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    Tenerife Business » Useful Information » Buying a Business in Tenerife » Why there are so many businesses for sale in Tenerife – and why you shouldn't worry about it
Updated: 03-06-2014

Why there are so many businesses for sale in Tenerife – and why you shouldn't worry about it!

One of the number one causes for concern that prospective Tenerife business buyers have is why they see so many businesses around for sale in the first place. Made evermore cautious by the whispers of wounded veterans of the last recession, it's easy to come to the conclusion that these businesses are being sold because they are failing. This misconception causes many to give up on their dream before they've even begun.

In fact, less businesses in Tenerife are failing than ever; according to this months' official statistics, business dissolution in the Canaries has dropped by a whopping 32.3% in just one year; which accounts for the largest drop in business failures for any region in Spain. This means that only 65 businesses actually failed last year in the whole Canary Islands, while 344 new ventures were started.

So where are all of these 'For Sale' signs coming from? Well... they've always been around; the truth is that there are always a large amount of businesses for sale in any thriving or changing economy – and Tenerife has both of these qualities. We've mentioned in previous articles before how Tenerife's economy is changing; fine culture is replacing cheap lager due to the tourism board's successful campaigning to source a richer clientele for the island. Boy, is it working, too; tourists spent 10.5 billion in the Canaries alone last year; which represented nearly a fifth of all tourist spending in Spain in 2013.

And as for thriving? We will let the latest statistics speak for themselves; the first four months of 2014 broke all previous records; where for the first time in history, over 4 million tourists visited the Canary Islands (4 077 759 exactly) – accounting for an average of over 1 million visitors a month. Inbdeed, it seems the Canaries are quickly becoming Spain's tourism capital; knocking all other regions out of the water in terms of both domestic and foreign tourists – increasing 22.1% since last year in April (as opposed to 13.2% in the rest of Spain). Tenerife is by far the most popular destination out of all the islands, representing almost half of all of the visitors to the Canaries (518 310 in January this year).

In the monthly calculation, captured in April, the Canaries accounted for 18.2 % of all foreign tourists arriving in Spain. All the major source markets of tourists to the islands recorded double-digit growth , in all cases higher than 15%. The proportion of domestic visitors was caught well above the sum of the first four months of the year to the other autonomous regions, reaching 26.6 %. And even though hotel prices have risen more than in any other region in the past year (by an average of 7.8%); hotels in the Canaries enjoyed the largest room-occupancy rate in the whole of Spain, according to April's statistics – 70.4%!

You don't need to be in a crisis to sell your business; in fact, it makes far more sense to want to pack up and sell during a boom; you have the opportunity to ask for a decent price, and you get to leave a part of your life with your head held high. Often, people are far more reluctant to admit defeat and sell a failing business than they are to sell a successful one for the right asking price. We deal with a lot of business sellers, and they can have a multitude of different reasons for wanting to sell on; however a select few keep recurring among our clients. Below we've compiled a list of the most common reasons people have for selling their Tenerife businesses when they ask us for sales advice.

 

Top reasons why people in Tenerife sell their business

 

Lack of planning/ experience

 

More and more business owners are starting to take notice of the new markets and are adjusting their business models accordingly – and these are the businesses which are thriving. However some people are still chasing that 'dream in the sun' they've had for years, without putting any realistic thought or planning into how they will achieve it. Unfortunately running a business in Tenerife is no easier than running a business anywhere else – in many cases it can be more confusing as there will quite likely be a language barrier to overcome as well as any other usual obstacles in your chosen line of business. We see too many people dive head-first into an industry in which they have no idea about or previous experience in, often underestimating the difficulty of their new career. Running a bar, for example, can be much harder than it looks, and having the wrong expectations or thought process behind it can leave people working long, hard hours with very little return. While these people are quick to blame 'the location, all inclusives, etc' for their failed business venture; in reality their failure lies most often in themselves and their wrong expectations.

However, it is important to mention that this is not applicable to everyone with no previous experience. We’ve seen fantastic success stories of people who used to work in banks and offices and who are now running very successful bars in Tenerife and are enjoying it. Personal commitment, hard work and determination are the keys to success. Nothing happens in a few months; mostly it needs years.

 

Business expansion

 

Some buyers are more cautious about their investment, and prefer to test out their ideas on a smaller scale and size before they move into a bigger premises; if their initial attempt is successful, they then sell up and move on. Others simply start with what they can afford at the time, and then expand after a lot of hard work and determination; either way they are selling their businesses on because it has flourished.

 

Personal reasons

 

Every once in a while there can be a time where a sudden emergency demands you drop everything; issues relating to health or family can mean having to sell everything, including your business. As a large amount of business owners in Tenerife are also expats, it has always been extremely common for people to sell their businesses in order to move back to their home country. Homesickness can develop over time, or family members can have trouble settling in, so some people can end up deciding a life abroad isn't right for them in the end.

 

Career change

 

After successfully running a bar, restaurant, or any other business for a number of years, there is nothing wrong with wanting to try your hand at something new, or wanting to work shorter hours.
Just like those who sit in the office dreaming of quitting their job, bar owners can also yearn for a change of direction or lifestyle.

 

Retirement

 

We've had business owners who have spent the past 20-30 years building up their businesses from scratch and are now looking for a well-deserved retirement, however they feel they cannot just shut down their well-established businesses. Concerns about their loyal staff losing their jobs means that this is the best reason for a person to sell their business from a buyers' point of view; imagine how much goodwill you can buy! 


By Emelia Beeson


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