I'm Thinking Of Buying A Karaoke In Bangkok

[Michael W]

The owner lady has some health problems and wants out of the business. I've looked at the cash flow over the past year (though not at the individual receipt/check-bin level) and it's clearing 40-70k baht a month in pure profit. It's also completely outfitted so can be run immediately as-is, though over time if things go reasonably well I have a variety of upgrades and improvements in mind.

I also intend to keep the existing very small staff as-is and in addition pay my girlfriend a salary to takeover the day-to-day management. She's long expressed an interest in this kind of business and has friends who have owned similar ones.

This is very much a Thai customer-oriented establishment -- very few farangs patronize it, maybe the odd English teacher. Still, in the back of my mind are all the horror stories of farangs buying go-gos and beer bars, so I imagine all the same caveats apply.

On the surface does this sound like something worth pursuing (with the obvious stipulation that I'm only putting up as much money as I can afford to lose)?

If I do go forward I also very much want to make sure the ownership transfer is done completely properly and legally without any unpleasant surprises. And of course I want to have the right kind of business visa and work permit. With all that in mind, can anyone recommend a reasonable and honest place to take care of all that, i.e. a kind of one-stop-shopping? BTW, I'm also an American which via a special treaty I believe provides some advantages to doing business in Thailand.

[Noel]

How much is the asking price?

[kasi]

Unless you know the biz well and all the players really well (particularly the girlfriend) stay away from it. It's a cash business dealing with alcohol and ladies which are very difficult to monitor without a well thought out system and plan. Unless you are there 7 days a week. Also since it's a biz catering to thai people you will out of the loop most of the time even when you are there.

Also 40-70K isn't much if some hidden expenses pop up. You could start loosing money in a big way fast.

Be very careful!

[Michael W]

How much is the asking price?

80k baht, cash up front, though I'm going to try for 90k, 45k at closing and 45k 30 days later.

[steveromagnino]

How much is the asking price?

80k baht, cash up front, though I'm going to try for 90k, 45k at closing and 45k 30 days later.

Hmmm.... the business returns a profit of 40k a month, and they will sell to you for 80k?

Theoretically sounds ok, although tiny numbers....

As an American you used to be able to outright own a business through the Treaty of Amity, but being that this sort of unfair favouritism is against the principles of the WTO AFAIK, it is no longer the case, and any buy out via a company would be involving a grandfathered company that someone like Sunbelt may have on hand to help you with.

Some questions I would be asking:

- what are the audited amounts of tax paid by this business in the past

- what assets will you be purchasing; what is the state and condition of each one listed in the asset register; what current assets are included (specifically stock)

- what are the terms of the lease; specifically how much longer is the lease good for, and what are your rights of renewal

- who exactly are the customers, and if Thai will they have a specific objection to spending money in a foreign owned establishment (for some people it is a big deal)

- what plans are in the area for competitors to set up

- what is the state of the accounts payable and receivable; are there hidden liabilities

- what is the state of the assets required to run the business; sound system, fridges, lighting, furniture and who owns them or will you have to replace and buy them

- what is the staff status; does each have an employment contract, have they been employed legally, how much do they get paid, etc

- is there ANY illegal activity being conducted at all on premises in past - drugs, prostitution etc

- what is the usual payment if any to the local police dept regarding general security, opening late/early, etc

- how much time will the sellor provide to you to help assist in taking over the business; can you get a restraint of trade on them

If this is the sort I think it is; the machine, serving a few drinks, no girls, no hanky panky, then it seems like an OK business, although the return is good in ROI terms but a small amount in absolute terms for BKK, while probably good for provinces. YOu might like to consider that these sorts of businesses are hands on and VERY tiring; I owned a share in a pub for a while, you will wear yourself out with late nights.

80k is almost nothing to invest anyway; so you can't be too far out of pocket. nevertheless, do your homework, especially if you intend this to be your workpermit company.

If that is your intention, then bear in mind; as a single guy (presumably) you need to form a company with 2m baht in capital or more; and to have a WP you'll need 4 staff in this situation.

The two aren't exactly the same thing; you could form the company, then the company has as one of its assets this business, which runs, and the remaining 1.91m baht is sitting in the bank account.

However, make sure you do your homework, otherwise you might find that fast diminishing. This is a fairly competitive business with almost no barriers to entry. Usually the farang business model is based on what they would like to see in a place, and often those attributes are meaningless to the Thai people who consider other attributes to be more important. Be very careful, especially if you are American, in jumping to conclusions about what improvements should be made; the formula as it is may be actually working quite well for the target market.

For all the legal stuff, Sunbelt has quoted for some things for me and a few people I know, and seem as reasonable as any. The bigger firms could do it too, but you'll pay more, and it looks like this is fairly straight forward. Tillecke Gibbons I think is the one I actually have been using; they seem fine.

