Spain is often regarded as a “dream destination” for expats from all over the world because of its inviting climate, warm people, sunny beaches, natural beauty, delectable cuisine and rich culture. Several expats, especially from the UK and the US, move to Spain with the intentions of starting up their own business, as the local jobs rarely pay enough for them to lead a luxurious life.Before taking any steps towards a move to Spain, do remember that setting up a business is not an easy task, especially in a foreign country. While some expats have managed to run a successful, profitable business within a short period of time (3 years or so), statistics show that in the last few years many British, German and French entrepreneurs have given up their expat dream of living in Spain and have headed back home. Larger companies may find it easier to set up shop in Spain because of the financial and legal backing that they have, but things are very different for small firms. Apart from the start-up legalities, licenses, permits, location and taxation issues there are a few things that all prospective entrepreneurs should keep in mind before taking the decision to run a business in Spain.
1. Speak the language: When setting things up, you will need to interact with several government officials and skilled workers. While these people are quite helpful even to foreigners, they rarely speak fluent English and therefore communicating with them may soon become a challenge if you don’t speak their language. Moreover, if you are planning to look for any Spanish investors it is absolutely crucial that you not only understand but also speak Spanish with some level of fluency. This ability also becomes an advantage in attracting local clients. Fortunately, most language institutes and online resources offer beginner to advanced courses in Spanish for reasonable prices.
2. Build a safety net: It is a well-known fact that any business takes a while to become profitable even if it doesn’t require a lot of capital. It is the daily running expenses that cause most new, small establishments to go bust within the first few years. To avoid such a situation, do make sure that you have enough money saved up to survive for at least 12 months without any income. Don’t forget to work out what the monthly costs will be to keep your business afloat. Look for options like investors, financers and partners to reduce your risks. Alternately, certain banks and financial institutions also offer start-up loans for small businesses at affordable interest rates.
3. Offer a unique product or service: Ideas like running a bar, a restaurant, a bed-and-breakfast, an English language institute, an estate agency, an art gallery or a gym seem to have become a common plan for most British and American expats settled in Spain. However, there is a lot of competition in most of these industries, not only from the local population but also from other expats. If you’d like your establishment to become profitable soon, make sure that you are offering something unique, which the competition cannot replicate. Once your product or service becomes popular, you may be in a position to demand a higher price.
4. Test your idea at home: If you haven’t been successful in running a business before, things aren’t going to get any easier for you once to move to Spain. You require strong business acumen to overcome the language barrier and lack of contacts. It is therefore best to test your entrepreneurship skills at home to understand your own strengths and challenges. You will also get a better idea of the financial and logistic workings of your business. Only if you manage to break even within a set span of time should you think about setting up your own establishment in Spain. Of course, do bear in mind that a business which was successful in one country won’t necessarily be profitable in another.
5. Make sure you have a reliable client base: Counting on other expats to bring in business is a very common mistake people make. Contrary to common belief, several expats, even from the US and the UK, are just about surviving financially. It is therefore important to study the market carefully and see what kind of local clients you can expect to keep your business going in the long run.