Category: Business culture in Spain

When you’re working as self-employed in Spain, you’re likely to come across lots of legal Spanish words you don’t know. Here’s a glossary:

What does … mean?

• NIE (Número de Identidad Extranjero): Foreign Resident’s ID Number
• NIF (Número de Identidad Fiscal): Business tax number. If you are a freelancer in Spain, your NIF is the same number as your NIE.
• Número de Afiliación a la Seguridad Social: Social Security Number
• Hacienda: Inland Revenue
• IRPF (Impuesto sobre la Renta de Personas Físicas): Income Tax (or closest equivalent)
• IVA (Impuesto sobre el Valor Añadido): VAT (Value Added Tax)
• Cuota de Autónomos: Self-Employed Social Security monthly tax payments
• Agencia Tributaria: Inland Revenue (the arm of the Spanish Inland Revenue dedicated to tax-collecting)
• Modelo: Tax form
• Domicilio: home address
• Alta/baja: Sign-up/sign-off
• Autoliquidar: Pay tax into the system yourself
• Declaración de la Renta: yearly tax form, filled in by all citizens
• Retención: tax deducted from your payment and paid in on your behalf by a hiring company
• IAE (Impuesto sobre Actividades Económicas): Corporation Tax
• Autónomo: freelancer/self-employed
• PYME (Pequeña y Mediana Empresa): SMB (Small/Medium Business)
• Hoja de Vida Laboral: Employment history record
• Pago fraccionado: split payment
• Rendimiento: yield
• Préstamo: loan
• Hipoteca: mortgage
• IRNR (Impuesto sobre la Renta de No Residentes): Income tax for non-residents
• IS (Impuesto sobre Sociedades): Corporation Tax

Any more to add to the list?

The lote de navidad (Christmas hamper) is a popular tradition in Spain. A typical hamper contains delicacies such as wine, cava, jamón, pâté, truffles and nougat. Christmas hampers are typical of “old school” companies, but more modern businesses tend not to offer them, opting for a lower-cost option such as a bottle of wine and a company Christmas dinner instead.

Supreme Court rules: Christmas hampers are on

Everyone loves a Christmas hamper, but be careful if you do decide to offer one to your employees or business partners this year. A recent sentence by the Supreme Court ruled that companies who’ve traditionally bought Christmas Hampers for their employees must continue to do so.

This happened after a company stopped giving out Christmas hampers after merging with another that didn’t have this tradition. The Supreme Court ruled that receiving the hampers was an acquired right. As such, employees should continue to receive them.

Father Christmas’ fiscal obligations in Spain are still under investigation.

Source: El Diario

There are lots of theories designed to measure and describe business cultures. One of them is Geert Hofstede’s cultural compass. This rates countries based on 6 different attributes, and is designed to explain what a culture is like. But how accurate is it? How much does it really tell us about day-to-day dealings? Here I’ve looked at the values the Geert Hofstede model has ascribed to Spain, and evaluated them based on my own experience of Spanish business culture.

Business culture in Spain – Hofstede’s cultural compass

Power distance

Geert Hofstede scores Spain highly (57) on this aspect. This means that people do not generally question authority, and accept their place in hierarchy.

I don’t know if I agree. For one, what about the indignados movement in Spain? How does this apply to Spanish business culture? For better or for worse, in large cities in Spain North American business models are just as fashionable as cupcakes, swing dance and gintonics. In Barcelona, start-ups and playing ping-pong with your boss is increasingly the norm. This means a more equal power balance is in demand from the younger generation. Some might say that this is superficial. Offices in Spain today will all describe themselves as having a flat hierarchy to attract talent, but once you’ve got the job you’re still expected to follow suit. But surely something similar is true of most places?

Individualism

In summary, Geert Hofstede says that Spain is Collectivist compared to other European countries, but Individualist compared to most of the rest of the world. The means that Spanish people can easily get on with people who are not from Europe, but might see other Europeans as “aggressive and blunt”. In terms of Spanish business culture, it also means that people are good at working together.

The idea of Spaniards describing other Europeans as “agressive and blunt” is surprising to me. Wherever the truth of the matter lies, I frequently hear Spaniards describing themselves as “muy directos”. In my experience, the comment about teamwork in Spanish business culture is accurate. I find Spanish culture to be very inclusive – one of the lovely things about when I worked in summer schools was how tolerant most of the children were of each other. The same applies to business – normally, even the more eclectic members of the office will be tolerated and included.

Masculinity

Spain scores 42 here, making it a “feminine” country. According to Hofstefe, consensus and getting along are valued, whereas competitiveness is not. Hofstede comments that in Spain “children are educated in search of harmony”. In Spanish business culture, managers like to solicit input from their reports, and politicians seek “participation of all the minorities”.

