First things first: What you need to think about initially can be put into 2 categories
1. The business model
What in the way of experience do you have list them down and deal with the areas of weakness before you acquire your business/premises.
There is no right or wrong type of person to run a business. If you are determined to make it succeed, and are prepared to work long hours, then you have the ingredients for success.
Most if not all businesses will have a core income stream but there are always other avenues to maximise your earning potential. An example is ‘Ryan Air’ they work on a net profit margin of approx. £4.25 per travelling passenger, the biggest contributor to this figure is not the flight income but all the associated products/services.
Look to how you can maximise your earning potential
Who are your competitors and what are their Unique Selling Points (USP) will you compete against them offering the same USP or will you do something different.
As with the statement above “ignorance of the Law is no defence”
Know the law, failing to know the Law of the land is not a legal defence, the penalties can (and are here in Thailand) very harsh.
Staff: Time keeping, Training, Holidays, employment tax etc.
Stock Control: Stock wastage, ordering, minimum levels
Income & Expenditure: Instant/ Daily/Weekly/Quarterly/annual reports on all forms of revenue streams.
Sink Funds: What are they and how do I manage unforeseen costs and wear and tear.
Book keeping: Records for the accountant to submit VAT, National Employment and end of year accounts to the tax authorities.
Till: To check accuracy of what is shown against stock and room bookings, along with all forms of income streams.
Cash flow projections: Without having a plan of what you expect to achieve how do you check your progress and look to specific areas in which you are failing or doing well.
Without a plan of who you are aiming at and how you intend to draw those people into your business then you are reliant on passing traffic and word of mouth, these two forms of customers are worth having but they will never keep you busy and in profit in the early days of a new venture.
Decide on the amount of money you can afford to invest in marketing or how much you are willing to pay away for each product you sell (this way there is no initial outlay) and use the money to drive people to your location, include these costs into your ‘Cash Flow Projections’ (I know I have heard it before “why do I need all these forecasts and plans my business is not big enough to warrant spending time on such nonsense” my response is “A Goal without a plan is just a wish and I personally have stopped believing in wishes”
Without this basic knowledge how do you know you are trading legally (as of 2013 for each non Thai national employed within a Ltd company the same company must employ 4 Thai nationals and tax and National Insurance is payable on all 5 staff).
What do you do when you may have to sack staff?
Simple in practice but you have to know what/who you are marketing too, age group, spending power etc.
Are there any local restrictions re planning or usage of a building?
There are plenty of courses you can purchase to fill in missing areas of competency, “By failing to prepare, you are preparing to fail.”
Do spend time in getting to know the right people before you commit to a business venture i.e. those that are qualified in the areas of Tax and Employment Law (NOTE: only Thai Nationals can trade as Solicitors or and accountants) and try not to be taken in by those that have no real knowledge of the facts or have ulterior motives in steering you in the wrong direction.
Winston Churchill“Courage is what it takes to stand up and speak, Courage is also what it takes to sit down and listen”
2. The Second Category: The Expected Costs
Plan Plan Plan without your initial planning and cash flow forecast you will not be able to plot your progress/failings in specific areas and deal with the issues as they arise, you also plan to produce sufficient Net income to have returned your initial capital expenditure, it is at this point you will have achieved what we all strive for “security of our hard earned money within a 12-18 month period” otherwise you may as well have left your money in the bank and made whatever interest was available.
If you are employing borrowed money have you built it into your cash flow models and can the business afford the cost?
Do bear in mind you may need additional funds in the early months to pay for your living costs while the company is in its infant state
If you change the décor do you lose your existing customers?
If you have no concern in losing the existing customers and are looking at a new type of clientèle why buy the business to start with?
Plan Plan without your initial planning and cash flow forecast you will not be able to plot your expected income and when you envisage you will breakeven, it therefore means you will have not planned to have enough funds available to get you through this initial start-up period. There is nothing worse than for your clients to see you struggling to survive, it will drive the majority away.
Acquire a good system and ensure it can cover all your existing products including additional none core products and that it can grow with your business
Acquire a system that can grow with your business, some systems have a max capacity and adding more products could mean buying a brand new system or running two separate systems.
Are you buying the Freehold of the property or the lease, if a lease how long remains of the present term of the lease, how secure is the freeholder?
Stock is the stock in date, is it what people want
Furniture and fixtures: What would the items be worth if you were to buy them new. What life expectancy can you put on their future use?
Goodwill the hardest of all things to value, consider the UK pub group; Wetherspoon they do not buy existing public houses but acquire green sites and build their own customer base, they can therefore spend more on the property and not on an unknown commodity.
All businesses should always be for sale, it gives the seller an additional option as we never know what is around the corner, it also shows what your customers and competitors think of you, if no one wants to buy your business it is not seen by any one as worth having and therefore you need to do something about it.
Look to build an exit route, the time will come when you want to slow down or stop working all together, if the business is a success then the sale is an easy process or you can look to the option of installing a manager which may prove to be more beneficial.
Build this into your planning and cash flow forecasts because if your forecasts demonstrate that you cannot earn the monies you require, then why go into the venture in the first place…walk away while you can.
Research all your potential suppliers and alternative suppliers, just because the existing owner is using a single supplier does not mean they are getting the best available deal
An important question to ask but it does not mean you will get an honest answer
How genuine are the reasons for selling? The most common given reasons are looking to retire or move on; if it is such a good business surly they can rent it onto another person or install their own manager and still earn money and if it is not a good business why are you buying it? If it is because you are better than the seller then you may simply be buying the business on a hope and a prayer and you have not done your homework! If there are no customers to be had the likelihood is there is nothing you can bring to the table that will change that fact.