Hope that helps.

[Khun Jean]

If you want to see you girlfriend regular and not only sleeping, i would suggest not to buy it.

If you are short for cash and need it to sustain your live here it is understandable you are thinking about it.

Just think about your live now, without a karoke bar. Is it bad? Will it be much better with a karaoke bar?

It has all the same pitfalls as a bar. Your girlfriend, if she is on the premises will get constant offers.

Are you OK with that? People go there for a drink, often too much. Can you handle that, can she?

You do know a karaoke is a front for prostitution right?

Don't underestimate the amount of work!

If all that is known and you are ok with it, then think about the profit.

Is 40K enough for the amount of work. Forget about the upgrades, Thais are not stupid, all has been tried before. It will only cost you extra money.

My sister in law used to have a restaurant/karaoke for years. She is a frugal person. She made enough money to survive, no savings. She just got tired of it, everytime the same stupid jokes, offers for companionship, problems with people paying, etc... She was in a way 'trapped' in this business. Not easy to sell because there are so many shophouses for rent. A little paint a few cheap tables and a karaoke machine and voila a new karaoke bar.

My wife and I offered her some assistence (a little bit money). It helped her to survive in the time she had no work.

She is a house cleaner now, makes more money, more freedom, better workng times, time for her kids. Makes 200-300 baht per house. Sometimes she cleans 2-3 houses a day. Now her income is about the same but with so much more time left. Children have a mother again, my wife has a sister again. They now live in the same 'timezone'. With a karaoke bar you have to be a nocturnal creature. It will destroy your normal social contacts.

Always compare with other types of work and profits. Money can be made more easy.

[simon43]

One thing to check out is if the current business is paying for all the music licences. To stay legal, you need to purchase a 'copyright' licence, usually every 3 months. But this is not one licence! You need to purchase a licence from each record company whose music is played in your bar. And there are also licences for 'farang' music and for Japanese and Korean music etc.

So, to stay legal, that can add up to a fair sum of money every 3 months. (A licence is typically about 3,000 baht).

So maybe you don't bother with the licences? Think again because the record companies make regular checks on the bars and will confiscate your karaoke equipment if you are playing one of their artists without a licence

Simon

[britmaveric]

Also should check out tea money involved and also the lease of the establishment.

[Michael W]

you need to form a company with 2m baht in capital or more

Is it the case then that if I don't have 2m baht I simply can't be the sole owner of the business?

[britmaveric]

you need to form a company with 2m baht in capital or more

Is it the case then that if I don't have 2m baht I simply can't be the sole owner of the business?

Your lady can........

[rishi]

Sorry, but that story sounds way too good to be true. A business that can be proven to yield 40-70k a month (or 600k+ a year) in pure profit, would be worth over a million on the open market.

Even with socalled "health-problems" a Thai woman running an obviously (if its true) successful karaoke bar for more than a year, can't be that stupid to let her business go for 80k. At least she'd know that she wouldn't have much problem in renting it out for say 20k a month. If she could convince her fellow citizens, they could make a profit of 20-50k a month without investment or skills - there'll be thousands of them ready to leap right at it - and she'd have a pretty good monthly income herself. She can't but know that - so obviously she can't convince her fellow citizens as easy as she has convinced you.

My guess is that either you have forgotten a zero in your second post - or you are being set up!

Or maybe the woman knows something you don't know:

About a year ago there were several bars - part of a row - for sale near the Night Market in Chiang Mai, I weren't interested in bars, but I noticed the "For Sale" signs. The location were pretty good for a bar and the sale prices reflected that. A few weeks later the whole row of bars were gone and they'd started the foundation of a new hotel.

Do you have a place, where you can store some worn out, unsaleable karaoke equipment at hand?

[Orion76]

How much is the asking price?

80k baht, cash up front, though I'm going to try for 90k, 45k at closing and 45k 30 days later.

Impossible... unless you made a typo and meant 800,000 baht asking price then this is most certainly a "run don't walk" away from deal.

Otherwise the short answer is, you would need a friend who you trust, have known for several years and who is experienced with running this type of establishment in this particular police district to manage the place or there will be no end to the problems you'll get yourself into.

[ThaiPauly]

Personally I would not touch it witha barge pole unless I spent at least 2 weeks staking the place out without the owners knowledge.

The cash flow figures she gave you? are you 100% sure these are accurate?

My Wife bought a restaurant and we decided that whatever was written in the "little book" was to be completely discounted and we were correct to assume this as the income was highly exagerated. We bought because we saw the potential and what WE could do with it. The labours My Wife has put in are now begining to pay off, but if we had bought it under the assumption that it was going to make the profits the previous owner said it was gonna make, we would have been bitterly dissapointed. we looked at what was coming in every day for a few weeks then went in with a lower offer which was accepted.