There are many aspects of this sentence which do not match up to my experience. Although Spanish children I’ve known have often been inclusive, many people are not afraid to speak their minds. I definitely disagree that managers like to consult subordinates – this has not been true in my experience of Spanish business culture. In terms of politics, I’d also point out that the Spanish government includes the autonomous regions less than, for example, the UK includes Scotland, Northern Ireland and Wales. In terms of business culture in Spain, you shouldn’t feel any need to give special attention to caring and consensus. That said, wherever you work it’s wise to care for your clients.

Uncertainty avoidance

Hofstede rates Spain very highly (86) for uncertainty avoidance. He comments that “People like to have rules for everything… There is great concern for changing, ambiguous and undefined situations”. He points to a survey where 75% of young people in Spain v 17% of young people in the USA expressed interest in working in the civil service as evidence (the civil service being highly stable).

I think Hofstede’s example here is unfair. In the worst of Spain’s crisis, over 50% of young people were unemployed. In such circumstances, it’s natural that a “job for life” would sound attractive to most people. That said, the idea that “People like to have rules for everything” rings true – see my section on tax in Spain for the self-employed if you need more convincing about this aspect of business culture in Spain! I would also agree with the point about ambiguous and undefined situations. In a business context, I note that people are more likely to stick to established models than take risks. In terms of Spanish business culture, you might want to keep some of your more original ideas to yourself until you’ve tested them. Or (as I do :)) accept people’s surprise, and build a name for yourself as an innovator.

Long term orientation

Spain scores 48 here – they are almost average. Despite this, Hofstede asserts that the Spanish live in the present: “Spain is the country that has given the meaning of ‘fiesta’ to the world”.

Ok, can we lose the “fiesta” label already please? It’s just not true in certain parts of Spain. However, I’d agree with the overall sentiment. Spanish businesses I know look to combine long-term strategies with ways to get by in the short-term. I have sometimes found the balance swings a bit too far to “getting by”. So helping define a long-term vision has been a way I can add value.

Indulgence

Spain scores relatively low here (44), meaning that according to Hofstede people do not indulge. This also makes people have a “tendency to cynicism and pessimism”. It means that people put work emphasis on work than free time and do not indulge themselves.

What happened to giving the meaning of “fiesta” to the world? There are so many great ways to indulge in Spain – mojitos, open-air concerts, tapas – how could you resist? In terms of Spain’s business culture, it’s one of the few countries I know where staying for a coffee after lunch instead of running to a meeting is an advantage (it allows you to network). Work-life balance is also, in my experience, valued more highly here than elsewhere. I’d also disagree with the idea that Spaniards are cynical and pessimistic, both in Spanish business culture and personally.

Spanish business culture – conclusion

Geert Hofstede’s models might reflect the country average, but they don’t describe my experience. As much as this is conditioned by the business culture of Spain, it is even more conditioned by the sector and circles I move in. I mix mostly with modern, liberal Spaniards, interested in trends and technology. Countries are large and complex. You really can’t generalise.

Also, while I don’t fit with all the values in Spanish business culture, this doesn’t put me at a disadvantage. Actually, a fresh perspective has often allowed me to add value and come up with solutions no-one else thought of. In order to do this, it’s important to be able to understand – and tolerate – other points of view.

Got a good idea, but can’t afford to run with it? Raising capital to start your business can be tricky. Fortunately, technology might be able to help out.

Crowdlending (raising business capital en masse online) is currently growing at a rate of around 300% per year in Spain. So although it still represents a relatively small amount of capital compared to the rest of Europe, things are moving fast.

Setting up business? Well-known crowdlenders in Spain

There’s currently over 20 crowdlending platforms in Spain, and together they’ve helped thousands set up their own business. Interested? Here’s some of the best known:

• ECrowd! – Based in Barcelona, backed by the local city council and the Ministry of Energy, Industry and Tourism. Investors can contribute €50 – €3000 and provides loans between €50,000 – €1m. Most projects are related to the energy sector.
• Aboribus – Investors set interest rates and amounts to bet on shares in a project, and loans are between €10,000 and €150,000. More or less any sector can use Aboribus to help create their own business in Spain. Investors are recommended to develop a varied “portfolio” to spread risk; various automated options are available to help do so.
• Microwd – Perhaps not one you can use to fund your own business but equally worth a mention, Microwd is a Spanish NGO looking to use micro loans to break the poverty cycle in Nicaragua. Invest in local projects such as corner shops and vegetable trade, all run by women.

