Opening A Business

Working for yourself

Everyone's dream

There are 4 main forms of opening a business in Spain and this article will hopefully shed some light on the process and contribute in some way into making an informed decision about working for yourself.

Site Selection

This is of course is based on the fundamental basics of supply and demand however the following factors can influence the decision making process:

Destination Vs Central location

If you have a unique cook, an amazing service level that can't be rivelled and a reputation that most of your competitors could only dream of having, then a destination site will suffice. People will drive to you, find you and tell others about you. Destination sites command a very high advertising spend so consider that around the time that you are making your final decision.

Popular locations are very expensive, here in Los Alcázares they can tend to be very high in terms of price per square metre. Something to bear in mind is the fact that these so called high foot flow areas are extremely busy in high season but struggle to stay open in the winter.

Provided that you cater to both tourists and residents your going to be fine. Research is a powerful business tool, I am stating the obvious but it's often overlooked.

Form 1

A "Local" as it's known in these parts can come in what we call a naked form, meaning that it's a shell with a closed up brick frontage.

This shouldn't put you off in the least and is quite  normal. Here you will fund the business costs, Architect, contruction company, lawyer, fixtures, licences and fittings.

In return you will get a very long lease and a much lower rent. This will allow access into a high foot flow area but for a lot less money.

Some landlords may offer to build the store in return for a higher rent but that's at the negotiation stage. There is alot to be said for construction since you are able to work with a blank canvass and you get exactly what you want. Just to give you some idea of costs;

Architect €1,800*
Construction €25k based on 70 square metres from a shell*
Licences €600 to €3,000*
Fixtures and fitings €5k to €50k*
Legal €1,200*

*These costs are based on fact however as with anything you get what you pay for so your own requirements will alter these costs.

You get what you pay for

Protection


You get a lease that's yours, the landlord gets the place built out, you can sell your business on with a longer lease so it has a bigger resale value and everyone is faced with a win win situation. Very few commercial buildings are English owned but that said there is little difference since irrespective of where the landlord comes from they have to follow the legal obligations.

Form 2

Find a unit that is vacant in a finished state, pay a months deposit and pay per month on a standard  contract. You will still have to pay for all the services as stated earlier, you will only really save on the construction costs. Depending on location and whether the building has kitchen infrastructure you can expect to pay upwards of 700€. *Depending on zone.

Form 3

You find a shell, the construction costs are on the landlord but you pay a much higher rent for the duration of the lease. This will make room for a huge saving in the short term which will help you and give you time to get established. 

Form 4

A going concern can have significant value, technically speaking it's the most popular and often the fastest way to get started. There are many negatives such as inheriting the previous owners formula which if changed will alter the dynamics of the business which is a risk not worth taking. 

On avaerage a business transfer ranges from €50k to €60k but as I mentioned before it varies since the goodwill of the business could span over 20 years, there could be very expensive fixtures and fittings involved. 

How do I value a business?

You should know that an independant lawyer should look at the history of the business and provide a form of benchmark. Very often business owners feel that their businesses are worth alot more than they actually are. There is a method to this madness and here is just one example.

As a buyer, do I pay the agent?

No, our fee is charged to the landlord so our service is free for you to use.

I'm out of ideas

The community is growing irrespective of Brexit, this is primarily due to the UK's aging population, work culture and cost of living. That said, a fatal error would be just to cater for the English community since a concept which appeals to different communities would make for a more secure business plan.

Self employed

Your pension, medical and ability to secure finace from a credit card to a mortgage depends on a payment of €250 a month whether you take money or not. If you overpay then you will get a rebate within the financial year. Those that don't pay will find it challanging to advertise, aquire a business loan, join business associations and ofcourse sell a business on later in life. The main feature to keep in mind is that you can't pay white bills with cash.

The idea

It all begins with an idea, it must be aimed at a versatile market since in Spain there are two. On season and off season. Tourists do not have the same wants and needs as a resident. An example of this would be an English tea room. In the winter residents will flock to get a cup of tea a slice of cake and a good natter, change to summer and the same establishmnent is struggling to find clients . 

If the tea room froze tea on a stick and offered vouchers to encourage retuning tourists then the business could enjoy both success in the winter and the summer. My example is only to demostrate my point. I hope you have enjoyed this article, please share or like to support me. Till next time..