Top 10 Tips for Small Businesses Struggling in Spain

Published on 15/09/2011 in Working in Spain

Nine Euros for a month’s advertising. It may not sound much but for many small businesses in Spain today it is. That’s the feedback I’ve been getting over the past couple of weeks and it has come as quite a shock.

But nine Euros? If a business cannot afford to spend just nine Euros how on Earth are they surviving at all?

“I cannot afford to pay for advertising at the moment….”

“With the crisis as it is we are spending no money on advertising…”

“Sorry, at the moment I can’t pay for ads, maybe in the future…”

Those are just some of the comments that we’ve been receiving whilst promoting our new Business Directory monthly payment plan.

Whereas traditionally we have always taken a year’s payment up front, we decided, to encourage more businesses to give the directory a chance by offering them to pay just nine Euros per month with no commitments. So they can cancel after the first month and pay nothing more.

I really thought that this would be of real interest to small businesses, especially as we have made some huge changes to drive considerably more people to the directory so we know their listings will get a high level of visibility.

But after our initial launch campaign, around 40% of businesses told us that they couldn’t even afford the monthly fee. And by the way, we have only contacted those businesses that originally expressed an interest in the directory, we haven’t cold called anyone.

All these businesses are in different sectors from real estate, home appliances to fashion and beauty.

Catch 22

When we started out in business it was impossible to get an ad out for less than €200 per month. We didn’t have much money then so we had to choose very carefully where to advertise. But if someone had offered me the possibility of advertising for nine Euros I would have given them a huge kiss. Sadly those sorts of offers didn’t exist back then...or maybe no-one wanted me to kiss them

Forehead adMaybe it wouldn’t have worked but if it had it would have been more than worthwhile and if it hadn’t I’d have lost a small amount of money which I could have made up by sacrificing five or six coffees the next month.

Marketing is the lifeblood of any business, big or small. If you don’t have a business that is constantly in people’s faces how will they know you exist? There is of course repeat custom, social media and word-of-mouth but if that’s not enough to pay all the bills and you can’t afford to advertise, surely the business can’t survive?

Business need to market themselves constantly to maintain their market share and/or grow.

Although at Eye on Spain we don’t directly pay for advertising, we pay for “advertising” in the huge amount of search engine optimsation and marketing that we do. This takes a lot of time and effort but that’s how we choose to market the website and have people discover it.

It’s a massive cost in itself.

Fearing for Small Businesses in Spain

Talking to another business owner yesterday who relies on advertising to provide his service (he owns a media company), he told me that they have also seen a massive reduction in businesses taking out advertising over the past few weeks. In fact he said that come end of August it all practically dried up.

We’ve known for some time that businesses were starting to tighten their belts, hence why we brought in the low monthly payment plan for our business directory, but I couldn’t foresee that so many were going to struggle this year.

It’s not just real estate businesses affected either, these are everyday businesses. Just walking around the high street in a nearby town to where we live you can already see quite a few empty shops. There’s just not enough money being spent.

Talking to a local bar owner a couple of weeks ago, she told me that on some days during the summer they were taking in earnings of only around 10% of what they were making the same time last year. No business can survive a 90% drop in earnings from one year to the next, especially when they are so dependent on the higher income during the summer months. She told me that in October they will probably close their doors for good.

So what’s a business to do?

There is no one simple answer that will help every small business owner in Spain today but there are a few things I can suggest, most of which we done ourselves:

1. Provide great service

This should be a given anyway but so many times it’s not. If I’m going to have lunch with my family and planning on spending 30 or 40 Euros then I want great service. That’s a lot of money these days and I want good food with a smile. If I’m paying someone to fit a new air conditioning unit I don’t just want a great price, I want someone to turn up on time, dressed smartly, have a professional attitude, complete the job brilliantly, on time and within budget.

Forehead adGreat service = happy customers + word of mouth + new customers + repeat business

Yet so many businesses in Spain overlook this relatively simple improvement. It costs nothing to provide a better level of service.

2. Cut costs, don’t increase prices

I’ve seen several businesses bump up their prices to compensate for a drop in customers. That’s really not the way to do it. Why should I as a regular customer now get hit in the pocket because business is slow?  That's not fair.

Every business can cut costs. When times are good many small business owners don’t keep such an eye on how much they pay for things. Now, instead of putting prices up start by negotiating better deals with suppliers, reduce energy consumption, phone and mobile phone providers, etc.

We did this last year and reduced our business costs by over 40%. That’s essentially a 40% increase in profits by simply looking into every euro spent by the business, and that’s without increasing turnover.

3. Track all marketing efforts

Not every method of marketing works or is cost effective. You need to track each campaign separately and determine if that particular ad spend is giving you a return on your investment.

Check where every lead has come from. What did it cost to acquire that customer and what did it cost to service it too.  It's the only way to truly know where to put your money.

