Research

What you need to check

Research

Beware! For many foreigners, starting a business in Portugal is one of the quickest routes to bankruptcy known to mankind.

In fact, the majority of foreigners who open businesses in Portugal would be better off investing in lottery tickets, when they would at least have a chance of getting a return on their investment! Many would-be entrepreneurs leave Portugal with literally only their shirts on their backs, having learnt the facts of Portuguese business life the hard way.

If you aren’t prepared to thoroughly research the market and obtain expert business and legal advice, then you shouldn’t even think about starting a business in Portugal (or anywhere else for that matter).

The key to starting or buying a successful business in Portugal is exhaustive research, research and yet more research (plus innovation, value for money and service). It’s an absolute must to check out the level of competition in a given area. Note that even when competition is light, there may be insufficient business to sustain another competitor.

A saturation of trades and services is common in Portugal, particularly in resort areas where there’s a glut of bars, cafés, restaurants and retail outlets catering to tourists. Your chances of making a living from a bar, restaurant or retail outlet in a resort area are practically zero, as there’s simply too much competition and too few customers to go around.

Some foreigners (e.g. bar and restaurant owners) will do almost anything to lure their competitors’ customers, even reducing prices to below cost. In winter you may be lucky to take eurosymbol100 a day in a bar and it often isn’t worth opening your doors! The Portuguese survive because they invariably own their business premises, have low overheads and live inexpensively.

If you’re convinced that you have what it takes, don’t burn your bridges and sell up abroad, but rent a home in Portugal and spend some time doing research before taking the plunge. You should also lease your business premises (at least initially), rather than buying them outright. However, before doing so it’s imperative to ensure that you fully understand your rights regarding possible future rent increases and the renewal and termination of a lease.

Many foreigners start businesses in Portugal on a whim and a prayer with little business acumen or money and no understanding of Portuguese. They’re simply asking for trouble. It’s pitiful (but all too common) to see newcomers working all the hours under the sun struggling to make a living from a business that’s doomed to failure. Bear in mind that when a couple operate a business together, it can put an intolerable strain on their relationship and many marriages fail under the pressures.

Further Information

Most international accountants have offices in Lisbon and are an invaluable source of information (in English and other languages) on subjects such as forming a company, company law, taxation and social security. Price Waterhouse publishes a useful booklet, Doing Business in Portugal, which costs around US$40 and can be ordered online (www.pwcglobal.com ).

Wealth Warning

Whatever people may tell you, working for yourself isn’t easy and it requires a lot of hard work (self-employed people generally work much longer hours than employees); a sizeable investment and sufficient operating funds (under-funding is the major cause of business failures); good organisation (e.g. bookkeeping and planning); excellent customer relations; and a measure of luck (although generally the harder you work, the more ‘luck’ you will have). Don’t be seduced by the relaxed way of life in Portugal – if you want to be a success in business you cannot play at it.

Nevertheless, although there are numerous failures for every success story, many foreigners do run successful businesses in Portugal. Those who make a go of it do so as a result of extensive market research, wise investments, excellent customer relations and most important of all, a lot of hard work.

Further reading

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