business for sale,advice cheers.

[junglesoup]

I was just browsing some of the business for sale in bangkok.I found a internet/coffee shop all in one for sale near the thai chamber of commerce university for sale.

 

Now I beleive that if something sounds too good to be true,it usually is. But on the other hand my girlfriend worked in an internet shop and said they are quite profitable,expecially if it is a coffee shop also.

 

After all expenses in the month,rent-36 000, staff wages -20 000 and replenishing-15000-20 000,the site said the profit was about 80 000 per month. The selling price of the business was 570 000baht which meant a 7 month return on the investment.This seems like a very good deal. They said they are selling because they have other business ventures and are selling it cheap for a quick sale.

 

I know coffee has a high mark up profit.Starbucks apparentely make a cup of coffee for 5baht and sell it for80 or 90baht. The other thing is that if it has a goodlocation then people will surely come in.

 

Just want to know your thoughts on this. What to watch out for and any draw backs to be aware of.

 

Thanks in advance.

[samak]

forget the Starbucks margin!

to be on the safe side calculate that your average customer surfs for one hour (20 baht) and consumes in average (coffee, softdrink, snack) for 40 baht (material costs already deducted).

to achieve 80k profit you would need to have 2600 such customers per month or 87 per day (of course you need to open everyday). if you operate from 10am to midnight, this are 6-7 customers permanently in the shop. for this you need to be able to accommodate at absolute minimum 10 PC's for peak hours.

you did not mention the size of the shop (number of seats, PC's, tables).

at the moment you have not been to the shop yet and do not even know exactly where this is!

you have to do a very careful due diligence before you make this deal. go there a couple of times at different times of the day (also weekends when the university is closed), count the customers, observe what they consume, look at the prices. then you can make a much better calculation than i have made above.

remember that the costs the seller mentions is on the low estimate side and the revenues on the high. check this out. check all costs carefully, utilities, social cost for staff, depreciation for PC and equipment (you need to renew at least every 2 year), repaircosts etc. etc.

what do you buy with the 570k?? this is certainly far over IT equipment, fixture and furniture (consider their second hand prices). has the shop such a good clientele and a good reputation that it is worth to buy at this price? consider what you would have to pay if you just buy second hand equipment and decorate a shop at a good location and open a new internet/coffeeshop?

consider that prices are negotiable and often owners are in debtsand need urgent cash. advertized prices are moon prices; maybe 40-60% of the advertized price of even less are realistic! you also need to consider the seller's situation and prepare to negotiate hard!

 

just my 2 satang. i have no experience at all in this biz; just thoughts!

[pe7e]

I think the first thing you should realise is there is no effective consumer protection in Thailand so you can expect to be lied to in sales situations. Why would a businessman who was capable of building such a wonderfull business then sell it for a fifth of its true worth? If it were me, I would put a mananger in at a probable cost of 20,000 bt and retain the other 60,000 for myself, which is 20x in excess of the interest attainable on 570,000bt. Also because of the growing availability of fast internet connections and cheaper PC's the internet cafe buisness model is on the downhill slope and will continue to be. Now if you're looking for a sure fire way to make some easy money I may be able to help, my cousin is an attorney acting for the ex Nigerian minister of finance, due to the delicate nature of his previous job he needs help in getting his personal fortune out of the country ::

Seriously, stick with your initial reaction, unless you want to kiss goodby to .5Mbt

[junglesoup]

cheers samak and pe7e. That sounds like good advice. The number of pc's is 15 and Iforgot to mention that they do a photo development and printing service also.

 

I will go and check it out. The owner recentely spent 300 000baht modernising also. I do understand that there is high spee internet availablealot now and pc's are cheap,but they still arent that cheap the majority of thai people. I just thought the combination of a coffee shop/bakery can make it more attractive. when I go to check it out I will get a better idea I m sure.

 

I also thought about setting up one inthe condo/serviced aprtment I stay in at ground floor level. The condo only has three pcs for internet. I thought maybe a coffee shop internet place here would do well also. The apartment is full of farangs,japanese etc,so I reckon it could sell alot of coffee and food.Also the restaurant here is shit and never many people in it. I lllet you know what its like as I may go tomorrow. Thanks again,

Chris.

[gummigut]

I believe it's not a bad business, especially next to a University.

 

Thing is, numbers are easily fungible. I wouldn't believe what any Thai tells you (especially if they want to sell).

 

Luckily, it is quite easy to estimate gross receipts.

 

Have a thai (i.e.: girlfriend) to spend 2-hours at a time in the shop, over several different times over a week.

 

Have them write down the services purchased.

 

Extrapolate for Gross receipts. It'll be surprisingly accurate.

 

Costs are not that hard for the coffee and internet portion. Takes very little research. Not sure about photoshop, but that shouldn't be hard to research either.

 

<<burp>>

[longwoodguy74]

Not sure i'd want to drink my coffee in a shop that has the smell of photo-developing chemicals in the air...but then again, TIT and all, so who knows?

[cavanami]

Ohhh...business in T'land...

 

I have a small massage shop and I can say:

 

1. the employees will steal from you, factor it in.

2. the present owner is not giving you the true numbers.

3. the rent is too high (I pay 5000 Baht/month)

4. 80000 B / month, no way!!!

 

Please look into it very well. I have a friend in NE T'land with an I'net Cafe and his g'friend (who has a Master degree in Computer Science) runs it with family members as the staff...they still steal money!!!

[Nervous_Dog]

Monthly rent does seem a bit high, by UTCC is a bit of premium. I wonder maybe the owner who is selling thebusiness OWNS the building?

 

DOG

[Flashermac]

UTCC is more of a business than a university. There are something like 60,000 students enrolled there now! It is almost open admission, due to the competition from the "rachaphat universities" nowadays. (There used to be just the government universities and a handful of private unies offering degress. Nowadays, the teacher colleges have been "transformed" into universities and make things tougher for the private unies in attracting students. Still, UTCC is popular as it has a very good record for finding jobs for its graduates.)

 

This sounds like a great location for a shop, though it is not the only one there. Also, remember that UTCC essentially runs from June through the beginning of March. Not much in the way of summer classes, so March, April and May could be rather low income months.