Living Spain - February 2003
Doing Business
So you want to set up in Spain? As more and more people are opting to move there as a career change, Marcus Markou spells out how to buy a business
"The glorious predictability of the summer weather has been attracting refugees from northern Europe's damp and clammy lands for decades", so says the Lonely Plant online Guide, describing the powerful allure of life in Spain. In the past, most have taken the life-changing decision of moving to Spain after retirement. For example, a large British ex-patriot community has grown up along the Spanish Costas and its myriad golf courses, enjoying the longest holiday of seeking to invest and take over existing businesses. They do so well before retirement age and have seen the opportunity to make money as well as improve their quality of life. And life in Spain is good. The Economist magazine ranked Spain as third highest in the world on a range of parameters including weather, culture, economy and political system.
Fulfilling your long cherished dreams of making a viable living in the Spanish sun is a lot more straightforward than you might think. As anywhere, according to Philip Lloyd-Cox of Business Finder Mallorca, a business broker selling businesses on the island of Mallorca.
According to Lloyd-Cox buying a business in Spain "is as easy as it is in the UK or US." He explained that research over the web was a good tool for narrowing down options and helping to establish an initial interest but insisted that buyers must "come out here, take a look for themselves and be prepared to move quickly."
Lease of life
The most common type of business purchase is a Traspaso, or leasehold. The landlord owns the building shell, and you own everything else. Always aim for a lease longer than five years which is more normal these days and can usually be renewed for an additional term without further payment. Freeholds are more difficult to obtain, as the Spanish consider the rental income as their pension or for their children to inherit. If you do find a freehold bargain, snap it up quickly!
Lloyd-Cox says it is important to wait until you're in a position to buy. However, he adds "do not attempt to buy a business without professional help from a qualified Spanish Lawyer (Abogado) or fiscal advisor. There are pitfalls as with any country; listen to the locals, but take the advice of a professional."
"Don't overlook obtaining your licences" reminds Lloyd-Cox. All businesses opening in Spain must have an Apertura (opening licence) to start trading, which is granted by the local authorities. If the business is a bar, club or restaurant, it must have a turismo licence and the owners a ‘food handlers' certificate, which your broker can organise. Music licences vary from one resort to another, and depending on the local council month's deposit and the first month's rent in advance, plus the cost of any working stock if not included in the price.
The tourism and service sectors are the obvious choices when buying a business in Spain, with its 4000km of beaches and long April to October summer season. Outlining potentially successful strategies, George Lacey of Lacey and Co, a business broker with many years experience selling businesses in Spain, asks that buyers be "a little more creative in their approach' than their predecessors. The market in bars is "quite saturated and only succeeds if well run." Of course, a bar will always sell well to holidaymakers, particularly British ones, but that is "often reflected in the price."
Cheeky
Rural tourism is really beginning to take off in Spain as people begin to consider the charms away from the often-crowded costas. Converting fincas or country farms into guesthouses and B&B's is generally regarded as an innovative and lucrative way forward. Property in the country is often much cheaper than land on the coast. George Lacey, has sold a 100 acre farm for £23,000 and says "farms can cost as little as £15,000 depending on their state of repair." With some work and investment such guesthouses can make money by organising themselves as mountain bike, hiking or horse-riding centres. "One place offers naturist breaks to nudist couples for £60 a night," says Lacey.
In terms of area, the Costa del Sol is always a favourite as it offers a good all year season. But the up and coming regions of Murcia and Almeria are relatively cheaper and just as sunny. An interesting location is the River Ebro, running through the north of the country, a great place for fishing related business. Catfish weighing up to 100lbs have been known to be caught there.
Balearic beauty
Mallorca is in a period of transition. The German market, which dominated the island for many years, is now in decline and the local government are keen to promote areas away from the mainstream. The new eco-tax although controversial is ensuring that the island continues to develop sustainable tourism. A mere 60p a night for visitors it is all it costs to help maintain the beauty of one of the most stunning islands in the world.
Its worth also considering golf. The incredible Spanish golf boom just goes on and on. Courses often do great business as dedicated golfers stay on site for food and drink and hardly venture away, but as with the bars their profit potential is usually built into the asking price.
Whether converting a hobby into a job, reinventing yourself for the 21st century or investing a windfall, a fulfilling life in Spain awaits you. A bit of hard work now could be all it takes to be relaxing on a terrace chatting with guests and thinking "Why didn't I do this earlier?"
Marcus Markou is founder of www.BusinessesForSale.com
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