Trying to better understand business start-up costs in Cambodia

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Hammerntongs
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Trying to better understand business start-up costs in Cambodia

Postby Hammerntongs » Wed Apr 05, 2017 6:29 am

Was hoping to get some information from those of you with knowledge and/or experience in Cambodian business start-ups. Myself and a couple of friends have been discussing attempting to open a new backpackers hostel (not taking over another hostel, but opening a brand new one) and are wanting to do so in Siem Reap.

We've all spent a few months in the city and have chosen it for numerous reasons. We've done as much research as possible with regards to all of the different costs wed be facing in attempting to get this business off the ground. We have some business experience, but no experience operating in Cambodia.

A bunch of things have piqued my interest along the way and I'm hoping some of you can help me understand some of them.

1) why are people who are looking to sell their existing hostels asking so much money? That might seem like an odd or even naive question, but I'm curious and I'll explain why. It seems like an average ask for a 30-50 bed hostel with a 2500-4500/mth lease is 75k. After doing some research it appears if I was to go and set-up a similar hostel from scratch, obtain the lease myself, etc. that I could get the whole thing going for half that cost. Am I badly underestimating the costs involved with a new start-up? Or are these people simply looking to get paid for the infrastructure they've put in place?

2) I've put together a budget but realise, given my lack.of experience doing business in Cambodia that I'm probably missing some key costs which could effect the entire budget. Aside from rent, electricity and staff costs are there other big/significant/constant expenses I should be budgeting for?

3) are there any rules or regulations regarding expats leasing land and building? I understand that only a Khmer can own land and buildings but from my understanding a foreigner can own a business and hold land leases, is this correct?

I have other questions but we will start with these. Thanks in advance for any advice or help you can provide me with.
diesel
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Re: Trying to better understand business start-up costs in Cambodia

Postby diesel » Wed Apr 05, 2017 7:26 am

Some ask ridiculous amounts of money for their bussiness, some has a good name and famous oninternet, lonely planet etc.but many hotels, hostels, guesthouses restaurants are far overpriced!!!!
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PSD-Kiwi
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Re: Trying to better understand business start-up costs in Cambodia

Postby PSD-Kiwi » Wed Apr 05, 2017 7:42 am

1. Yes, a lot of lease hold business are asking ridiculous sale prices, but they normally sell because fools are easily parted with their money.

2. Licensing (business, tourism, fire, whatever else may be required), tax, insurance, work permits, Internet, TV, maintenance....

3. Correct, no requirement for local partners
Luigi
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Re: Trying to better understand business start-up costs in Cambodia

Postby Luigi » Thu Apr 06, 2017 1:23 pm

Hammerntongs wrote:
Wed Apr 05, 2017 6:29 am
Was hoping to get some information from those of you with knowledge and/or experience in Cambodian business start-ups. Myself and a couple of friends have been discussing attempting to open a new backpackers hostel (not taking over another hostel, but opening a brand new one) and are wanting to do so in Siem Reap.

We've all spent a few months in the city and have chosen it for numerous reasons. We've done as much research as possible with regards to all of the different costs wed be facing in attempting to get this business off the ground. We have some business experience, but no experience operating in Cambodia.

A bunch of things have piqued my interest along the way and I'm hoping some of you can help me understand some of them.

1) why are people who are looking to sell their existing hostels asking so much money? That might seem like an odd or even naive question, but I'm curious and I'll explain why. It seems like an average ask for a 30-50 bed hostel with a 2500-4500/mth lease is 75k. After doing some research it appears if I was to go and set-up a similar hostel from scratch, obtain the lease myself, etc. that I could get the whole thing going for half that cost. Am I badly underestimating the costs involved with a new start-up? Or are these people simply looking to get paid for the infrastructure they've put in place?

2) I've put together a budget but realise, given my lack.of experience doing business in Cambodia that I'm probably missing some key costs which could effect the entire budget. Aside from rent, electricity and staff costs are there other big/significant/constant expenses I should be budgeting for?

3) are there any rules or regulations regarding expats leasing land and building? I understand that only a Khmer can own land and buildings but from my understanding a foreigner can own a business and hold land leases, is this correct?

I have other questions but we will start with these. Thanks in advance for any advice or help you can provide me with.
How much have you budgeted for tea? :popcorn:
willyhilly
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Re: Trying to better understand business start-up costs in Cambodia

Postby willyhilly » Thu Apr 06, 2017 3:38 pm

Tax is becoming onerous. Many are even being asked to pay back the 10% VAT they imposed on patrons but never remitted to the Treasury. It's outrageous! Apparently the tax office is even asking for a tax on profits now, whatever next.
It is actually very straightforward to start up any sort of business, hire a Khmer who is au fait with the current laws and off you go. Buying an established business seems to be expensive and unnecessary. Just be aware of the time it might take to establish oneself in the market.
Buying an established business could also leave one open to tax liabilities. You would not believe some of the tax bills that barangs are having to pay for past indiscretions, hundreds of thousands of dollars in some cases.
PM me if you want some advice.
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Raybull
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Re: Trying to better understand business start-up costs in Cambodia

Postby Raybull » Thu Apr 06, 2017 4:11 pm

willyhilly wrote:
Thu Apr 06, 2017 3:38 pm
Tax is becoming onerous. Many are even being asked to pay back the 10% VAT they imposed on patrons but never remitted to the Treasury. It's outrageous! Apparently the tax office is even asking for a tax on profits now, whatever next.
It is actually very straightforward to start up any sort of business, hire a Khmer who is au fait with the current laws and off you go. Buying an established business seems to be expensive and unnecessary. Just be aware of the time it might take to establish oneself in the market.
Buying an established business could also leave one open to tax liabilities. You would not believe some of the tax bills that barangs are having to pay for past indiscretions, hundreds of thousands of dollars in some cases.
PM me if you want some advice.
That doesn't sound pleasant at all! :shock:
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AE86
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Re: Trying to better understand business start-up costs in Cambodia

Postby AE86 » Thu Apr 06, 2017 8:04 pm

My advice, having owned and operated several profitable businesses in Cambodia, would be to start your own. Do not buy, partner up with, or lease ANY business from anyone.
Reckless driving cucumber - 成
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LeesaJohnson
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Location: London

Re: Trying to better understand business start-up costs in Cambodia

Postby LeesaJohnson » Fri Apr 07, 2017 5:04 pm

Great to see this thread about business costing but I would suggest you that you need to check the risk you can face before you start the business.

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