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10 Steps to Setting up a Business in Spain ... and Surviving PDF
 

By John Cottam

alt  Olive Country Life magazine, July 2009

 

 

John Cottam is a graduate in Spanish and Portuguese and a former languages teacher.  On October 8th, 1989 he set up a translation company in Manchester, Elite Language Services, which has clients throughout the world.  This year Elite celebrates its 20th anniversary.  John owns a house in Velez-Malaga which he visits as often as time allows. Exclusively for Olive Country Life Magazine, John gives his advice for setting up a successful business.

1.    Choose a Spanish business area that you are really interested in and have a good deal of knowledge about.  You should ideally have qualifications and/or years of experience working in the business field you are about to enter.

2.    Whether you are setting up the company on your own or with other people research the possibility of co-operative status, ie a company limited by guarantee that is preferable to a partnership where you are liable for your partners’ debts.  Write up a one-page resume of a company business plan using the SWOT (Strengths, Weaknesses, Opportunities and Threats) criteria.

3.    Work out a first-year budget based on projected expenditure (left column) and income (right column). If you cannot operate from home or are itinerant, ie run your business by visiting clients, the expenditure cost of maintaining the business will be relatively high due to office rental costs, business rates, cost of a business telephone, fax, IT costs etc.

4.    Decide on a start-up date and find out all the business information relevant to Spain you need to know about the type of company you are setting up whether you are a sole trader, a co-operative or a partnership.

5.    For the first year of business operations evolve a marketing strategy based on macro and micro marketing.  Macro means consideration of a small ad in Paginas Amarillas (Yellow Pages) and a local business directory if one exists in your area.  If your telephone number is a business line investigate whether you are entitled to a free single line advert. Micro means paying for a business card containing all your own contact details and qualifications where appropriate, in addition to all the business contact points for a potential customer (address, telephone, fax, email address, website address). Give out the business card to everybody you know who you trust will recommend your company whether they work in a business or not.  Also contact local Spanish businesses, cafes, bars, restaurants or hotels that may need your company’s services or products.

6.    Every three months carry out a quarterly review to assess progress.  Is company income increasing? Are there more customers than the last quarterly review?  What good and bad events have happened in the last three months?  Take a particular look at how costs can be reduced by the use of IT that is using email instead of post, investing in a Skype telephone system.  Skype can eliminate the costs of short and long distance calls and has made considerable savings to many companies’ bills. Look out for the latest IT technologies such as Skype or webcameras (for teleconferencing) that often lead to substantial cost savings.

7.    You will need an accountant and a solicitor.  If you do not have any suitable contacts, ask friends for their personal recommendations. Word-of-mouth recommendations are the most trusted means of selection for any business decision.

8.    Pay for the construction of a company website from which a colour or black and white brochure can be run off.  These can be given to any potential customers and the website address included in any adverts as well as on the business card.

9.    Keep an eye out in local and national newspapers for prospective customers who would benefit from your company’s services or products.  Ring up these potential customers and simply ask if you can speak to the sales manager and send your company brochure to them? 

10.    Have a methodical system of chasing unpaid invoices. Old A4 envelopes can be used to record the customers’ details with the invoice date, date when invoice should be paid and whom to contact if the customer doesn’t pay on time.  Any new customer who wants work from you that exceeds £500, ask for a 10% deposit, if they won’t pay that, refuse to do the work they require.  Any customer who has to be chased for payment, after two or three late payments, inform them after you receive the last invoice payment that you will do no further work for them. Continue with the quarterly reviews and after every five years of company business at your annual AGM, that should be held at the end of March, undertake a special review as to what positive and negative lessons have been learnt? Is there any new IT in your field of expertise, etc? 

An estimated 90% of Spanish businesses fail over the first 10 years. The key to survival in business is to keep your company costs as low as possible by implementing the cost saving measures outlined above. If your average business expenditure is below 50 € per week (and it can be done!), you are probably going to survive this recession, just as streamlined companies did during the last recession in 1992.

Any queries about this article should be directed to John Cottam as follows:
Tel: + 44 161 773 0804; Fax: +44161 773 0863 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it

See website www.elitelang.co.uk


Factfile:

A Skype telephone can be used between broadband computers that have both downloaded a Skype access file from the Internet, the only expense is a VOIP (Voice Over Internet Protocol) telephone handset, at a cost of about 15 euros. This is connected to a USB portal in your computer.  With the Skype system, at no extra cost other than the charge you pay to your internet provider, you can ring anyone in the world if they too have the Skype system activated on their computer and have incorporated the criteria above.