The Realities of Owning a Bar in Thailand
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 think again, sunshine! It's more difficult than you think - if you want to make money, especially. And if you do try it, you'll find out soon enough. This is Thailand!
You have been to Thailand several times, enjoyed the weather, fallen in love, 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 in Thailand. Here for you 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 Thai girlfriends whose money comes from retirees or boyfriends wanting to do something different. The old saying "I've always wanted to own a bar to tell the folks back home"- only trouble is many make nothing!! But relieve the pressure from their own countries to relax knowing they have a bar. Those who try can have a partnership but looking at any bars here; do not go on any bookkeeping as basically that's a complete waste of time. If a partnership, most of the income is under the table; if 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. If you buy a business without a company then forget looking at the monthly take period. Most bars that do work are owned by ex-pats who have lived here for years. They succeed as they know the whole environment.
THE USUAL MISTAKES
Most visitors come to Thailand in the "high season". Potential bar owners may forget that they must survive the "slow period" which is April thru to November. It's not easy now when you think of Pattaya with over 1000 bars and Chiang Mai with around 700, all competing for the same customers, but with prices for beer, food and services increasing. If you have 500,000 baht then you can run a shoe box in a bar centre with 50 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 the girlfriend!
SO, WHAT SHOULD YOU LOOK FOR?
1. Cost of the business. This is usually 'key money' and can vary. The key money
will depend on the claimed income the business makes. It will be more than
appears on the tax returns for sure. It will be less than the present owner
claims. You will never really be able to confirm the annual take. 'Staking out'
the place for a while and counting the daily customers may help.
2. A signed contract with a lawyer - preferably yours rather than the seller's.
3. Make sure the business actually belongs to the seller including equipment,
furniture, chattels etc. and check all bills are paid.
4. Leases in some areas are down to 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.
5. You need partnership if you have a Thai partner but remember if you need a
work permit & you believe your business will work go for the Company and work
permit.
6. Licenses: The holder of the property (Thai) must hold the cigarette, liquor
and food licenses 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.)
7. Talk to the neighbours about flooding, power and water cuts. If you have
girls then expect to pay tea money to the local constabulary and don't sell
Viagra unless you hold a pharmaceutical licence.
8. Make sure power etc is paid up and bills clean.
9. Most of all you will need good luck!
WHAT IS MOST IMPORTANT?
"People buy people, not products"
1. Location is important but good management 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.
2. Location is second. Good parking and lots of foot traffic are important. In
prime areas rents can be as high as 40,000 baht a month.
3. Your business: Theme: what do you want to do? Will it make money? Decor: have
you got the money to make your business comfortable & successful without over
expenditure.
4. If you have an attitude problem then don't even start. You need hospitality
skills; they are essential in this business.
5. Ability to service your never-ending bills. Remember having a company you
must pay tax, accountant fees and other expenses and more, but you are far safer
than with a partnership.
6. Your Thai partner or girlfriend; if you have met in a bar then expect to look
after her daily needs and those of her extended family including medical and
'tea' payments.
7. Never think for any reason that coming to Thailand, spending 1 million baht
on a bar you will succeed. Chances are you will last a year and not have any
more customers than the previous owner.
8. Analyse the business for your competition and check them out.
9. Remember bars, restaurants and guest houses are 7 day businesses. If you want
to work every days then OK but believe me after a year you will get a clear
message in your brain: "Why did I buy this?".
CONCERNS FOR POTENTIAL BUSINESS OWNERS - NOT ONLY BARS
1. Being ripped off by lawyers.
2. The owner of the property.
3. Having to have 3 million baht in a Thai bank before you can start.
4. Renting versus Owning (You never really own the business, just the
goodwill, fixtures and fittings)
5. Having 7 Thai partners. (Does this mean you don’t have control of your
own business?)
6. Key money. Advantages and disadvantages.
7. Corruption.
Combined words of wisdom from those who have "been there, done that"! And paid the price for their folly in many cases. But don't be totally discouraged. There are those that have made successful businesses and partnerships too!
[This article was written by one QVC Barclay, based on emails he received on the topic. Thanks are due to him.]
Read Farang Living in Thailand for more insight into foreigner living in Thailand.