Retail Business In Issan

[tingtongmakmak]

I'm interested to know how much initial investment and starting capital are needed to open a retail wholesale business in Issan. The kind of business I have in mind is where small shops come to buy, sort of like a mini Tesco-Lotus, or a retail distributor.

If, however such business cannot compete with Tesco-Lotus, what other small business would you suggest that can generate at least a small profit each month? How about a gas station + convenient store?

[tingtongmakmak]

I'm interested to know how much initial investment and starting capital are needed to open a retail wholesale business in Issan. The kind of business I have in mind is where small shops come to buy, sort of like a mini Tesco-Lotus, or a retail distributor.

If, however such business cannot compete with Tesco-Lotus, what other small business would you suggest that can generate at least a small profit each month? How about a gas station + convenient store?

I've heard that you could start a business in Issan with around 2 million baht, does that sound about right?

[Morden]

Your question is similar to asking the length of a piece of string. You have to research your market and draw up a proper business plan. The alternative is to simply rent premises, buy stock and hope for the best. I suspect that many hopefuls have done it this way before you and failed. It's easy to build a promising plan by imagining queues of customers at the door but you must play devil's advocate with yourself. Let me pose a few questions for you to ask yourself for starters:

1. Why should customers leave Tesco and come to your business?

2. Can you buy stock cheaper than or at the same price as Tesco? If not, what do you offer instead? Location, maybe?

3. What would you do if the local competition cut prices to wipe you out?

4. Can you really anticipate all of your costs accurately? If not, allow a substantial contingency reserve.

5. Do you know enough about your area as a market place?

There are many more questions that you will think of, I'm sure. If you start with a really honest SWOT analysis and the business proposition still looks good, you have a chance of success. But also decide what you will do if it fails. Don't put everything you have got into a business unless there is absolutely no chance of failure. And don't underestimate the need for a good plan, especially if you can't afford to lose your investment.

Good luck!

[tingtongmakmak]

Thanks for the advise, Moden. I realize the difficulties in operating a business and the amount of work needed to be done. And as you pointed out, it's not easy and it takes a lot of planning and consideration before investing in a business.

My thinking is that such business can be profitable if the nearest Tesco Lotus is a hundred miles away, and my girl's family is already operating a smaller scale business in town and so they should an idea on the local market in general.

Anyway, at this point I'm just exploring this option, to see if other people might have had similar experience or know someone who have successfully open shop in Issan. Perhaps they can shed light on the subject as to the money involved or other things that need to pay attention to.

[johnnyk]

If they have a business AND you trust your girl maybe you can invest in the existing business to improve it.

Otherwise Morden is right on.

Hard enough to succeed in the west with vague ideas never mind Thailand where falangs hold few cards.

[Carmine6]

I did a rough estimate of how much it would cost for a convenience store around Chaiyaphum and came up with 2 million baht on the first pass. Then I did some adjusting and came up with 2.4 million as a rough figure. This includes 1 rai of land along a fairly busy road for 600,000 baht, and building the store from scratch. The land cost is the only firm figure I have, but the building cost I base on what it costs for a larger house in the area, then I added 1,000,000 for fixtures and inventory.

And this is not with a gas station, maybe a 50 gallon drum for the motorbike sales. I wouldn't be surprised if my estimate got to 4 million baht if I really started adding things together. It could be done for 2 million, but for a store that would be big enough to supply enough profit for living expenses, I suspect it's going to have to be bigger and perhaps on more expensive land.

Like Morden says, wholesale is much more complex, and capital intensive. Not being Thai makes it that much harder. You're dealing with business people on both sides of the transaction and there's going to be more negotiating than with a strictly retail business. But maybe if you set up far enough away from the family, you can help each other by cutting volume deals jointly. You can kind of piggy back on their existing relationships and then use the increased volume to save both of you some cash.

Edited February 19, 2006 by Carmine6

[johnnyk]

Way up in Chayaphum you will be seen as one big cash cow.

