Starting a Business in Portugal

During lunch at Kickstart 1H10 I had the privilege to sit with Patrick van deer Walk and one thing he asked me was: “So, how is the climate looking here in Portugal for entrepreneurs?”

Being a sun shinning day outside I wasn’t quite sure if he was talking about the weather :) but of course he was talking in terms of the conditions and general atmosphere in Portugal to start and run a business. Here’s a brief overview of what I told him and what I think after having put some thought into it.

1. Talent

It’s hard to find and recruit good talented and ethical workers. It’s even harder to get them to stay with you in the long term. This “individualistic attitude” and aversion to risk was indeed pointed out in a report by the European Commission in 2006. Maybe the solution here is to recruit more foreigners that would like to live here?

2. Entrepreneur Support

The initiatives to support entrepreneurs pretty much boil down to strategic propaganda by the government and are extremely bureaucratic. They have to treat everyone the same way, it doesn’t matter if you’re starting a tech company or a hotdog booth.

3. Net 60/90

We have Net 60 or Net 90, payment 60 or 90 days after invoice date – the government and big corporations all seem to use this. That’s really bad for entrepreneurs because after a sale there’s still 2 to 3 months before getting any money into your account.

4. Not a big market for mergers and acquisitions

The likelihood of your business getting bought by “bigger fish” is very low. Can you list tech companies that were acquired or merged? There are no examples of successes so there is little incentive to try something like starting a startup to sell in the first years.

5. Universities are not entrepreneur oriented

The creation of startup companies is not adopted by the Universities as a priority and as a result most students finish their degree without never ever thinking about the possibility of starting their own company. It is something so remote that it is not even worth thinking about.

6. Anti-entrepreneur culture

Most of the older generations does not recognize any value in someone that takes the risk of starting a company or going self-employed. It’s simply not appreciated. A friend that runs a startup told me his mother didn’t believe he was working until she saw his name on the newspaper.

On the positive side,

1. Climate

the weather is very good. According to an article by BBC, “Its southerly latitude gives it a Mediterranean type of climate, similar to that of the state of California, but one where the summer heat is tempered by the Atlantic influence.”

2. Food

and the food is great (we were having Sushi so I don’t think this point applied very well at the time). Portuguese food varies but fresh fish and shellfish are found commonly on every menu, and the country is full of specialty seafood restaurants.

3. Taxes

Our taxes are still lower than most countries in Europe. The tax burden is at 36.2% for singles with no kids (I would say the typical entrepreneur) in Portugal, compared to e.g. 51.8% in Germany. (OECD, 2005 data)

4. Green Receipt Book

Although a plague for employees (because companies misuse them) , the green receipt book (Caderneta de Recibos Verdes) is actually a helpful measure for entrepreneurs because they allow to hire people with less costs on the first year of company operations.

5. Tourism

The climate, beaches, lifestyle and leisure activities that attract companies, researchers and students to Portugal are also the mainstay of the country’s tourism industry, which accounts for more than 10 per cent of gross domestic product.

6. Community

The amount of Hackers, Makers and Geeks in Portugal is growing and so is the number of group meetings that you can find. Many are held monthly or at least regularly.

Please note,

this is of course far from being complete, accurate or even meaningful. I was careful enough to include a few positive points to counterpart for the negative ones. I didn’t want to be accused of pessimism, a point many would have listed here as well.

8 thoughts on “Starting a Business in Portugal

  1. Green Receipt Book is no good. End of story!!

    Every company with employees that are starting their first job, can avoid paying social security during the first year (the employee although has to pay it)

  2. jrs, it is a question of perspective. From the employee point of view they are no good. For the company owners it is obviously good..

  3. Ok then, we agree.
    thank you to pass by the message that in Portugal there are good ways to explore employees……

  4. jrs, that's far from the message I want to convey here in this post. I'm against using the green receipt book to hire "false" self-employed workers.

  5. This is a very interesting article about business in general. Thank you for sharing. Wish you all the best and all the luck! Greetings from Sahara Desert Nuno!

  6. Hi Nuno! Thanks for sharing. Having recently arrived back in Portugal after 2 years out, I was finding it hard to describe or figure out the climate in Portugal for entrepreneurs.
    Just some thoughts:
    Entrepreneur Support: there is certainly a lack of support/opportunities/incentive for interpreneurs in Portugal. I definitely found it easier to start a business in England or in the US. In Los Angeles, for instance, there were even Non Profit Organizations whose mission is to help people start and run a business. They give (free or with a small charge) courses, seminars and workshops on all aspects of doing so (finance, accounting, self promotion, marketing, contracts, etc…). For example, and I know that in Germany there is some kind of similar support given by the government or city councils, I am not sure. Yes, I think there is a lack of entrepreneur culture and you mention later in point 6.

    Anyways I wish there were more positive things to add, maybe we just need to build them up from the ground..

    Best wishes and thanks for your article!

  7. This a great article, Nuno. I hope your thoughts on the matter work as an incentive to both investors and people wanting to take the risk of working on their own. I just can't figure out why we have so many unemployed people in Portugal who just sit tight waiting for "the next big thing" to happen in their lives while other people take time away from sleeping to try to move forward.

    Thanks for sharing, my friend.

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