Over the years many clients have come to us saying that they are moving to Spain and are going to pursue their dream of buying a bar. It’s the most common request we have for people looking to open a small manageable business in Spain. Many of them work out, many don’t, especially when the buyer tries to cut corners and does not do his or her homework and due diligence. Profits in Spain for this industry are higher than in Ireland or the UK, staff wages are lower, taxes and red tape although considerable, is bigger than it is back home and the job itself tends to be much more sociable. Think about it, your clients are on holiday, relaxing coming to your cafe with their disposable holiday money to spend.
One such successful client was Mr Peter Jones, from the Lake district in the UK who asked us for our advice. He did not have a huge amount of specific experience in the Cafe bar business but made up for that with enthusiasm.
We told Mr Jones to do his home work carefully before agreeing to buy a bar. Firstly, to look at exactly why the current owners are selling, come over, try to find out some background and talk to people and see how busy it is. There are certain bars and restaurants which have changed hands ten times in ten years. Maybe each tenant made mistakes or maybe the location is wrong. No matter how good your bar is, if there is no foot fall, there is no profit. Ian Comaskey form Comaskey Properties, our sister company, has a lifetime of experience in the service industry having started working in his grandparents bar at ten in Drumcree, Ireland. He can tell our clients in ten seconds flat if their business will work or not.
Turning a loss making bar profitable is possible but hard especially when you are starting off in a foreign country. We told Peter to make sure he got the bar´s financial records and to go through it carefully with a lot of questions. Ask about debts. You dont want to buy the business and find out you are paying off the last guy’s electricity bill. It happens all the time especially when buyers and sellers sign “private agreements”.
A very important issue is the licences as these must be in order. You must have a lawyer check them and if you want to do something extra that there isn’t currently a licence for (like live music) then find out how difficult it would be to obtain this licence. Do not assume you can start with live acts for example and get the licence later; you will have a fine slapped on you very quickly. Naturally we can arrange this as part of the service we offer to new business owners.
Every local region has licences for alcohol supply, music and everything down to fire extinguishers. Staff must have food handler´s certificates and you must check the minimum requirements for that area (does there have to be a menu del día – daily menu for example or the menus in the local language?).
But as we told Peter, the most important issue is getting the tax side sorted. Is the business going to be a legal company or was he going to operate it as a self-employed individual. Both have advantages and disadvantages. Either way the Accounts have to be prepared, taxes and social security paid and his staff must have proper contracts. We were able to help him with all of this, explaining it clearly and simply in his language, enabling him to stop worrying about the administrative side as he knew exactly what he needed to do, and to concentrate on the issue of winning customers.
For Mr Jones, his dream came true and he still runs his successful bar in the sun with our help and back-up. It was not all plain sailing. He still needed to be careful with suppliers of beer, coffee and food; ensuring he was paying the same rates as everyone else. Staffing was an issue as during the summer, Mr Jones was so busy, he was hiring staff and almost made a huge error in hiring a student or two while paying them under the tale. We are 100% opposed to this and we helped Peter sign them up on short term part time contracts, protecting not just him but the employees too. Insurance needs to be in place, the equipment needs to function and that’s all before you have the fact that you still need customers not just to walk in the door, but you need them to come back. It’s a tough game but when you get it right, especially in Spain, the rewards are fantastic.
If you would like to pursue your dream, and if you’d like to meet some of the people we’ve helped establish a business in spain, please contact Amanda on enquiries@spanishsolutions.net