Every estimate for building, supplying etc etc will be designed to fleece you to the max.

That far upcountry you are someone's chance for a big score.

Chok dee maak.

[Carmine6]

Way up in Chayaphum you will be seen as one big cash cow.

Every estimate for building, supplying etc etc will be designed to fleece you to the max.

That far upcountry you are someone's chance for a big score.

Chok dee maak.

Yeah, I already am seen that way, and I've only visited. That's why if I ever did something like this, I wouldn't even go up there until things were under way. I'd have my girlfriend do it. I was mainly doing the math just to back into how feasible very early retirement would be, and how much I'd have to be willing to lose.

[Heng]

I'm interested to know how much initial investment and starting capital are needed to open a retail wholesale business in Issan. The kind of business I have in mind is where small shops come to buy, sort of like a mini Tesco-Lotus, or a retail distributor.

If, however such business cannot compete with Tesco-Lotus, what other small business would you suggest that can generate at least a small profit each month? How about a gas station + convenient store?

I've heard that you could start a business in Issan with around 2 million baht, does that sound about right?

Sure, but you can also start for much less, and much more as well.

My first business, in college in the US, was taking classroom notes from various diligent fellow students, and selling them (essentially a stack of photocopy paper) for $30 a packet. Broke even with the first batch of sales, let it go after about half a year (as there would be hel_l to pay if I didn't get my GPA up into the expected Asian American range), most of the profits going to beer, Doritos, and Subway. Total investment, $200-$300 USD. Compared to my expectations, I'd call that one a failure (but plenty of valuable lessons all around). My second, and first in Thailand, total investment $1,500-$3,000 USD, breeding and exporting aquarium fish. I've since poured several hundred thousand US$ in as it has grown (into cut orchids, aquatic plants, brine shrimp eggs, etc.) over the years (started in 96-97), but the actual startup capital was less than the cost of a flat screen television.

FBT (Football Thai) headquartered on Ramakhamhaeng Rd. started by the owner sewing handmade soccer balls and selling them door to door. CP Group started from the parents of the current president (yes, just one generation) packing and selling seeds in paper bags.

IMO it's best to start small, it's easy to pour it on once you get your momentum going. Oh yeah, and do it yourself. There will be plenty of time to sit around and delegate responsibility to others and post on Thai Visa, play PS2, sip Weller and Water, hit tennis balls, etc. AFTER you're well established and rollin' rollin' rollin'.

correction from grandpa: paper bags. not plastic bags.

Edited February 21, 2006 by Heng

[Thaipwriter]

what other small business would you suggest that can generate at least a small profit each month?

My best idea for a small business in Isaan is to put your 2 million baht into GBP sterling in a savings account earning 5%. drip feed from this account into various other high street savings accounts that offer up to 8%.

You will see a small profit each month of about 7000 baht.

At the end of your first year you will have made 84,000 baht and here is the best bit......

YOU STILL HAVE YOUR 2 MILLION BAHT

This idea for a business gives you a lot of free time that would be otherwise wasted trying to scratch a living in the poorest region of Thailand. Why not go fishing instead?

Hundreds of other guys have tried the same plan as yours and no longer have any money.

The chances of success are remote, but you will give the GF's family much face by trying.

[rishi]

Life is what you make it. Putting your money in a savings account and watch it grow, sitting in your easychair - how much of a life does that make? Lets wave a flag for better die trying, than not having tried at all.

[Vegemite]

Life is what you make it. Putting your money in a savings account and watch it grow, sitting in your easychair - how much of a life does that make? Lets wave a flag for better die trying, than not having tried at all.

Well said.

I was waiting for the standard answer " if you want to make a small fortune in Thailand come here with a large fortune".

It is just so easy to say these things, and they get said way to many times.

Ray23 was doing a bit of research on opening a store for farangs and got a lot of feedback. He is probably cruising around here somewhere but if he doesnt surface you can find his post on this exact subject a few pages back in the Issan forum.

All the best.