Stickman Readers' Submissions December 15th, 2003

Starting A Business In Thailand

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So, you have been to Thailand a few times and like most people you have enjoyed the weather, fallen in love at least 5 times a day, done the bar scene, learnt a few words, and spent every hour comparing prices to back home.

Now you are thinking “I wouldn’t mind running a bar here” or “Just imagine…. Owning a Go-Go bar, how hard can it be?” Well Toto, you’re not in Kansas anymore.

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Almost everything is different here, so to find out more you can read Stickman’s pages on this website. However I have had several interesting e mails from various people who have travelled this dark, bumpy, road.

So I have put together a rough guide to buying a business in Thailand, which may prevent you from slitting your wrists, or driving your rented wreck over a cliff.

If any reader has any tips, disastrous stories, happy stories. I (Like many people) I would like to hear from you.

My advice based on emails from contact is:

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 Ok then normally there is a work permit available and the books have had yearly audits but still many are underwritten. If you buy a business without a company then forget looking at the monthly take period. Most bars that do work are owned by expats who have lived here for years—they succeed as they know the whole environment.


THE USUAL MISTAKES

When a foreigner comes to Thailand they forget that they must have income over and above the "slow period" which is April thru to November. Its not easy now when you think of say Pattaya with over 1000 bars and Chiang Mai with around 700 plus bars all competing for the same baht & the prices for beer, food & services increasing. If you have 500,000 baht then you can run a shoe box in a bar centre with 50 others blaring out separate music for maybe 1 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 and the girlfriend?

SO, WHAT DO I LOOK FOR?

1/. Cost of the business. This is usually key money and can vary. The key money will depend on the income this biz makes.
2/. Signed contract with a lawyer preferably and not the other person's lawyer.
3/. Make sure the business belongs to the seller & check chattels etc & if the 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 1 year 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 & 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. ( Essential )
7/. Talk to the neighbours about flooding, power & water cuts. If you have girls then expect to pay tea money to the local constabulary & don't sell Viagra unless you hold a pharmaceutical license.
8/. Make sure power etc is paid up and bills clean.
9/. Most of all you need good luck?


WHAT IS MOST IMPORTANT?

"People buy people, not products"

1/. Yes one would say location but no its management. If you are not running your business yourself be prepared to get ripped off. Management is the key to success in Thailand. Only those with charisma & 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 home but this is hard to find especially someone whom you have little faith & trust in.
2/. Location is second. Good parking & lots of foot traffic are important and prime but 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 here. You need hospitality skills essential here.
5/. Ability to service your never ending bills. Remember having a company you must pay tax, accountant fees and other expenses plus but you are far safer than a partnership. Make sure power etc is paid up and bills clean. This includes investing in reliable business insurance as well.
6/. Your girlfriend & if you have met in a bar then expect to look after her every day payments and those of her extended family including medical & tea payments.
7/. Never think for any reason coming to Thailand spending 1 million baht on a bar and succeeding. 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 events. If you want to work 7 days then OK but believe me after a year you will get a clear message in your brain: "why did I buy this".
So if you have any comments please add to this website:

TOPICS OF MOST INTEREST:

1. Being ripped off by lawyers.
2. The owner of the property.
3. Having to have 2 million baht in a Thai bank before you can start.
4. Renting versus Owning (Ever though you never own the business, just the good will and fixtures and fittings)
5. Having 7 Thai partners. (Does this mean you don’t have control of your own business?)
6. Key money. Good side and bad side.
7. Corruption.

Stickman says:

A lot of foreigners do well in business here and some bar owners make VERY good money too.


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