Of course, you should always check interest rates and conditions thoroughly before applying for any kind of loan.

Barcelona Activa is one of the best things the local government does for self-employed workers in Barcelona. This organisation can provide you with information, training and even a co-working space to start off your business activities.

To access the majority of the services (excluding the Cybernarium), you’ll first have to attend an introductory welcome session at the offices in C/Llacuna 162-164. After attending, the centre will send you a password to access the website’s facilities.

The session I attended was in Castilian Spanish, although I understand sessions are normally in Catalan. The presenter I had didn’t have any problems with this and was, she said, “happy to be flexible”, although presumably this could depend on who you happen to get on the day. You’ll also find a “Welcome Session” in English.

What does Barcelona Activa provide?

Useful things provided by Barcelona Activa include seminars about topics like business plans, marketing, finance, legal procedures and the entrepreneur as a person. You’ll also find information about co-working spaces subsidised by the government here.

One of the most useful aspects of Barcelona Activa, and one which anyone can access, is the Cibernarium. These guys offer high-quality IT training in things like Google AdWords, Photoshop, etc. The majority of sessions are free, but make sure you sign up fast as they can fill up within minutes. You don’t have to have attended the welcome session to sign up to the classes at the Cibernarium.

The presenter mentioned that, previously, she was able to give out lots of information about the kinds of grants that might be available. However, since the country has fallen on hard times, there’s less to say.

Text and photos by Penelope

What do each of the main parties have up their sleeves for Spain’s autónomos in the 2015 General Elections?

Election fever is beginning to hit Spain. What with local elections in May, general elections in September and regional elections scattered around the year, party politics are firmly on the agenda for 2015. The number of Spanish self-employed autónomos is growing every year, so which party will be doing the most for this increasingly sizeable minority? Who should you vote for if you’re working freelance in Spain?

• The PP (equivalent of Conservative/Republican party), currently in power, introduced the system of social security discounts for new or young autónomos during their last stint. However, they also increased VAT levels as well as income tax (although, unsurprisingly, this was lowered for election year). If they get into power again, the PP plan to introduce laws favouring self-employed workers with young children and dependents. For example, autónomos with children younger than 7 will not have to pay extra social security for someone they need to hire to substitute them while they’re looking after their children. Slightly more lenient laws for families with debts have also been introduced. To favour hiring, self-employed workers hiring other people will also be subject to discounts on their employee’s social security payments if the employee isn’t earning much.
• The PSOE (equivalent of Labour/Democratic party) aims to simplify the process and paperwork needed to start up a business, as well as opting for a Constitution from the Consejo del Trabajador Autónomo (Freelance Worker’s Council) in order to bring the self-employed into debate if they come to power in the Spanish general elections in 2015. They also plan to adjust social security payments to earnings as opposed to the current flat rate. The PSOE also aims to make going into business again easier for autónomos with debts.
• Podemos (upcoming left-wing party) has recovered from some bad press involving autónomos in 2014 and is now aiming to give the self-employed the same rights as in other countries like France, where payments are in proportion to earnings rather than having the same rates for everyone. They also aim to open a public bank in order to facilitate access to credit.
• Ciudadanos (in theory, politically centred) is a smaller party, but has been hailed by some as one of the only parties to offer a genuinely good deal for autónomos. In the 2015 General Elections, they aim to make hiring permanent employees easier for the first two years of their employment, as well as linking social security payments to earnings. They also plan to have just one VAT rate (falling between 16-19%) and raise the minimum that needs to be earned before paying income tax (IRPF) to compensate. They also aim to avoid “hyper-regulation”.

Who gets your vote? One thing’s for sure: with the number of self-employed in Spain increasing year-on-year, the parties who overlook this proportion of society stand to lose more than a few votes.

While researching this article, I wrote to the main political parties in Spain to ask them what their policies for freelance workers are. Given that only one party (Podemos) replied, the information here is gleaned from newspaper articles such as this one.

Text and photos by Penelope

The most recent version of the Spanish equivalent of the Labour Force Survey, the EPA, is out, and for once the results actually seem to be pretty encouraging. The main headline shows employment has gone up by nearly half a million people over the past year. Of these, it’s estimated that there are around 50,000 new “autónomos”, or self-employed workers.

Currently, it’s estimated that over three million people are self-employed in Spain – around 13% of the active working population. And that’s just counting the official ones – statistics including anyone working “in black” and just doing the odd part-time bits of work in addition to their full-time job are likely to be a lot higher.

Remembering having reported a similar news item last year, it seems to me that the increase in freelancers is not just a reaction to the crisis, but rather a permanent shift in what we look for in a job. And many authorities do seem to feel that the Millennial generation is more likely to want to be self-employed.

