Foreign Perspectives

One thing that’s very noticeable in Valencia is that everywhere you see employment vacancy signs which implies quite a strong local economy.

As in other places in Spain there’s building work going on just about everywhere but it doesn’t seem so intrusive as it does in some cities (notably Madrid) with many quiet areas around the city. There’s more of a laid-back feel about the city too: everyone is certainly going somewhere yet they’re not going at the hectic pace you often see in Barcelona.

With the building work, there’s certainly money to be made in property speculation of course and the apartment we rented was owned by a relatively young Spaniard.

And the banks? It seemed like almost wall to wall banks in most of the central area of the city. Both more branches and a much wider variety of banks that I’ve seen anywhere outside London. They’re all competing for business too with many offers available on loans, credit cards and so on.

Amazingly many B&Bs still don’t accept credit cards and thereby end up losing business as many people prefer to pay directly with a card than to have to pay extra charges to lift cash abroad.

But, how do you do it?

Well, there are basically two ways that a B&B or self-catering complex can operate with a credit card.

1. Accept cards solely for deposits; and
2. Accept cards for all payments.

Naturally, it’s possible to start off just taking card payments for deposits and move onto accepting them for all payments. In fact, it’s useful to do exactly this to try out card payments for your business.

If you’re only taking card payments for deposits then you don’t need to sign up with a bank. The simplest way is to sign up with paypal for a business account. Payments received will cost you 3.4% plus 20p so if you take £10 will cost you about 54p (5.4%), £100 will cost £3.60 (3.6%) and £1000 will cost £34.20 (3.42%). These charges are similar to those that a small business would pay were they to do credit card processing via their bank in the UK but somewhat higher than the typical 0.75% for banks in France.

From these figures you’ll see that it’s best to use paypal for deposits. That way a typical 25% deposit will effectively cost you under 1% of the total bill for paypal processing.

You could use paypal to accept all payments this way but you would need your bookings to be paid 100% in advance to do that as you can’t easily use the paypal system to make on the spot payments (if you really have to you can do it by having the guest logging in using your Internet access and making the payment). So, if you want to accept all payments by card, then you need to get the little credit card machine although, in principle, you can run with PayPals virtual terminal option (£20/month) which gives you the equivalent of the little machine but using your computer to process the cards.

To get a credit card machine setup you need to have a business bank account and, in most cases, have had it for six months although for B&B and self-catering properties the bank will normally waive the six months requirement. In France, you’ll need to be registered and provide your KBIS.

Costs for this vary a lot. You can buy your own machine but they’re rather expensive (typically £300/£500) and therefore most people rent them from the bank (around £20/£30 per month). In most cases you’re better to opt for a fixed installation as the portable terminals can cost 50% more. Other things to consider are which cards you’ll accept. Normally Visa/Mastercard are sufficient (and will include Visa Electron and Maestro). American Express is becoming more popular but is usually more expensive than other cards. If you get a lot of Japanese then it’s probably worthwhile taking JCB. You can even accept various storecards but unless you’re in a shopping centre it’s probably not going to be worth the extra expense.

How do you do it? Open a business bank account then apply for the credit card facility at your bank.

One thing to watch is that you will need Customer Not Present enabled. This lets you charge cards without having the credit card in your hand. You’ll need this to take deposits.

Is it worthwhile doing though? Yes, it is. Sure it will cost you more but you can take that into account in your pricing. If you assume that a credit card payment will cost you 4% then adding as little as 2% to your prices will pay for it all in that not everyone will pay by card and many of those that do will use a debit card which’ll cost you less. So, if you’re charging £50/night that equates to adding £1 to your charges. Incidently, don’t try adding that £1 only to credit card customers as you’ll just end up driving them away.

We’ve been looking around the prices of places locally and there’s quite a divergence between what some places are actually worth and what they might sell for at the moment.

For example, there’s a major hotel/restaurant complex near us that’s listed for almost EUR 2.5 million. It’s easily worth that as it’s a recently modernised building with over 30 rooms, large swimming pool, gardens, sports facilities, has a second building under construction to add another 30 rooms and planning permission for a third building for the complex plus extensive grounds.

Unfortunately, that complex is totally out of character with the region. There’s nothing comparable to it locally and for good reason: there just isn’t the market for it here.

So, whilst it might well be worth 2.5 million (and probably more), chances are that it’ll sell for around 1.5 million or so. That’s if it sells at all, of course, as it’s nothing like what people would expect in this area which means that nobody is looking to buy such a facility here.

Many places tend to treat repeat customers specially through offering discounts, extra services, or whatever.

However, they remain customers and one of the key things about that is that you need to get money off them for whatever goods or services that you sell, even if they are both a repeat customer and a large one.

One trap to fall into is to be more lax with the payment terms. Unless you habitually offer credit then you shouldn’t offer it to even the best of customers as sooner or later it’ll just cause needless friction between you and a good customer. If it’s pay on delivery for everyone else then that should be the case for even the best customers too as your sales contract probably doesn’t allow for any credit in such circumstances: a recipe for trouble collecting the cash if ever there was one.

So, yes, offer better discounts to better customers. Yes, offer, additional services to better customers. But, NO, don’t change your payment terms.

I’ve been looking at the ASUS range for quite a while now but really couldn’t see the point of getting a baby computer with only at most 20GB storage. Sure, it would have sounded a lot a few years ago but when you start thinking about photos and videos it just doesn’t cut it these days and that’s before you even think about software.

All these little computers are tagged as “netbooks” meaning that they’re intended primarily for use as portable Internet browsers. Certainly for those with 8GB or less “disc” space you’d not get much in the way of applications loaded up but when you’ve 120GB of hard drive to play with what you’ve got is a smaller version of a laptop ie they can do pretty much everything that their bigger brothers can do.

Typically these small computers come loaded with a custom version of Linux although you can also get versions with XP and Vista loaded too (they’re usually £20 or so more expensive). The Linux versions usually come with OpenOffice (the Linux equivalent of Microsoft Office), photo and video display software and, of course, games. In other words, the software that most people use. Note that the Linux software is free you don’t get hit with the extra cost of buying MS Office that you would with the XP or Vista versions.

Out of the box the Aspire One seems like a closed system but it’s easy enough to open things up: just press Alt+F2, type xfce-setting-show and press enter, click on Desktop, then Behavior and finally Show desktop menu on right-click. Now, right-clicking on the desktop will give you the full range of options and in particular going to System, Add/Remove software will give you oodles of choices to extend the functionality of your system.

Incidently, don’t think that going down the Linux route will cut you off from the Microsoft world because there are emulation packages available that’ll let you run pretty much all XP/Vista based software.