Food be the niche of choice for young tyros
Given their almost ubiquitous nature, you would think the average young entrepreneur would be looking to get a stake within the highly visible and usually successful franchises like 7-11 or Family Mart. Yet the reality is that according to the Industrial Promotion Department those aged in their twenties and thirties with just over a million baht to invest in a start-up business are turning towards niche products, predominantly in the food line.
The Industrial Promotion Department is one of those arms of government created to facilitate small to medium enterprises and within this organization is the Bureau of Entrepreneurship Development.
Whether the public servants within this bureau are driving the move towards niche markets or they are simply providing a certain level of support because of current trends might be a little hard to determine. Nonetheless, the top three lines of products which are attracting younger entrepreneurs are food, beauty products and clothing.
Within the food line, which is easily the most popular among the young budding future giants of industry, it’s Western-style restaurants (steakhouses and burger joints for example), bakeries, coffee shops and other non-alcoholic drink outlets, and health foods which offer the best mark-up and opportunity for strong profits.
These businesses operate at 40 to 50 percent margins.
Food export businesses, centering around processed fruits and vegetables as well as seafood and fresh produce, expanded by just over four percent in 2012 and was worth about 240 billion baht to the economy.
The Entrepreneurship Development Bureau suggests small food businesses can sell around 100,000 baht a month of product which means it is possible for the operators to take home up to 50,000 baht a month in profits.
The Bureau has noticed that over the past three or four years businesses have become much more specific about the type of products in which they deal, catering very much to niche markets. These kinds of markets, while small in overall size, tend to sell quite expensive items at good markups and the Bureau offers help if asked.
Its New Entrepreneur Creation initiative attempts to help selected start-ups by offering professional guidance on sales strategy, distribution channels, and general marketing.
In 2012 this initiative had a budget which extended to helping 3,500 entrepreneurs. Of these, 1,160 actually went ahead and started a new business, investing an estimated 1.3 billion baht and creating more than 4,600 jobs. It was noticeable that most of these start-ups were funded by people aged in their twenties and thirties with older people more cautious due to having young families and being concerned about ultimate failure.
The Bureau hopes to help train a further 3,500 people this year.