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April 21, 2015
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Some words of wisdom and friendly advice to anyone who thinks a Thai bar is a 'dream business'. Don't let it become a nightmare...
If, like the hordes of tourists enjoying themselves so much in Thailand's bars and clubs, you start thinking, "This is the perfect life. I could do this. How difficult can it be?" then better think again, sunshine! It's much more difficult than you think that's if you want to make money. And if you do try it, you'll find out soon enough. TIT This Is Thailand but it's never quite what you imagine!
Could this be you? You have been to Thailand, maybe several times; you've enjoyed the weather, fallen in love at least once if not more, done the bar scene, learnt a few words of the language from the girls in the bars and the bedroom, and more. It's really got you thinking! But almost everything is different when you actually start living in Thailand.
Here is a basic guide to buying a business in Thailand. It may prevent you from slitting your wrists, or driving your rented wreck over a cliff.
Many bars are run by a foreigner's Thai girlfriend, boyfriend or even ladyboy (kathoey) partner. The money comes from retirees or boyfriends wanting to do something different.
Those who try, can have a partnership but if you're looking at the books of operating bars, pay little attention to what the owners show you; the bookkeeping will be minimal. Basically it's a complete waste of time. In a partnership, most of the income is 'under the table'; if it's a company then normally there is a work permit available and the books have had yearly audits but the figures are likely to be inaccurate as no one wants to pay tax if they can avoid it.
If you buy a business without a company then forget looking at the monthly earnings. Most bars that do work are owned by ex-pats who have lived in Thailand for years. They succeed as they know the whole environment. They need to have a good reason to sell a going concern. Always be suspicious and check your facts as best you can.
Most visitors come to Thailand in the "high season". Potential bar owners forget that they must survive the "slow period" which is April through to November. It's not easy now when you think of Pattaya with over a thousand bars and Chiang Mai with around seven hundred, all competing for the same customers in times of dwindling numbers of tourists, but with prices for beer, food and services increasing.
If you have 500,000 baht ($15,000) then you might be able to run a 'shoe box' in a 'bar beer centre' with fifty others, each blaring out its own music, for maybe a year before your money runs out or your brain dries up! You need twice this amount or even more just to survive the off season not to mention keeping your live-in partner!
Cost of buying the business with an existing or new lease on the premises. Part of this is likely to be 'key money' (money paid to the landlord for the keys to the premises). Key money in Thailand can be a minefield as it is applied in different ways, sometimes as part of the lease, and paid again when the lease is renewed. It's not always based on the intrinsic value of the business; landlords may take a payment to avoid their paying full taxes on the lease. They may also try to include a clause making the tenant liable for that tax which is based on the lease cost per annum. Make sure you understand how and to whom the key money is paid before buying and get a separate signed receipt.
Actual income will probably be more than appears on the tax returns, but less than the present owner claims. You will never really be able to confirm the annual take (or why someone would be selling a thriving business). 'Staking out' the place for a while and counting the daily customers may help you get an idea of the potential, but don't forget the seasonal aspect.
A signed contract with a lawyer - preferably drawn up by yours rather than the seller's lawyers.
Make sure the business actually belongs to the seller including equipment, furniture, chattels etc. and check all the bills are paid.
Leases in some areas are year-by-year, which means if you make any money, next year the lease could increase. In Chiang Mai around the night bazaar some bars have month-by-month leases but annual leases are more common now.
You need partnership if you have a Thai partner but remember if you need a work permit and you believe your business will work, go for the Company and work permit option.
Licences: The holder of the property (Thai) must hold the cigarette, liquor and food licences in their name. Therefore the premises leased are in the name of a Thai or Company. You can protect yourself with a contract written up by a Law Office. This is essential.
Talk to the 'neighbours' about flooding, power and water cuts. If you have girls then expect to pay 'tea money' to the local constabulary or mafia, and don't sell Viagra unless you hold a pharmaceutical licence.
Make sure power and other bills are fully paid up.
Most of all you will need good luck!
Location, location, location, as the saying goes, are the three most critical factors for a walk-in business. Good parking and lots of foot traffic are important, but in prime areas rents can be higher than 50,000 baht ($1,500) a month.
While location is important, good management is possibly more so. If you are not running your business yourself, expect to get ripped off. Management is the key to success in Thailand. Only those with charisma and a flare for the business they run, succeed and then that's hard work. Remember "People buy people, NOT products". If you have a good front person who speaks English, can interact with foreigners and government departments, then you are half way there but this is hard to find especially someone whom you have little faith or trust in.
The business itself. What do you want to do? Will it make money? Have you got the money to make your business viable and successful without overspending?
If you have an attitude problem then don't even start. You need hospitality skills; they are essential in this business.
Ability to pay your never-ending bills. Remember having a company you must pay tax, accounting fees and other expenses and more, but you are far safer than with a partnership.
Your Thai partner or girl/boyfriend; if you have met in a bar then expect to look after their daily needs and those of their extended family, including medical and 'tea' payments. And replacing the buffalo back home in Isaan that just died.
Never think that by coming to Thailand and spending a million baht ($35,000) on a bar, that you will succeed. Chances are you will last a year and not have any more customers than the previous owner who sold it because of lack of business and ran out of money!
Analyse the business for your competition and check them out carefully. See what they do right or wrong and where you could do better.
Remember that bars, restaurants and guest houses are 7-day full time businesses. If you want to work every day that's fine, but after a year you will be getting a constant question in your brain: "Why did I buy/start this?"
Being ripped off by lawyers
The true owner of the property
Having to have 3 million baht in a Thai bank before you can start.
Renting versus Owning (You never really own the business, just the goodwill, fixtures and fittings)
Having 7 Thai partners. (Does this mean you dont have control of your own business?)
Key money. Advantages and disadvantages.
[This article was written by one QVC Barclay, based on emails he received on the topic. Thanks are due to him.]
Combined words of wisdom from those who have "been there, done that"! And in many if not most cases, paid the price for their folly. But don't be totally discouraged. There are those that have made successful businesses and partnerships too in Thailand! However, you may have trouble tracking them down to try and learn their secrets!
Compelling novel, a "must read" for any foreigner considering buying, owning or running a bar in Thailand or even just visiting.
An absolute "must read" for a potential Thai bar owner or for that matter any single male who has been or intends to go to Thailand and hopefully meet the woman of his dreams is Stephen Leather's "Private Dancer" available in paperback from Amazon.com or Amazon UK.
I'm not promoting Private Dancer to make a few cents from Amazon. Even if you have to beg, borrow or even steal a copy, find one and read it from cover to cover! One of the main characters is a bar owner in Bangkok.
I can also recommend a revealing report about Thai women, (the ones that a foreign man is most likely to meet on his first few visits). It's written by Bill Williams who doesn't try to disguise the truths that a lovestruck male simply cannot seem to accept when he meets the new 'love of his life' perched coyly on the bar stool next to him, her hand already on his thigh and more importantly, what can happen afterwards when they (him, anyway!) have 'fallen in love'.
Read our Farang Living in Thailand page for more insight into expat or foreigner living in Thailand.
Foreign Business in Thailand goes into more detail about starting or owning any business in Thailand, also known as the "Land of Smile" but which some cynics would call the "Land of Guile".
I realise nothing I've written will deter anyone from visiting Thailand, and
that is certainly not my intention! It's a great place, but you need to have
your wits about you, especially when meeting women or going into business in any