Buying a Business on the Costa Blanca

In today’s interview with expatriates living in Spain we talk to Lee Hartopp who runs the business CB Property Brokers based in Alfaz del Pi which is on the Northern Costa Blanca just to the north of Benidorm.

This interview will be of particular interest to anyone who is considering moving to Spain and thinking about the option of buying a business in Spain, especially if you are looking at buying a business for sale on the Costa Blanca.

Because of the fine Costa Blanca weather and lovely sandy beaches, this area is full of popular tourist resorts with lots of opportunities for businesses catering for the tourists needs such as bars and restaurants. The growing number of expatriates now living permanently in Spain, in particular on the coasts, also gives many opportunities for businesses providing services to these people.

There are really very few opportunities to get a job in Spain for English-speaking people so many people who are looking to move to Spain consider starting their own business in Spain. But instead of starting from scratch which is extremely hard, why not buy an already established business which has been operating and generating profits with an already-established location and customer base?

Lee’s business, CB Property Brokers, deals with residential sales and long term lets in Spain but predominantly he deals with commercial property in Costa Blanca – in other words matching people who are looking to buy a business on the Costa Blanca with sellers of existing businesses on the Costa Blanca. The area covered is approximately from Denia to the North, to Gran Alacant to the South and inland Costa Blanca.

Lee, perhaps first of all you could give us some background on when you moved to Spain.

I moved to Spain seven years ago with my wife and three children, my twins are now 12 and my daughter 17.

So the obvious question is what made you move to Spain?

To be honest I was sick of corporate life in United Kingdom. I had reached a high level as a marketing consultant and I was fed up of just being another number. I wanted the opportunity to work for myself and the natural extension to that was to help others settle as we had ourselves.

We have very much ‘been there got the T-shirt’ so to speak by learning the hard way from our experiences of moving to Spain. From dealing with getting our children into schools, to finding a property to live in, to dealing with the infamous Spanish bureaucracy. We are now able to help our clients make the transition into their new life much easier and a lot less stressful.

When we are helping clients who want to buy a business for sale in the Costa Blanca area, we recognise they have enough to think about and deal with, so the more we can help them, the more they can concentrate on establishing a successful business in Spain.

Our value added service includes formal introduction to gestorias (tax consultants), abogados (lawyers), NIE applications, residential applications, healthcare registration, business licencing, foreign vehicle registration, notary accompaniment to name but a few. We also offer an ongoing support service after the sale has gone through.

Please tell us what happens when somebody contacts you who is interested in buying a business in the Costa Blanca, Spain?

Firstly I would try get the client to be specific about their needs so that I can truly understand what they are looking for. It is important to me to find people a good viable business. To do this I need to understand things such as how many people must the business support? Are there children and how old are they? If the children fail to settle, it is likely you will also fail to settle. What type of business are people looking to buy? If it is a bar, I need to know if people wish to do food or purely sales of drinks. The more detailed information I can find out the better.

Clearly with any business that people take on, there is no guarantee of success but the more we can understand our clients and needs the better. I won’t show people businesses which I think are not right for them.

What sort of businesses for sale on the Costa Blanca are people looking to purchase?

We are located very close to Benidorm and of course this is most popular tourist resort on the Costa Blanca so we get a lot of enquiries people looking for pubs and bars for sale in Benidorm, cafes and restaurants for sale in Benidorm as well as shops and empty units, or locales as they are known in Spain. It isn’t just about Benidorm either, we have people looking at buying businesses all over the Costa Blanca in popular towns such as Javea, Calpe, Moraira etc. Other businesses include nightclubs, hairdressers and gyms to name just a few examples.

Of course people have a dream and a wish for better way of life but it’s not all a bed of roses and some will be successful and some will fail. Our job is to give impartial advice, to make people aware of any potential pitfalls so they can avoid them and point out and explain all the costs involved in buying a business in Spain.

We go through the process of due diligence by making sure that there are no outstanding debts associated with the business or with the property itself, so we make sure that if you are taking out a lease, that the property is not in danger of being repossessed due to the landlord not paying the mortgage. We work closely with town halls and lawyers to make sure everything is done legally and professionally.