In any case, something that’s clear is that Spain’s autónomos will make up a sizeable minority in 2015. With elections the hot topic this year, will any of the main parties do enough to capture this vote? We’ll be following this over the coming months…

Do you think the increase in self-employed workers is a trend that’s here to stay? Hit the “comments” box below to let us know your take on things.

Images and text by Penelope

 

Hello everyone! Today, we have a guest post from another freelancer (and, it must be said, one who has far more years of experience than I do). Thanks for your contribution! Readers, if you’d ever like to submit anything similar, don’t hesitate to drop me a line at the bottom of the page.

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I’d like to share with you some reflections and tips from my own experience of being self-employed…

Build your network:

Do you have the personality to handle being on your own and having the responsibility for driving your business? Everyone needs a network, whether this is a supportive family member or friend, a fellow self-employed person you can meet for coffee and a chat to compare notes or a formal networking group.

Incidentally, on the subject of networking groups, you could spend all your time networking. So choose your groups carefully and go for ones where members are genuinely interested in collaborating and passing on one another’s details. I have been to some networking groups where people in permanent employment treat the event as a fun day out and an opportunity to get away from the office.

Don’t forget online networking, too. Join carefully chosen groups and, without giving away too much intellectual property (see below), contribute your own ‘thought leadership’.

You can’t afford to be a shrinking violet:

Don’t be shy to ask for referrals and recommendations, preferably in writing so you can use the positive comments on your website and in your marketing.

Keep on top of invoicing:

One thing for sure is you must make invoicing a priority, and be organised about doing so. After all, it’s not a sale until the money is in the bank!

When you take on a corporate client, make sure you understand their purchasing and accounts payable processes. If the client has a cut-off point for supplier half-way through the month, an invoice sent on the 16^th could take 6 weeks, not 4 weeks, to be paid. Similarly, don’t miss the end of the month, a very common cut-off point.

Try to get the email address of the accounts payable person and copy them in on all invoices, so they can’t claim not to have seen it.

Be firm about payment:

Remind the client when payment is due by sending a statement of account. Chase at once when a payment is overdue. One company accountant told me: “I pay the ‘squeaky wheels’ first”. Be a squeaky wheel.

If you can retain your hold on materials or part of the job until you receive payment, exercise this right. For example, release copyright for any writing only once payment is received.

I no longer take on clients who pay after 45 days; it’s payment within 30 days or I don’t accept their work. This is harder in your early days of freelancing, I know, but a large company screwing down a small supplier tends to reflect an aggressive approach in general to doing business.

Don’t give away too much:

In the attempt to impress a prospect or help an existing client, there’s a risk of giving away too much free consultancy.

Recently, a client I’d worked with previously when she was with another company asked me for help with a brochure; so I outlined some key points they should change and suggested a new structure, with a view to then rewriting it for them. She eventually came back to me saying their deadline had been too pressing to commission me to rewrite the brochure but they had put in place some of my suggestions and thank you very much!

The trick is clearly to strike a balance between proving you know your stuff and not enabling the client/customer to DIY.

As you can see, clients still have the ability to surprise me, even after being freelance for a fair while!

Don’t be afraid to say goodbye to a client:

This may seem strange advice and in the early days you’ll probably be happy to take any work that comes your way, whatever the egos you have to deal with and whatever the rate of pay.

However, as you become established, think about your customer base. Which are so high-maintenance that you spend double the time on a project that you estimated? Which expect instant service – and want it yesterday? Which consistently delay payment?

Ask yourself: if I divest myself of this customer, would it free up my time and energy to seek and take on a new customer? You don’t have to be confrontational; you can say truthfully that you’re too busy to give their work the time and attention it deserves at the moment, or you’re not taking on that type of work currently.

Alternatively, you can try to ‘train’ them in better ways. Make sure they know that there’s a lead time or tackle the fact that you always have to chase their accounts payable department. They might just improve their behaviour, rather than having to source a new supplier.

Do what you do best and delegate the rest:

Running your own business involves being a man or woman of many parts in addition to providing your core skill: sales executive, business planner, project manager, purchaser, bookkeeper… At best, this makes it immensely varied. At worst, it can be stressful.

Do you know anyone with whom you can do a skills exchange? If not, it may be best to pay a professional to take on tasks with which you struggle, as again this frees you to focus where you can be truly productive. Certainly, having sound advice from an accountant is pretty essential.

I hope this advice helps. Good luck!

 

Photos by Penelope. Thanks again to our anonymous guest poster for her contribution.