman will adapt and be flexible with his business plan so he ends up taking that champagne bubble bath.

www.sunbeltasia.com

[dutchblues]

The reasons I want to start up a business there:

1. I think our books will do fine there as they do in many other countries.

2. As Thailand is one of the countries I love most I find it a petty that we do business in so many countries but not in Thailand yet.

3. I would like to have an anchor there for the future. I think it would be nice to have a home there in the far future for the winters. Wo knows this business can develop to a profitable publishing house.

What I don´t want:

1. Earn a lot of money on the short term.

2. Have a lot of troubles.

3. Be a ATM-cash machine for the Thai.

4. Be cheated on.

As I quoted earlier, to be honest it would be a adventure and toy which should not become too expensive and a pain in the arch. Will keep you posted!

Edited November 14, 2005 by dutchblues

[~G~]

my post is directed to entrepreneurs that prepare a business plan with merely "breaking even" (without a salary for themselves!) as a probable result and pay little attention to the lack of strength of a business of that kind.

As for business plan, put twenty people around a table and have them come up with a plan. Not one in their business plan will show red after 3 years. I have seen thousands and never saw one that wasn’t profitable in 3 years or VERY profitable in 5 years.

I agree with you that business plans can be mere wishful thinking. I have been presented with plans that predicted gold mines, and had little connection to reality. For example, an enterprise in manufacturing. That plan had many expense items accounted for, but not one baht spent for marketing. Then, in the revenue section, the prices were 4 years old and 100% higher than the prices at the time of writing the plan. It did include a nice salary plus benefits to the consultant of the project who prepared the plan

Still, many don't even bother with that; I have met a person who rented an expensive retail space and used it to sell second hand cloths (not in Thailand, by the way). Five minutes with a calculator would show that with that kind of margin per item, even for breaking even she'd require to sell hundrends of items a day. In fact, she couldn't sell more than a few a day, niether had the flexibility to adjust the business to a more promising directions.

[ThaiPauly]

The BIGGEST problem you will have is without doubt the Thais themselves.

It seems that however much you trust them they think (and are probably correct in assuming) that you have a lot more money than them and they want to be rich like you!

I had someone who I thought was a freind come to see me about ten months ago with a business propostion. I had known this very intellegent, perfect English speaking-ex Hotel manager Thai for well over a year.

He was, through our conversations, aware that I was looking for a Business Opportunity and seized his chance.

His plan was that I should build a hotel in a very up-and-coming region.

He would help with all the building plans and legalities, find me the staff, train them, basically everything, all I had to do was pay for it.

He had obviously spent a lot of time researching this and had even found the plot of land (AND NEGOTIATED A FAVOURABLE PRICE WITH THE SELLER )

Which meabt that he was obviously going to get a rake off from the price when I bought it. As the Land had never been put on the open market, he said he had negotiated a 500,000 Baht discount and that this land would probably double in price when the new airport was built.

I asked him what his end was and he said that he would want exclusive rights to take all my Customers on Chaing Mai sightseeing tours.

When I asked him how much he wanted to invest in this project I got the answer I was expecting-NOTHING.

So the risk was all mine and if I went under he could walk away scot free.

I did him the courtesy of taking 2 weeks to consider it although my mind was made up the minute he told me he did not want to invest.

Once I had told him the answer was no, I have not heard from this supposed "good freind" to this day, even though through other memebers of his family he knew I had been very poorly 3 months or so later.

What I am aiming to get accross here is that never trust a Thai with anything to do with YOUR MONEY. I had had something similar happen to me when I first arrived, and as far as I am concerned I will NEVER do any business with any Thai that suggests I should!

Hope this helps someone

TP

[Butterfly]

Never trust Thais for doing business. Even the rich ones. Actually the very rich ones will screw you more than the poor ones. Stay away from them. Buy from them but do not invest with them or let them run the business.

[steveromagnino]

I think anytime you do business overseas, you need to understand the nature and culture of who you are dealing with. I do not buy into this "Thai people are xyz blah blah blah" load of crap; some THai people are and some Thai people aren't al those things, but sadly many self proclaimed experts would have you believe that their failures are not due to themselves or their ill conceived ideas, but due to all Thai people being scam artists, bludgers, etc etc. Hmm... I am skeptical, and the number of successful farangs and foreigners I know doing business here with Thai partners successfully would bear that out. It isn't easy, but it is certainly possible.

In my experience, Thai people are no more tricky or less tricky than others my family and I have had to deal with over the years; but if you don't know the language then you severely curtail your partner selection possibilities, and when you end up with a partner who is not sharing your vision and without the skills you need, well you have a big problem. And getting the right people in a start up is probably third most important fundamental business step behind getting the cashflows organised and having your markets sussed out.

The key thing is a developing country compared to a developed country is the way of doing business is far less transparent; if you cannot make out what is important vs. not important in the somewhat opaque business evironment here, well you and your partner are going to struggle. Certainly, the market data and info available plus support processes are so much stronger in developed countries; however that should be compensated for in your risk vs. return equation.

From what I know of publishing, it is a tough market here; for magazines anyway, I did due diligence on a few titles a large MNE wanted to but into here and in the end they realised they could not make it work, partner or no partner.

Think carefully about what you want the Thai partner to be doing, and then on the basis of what you need them to be doing, then select who your partner should be. If it is only a legal requirement then you should not be asking them to run anything. And vice versa, if you need them for contacts or networking or whatever, then select someone with those skills.

I would not approach it from the "I know a guy, he seems like a nice guy, so he can be my partner" approach which many non-Thai speaking business guys coming here with big dreams seem to have.

Regarding business plans; well most businesses if they are not making money within 5 years, are probably getting very tough to fund; so that is why most plans show the valley of death finishing within year 2-3 or so. Plans may be a load of cobblers but better to have the plan and the idea and hope, than no plan and drift around, suddenly discovering a cash flow crisis or staff issues that would have been identified earlier had the person had a plan.

And sure, a start up is probably more likely to fail than buying a going concern. However, the start up gets compensated with a higher return when they sell on the basis of future earnings (if they choose to sell); the going concern pays for that. All depends on how much risk you are willing to take....