The most important check is to ensure that the owner of the business is in fact the owner, in the case of a leasehold business we check that the landlord in fact actually owns the establishment and the tenant offering the business for sale has a valid rental contract giving the necessary resale permissions.

We check whether any unpaid mortgage arrears are against the business, whether any debt is placed against the business be it unpaid utility bills, unpaid supplier bills and whether the business has been sublet without the landlords consent to a would be fraudster.

Let’s say for example I am a client interested in buying a bar in Benidorm, what would you be asking me?

I would be asking you to qualify a budget because there are so many different bars for sale in Benidorm, some with frontline locations will naturally be much more expensive than others set inland so it’s important to know at what level you wish to purchase.

I would want to know how many people the business needs to support in order to find a viable business.

I would need to know how hard you’re prepared to work, in other words what sort of hours and days you anticipate working in the business, this is very important as to the type of business you would be looking to buy.

I would need to know if there are children involved and how old they are. For children aged 12 or over it’s very difficult for them going into the Spanish school system. It’s not that picking up the language is the problem because in 18 months they will be completely fluent. It’s more the fact that at that level the work is hard and so it’s a question of whether they will get up to speed with the level not really the language.

So if I was interested in buying a bar in Benidorm how much will it cost me?

Well it completely depends on many different factors.

Can you maybe give me a specific example of a bar for sale in Benidorm?

Okay, there is a bar for sale in Benidorm for €30,000 on a leasehold basis commonly known as a Traspaso or in more recent times a Cesión. For this you are getting the fixtures and fittings and the goodwill of the business the licence status in the meantime will have been checked by us beforehand. You would then pay on a monthly basis the agreed rent as agreed within the contract.

As well as these costs of course there would be additional costs including utilities such as electricity, taxes and social security payments which would enable you to receive access to the Spanish national health system.

The contract that you would sign in this example would be for five years with an option to extend for another five years.

Can you give us any advice that people should consider when thinking about buying a business?

I would very much question the level of your expertise. In other words have you worked in a bar or restaurant before? If you haven’t, it can be picked up of course as long as you are good at dealing with the public and have good personal skills. Look at how the Spanish run their businesses, often you see them well-dressed and paying great attention to detail.

Do your research. If you are buying a bar it would be important to visit the bar at different times of the day. If books are available, to check the figures thoroughly although it should be pointed out that sometimes in Spain books are not kept because there is an option for businesses, especially bars, to opt for the modulos system in Spain where they pay a fixed level of tax.

So we’ve mentioned the rents, so if I was to purchase an existing bar in Benidorm, how much would the monthly rents be?

It would very much depend on the location but to try give you a typical example, for a single locale (unit) in Benidorm you’re probably looking at rent of between €800 and €1000 a month.

If you’re considering buying a bar in the Playa Levante area of Benidorm, which of course is the most popular, you will be paying more than that, perhaps for a single locale about €1000 to €1200 a month.

But it does depend on location, for example if you are looking at buying a bar in the old town of Benidorm you monthly rent will be about €600 to €1000 a month, so in that area the rents are much cheaper. On top of these figures you need to add the IVA of 18%, which is the equivalent of VAT in the United Kingdom and which is paid on a quarterly basis.

Are you dealing with the finance involved in buying a business?

Ideally the client will come to us with their finance already in place. Note that banks will not lend on leasehold businesses but if you’re looking to purchase a freehold business the banks are often willing to lend 60% of the value of the bricks and mortar. So they won’t look at the actual business itself but they will look at the value of the property.

Lee thanks for the excellent interview, I’m sure many of our readers are interested in buying a business in Spain and if the Costa Blanca is the region you are thinking of, you can contact Lee directly or visit his website – see the details below.

Information kindly supplied by:

CB Property Brokers logo

 

 

Lee Hartopp
CB Property Brokers

Address: Calle Goya, Alfaz Del Pi, Alicante, 03580 Spain

Telephone +34 965 888 392
Mobile +34 626 097 819

Go To CB Property Brokers Website

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