4. Efficient responses to enquiries

There’s nothing worse than asking a company for a quote or for some extra information only to have to wait days to receive it.

People generally don’t like to be made to wait. Be efficient and don’t take longer the 24 hours to respond to someone, even if it’s just to confirm that you’ve received their enquiry and you’ll get back to them on a certain date.

Communication is key and the faster you can respond the better.  This doesn't cost anything extra to implement.  It's just about being more organised.

5. Website conversion – Impressions/image/information/personal

If your main source of new business is your website, is it properly set up to convert visitors to leads? In most cases they aren’t. You can spend a fortune on advertising but if people land on your website and they aren’t motivated to take an action then you might as well just throw that money down the toilet.

Search on Google for “website conversion”, there are plenty of good guides which you should read and understand what you need to do to improve the performance of your website in terms of generating leads. This is a big subject and oh so important!

Do it now.

6. Website promotion – SEO

Google is great! If you can get your business appearing well in Google search results then you’re going to be in a much better position to pick up new business. It’s called Search Engine Optimisation – SEO.

It does take time and effort to do it but in the long run it’s worth it. It’s free advertising for years…unless you screw it up.

As a good starting point download Google’s own PDF guide to SEO and begin working on it today. (Right-click the link to save the file to your PC)

7. Network

I’ve never been a big fan of networking as I’m actually quite an introvert. But most networking events are very cheap and you can make some very good contacts.

A good friend of mine gets ALL of his business through networking events. If I needed more business tomorrow I would make the effort and attend them. You never know who you will meet and how you can help each other in your respective businesses.

8. Work the forums

Putting in the effort to get you and your business known through forums and blogs is a very effective form of publicity.

I would rather that every business owner put in the effort to advise and help people out on the Eye on Spain forums than pay for advertising. Seriously. Popular and active forums such as the one on Eye on Spain become increasingly attractive when people know there are “experts” there to advise them.  Be that expert, be that "go-to-person".  Build up your reputation.  Your advice will remain online for years for new people to see...

When you post on forums you can add your business in your signature so people can visit your website or contact you.

This is how I marketed EOS in the early days. I spent many hours helping people out on forums, giving advice, some friendly banter, really just getting people to know me and my business. It worked incredibly well.

Best of all?  It's FREE publicity.

No TV9. Turn off the TV

Some people reading the point above will say “I don’t have time to spend on forums all day”. Well, that’s complete b****sh**. If you dedicated just one hour in the evening to post on forums and social sites such as Twitter, that would be a big start.

And all you have to do to achieve this? Don’t switch the TV on when you get home.

TV should actually be banned! Successful people don’t have time to watch TV. Use that time productively. Marketing doesn’t have to cost money, it can be just your time instead.

10. Try the EOS directory ;)

OK, I had to sneak this one in! Nine Euros for one month’s advertising. It’s got to be worth a try :) It won’t work for everyone but you just never know…

 

Well, I hope some of that has proved useful in one way or another. If you want to add any of your own points to this list then you can leave them in the comments section below.

Here’s to your success!
 

Written by: Justin Aldridge (EOS)

About the author:

Justin has been running Eye on Spain for over 5 years and recently with his partner Susan launched their popular moving to Spain video guide, Spain Uncut.




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Comments:

Rob in Madrid said:
19 September 2011 @ 19:03

Point 2 - just had that experience. When we first moved here we found a really nice English speaking hair stylist, while expensive she was friendly and helpful, but recently she put up her prices. That was the straw that broke the camels back, I called her to see if she would offer a discount if we agreed to moved to a different day (she has several clients in this area) saving her a lot of driving. She said no, so we're going to say no as well.

By putting up her prices rather than cutting her costs she's losing two good customers.



phil said:
17 September 2011 @ 00:08

God, it's hard working with the Spanish though! All they seem to do is drink Tea!!!


Justin said:
16 September 2011 @ 23:37

That's a really good point Steve. Most expat businesses really restrict themselves by not being able to service the domestic Market. And with a shrinking expat audience it all adds up to more hard times.


Steve Smith said:
16 September 2011 @ 21:22

Justin,

Generally a good article however I do think you have missed one critical point for many failing businesses. Learn Spanish. Why are so many businesses run by ex-pats solely for ex-pats? There is a massive market out there of Spaniards who would quite happily deal with an 'extranjero' if they only spoke the language. As a market trader over 80% of our business is with Spaniards.



Jan said:
16 September 2011 @ 18:20

Good article, however I don´t think it is simply because businesses say they can´t afford to advertise - I think many are too lazy!