(This was a private sale-no agents involved)

If you "case the joint" every night for 2 weeks you will have a pretty good idea of their revenue and see if it matches what the owner says it is.

If she is telling the truth, thats a start, then you have to consider the potential problems posted by other Members on this thread

Good Luck, let us know which way you decide to go

TP

PS we very nearly bought a business before did the stake out They claimed to be making 1.1m a year, we knew this could not be possible from the business going in and out, In the end they admitted that they actually made 80,000 baht in their last year "but that we could really make a go if it if we put the effort in" On this occassion we could not see how we could derive extra business from this operation so we walked away. the business closed down pretty soon after and was turned into something completely different.

BE CAREFUL

[steveromagnino]

Sorry, but that story sounds way too good to be true. A business that can be proven to yield 40-70k a month (or 600k+ a year) in pure profit, would be worth over a million on the open market.

Rishi -

My guess is that there is no factoring of management fees to run the place, hence the owner is going to be earning a wage of say 40k a month, and the business actually makes zero profit...or alternatively, the business makes 40k profit a month, and the manager works for free.

[Michael W]

Sorry, but that story sounds way too good to be true. A business that can be proven to yield 40-70k a month (or 600k+ a year) in pure profit, would be worth over a million on the open market.

Even with socalled "health-problems" a Thai woman running an obviously (if its true) successful karaoke bar for more than a year, can't be that stupid to let her business go for 80k. At least she'd know that she wouldn't have much problem in renting it out for say 20k a month. If she could convince her fellow citizens, they could make a profit of 20-50k a month without investment or skills - there'll be thousands of them ready to leap right at it - and she'd have a pretty good monthly income herself. She can't but know that - so obviously she can't convince her fellow citizens as easy as she has convinced you.

My guess is that either you have forgotten a zero in your second post - or you are being set up!

Or maybe the woman knows something you don't know:

About a year ago there were several bars - part of a row - for sale near the Night Market in Chiang Mai, I weren't interested in bars, but I noticed the "For Sale" signs. The location were pretty good for a bar and the sale prices reflected that. A few weeks later the whole row of bars were gone and they'd started the foundation of a new hotel.

Do you have a place, where you can store some worn out, unsaleable karaoke equipment at hand?

I've pretty much taken this and similar advice to heart. I did not make a typo; the owner does only want 80k baht for the business. She also provided me on sheets of paper tallies of income and expenses for every day for the past year. I entered all this into a spreadsheet and from this added the monthly totals. There's also 8500 baht/month rent to pay for the three floor shophouse. The karaoke and kitchen occupy the first (ground level) floor with the two floors above divided into several rooms that could possibly be rented out.

Another karaoke owner at the other end of town was also quite surprised at the low price. I can only conclude, as you noted, that for outside reasons beyond her control, the owner is being forced to sell, and that those reasons, which she is not sharing, will cause the business to close not long after the purchase.

Because of this suspicion and points made in other posts about the difficulty of running this kind of business, I've decided to pass on the deal.

[ThaiPauly]

Good decision

[Heng]

From the Thai side of things (I think a lot of locals think this way as well), I'd probably hand over a not so profitable business I didn't want to bother with to any distant cousin from the sticks, before selling it to some random stranger. If this lady is truly on her own, then perhaps it might be kosher.

[DJ_Illusion]

Hi everyone,

i really need some help concerning the legal paperwork. You see all i want to do is operate a karaoke bar in Bangkok but i heard, correct me if i am wrong i have to setup a company and get a work permit and in order to get the work permit i need to enter thailand with a business B visa which is valid for a year i think and even after i get that visa i have to do a visa run every 3 months and pay like over 100$ every 3 months on the boarder. alright now i think its just a little bar that i am gonna operate not a 3 storey night club i think i know now why ministry of sounds nightclub closed and ran away!

i am trying now to work out a deal with sunbelt but still somethings are unclear to me like they offered to sponcer me so that i can enter thailand with a business b visa and then what? i mean if i wanted to run a bar i would need a work permit now the work permit that i would get would be to work with sunbelt obviously not to work in a bar(operate it)

The last time i been to the ministry of commerce in Bangkok i was told by the officer there that he has never had someone coming in to establish a company to run a bar before, even after i looked up the booklet he gave me i couldnt find a licence for a company operating a bar/pub/nightclub etc.

as you can see i got alot of pieces of the Puzzle missing i hope i can get enough help on these issues

i am a residant of the kingdom of bahrain if that has anything to do with it thanks alot i do apreciate it