So You Want To Start A Business In Thailand?
Originally posted on January 15, 2012
I read this post on a Thai forum the other day:
“I currently live in Viet Nam and am thinking of moving to Thailand. I have approximately 3 million baht and want to start a business in Phuket, maybe a guest house or a restaurant/bar. What do you think of this idea?”
I wanted to just scream at my computer screen “No, you idiot! If I thought for a week I couldn’t come up with a worse idea, or a better way to lose all my money.” Hey, if the guy wants to throw his money away, throw some of it this way.
So maybe now I should tell you what I really think about Expats starting businesses here in Thailand. Pick out 10 Expats who have tried to live out their dream of starting and owning a business here and I can show you at least 9.5 of them who have lost everything.
For example, I have a friend who had a great business plan and a good mind for business. About ten years ago he started his dream company. And it was doing OK, for a while. Just last week he told me that he would not be able to make payroll for his six employees this month. His savings and investments here are all gone, some through fraud perpetrated against him by his partner/girlfriend (I can’t think of anything worse than having your heart broken except maybe having your bank account emptied at the same time, by the same person.) and some due to lack of payment for services rendered (mostly by other Expats who cannot pay their bills either).
I don’t give advice to people about how they should live their lives. But I do have stories to tell and some thoughts on the subject.
1. I am retired, and I am going to stay that way. If I wanted to live a stressful life like I did before I quit work, then (as they say in New York) “I should’a stood at home.”
2. Maybe I might need some extra income. Instead of laying all my retirement savings down on an iffy endeavor, how about doing something like eBay or Craigs list or something that doesn’t require locking up all my savings.
Before I retired here permanently I bought Thai handicrafts in Chiang Mai, shipped them back to Seattle, and sold them at outdoor fairs for 4 summers. Best summers I ever had. Didn’t get rich but I made enough to live in the U.S. for the summer and then buy my plane tickets back here.
3. If one just gets bored and can’t find anything to do with yourself, and you think starting a business will make things better, then think again. If you can’t find anything to do here and are bored then you probably have had the “bored” problem all your life. You’d probably be bored anywhere. If you start a business you’ll just be exchanging stress and worry and 16 hour days for bored.
4. Occasionally you might meet someone who proved successful.
I did meet a man who just needed to make himself busy. He opened a resort/spa and has been quite successful. He had been a hotel owner back home for 30 years and had loads of money and he knew the business and had the cash to survive the first difficult years before his business took off and all you see is your money going out the door. He had all the prerequisites to build a successful business, which he did. His problem now: He is in his seventies and is having trouble keeping up the pace of running a popular resort. He’s tired and would love to slow down, but can’t (picture Rick in Casablanca) or he’d lose everything. So success can also have its drawbacks too. That is something many retirees looking to start a business here often overlook – How long can they keep up the pace of owning a business?
Although it is rare, I do know a few Expats who have had successful businesses here. They all have the same things in common though: In depth knowledge of their business, lots of money, a really good marketing scheme. Here are a few that work and are run by people I know.
Selling URLs and Pay-Per-Click (PPC)
One business owner I know buys domain names (URLs) with catchy names that he later resells to people who think these names will attract people to their sites. Right now he is concentrating on Chinese URLs. He also has a number of pay-per-click sites that you end up at when you have mis-typed the address you really wanted to go to, like (not owned by my friend): thaivis.cominstead of thaivisa.com. You end up at a site with a list of other websites, usually similar to the one you wanted to get to in the first place. The website owner pays my friend a few cents anytime someone clicks on one of these. It’s a one-man business and takes almost no investment but he needs to keep quiet since he is working without a work permit.
U.S. Pet trade
I know someone who sells to the pet trade in the U.S., mainly for dogs. He has opened a fabricating plant here and ships the completed items back to the U.S. with quite a savings to what it would have cost to make them there (It’s called “outsourcing”.). He also owns the distributorship back home so he has no problem selling what he makes. Big time investment costs but almost a guaranteed sale on the other end.
A friend got the idea of making large, one-piece wooden conference tables. He scourers the rice fields nearby and when he comes across a big tree (usually a Rain Tree) he negotiates with the farmer who is happy to sell the tree as it sprung up on its own and now it taking up lots space in his rice field. He brings the tree to a saw mill and has it made into large slabs (6′ to 12′ long). He then finished them beautifully, puts on stainless steel legs and voila, an executive, one-of-a-kind-big-corporation conference table. Reasonable investment cost. Most sales are to Europe and other parts of Asia and are done through the Internet.
Note: I know of almost no bar, restaurant, or guest house owners who have really made it. In fact, they are usually looking to sell the business (Don’t believe me? Take a look here. ).
5. Keeping her busy. This is something I hear from older Expat men who are with younger women. Even though they use the words themselves, they don’t seem to know that “Keeping her busy” is just a euphemism for “Keeping her away from ….. (fill in the blank old man).”
Say I want to buy a business to keep my girlfriend/wife/mistress/paramour busy (this is usually a restaurant, bar, beauty/nail salon, or massage parlor, or maybe a 7/ Eleven for the big time spenders). Here the percentage of failures is more like 10 out of 10. If your girlfriend/wife/mistress/paramour knows they have you to take care of them, why go to work? They might be young but they’re not stupid.
6. Real estate is probably just as bad an investment here (if not worse) than anywhere else in the world given the present economic climate. In Thailand, the Thais look at a pre-owned house or condo just as they would a used car – better to buy new. You’d probably be looking at selling to another Expat if you could. If I said that resale of property is an iffy investment I would be severely understating the situation.
Want to be a business owner? Here is what people say.
Know your business. If you haven’t ever run a bar or restaurant or a guest house or 7/Eleven, or invested in real estate, now is probably not the time to start. Do what you know and have an air-tight business plan.
Have loads of money. The money you invest here should be money you could throw away and still be able to live at the level you want.
Know about the business climate in your area. Things are quite different in different parts of the country. Bangkok is different from Chiang Mai, and Pattaya and Phuket are different from just about anywhere else in the world. Here is a book that might be of some help How to Establish a Successful Business in Thailand, by Phillip Wylie.
Know how to market what you want to sell.
Speak Thai; at least enough to speak to your workers and customers and with the various government officials you will need to communicate with.
Know your workers. In Thailand, many of your employees might be Thai, or they could very likely be Burmese, and in the south they might be Muslims. The more you understand their culture the better employees they will be. I just went to a business grand opening in a Muslim neighborhood. The men were in sarongs, the women in head scarves, and they served goat curry for lunch. A Buddhist opening would have been a different world – and I am sure pork would be on the menu.
Play it by the book. If you try to cheat, say on taxes, or business licenses, or work permits, or hiring illegals, you are in for lots of trouble, with unscrupulous officials, mafia types, shakedown artists. The people who follow the rules, however convoluted they may be, have a much easier time of it. Get a reliable, and if possible honest, lawyer.
So, What to do with that 3 million baht?
A better answer to that person who wants to invest 3 million baht here in Thailand would be: If you lived simply but comfortably, say on 25,000 baht a month, you could live for 10 years on that amount of money.
That’s what I would do.