I offer a FREE directory on my well established site. I also offer a "what´s on" forum for bars to put their events in which would then probably show up in google search - as many of my site´s forum posts do. I´ve explained that there is a RSS feed automatically going from this forum to a facebook and twitter page so their posts would get seen there also, but even though I have directly contacting a few bars to suggest that they take advantage of these offers (because my site members & visitors want to read about where they could go that evening) - they still don´t trouble themselves to do so. Many bars have a facebook page where they advertise their what´s on, so all they need do is copy and paste after all.

I know if I was in business I would be biting the hands of people who offered me free publicity so I really don´t understand their mentality.

Today I had an air-con fitter come as he was given a direct recommendation on my site - when I told him one of my members recommended him, he said, "I get a lot of work from forum recommendations" So why doesn´t he and others, whilst adhering to the site rules, take advantage of the power that forums have of reaching the customers that need their services? A simple, "thanks for the recommendation" on that forum post, might have brought him even more customers...



David said:
16 September 2011 @ 13:11

HiJustin,

Thanks for the excellent article, I agree with you when the going gets tough the tough have to get going. However, and not to sound defeatist, when the well is dry and there is no money in the economy expat busness owners have to think of 10 good reasons for staying in Spain and slogging it out. Perhaps your next article could be 10 reasons not to go elsewhere. I struggle to find 3!

TFIF

David



Craig Edmonds said:
16 September 2011 @ 10:31

@pat lee - get a life and learn to spell. If you are offended by that then you had better not see this: http://www.youtube.com/watch?v=wHfo8zwYFUo


Thomas Ketchup said:
16 September 2011 @ 10:21

Get over it Pat. It´s a squirt of tommy sauce and mustard on a wipe-clean formica counter. "Defacing food" - ha ha, I don´t even know what that is? Would someone writing on a blackboard with chalk be shocking to you as well? It´s a good image, relevant to the article, that says "Waste my time and I´ll waste yours."



jaylou said:
16 September 2011 @ 10:17

Yes I totally agree. Service and quality is everything. A new restaurant recently opened near me (very brave) offering good food, friendly service and good surroundings. It has been packed every day since it opened, despite others around with no business at all. Why
don´t people realise that - you would think it was completely obvious. And also they don´t seem to realise that if they don´t tell people they are there and what they are offering then people don´t know.



Webster said:
16 September 2011 @ 09:49

Sound business advice, Justin, especially numbers 3 & 4. I run a business in the UK and every week we take calls from business directories wanting us to advertise - and therein lies the problem for us - tracking effectiveness. Lots of directories also do a ppc (pay per click) advertising offer but the majority have no codable/reportable way for the response to be tracked so they render our financial input worthless as we can not monitor effectiveness.

We reply to EVERY enquiry, and about 1 in 10 tell us we are the only company to respond - so, business owners, lose fear of the phone! Even in these internet days, speaking to a person, expressing your personality and being interested is the best marketing you can do. People buy from people and its easier to upsell.
www.griffindesigns.co.uk



Jacqui said:
16 September 2011 @ 09:25

A good article Justin. Many people don't understand that not advertising in difficult trading times is a false economy but it is wise to consider where and how to advertise and that's when it becomes so important to know what works for your business.


Graham said:
16 September 2011 @ 09:03

Great article Justin. can I use it as a guest post on my blog too?
I also think the picture is great and that business will have taken the lesson to heart and not repeat. I remember not being served in an hour and a bit one lunchtime in Valencia with nine other people four of whom were kids. We walked out and they came after us to pay for drinks. When I asked for the libro de reclamaciones which they didn't have they quickly shut up.
Why is the answer always 15 by the way?



pat lee said:
16 September 2011 @ 07:33

good overall advice ...
however the image used whether home made
or worse, real ,is rather shocking .
Defacing property or food is certainly not the way to go about lack of service , and is an
enticement for reckless behaviour .
Like any other customer , I ve had a few cases of poor service , and not only in Spain .
Although you may not feel at the time being
rightly treated as the VIP you think you are ,
your best bet is to just walk out and try it some other time or not .
In my bar , you would be immediately expelled and barred for ever, whoever you are ,and in
the likely case you wanted to show your tattoes
and use foul mouth language ,the Guardia would
sort you out in a matter of minutes.
and I must add to their greatest pleasure , other
customers and mine ,too .
We all make mistakes , but the choice of this
picture is a whooper .




Steve Hall said:
16 September 2011 @ 00:39

Hi Justin, As you know I am very active in the expat business communities. This week I sent out a "welcome back" email to my carefully updated business database. This base was 100% tidied in mid June. I was horrified to get a 6% bounce/gone away. As the bounces starting coming in I began to check them carefully. Sure enough, by double-checking against websites etc (and some phonecalls) it became clear that some 6% of businesses had closed up over the past 10 weeks! That is a horrendous percentage . I can't help feeling if many had followed your advice they would not all have closed the doors. VERY, VERY SAD!

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