Launching a Business in Spain the low down
Living in Spain is a dream for so many, due to the great climate and enviable way of life. But how are you going to fund living the dream? Due to the expense and red tape involved in hiring and firing, getting a permanent job is tough. This makes many people decide to try their hand at launching a business in Spain.
These entrepreneurs bring ideas, influences and investment from other parts of the world and are an excellent asset to the local community. However, they can struggle because they do not understand the unique business environment and challenges which the area poses. Therefore, this post aims to give you an overview of how to set up and market your business in Spain and the pitfalls to avoid.
Know the market
You must do your research and really get under the skin of the place to understand if your business idea will work. Each part of Spain has different challenges and opportunities and so will respond to your business in a completely different way. If you are marketing nationally you must understand the Spanish culture, buying patterns and desires, as well as the language. Read more about marketing to the Spanish
On the Costas you can focus on the “foreign” market, but even then it may be more complicated than you think. The Costa del Sol for example, is a highly fractured area with many different nationalities and languages, many media outlets and different target markets with very diverse habits, buying patterns and needs. You need to understand this and decide who your product or service will appeal to, so you don’t have to be marketing to everyone in multiple languages. Read more about doing business on the Costa del Sol
Don’t assume an idea which has worked well in other countries will work here! So many businesses here fail because they are concepts brought from abroad which have not been tested locally, or which rely on assumptions that everyone wants what you are missing. Take into account the lifestyle, climate, habits, spending patterns and demographics of your target area and do your research to make sure they want what you are planning on selling before you invest.
Prepare the Marketing Basics
Every business everywhere needs a name, a logo, some business cards and flyers, a website and a Facebook page to be able to start promoting. Get this going as soon as you can – time is money! As soon as you have the business running, hit the networking events, this will help you become established quickly and cost-effectively. Only with effective marketing can you generate the awareness and clients you need to succeed.
Become legal
Get yourself registered with a NIE number (you need this to do anything here), open a bank account, get yourself a social security number and register as an “autonomo” or self-employed. Check that you know what needs to be done after Brext in terms of residencia and stay up to date by regularly visiting the British Embassy website. Be prepared that this means you will immediately start paying social security (National Insurance) each month, so you want to have as much ready to roll as possible before you take this step. However, new “autonomos” get an 80% reduction in social security for the first 6 months, and a 50% discount for the following 6 months, so it’s easier to get started.
We’d recommend that you meet with a gestor or accountant before you do anything and ask them to help you to launch your business in the right way. They will make everything so much easier for you and can handle most of the red tape.
Build trust and be visible
Especially on the Costas, new businesses are met with mistrust and the assumption is that if they don’t know you, that you’ll probably try to rip them off. Sad as this is, it’s a fact of life and it can be dealt with by networking, being transparent, proving your worth, giving assurances and procedures to allow for returns, and always standing by your word. Once you have a good reputation here it will stand you in good stead and lead to lots of referrals, but it does take time.
Minimise Risk
As we know, many new businesses fail and starting a business in a foreign country makes it even more difficult, so we’d suggest that you follow a low-risk strategy when you start out. We spent less than 300€ to start our business and kept risk and overheads low by working from home, using freelancers to supplement our skills without a set monthly outlay, using barters to secure skills or promotion, networking like crazy and working for free for causes we were passionate about. This got us known and respected quickly and with very little investment, so that we started to make money almost immediately. Read our story
Plan for the long term
Due to a lack of trust, fractured demographics and seasonal population it takes time to become established here, so plan (and budget) for the long game. Don’t blow all your budget in the first month, spread promotion steadily over a year if you can, combining advertising with PR, networking and community involvement and building a loyal following.
Best of luck with launching your business. If you would like help generating ideas, planning or understanding the market better, we offer consultation, marketing strategy and planning sessions, as well as more in depth marketing services to support your new business and generate visibility. Please contact us to find out how we can help.