Business Model - Question/Advice

[Thaiberius]

Gents/Ladies, I have just joined Thai Visa and wish to ask a question about a small business model and whether anybody has tried this and/or whether it is in common usage in farang small business set-ups.

Since around 2002 I have dabbled in small businesses (very small - buying for no more than £10k, mostly much less). These have included a small coffee concession, a small beer bar, a share in a laundry. I don't have a Thai partner either in business or personally. The businesses have not been my main source of income but have been, in varying ways, a learning experience and enjoyable with a small profit. On the other hand they have been vastly time-consuming. I have lived for varying lengths of time in Bangkok, Hua Hin, Patong, Koh Samui and Pattaya although I am now based in the UK.

I am moving back to Thailand later this year and wish to buy another small business.

My previous experience with running small businesses in Thailand have led me to think of using a different model to that I have previously used. I will not be going down the massage/bar route. The biggest headache I have experienced with the running of small businesses have been the training/reliability/retention of staff. Granted, a relatively small wage will never guarantee lifetime loyalty. I don't want to have to be around a good deal of the time dealing with problems which has been my experience in previous years.

Has anybody ever gone down the rental/commission route with a business? For example, a small farang-type delicatessen shop. (This is just an example, I don't have any particular location or business type in mind) - For delicatessen read generic. I purchase the business, pay rent, do the legal things, marketing, internet, train/support staff, arrange suppliers, deliveries etc etc. However, the day to day running on the ground is down to 1, 2, 3 people - reliability, retention and general duties down to the daily staff. They keep a % of takings and pay me the balance or alternatively pay a rent in order to run the business autonomously. I know some farang/Thai people in relationships and within families who practice this model but as I am a relative outsider is this viable?

Is there generally a problem with sub-letting? Other people who have tried this model can you tell me your experiences.

Any input good and bad much appreciated.

Thank you.

[YipYipYa123]

once they figure out how to do it without you -youre screwed TIT

[brit1984]

If you take all the risk and run all aspects of the business (except for HR) then the share of profit to the managers (for controlling the staff) should be low, and you will need a system for cash leakage / under-reporting of sales.

I'm not sure what would be the motivation behind the sub-leasing business property idea, except for maybe making some "easy" money from criminals / undesirables who prefer to operate their businesses slightly off the radar.

[CharlieH]

Try "Business" forum for more appropriate feedback.

[theoldgit]

Try "Business" forum for more appropriate feedback.

I agree, you might get a better response in a Business Forum, have moved it.

[choochoo]

small profit long hours means u are losing BIG money. Dont kid yourself!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[MRTHAIBRI]

Mate you need to be in control of the cash register 24/7 or they will take you for a long hard ride. They think all farang are stupid!!

[Thaiberius]

Mate you need to be in control of the cash register 24/7 or they will take you for a long hard ride. They think all farang are stupid!!

Guys, thanks for your responses, much valued.

Regarding the cash register/money flow, cash handling. This has been my main area of concern in past small businesses. For example, because I wasn't in the bar all the time I found staff running a parallel accounting/ordering system and I'm sure I'm not the only person who has found this. Unless I inventoried exactly in a small shop I had then things went missing, extra lines were introduced, cash/stored goods went missing etc etc. The reason I want to go down the sub-let/commission route is to take away as much of the cash handling element as possible.

The small return, long hours is something I want to keep away from (easier said than done you may say). I am under no illusions, in all my time in Thailand I've never ever seen a farang make decent money. The exceptions being those who risk large amounts of capital and come up trumps. For instance, a friend of mine in Pattaya has a very well-known long-standing bar on Soi 8. He is there at least 8 hours every day and makes around £25k pa. Not for me. I know another guy who has a bar/hotel in Pattaya who invested/risked around £300k a few years back and now makes a reasonable living even by western farang standards. The business is not my main income, I'm happy to make £5-10k a year but don't want to have the burden of all the problems I outlined in my initial post. This is why I feel a sub-let is probably the best way. Almost like a franchise model with a rent or maintenance payment weekly/monthly depending upon projected turnover.

I take onboard what the previous poster said about once they know how to do it then they will do it themselves. Granted but (and this is not meant to be an anti-Thai bash) there are thousands of Thai's working in what you might call the low-end economy, shop assistants, bar work, laundry work etc. They do know how it all works but is there the capital to start with, the motivation to see something through? I don't think so in the majority of cases.

Again, thank you all for the input.

[ezzra]

Mate you need to be in control of the cash register 24/7 or they will take you for a long hard ride. They think all farang are stupid!!

