Emigrating to a new country to set up a new business can be a scary and overwhelming process, especially if you don’t know where to start.
Spain has continued to become one of the most popular countries for British expats to start a new life in sunnier climates, so our team of experts have decided to focus on the thriving Spanish capital of Madrid to give you some advice on setting up your own business abroad.
As the capital city of Spain, Madrid is the cultural, political, and social centre of the country, making it a logical choice as a place to start a business. Madrid is extremely centrally located, and at 646 metres above sea level, it also happens to be the highest capital city in Europe. It is worth noting that this results in quite an extreme climate, from a chilly average of 1⁰C in winter, up to a scorching 40⁰C in summer.
The Madrid-Barajas Airport is the largest and busiest in the country, and operates direct flights to over 200 destinations, so you are extremely well connected to anywhere you need to be in the world. When it comes to intercity transport, Madrid boasts an excellent urban transport system, with one of the world’s largest high speed subways and railway system that connects to all major cities in Spain and beyond.
Approximately four million people live in Madrid, making it the third most populated city in Europe after London and Berlin. It is widely described as Europe’s most welcoming city, which was proved when it was voted the tenth most liveable city in the world by lifestyle magazine Monacle. It’s not difficult to see why, with its beautiful streets consisting of medieval delights and nineteenth century squares, mixed with eye-catching modern designs.
Madrid is also home to world class restaurants, hundreds of swanky bars, museums, art galleries, shops, and not to mention the premiership football team Real Madrid. Putting it simply, you are never going to find yourself short of things to do on a weekend. Madrid is also extremely multi-cultural, with around 18% of the country having a foreign passport, so you will never be far from other expats.
Madrid for your new business
If what we have told you so far hasn’t made you want to move to Madrid already, then you might also be interested to know that it was ranked sixth best city in Europe for business. It is home to a variety of industries and has influence in areas including fashion, entertainment, politics, science and culture. Madrid hosts the head offices of 90% of the major companies operating in Spain, and with one of the best levels of employment in the country, you can be sure this is a city that your business can really thrive in.
The steady increase in the number of people relocating to Spain from the UK and the rest of Europe has led to a whole host of new business opportunities, including estate agencies, furniture stores, English supermarkets and stores, restaurants, and many more. Technology has also become popular within the Madrid startup market.
When you are conducting the initial planning of your new business, perhaps go out and really explore what you think is missing and could become really popular. Because the market is so well developed and competitive, Madrid is an excellent place to capitalise on market gaps with new ventures that are already successful in places such as the UK and America, but have not yet been applied or introduced to Spain.
It is also worth investigating the trends that are already established in the Spanish market, then adding your own twist to your new business that will make it that bit more intriguing. For example, some unusual business ventures which have proved to be popular in Madrid are when people have combined two different industries, such as Kikekeller, a designer shop which also opens as a bar three days a week. Making your new business that little bit different is what will really lead to its success.
In recent years, Madrid has become somewhat of a start-up hub for entrepreneurs, giving potential new businesses some much needed help. Madrid’s attempts to become the business and entrepreneur core of the country have a lot to do with Madrid Emprende, City Council’s economic agency role. They aim to support public initiatives for entrepreneurs, and support the “ecosystem” by working with small and large companies with entrepreneurship programs, and offering free space for them.
One of the Emprende’s latest ideas is the Madrid International Lab, which is ideal for expats wanting to start their own business. The building opened in 2012, and has free space for 51 business projects in which at least one of the founders must be from abroad. They offer ‘soft landing’ services for companies coming to Madrid, and ‘startup services’ for foreign entrepreneurs who have emigrated to the city to start a project.
In 2013, Spain passed new legislature that meant new businesses could have the correct licenses and permits necessary to begin working within 24 hours. This was a major improvement from before, where the process would take 28 days and require 10 procedures and multiple trips to the bank. Officials have also created new tax plans for entrepreneurs, which includes tax breaks for businesses who want to go after public contracts and target their products for the world. This is especially useful for small to medium businesses who do not have a huge budget. It includes credit for investors in a newly developed company, and a tax credit for individuals performing their work duties.
Traditionally, when somebody started up their own business in Spain they either financed it with family money or used their own savings. However, as Madrid’s startup community has continued to grow, they have developed angel investors who have successfully launched and exited a startup. A list of angel investors gives entrepreneurs an insight into who to turn to for extra funding. Companies such as Invest in Madrid can offer investment advice to expats wanting to set up business, particularly as they have established themselves as experts in the Madrid area.
As the market continues to improve in Spain, hedge funds and private equity are becoming more and more popular, and innovative firms can make the most of foreign investors who are looking for new investment opportunities. Global Shapers Startup: Madrid is a Startup Hub which is part of a larger, global entity that creates hub zones all over the world. By bringing investment money into your new startup, you are free to focus on building the business without having to worry about financing.
Madrid: Settling in
It’s also really important to think about your personal life when you move to Madrid, as well as setting up your new business. Moving abroad is a huge decision, and our team of experts have taken a look at some of the things you should think about to make the move as smooth as possible.
Firstly, before you actually make the move to Madrid, we definitely recommend getting some Spanish lessons. Although the Spaniards’ standard of English is generally good in the capital, if you are able to have a conversation in Spanish it will be extremely helpful for your business, particularly when it comes to communication, planning, and making valuable contacts. Once you have been there a few months you will find that you will become fluent very quickly, but it is useful to have a good grasp of the basics before you get there to help you settle into the local community.
You also need to decide on where you are going to live. We would definitely recommend renting to start with whilst you are still settling in, then you can get a good grasp of all the different areas before you buy somewhere. For example, the Chamartin neighbourhood is the business and financial district of Madrid, so would be an ideal place to stay if you want to be close to the office. Although this area is extremely busy during the day, it is worth noting that it gets quiet on an evening and on a weekend.
If you want to live in the very centre of Madrid, then the Puerta de la Sol is known as the city’s heart and meeting point, so you will never be short of something to do. Expect to pay between €800 (£650)* for a two bedroom apartment, and up to €3,500 (£2,800)* for five bedrooms. If and when the time comes that you want to buy your own home in Madrid, average buying prices start from around €450,000 (£366,000)* for a two bedroom apartment.
Because Madrid happens to be a very multinational city, it should be easy for you to settle in and meet new people as you will never be far from another expat. The locals are also famous for being extremely friendly and welcoming, so we recommend getting involved in any hobbies or classes that you are interested in to help embed yourself into the local community, whether this is a cookery class or joining the local football team. Who knows, you might even meet a potential investor for your new business …
Whatever happens, remember that HiFX are here for all of your international money transfer needs.
*The above figures are based on the interbank rate, correct as of 16:00 on 29/02/16, and are provided for indicative purposes only.