The Realities of Owning a Bar in Thailand

Some words of wisdom to anyone who thinks a Thai bar is a 'dream business'. Think again...

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 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 think!

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 the 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.

Don't Make the Usual Mistakes

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 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!

What You Should Be Looking For and Checking Carefully

• 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.

• A signed contract with a lawyer - preferably yours rather than the seller's.

• Make sure the business actually belongs to the seller including equipment, furniture, chattels etc. and check all bills are paid.

• 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.

• 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.

• 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.)

• 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.

• Make sure power etc is paid up and bills clean.

• Most of all you will need good luck!

What is Most Important?

• 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 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?"

Concerns for Potential Business Owners – not only of Bars

• 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 don’t have control of your own business?)

• Key money. Advantages and disadvantages.

• Corruption.

[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!

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 pushing this book to make a few cents from Amazon. Even if you have to beg, borrow or even steal, find a copy of this great novel and read it from cover to cover! One of the central characters is a bar owner in Bangkok.

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, sometimes known as the "Land of Smile" but which some would rename the "Land of Guile".

There's no need to wait until you make that first trip to sunny Thailand:

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