Business Information

[roadking95]

This question would be for people who have purchased a business in the past or know of someone that has. I have asked some brokers the question in relation to P&L reports for a business, and the answer allways seems to be the same, that most small businesses dont have any. So without this information to verify what a business is actually trading, it is up to the owner to prove that the business is trading to the figures presented. How did you, the new purchaser ascertain as to how the business was performing.

I know that you can go and visit the place and see what trade is going on, but that will still only give a rough idea as to business. Is there some other way of doing some type of checks to give yourself peace of mind in relation to the purchase.

Thanks in advance

Steve

[Cyberstar]

This question would be for people who have purchased a business in the past or know of someone that has. I have asked some brokers the question in relation to P&L reports for a business, and the answer allways seems to be the same, that most small businesses dont have any. So without this information to verify what a business is actually trading, it is up to the owner to prove that the business is trading to the figures presented. How did you, the new purchaser ascertain as to how the business was performing.

I know that you can go and visit the place and see what trade is going on, but that will still only give a rough idea as to business. Is there some other way of doing some type of checks to give yourself peace of mind in relation to the purchase.

Thanks in advance

Steve

Most small shops will (at most) write down each sale in a book. However, unless we're talking companies, there's no audit requirement, requirements for verifiable cash register nor anything else to tell wether figures are true or not. Consequently, you can't be sure wether books are tailored.

Besides "spying" on the particular business you have in mind you can do as revenue department: estimate what similar businesses of same size and similiar locations make on an average.

[Sunbelt Asia]

This question would be for people who have purchased a business in the past or know of someone that has. I have asked some brokers the question in relation to P&L reports for a business, and the answer allways seems to be the same, that most small businesses dont have any. So without this information to verify what a business is actually trading, it is up to the owner to prove that the business is trading to the figures presented. How did you, the new purchaser ascertain as to how the business was performing.

I know that you can go and visit the place and see what trade is going on, but that will still only give a rough idea as to business. Is there some other way of doing some type of checks to give yourself peace of mind in relation to the purchase.

Thanks in advance

Steve

Many people have different methods. These are some I have used and feel comfortable I was getting a good number. No method is fail proof but at least its one more way to do due diligence.

Depends on the business.

If it is a upscale restaurant, you can figure on average 40% of the turnover should be credit card sales. Look at the credit card slips to get a rough idea.

Hotel : Three- four star hotel has on average, 70% of the room sales paid with credit cards.

Pizza shop. Calculate how pizzas are made with a bag of flour and sauce. Then look at the invoices and get a approximate in sales by looking at the number of can sauce and flour purchased . Of course someone could buy extra flour and sauce but if I'm looking at invoices from 3- 6 months ago and two years ago for a three month period, odds are low that is happening.

Coin Laundry. Look at the electric and water bill. Do the math.

Franchise restaurant. Most all have POS for royalty.

Spa, small restaurant, bar: Look at the daily sales book used by the staff. It should be different ink, pages tattered, coffee stains, etc. This could be doctored but I would feel much better than a book with the same handwritten with fresh pages.

Bar: Look at the invoices to see how much they buy. Then with the retail price used, you have a idea of what the gross sales should be. How close do you come with what the seller is stating? Same as restaurants with COS.

Just a few tips... The bottom line, think like a government tax officer.

www.sunbeltasiagroup.com

[midas]

This question would be for people who have purchased a business in the past or know of someone that has. I have asked some brokers the question in relation to P&L reports for a business, and the answer allways seems to be the same, that most small businesses dont have any. So without this information to verify what a business is actually trading, it is up to the owner to prove that the business is trading to the figures presented. How did you, the new purchaser ascertain as to how the business was performing.

I know that you can go and visit the place and see what trade is going on, but that will still only give a rough idea as to business. Is there some other way of doing some type of checks to give yourself peace of mind in relation to the purchase.

Thanks in advance

Steve

Many people have different methods. These are some I have used and feel comfortable I was getting a good number. No method is fail proof but at least its one more way to do due diligence.

Depends on the business.

If it is a upscale restaurant, you can figure on average 40% of the turnover should be credit card sales. Look at the credit card slips to get a rough idea.

Hotel : Three- four star hotel has on average, 70% of the room sales paid with credit cards.

Pizza shop. Calculate how pizzas are made with a bag of flour and sauce. Then look at the invoices and get a approximate in sales by looking at the number of can sauce and flour purchased . Of course someone could buy extra flour and sauce but if I'm looking at invoices from 3- 6 months ago and two years ago for a three month period, odds are low that is happening.

Coin Laundry. Look at the electric and water bill. Do the math.

Franchise restaurant. Most all have POS for royalty.

Spa, small restaurant, bar: Look at the daily sales book used by the staff. It should be different ink, pages tattered, coffee stains, etc. This could be doctored but I would feel much better than a book with the same handwritten with fresh pages.

Bar: Look at the invoices to see how much they buy. Then with the retail price used, you have a idea of what the gross sales should be. How close do you come with what the seller is stating? Same as restaurants with COS.

Just a few tips... The bottom line, think like a government tax officer.

www.sunbeltasiagroup.com

Sunbelt, and I am trying to get my head around what foreigners can and cannot do in their own business in Thailand. You mentioned " hotel " whereas elsewhere on this web site it lists hotels as being the prohibited activity under Category B. 1. - Service Industry: " Hotels except Hotel management ". I always interpreted that as meaning for example you could be the general manager

of an international name such as the Sheraton but that you could not carry at any work

in a guest house or small hotel. In other words you would need to leave all the work to the Thai partner ? But may be I am not interpreting the situation correctly?

If a foreigner and a Thai partner own a hotel or guesthouse, can the foreigner actually manage the business ?

[Sunbelt Asia]

Sunbelt, and I am trying to get my head around what foreigners can and cannot do in their own business in Thailand. You mentioned " hotel " whereas elsewhere on this web site it lists hotels as being the prohibited activity under Category B. 1. - Service Industry: " Hotels except Hotel management ". I always interpreted that as meaning for example you could be the general manager

of an international name such as the Sheraton but that you could not carry at any work

in a guest house or small hotel. In other words you would need to leave all the work to the Thai partner ? But may be I am not interpreting the situation correctly?

If a foreigner and a Thai partner own a hotel or guesthouse, can the foreigner actually manage the business ?

You can be the Managing Director/ General Manger of any Hotel or Guesthouse in Thailand. You can get a work permit, in fact, that will state that you are entitled to be in that role.

What you cannot do... is own more than 51% of the shares of a company that owns a hotel or guesthouse unless you are Thai, American or under a BOI promotion (must be more than 100 rooms)

www.sunbeltasiagroup.com