Business in Spain will never be the same again. That is good for a business who offer safety and security to their clients, bad for those who are only offering cheap and cheerful.
What will business in Spain look like? The “New Normal”.
We are entering week 14 now since it became clear that things are going to change in Spain. The Coronavirus has altered things, that is for sure. Will everything (or anything) ever be the same again? We hear people talk about the “new normal”. What does it mean? Unfortunately, the crystal ball store is closed so here are a few predictions.
Let’s start with a survey. Win-Big-Media are known more as a political marketing company in the States but they released a survey of 5,000 respondents last week. The reports tell us what the typical consumer is thinking and what concerns them.
Here are some interesting replies they received.
What are people worried about?
Not worried: 22%
Moderately worried: 24%
Largely worried: 54%
Not worried: 10%
Moderately worried: 19%
Largely worried: 71%
(Just read that again- despite the health crisis, people are more worried about finances than health).
Other interesting information:
34% of respondents believe life will return to normal in 6 months.
90% feel unsafe going to a large gathering of people- concerts, sporting events, mass etc.
70% will not feel safe staying in a hotel in Spain.
90% feel they will be safer in a private rental apartment or villa rather than a hotel.
68% Will not feel safe taking a flight to Spain when the restrictions are lifted on foreigners coming to Spain in August. (it is the death knell for tourism in Spain in 2020)
52% of people expect to see everyone wearing masks on flights in the future.
25% of people think the restaurants who survive will be open for business as usual in September 2020.
75% think the economy will not recover until after December 2020.
When Spain first went into lockdown, there was a real sense of helping each other- this slowly is changing but the consumer is looking for two things, closely related: Safety and Security.
Safety and Security
It is worth repeating; clients are seeking a business that will help them and make them feel safe. They will pay more for it. We see it in Spanish Solutions every day. We get a lot fewer clients asking “how much do you charge for a residencia, conveyancing, will or probate?”. Now, clients are checking us out, realising they are a lot better off working with a legitimate law office like us and quality now is more important to them.
They want quality work rather than engage in a race to the bottom where they just go with the cheapest company to help with tax and legal issues. Really, it was insane choosing a lawyer in Spain because she was 100 euro cheaper than a different one with very little regard to her abilities or lack thereof.
Safety, Security and trust are what clients need and want.
Another fascinating point made by Philip Stutts ( owner at win-bid media) after these thousands of interviews is that people no longer care about how wonderful your life looks on Facebook or Social media. In fact, now they find it a turn off when companies and individuals post how wonderful their life is. So many firms tell their potential clients that we can be just like them if we consume, this or that, use their services or products and our lives will be better.
Clients don’t believe it- they want to know what you can do for them to make them safe and secure- those two words again.
Local business is important rather than big corporations- I think property buyers will more likely use a local real estate agent and get their paperwork done by Spanish Solutions than using a big name combo. They know we are “safe and secure” so if we recommend a particular estate agent to buy through, by association they will trust that agent too.
Businesses that will fail in Spain in 2020
Restaurants. I used to say that the bar/restaurant business in Spain these days reminded me of a bubble, like one we had in 2008 in Spanish property. There were too many bars, too much of the same rubbish, nobody trying anything different and the standard is simply not good enough. Every business seems to compete over one common denominator- price. Why not, rather than offer the cheapest food, try to offer the best?
Commercial real estate. Bad news for those of us who own commercial real estate in Spain, good news for those who are looking to buy. The value (or cost) of commercial property in Spain will fall- it has to. Unfortunately, so too will rental amounts received due to the lack of demand.
Property rental companies/ Real estate agents. A difficult one but…. So many of them should be out of business by now anyway. Some operate an old business model, one that is too inflexible and can’t allow for any flexibility. Fleets of company cars, offices dotted all across the Costa Blanca, highly paid salespeople and admin staff all need to be paid for. If the consumers are buying less property in Spain and shopping around more, (not just for price, remember, but for safety and security) then these guys can struggle for their survival. The estate agent who “thinks on his feet” and can provide guarantees for clients- he will thrive. Estate agents who try to take short cuts by doing their own conveyancing will soon become a thing of the past and the market will be better for it.
