What Sort Of Money You Need To Open A Business

[roamer]

If you look at the way that Tesco locals and metros have started to decimate what remains of the corner shop market in the UK and then read their comments about Thailand offering "superb" opportunities for growth...I for one would worry if I were a 7-11 franchisee.

[Heng]

Then there's the option of the Tesco-Lotus Express franchises in the future.

[simcity]

Don't even think about anything to do with airports, IMO.

Areas like that are the domain of the connected; there is money to be made from captive audiences.

Very true. The rent being asked is for the new airport is high.

2,000 Baht a sq.m. per month for key money payable in advance for 5 years.

900 Baht a sq.m. per month base rent

25% of your gross sales with a guarantee minimum of 9,000 Baht a sq.m. per month.

Hence if you are looking at 92 sq.m. you need to pay

11,040,000 in key money( Gift) plus a minimum of 910,800 in rent per month.

If you are doing sales of 5 million you are paying 1,516,800 in rent per month ( which includes the pro rata key money per month of 2,000 Baht per sq.m.) which is 30% of your gross sales.

This is why the selling price of goods has to be higher at the airport than anywhere else in Thailand otherwise the vendor will lose money.

www.sunbeltasia.com

sunbeltasian , my friend working for kingpower and he told me at the new airport 30 % of gross sales .

big NONO about bying anything at the dutyfree then ..

[Sunbelt Asia]

sunbeltasian , my friend working for kingpower and he told me at the new airport 30 % of gross sales .

big NONO about bying anything at the dutyfree then ..

Thanks. Just depends on who you are, I guess. Could you find out if they have a guarantee minimum like 11,900 Baht per Sq.m.?

Rather than the 30% of the gross, I like 2,900 Baht per sq.m. and 25% of the gross. At least at 3,500,000 in gross sales the rent % is lower than 30%. Less than that in gross sales, you are looking blue in the face anyway. But King Power could like the 30% of the gross better. Just depends....

www.sunbeltasia.com

[steveromagnino]

Problem is that in CP's mind it is no problem to open a 7-11 within a 100 meter radius. Effectively splitting the profit in 2. Seen some places with 3 7-11's and 3 other supermarkets in 1 street. It just asking for problem.

In my opinion CP's strategy is filling their pockets with ZERO protection for the actual entrepeneur who invests. But 'mai pen rai'.

this is certainly not unusual; McDs (who offer a far more commodotised limited range product) outraged one franchisee by forcing him to change his agreement with them then opening a McDs of their own in the same building/shopping mall as him. And that was NZ. Bear in mind though, that McDs are operating for different reasons than the franchisees in some cases; in that case they wanted to block Burger King's expansion into NZ, and were willing to sacrifice a franchisee to do that....Generally McDs grants a few square miles happily enough, but in CBDs it may be sq m rather than miles.

It is not unusual for 7 11s to open VERY near to each other, but CP try to ensure the success and difference between each; after all there is a value chain for them too, and 50% of a small number with all the logistics of delivery and so on is a waste of their time too. I know them quite well socially, and they certainly want their franchisees to be doing well, because that success means they are doing well too. But they also want growth.

7 11 benefits from the often quoted statistic that franchise businesses are about 3 times less likely to go bust than start ups, because they have business systems and so on. If you have a great location with parking and so on, then you have great first mover advantage; I can guarantee the locals are already buying their stuff somewhere so you are probably sending an existing business broke (or poorer) rather than meeting that much pent up but unmeet raw demand for convenience store stuff.

So... more like a standard caveat emptor than a 'mai benrai' attitude - if you don't want to go into a business with zero exclusivity then look to Subway or similar who may be willing to give that to you. Not sure that 300k is enough for most food related franchises though....

[LoveDaBlues]

Give me your 1 million baht. I'll send you back 80,000 baht each month for a year. By then you'll realize how stupid it is to start a biz in Thailand and you'll only be out 40,000 baht.

[damotuxie]

Hi guys.

I did'nt read where you were thinking of operating in Thailand. I have heard some great advice here and at times have thought of starting business in Thailand myself. I sounds like you have o.k. capital and more to back yourself up with which is great to fall back on. Firstly this is JMHO and I have never operated or attempted to operate a business in Thailand before but agree with the poster that advised if you can't think of a business yourself then you may be in trouble from the outset. You will need to look at where you will intend to operate, what you hope to gain and how you hope to gain it.

My opinion is given the amount of competition in the market place profits from small business would not be absolutly fantastic. If you had a product that was unique, in Thailand tommorrow it would'nt be. Something my wife made me aware of in our very sleepy little province is the size of the schools, many kids don't have much money to chuck around but with the volumes of people in just two schools nearby each other retailing something (thinking food) would do well. Your profit margains would'nt and could'nt be exhorbitant but small profits can create quick returns, there may be a lot of hard work retailing in this scenario but the upside is that your going to make your money in daylight hours as opposed to a 7 operating non stop often staying open late at night for the sake of it-depending on location.

Personally I prefer to operate with a known quantity so I love the idea of earning foriegn money as opposed to Thai baht via my own country where I pay tax and play by rules I fully understand. Forien markets have a deeper saturation of wealth and the internet is makes it possible for you to operate no matter where you are.