Not cash only, they will eat and drink your stuff and do deals behind your back

with the suppliers for kick backs,, in short, unless you will be there 24/7 overseeing

every aspect of the business, forget about it...

[monkeycountry]

Gents/Ladies, I have just joined Thai Visa and wish to ask a question about a small business model and whether anybody has tried this and/or whether it is in common usage in farang small business set-ups.

Since around 2002 I have dabbled in small businesses (very small - buying for no more than £10k, mostly much less). These have included a small coffee concession, a small beer bar, a share in a laundry. I don't have a Thai partner either in business or personally. The businesses have not been my main source of income but have been, in varying ways, a learning experience and enjoyable with a small profit. On the other hand they have been vastly time-consuming. I have lived for varying lengths of time in Bangkok, Hua Hin, Patong, Koh Samui and Pattaya although I am now based in the UK.

I am moving back to Thailand later this year and wish to buy another small business.

My previous experience with running small businesses in Thailand have led me to think of using a different model to that I have previously used. I will not be going down the massage/bar route. The biggest headache I have experienced with the running of small businesses have been the training/reliability/retention of staff. Granted, a relatively small wage will never guarantee lifetime loyalty. I don't want to have to be around a good deal of the time dealing with problems which has been my experience in previous years.

Has anybody ever gone down the rental/commission route with a business? For example, a small farang-type delicatessen shop. (This is just an example, I don't have any particular location or business type in mind) - For delicatessen read generic. I purchase the business, pay rent, do the legal things, marketing, internet, train/support staff, arrange suppliers, deliveries etc etc. However, the day to day running on the ground is down to 1, 2, 3 people - reliability, retention and general duties down to the daily staff. They keep a % of takings and pay me the balance or alternatively pay a rent in order to run the business autonomously. I know some farang/Thai people in relationships and within families who practice this model but as I am a relative outsider is this viable?

Is there generally a problem with sub-letting? Other people who have tried this model can you tell me your experiences.

Any input good and bad much appreciated.

Thank you.

Would it not be easier to buy stocks, which is pretty much the same as buying a business and letting someone else run it? :-)

[Noi657]

Can I ask what your initial investment would be?

[GAZZPA]

I think the only way to make it successful is if you put the work in yourself.

The problem with the business model you are suggesting it relays on reliable and honest staff on low incomes to make it a success. In my experience this doesn't work as they don't really have a vested interest in making it all happen and they won't go that extra mile. Even if you offer a commission rate as an incentive it will be considered as a bonus to them, it either happens or it doesn't and they won't really care. After all it's not their money at risk so why should they really care if the business fails.

Also, don't forget that once you educate local people on how to don something they will take your training and knowledge and do it for themselves.

I am not really sure why you are doing this. The tone of your post suggests that you are just looking for a small income and are not particularly reliant on it. So, what will you do when in Thailand? Is it not appealing for you to have something to do, even if you share the workload with a trusted business partner and allow yourself time to relax.

So, my advice is find a trusted partner and control the business yourself. Or look at investing your money somewhere else that can generate an income rather then a retail style business.

Good luck.

[unanimosity]

once they figure out how to do it without you -youre screwed TIT

Exactly, which is why a franchise business model is what the OP has basically described.

[samran]

Mate you need to be in control of the cash register 24/7 or they will take you for a long hard ride. They think all farang are stupid!!

And time after time, many prove them right..

[samran]

Mate you need to be in control of the cash register 24/7 or they will take you for a long hard ride. They think all farang are stupid!!

And time after time, many prove them right..

[brain1]

I would suggest you look at Asia BackPackers and either their hostel Franchise or their I-Rovers Franchise, as both are in the accommodation market and their income is in the main from bed/room sales their management control system is easy to handle and leaves less opportunity for theft.

The I-Rovers income is only from room sales and as long as you control the booking of the 6-8 rooms and the electric metres to the rooms you control the business the other point to note is that there is only one staff member that of a Receptionist/cleaner.

Asia BackPackers: http://backpackers-asia.com/

I-Rovers:http://pattayaluxuryrooms.com/

[brit1984]

It doesn't make sense to take all the financial / legal risk, and perform most of the value added business functions (including marketing), and then accept anything other than all / nearly all of the profit (leaving aside the very serious issue of how you monitor that profit).

Given the objectives you have further clarified, it would be much more logical to invest in public equities (or other passive type investment instruments) and/or do a business with minimal capital investment and few employees to manage (e.g. consultant).