Shopping centres. Would you really go to La Zenia Boulevard now? They are built on a model that must be busy, all year round but without tourists or locals, how can they survive? Too big to fail? They still have mortgages to pay, rates to cover and once the stores start to close because they cannot afford the high rent charged, the business idea will come down like a house of cards. It’s done!
Churches, live sports events, movie theatres. I shouldn’t include churches here but, I like to be controversial and really it is all entertainment no? Well, take the movie theatre idea- surely that is done. Most people have a 60 inch TV at home and we now know that Netflix can deliver the best of entertainment to us directly so why would we go to a smelly, enclosed germ put to watch “The Irishman”? We won’t – if you own shares in a cinema chain sell them. Maybe you can run drive through movies- that would be fun, otherwise, it is Netflix and Amazon for the foreseeable future.
Hotels. Again, too big to fail?? I don’t think so, clients are worried about having to stay in hotels and 70% of people do not feel safe going to them. Have you ever seen the kids play area in a hotel? Germ alert!! Alternatively, you can stay in the comfort of a private rented villa in Spain, properly cleaned and virus proofed.
Businesses that will grow
Subscription business. Habits are hard to break but now that I am getting used to buying and having delivered directly to my house; my razors, my computer ink, and my super coffee, I’m not going to go back to the old model.
Health business. Thinking of safety, there is no better way to be safe from the coronavirus than being healthy with a strong immune system. The gym is in trouble, because well, it is not so safe. (Unsafe is unhealthy). Healthy eating, walking clubs, social tennis, natural supplements, anything low carb- this is what people want.
Online anything, pretty much. We are trying to take as much of the Spanish Solutions business online as we can- contactless transactions are the key, once clients know they can trust us. Why would people travel to a university to learn anything- just learn at home? You can learn to sell with Grant Cordone for 10 euro on Udemy in an afternoon- in your shorts.
Banks in Spain, as well as being a nuisance and totally unhelpful, why do we need them if we can do it all online?
Delivery business. Again, in our house, we loved having our groceries delivered to our front door during the COVID lockdown. Why not continue that trend with not just groceries, but our weekly wine consumption, Saturday night pizza, laundry, local fruit and veg (why can’t we get a decent vegetable delivery in Cabo Roig?) and everything else.
Outside the box business – I know a builder who is struggling with the lack of cash, clients and ambition of those who are here. I suggested that he sets up a business like this “Pat’s convert your home to an office Ltd.” We need to work on the slogan and the marketing but he could get me office furniture, filing cabinets, connect my printer, make sure my wifi is working, get me a working camera etc. That is a business right there- converting dead space, garages, spare rooms into home offices.
Use what we have here, local, in Spain- I mentioned before local businesses, security, health and subscription businesses. Why is nobody talking to the fruit and vegetable farmers in Pilar de La Horadada about buying their product, drying it, turning it into a food supplement and delivering it weekly to homes all over Europe? Do not think it will work? Check out Athletic Greens, a New Zealand based company and their 100,000 monthly subscribers paying 100 euro per month each. We have a business plan written for this business covering taxes, licences, suppliers, marketing and sales if you’re interested!
Elderly care. We are trying to help the senior ex-pat community in Spain by offering services where we call to their home, contactless conveyancing, taking care of their estate, equity release and more. What about health- these people want to remain in their home but they would like some help around the house to get the fridge full, change a bulb, fix the TV and pick up their prescription from the pharmacy. A local business, helping people, offering security and a feeling of safety- that is going to work.
