From the Baron www.baronbonk.com
I have often wondered why so many seemingly sane people want to get involved in a go-go business in Thailand. I have written about the pitfalls (business) and the cons but I was wandering around Nana Plaza last night chatting to a few managers and
owners when a penny dropped.
This article is not about the cons: there are plenty of go-go bars with 150% or more of the shares sold. There is certainly one go-go company that looks suspiciously like a pyramid that must come crashing down sooner or later. However there are also
quite a few individuals who have invested properly and diligently and have, as far as is possible, a legitimate business. Particularly in Bangkok such an investment is not Mickey Mouse money, unless of course you are a Boss Hog. Assuming the
investment is not a worthless minority shareholding it is unlikely that the deal will be less than 5 million Baht, and probably double, or more than that.
The problem I suspect is lies, well not lies but porkies. The reason I say this is because I sat in Nana on Thursday night and counted them in and counted them out. Well not quite, but there were few enough punters to do that without needing an
abacus. So the following night I am trundling around and chatting to bar managers. How is business I ask? 'Good, never been better,' is the standard reply. 'Last night was a bit quiet?' I suggest. 'No, had a really good night, we were full!' This is
the point: nobody ever has a bad night. Believe the owners and managers and every night at Nana Plaza is a bonus night.
But I know differently. Talk to the main go-go group in the plaza and the profit figures, per go-go, are stupendous even in the worst seasons. However the profit figures sound awfully like the turnover figures to me, after I have done a little
counting and watching!
Now, there is nothing wrong with this. Why should somebody tell you what their business is? And is it not human nature to suggest anything other than the fact you are doing very well. In fact I have always added 'my business is doing very well thank
you,' to the list of biggest lies. Of course if you are buying then you expect to get the real figures. But what are the real figures? The tax returns (nobody pays any worthwhile tax) are going to show a minimal profit. The figures to sell the
business are going to show the business in the very best light possible.
In the UK when buying a bar (pub) the main figures, often provided, are the barrelage figures. These are provided by the brewers and are pretty reliable. I am pleased to say that metrication has not yet reached the British brewer. A barrel is 36
gallons of beer, and an average tenanted pub will do around 300 per annum. In addition, figures in galleons, on spirits, wines and soft drinks will be provided.
So getting back to valuing that Bangkok go-go. Somebody somewhere should know how many cases of beer have been sold and how many bottles of spirits, etc. Of course the problem is that many suppliers do not supply proper invoices as most businesses do
not want them! But I am sure figures can be dug up. I suppose if all else fails the last month's inputs would give a good clue as to the real level of business.
Then, of course, there is the final and significant figure: the number of offs. I am not sure how that would fit into brewery terminology, I suppose in keeping with barrels it should be in 'gross.' The annual grossage of offs can thus be calculated.
So combine these figures with your price list and now you have your revenue.
So what are the outgoings? There are fixed costs like rent, but many are not fixed, for instance staffing and marketing (buying punters drinks). But this is where it all goes tits up. Not enough girls on the poles means not enough to attract
customers, too many and your bottom line goes negative. Enough management is needed, mamasans and managers, to make certain everything works, but they tend to cost money. Doormen, service personnel, DJs, etc., all add to the staff costs.
A good system is required to make certain that the money taken goes to the business, and not into somebody else's pocket. I know of a go-go that recently fired all its cashiers and pourers as they were caught 'with their fingers in the till.' I know
another place where the behind the counter staff are clearly 'at it' but the management think removing them will cause too many problems. A wrong attitude in my experience but trying to clear out a whole section is a massive problem. How do you
manage your dancing girls, when do you cut salaries and what for?
Those are just the simple management problems of operating the business. The problems of running it are even greater. How do you attract customers? How do you attract good girls? What music should your DJ play and getting him to play it? How do you
keep customers? How do you keep girls if they are not busy? Girls want offs as much as you want them, that is where the real money is. No offs, equals no girls.
Then there are the real imponderables of; closing times, whether or not showing is allowed, days that the police close all the bars, and the petty jealousies and bitchiness of your competitors. If a bar does well expect the nearby bar owners to
complain and report, correctly or otherwise, that bar for everything from staying open late to drug sales, etc. And believe you me, that is not just the Thai owners, some of the biggest complainers in the Plaza are farangs. There is no live and let
live: it is: 'get the bastards if you can!'
So this is what I was thinking about last night as I sat in the plaza. Why do so many people want to get into this (semi-illegal) business? Experienced bar owners in the Plaza reckon that any investment must come back within 18 months, particularly
with all the present uncertainties. However no Nana business is likely to be sold on that basis, because the desire exceeds the common sense. Desire for what: a business, a lifestyle in Bangkok or a desire to be a pimp?
Well, a good business as I have just suggested, it is not. Some got in early and benefited from being in the right place at the right time! Of course some succeed and do well. But they are few and far between and normally the business that does well
is not the first.
The lifestyle is terrible, it involves a commitment most nights from 6 pm to 3 am, too much drink and plenty of headaches as things go wrong! So assuming that the average person has enough sense to work out the reality of running a go-go there can
only be one driving force behind buying a go-go. They believe the porkies because they want to. Why do they want to believe that all that grime in the plaza must turn to gold?
Because most just want to be a pimp!