Conversion of commercial space. If we are right and the typical bricks and mortar business is on its last legs, this means there is a heck of a lot of retail space in Spain that will lie empty. What if, the town hall starts thinking forward and turns this dead space into a) short term rental property, motel-style b) elderly care facilities. This can save the Spanish economy, never mind the local one but will it happen? It is worth having a conversation with the relevant authorities.
Hot desking. Most small businesses who survive no longer need a large retail space, electricity bills, rates, maintenance etc. You’ll see space popping up where it is a shared space- Bobs Estate agent will share with Lucy’s cruise and travel agency, Mick’s car hire and Juan’s Spanish Solutions franchise! (Ok the Spanish Solutions franchise is a bit down the road but the rest makes sense). They share one unit, one receptionist, one phone number, one wifi/printer/cleaner/etc.
Location Independent workers. The success of Zoom calls, virtual meetings and the like during Coronavirus mean, for sure, tens of thousands of British ex-pats will move to Spain soon, pre-Brexit. (Remember that word?) They can live here in Spain as Spanish Residents and their accounting, graphic design or legal clients back in the UK do not need to know they are dressed in a shirt and tie on the top, Bermuda shorts from the waist down. Tim Ferris in the famous “Four hour work week” said the dream is to earn dollars and spend pesos- This is the nearest we can get to that life- Earn Sterling and spend euros. The cost of living in Spain is low, the lifestyle is relaxed and the quality of life is fabulous.
Restaurants. I know I said the restaurant business is in trouble, big trouble. I believe 50% of the restaurants that were open in March 2020 in Spain (or this region where I’m familiar for sure) will never open their doors again.
Just like during every crisis in history, people will “pivot” and take advantage of the crisis.
Two ways to make money from food in Spain after the Coronavirus:-
Cloud kitchen. I know a restaurant in Dublin who since mid-March 2020 offer their customers delivery of Italian food. The flyer they send out has two sides. They have another “restaurant” where they offer Indian food and a third one where they offer Mexican food. The thing is, it’s the same restaurant!!! They have decided to create “Jose’s Burritos” since the lockdown but it is the same kitchen and the same staff who prepare the burrito as the ones who prepare your pizza and chicken curry- Brilliant. One kitchen, three virtual restaurants.
A simple franchise idea. You can buy a franchise for a certain sandwich and easy bar food businesses very cheaply. Bar food might be finished in Spain.
Chick-Fil-A was such a franchise that was looking for a master franchisor in this part of Spain before Covid. You can buy an individual store for 10,000 USD or less. Why not create a similarly cheap and cheerful (yet more healthy than the typical English breakfast joint) business model here and stick it into all the Irish/British bars that can no longer afford to run their own kitchen? The equipment is there already, the clients are there (in lesser numbers), the opening licence is in place and all that is needed is a new look at the business idea. Synergy is the word.
Partnerships. We run a safe and secure law and taxation office. You probably know this. Most businesses in Spain need our services. I mean the actual business needs us as well as their clients. I think we’ll see more and more companies approach law firms like us with their idea- We can help them to get the licence passed, get the paperwork stamped and the business open. This is slow and often expensive and keeps the entrepreneur from actually doing what they want to do- opening and running a successful business in Spain.
Imagine someone picked one of our ideas for the list above- the food supplement idea, for example, is one I LOVE!! We can supply contact with the farmers, translators, access to the wholesalers, the producers, the licences, the approval from the Spanish food authorities, the distribution channels, the tax and legal advice and the ongoing paperwork in the company. The other partner does everything else knowing that the annoying, time-consuming stuff is covered. Surely we’ll see more and more of this type of synergy?
Estate agents need us of course but what about the insurance companies, travel agents (those who survive), currency companies, retail units who remain, bars and restaurants? We can help them all in exchange for a cut of the profit rather than a hefty upfront fee and become real partners . Something that is lacking in many sectors in Spain.
What can we provide them? Safety and Security.
The next 12 months are big for business in Spain. Those of us who survive in 2021 has a great chance to really kick on. In the meantime, it is going to be an interesting journey!