Without a doubt, every entrepreneur, before starting their professional activity, tries to choose the direction that will bring the maximum profit. To do this, you need to understand precisely which industry is worth investing in and which is better to avoid. In previous articles about doing business in Portugal, we have already talked about how to invest in this country, start your own business or buy a ready-made, what are the features of doing business in Portugal and also warned our readers about potential difficulties they may face in starting their own business in the country. In the framework of this article, we will discuss which particular destinations are considered the most popular and profitable in Portugal today.
Which business sectors are considered the most profitable in Portugal?
As you know, the current world order is characterized by increased turbulence, which is why all those who intend to start their business in any country, including Portugal, should choose the most optimal and justified activity. Therefore, to understand which types of companies in Portugal are in demand and, accordingly, the most profitable, we analyzed the information provided by the Portuguese business management company - Atlantic Hub, which denotes predominantly promising directions for investment in the country. Among them are hotel business and accommodation services; marketing; personnel management sector; sphere of information technologies; textile and clothing industry; sustainable entrepreneurship.
Hotels and accommodation services
Following the data of the international rating of International Living's 2022 Annual Global Retirement Index, Portugal is the best country in the world regarding climate. It isn't without reason that this European country was awarded such an award. Portugal has a temperate Mediterranean climate with humid air and almost 300 sunny days a year. The average annual air temperature ranges from 15 to 25 ºC, and burning heat and snow are considered exceptions. In that case, we definitely recommend that you do this because there you can find answers to all the questions that attract your attention about the climatic conditions in this country.
Thanks to this favorable climate, cultural heritage, security, highly developed infrastructure, a variety of air travel options, and comfortable traveling within the country using public and personal transport, Portugal increasingly attracts tourists yearly. Currently, tourism in Portugal is the country's most significant export economic activity. So, in 2019, tourism income amounted to 8.7% of the gross domestic product (GDP). However, in the same year, this sector accounted for 52.3% of services exports and 19.7% of all exports to Portugal. In addition, according to the information from the World Tourism Organization (WTO), which was last collected in 2018, Portugal is one of the top twenty tourist destinations in the world, with the highest number of tourists per year.
As a result, the demand for hotels and guest houses is increasing. Such industries as the hotel business or accommodation services are considered one of the most profitable in the territory of this European country because tourism succeeds here, without exaggeration, all year round.
Things have not been so good in the last two years, or rather, since the end of 2019 and the beginning of 2020, when the coronavirus pandemic covered the world. According to Jornal de Negocios, the sector suffered heavy losses at that time. However, according to some publications, Portugal's tourism is recovering and should reach the expected standard compared to 2019 in 2023 and 2024. Moreover, tourism growth can be observed in the summer of 2022. For example, in July of the same year, the number of tourists coming to Portugal increased by 85% compared to the same months of the previous year. This is why the hotels and accommodation services offered on platforms like Airbnb can be profitable business opportunities in Portugal, especially given the expected improvement in this sector.
Marketing is a set of activities aimed at creating, promoting and providing a product or service to customers, understanding and satisfying their needs. The marketing objective is to understand the customer so well that he/she will forever become a consumer of a certain company. To retain customers, a company/brand needs to know them well: their habits, fears, desires, etc. Marketing professionals often work in multiple areas, from planning to customer relationships. In many companies, the sales department is responsible for marketing needs by performing sales activities that are part of the customer relationship cycle. In other companies, the marketing department supports the sales department by acting in business support processes. There are various marketing profiles today, such as sales-focused marketing, relationship-focused marketing, and brand-focused marketing, emphasizing branding.
As for marketing in Portugal, this career is quite promising in this country. According to Hays Labor Market Guide, the marketing demand has recently been developing rapidly; therefore, this area is popular. Furthermore, the growth of this sector has been further accelerated by the advent of the coronavirus pandemic and the need to create compelling digital communication strategies, such as social media and e-commerce. Consequently, marketing is another excellent opportunity to start a profitable business in Portugal.
Human кesources sector
The HR sector is the company's area responsible for all people management, including recruitment, training and development of employees, personnel turnover cont, role and much more.
Increasingly, scientific studies talk about the importance of personnel management in companies. In this sense, there was an understanding that it is necessary to have competent and at the same time satisfied with their work people so that the organization can show better results. Therefore, the HR sector is another reasonable option for a profitable business in Portugal. Furthermore, in recent years, the HR sector has evolved significantly. With the growth of the number of vacancies and the need for careful selection processes following the needs of companies, there has been an increased demand for companies and professionals who provide this kind of service and who can be trusted. In Portugal, this industry is just starting to gain momentum, and that is why the HR sector, which includes the provision of recruitment and human resources services, is considered an excellent investment opportunity for all who understand this direction and want to start their own business in Portugal.
The rapid development of communication technologies in the 21st century has opened up a new industry - the IT sector, which is currently the most developing in the world. We remind you that information technology uses computers to create, process, store, retrieve, and exchange data and information. The field of information technology has become one of the most attractive for employment in the Portuguese labor market. In recent years, there has been a significant increase in the number of foreigners who suppose Portugal is a beautiful place to work with information technology. As we mentioned earlier, the IT industry in Portugal has increased in recent years. The country is the 'home' of many national and international technology companies. Therefore, investing in the information technology industry can be an excellent opportunity for a sought-after and profitable business in Portugal.
Textile and clothing industry
Europe's textile and clothing sectors are diverse and consist mainly of small and medium-sized enterprises. According to a report published by the General Directorate for Economic Activities in Portugal (Direção-Geral das Atividades Económicas), the countries that contribute the most to textile production in the EU are Austria, Belgium, the UK, Germany, the Netherlands, Portugal, and Sweden. In Portugal, the textile and clothing industry is one of the oldest and most traditional industries and remains one of the largest and most influential national business sectors. Portugal's textile and clothing industry sectors have experienced ups and downs over time, but these sectors have certainly seen growth in recent years.
According to data published by the National Bank of Portugal (Banco de Portugal) in 2019, the textile and clothing sectors numbered 2054 companies. In terms of turnover, medium-sized companies account for the most weight (about EUR 1,666.9 million), followed by large companies (EUR 1,114.9 million). From a geographical point of view, the textile and clothing industry sectors are solid in the north of the country, with about 76.1% of all existing enterprises, 10.6% in the center and 9.2% in the Lisbon metropolitan area. The remaining 4% is distributed among the districts of Alentejo, Algarve, and the autonomous regions of the Azores and Madeira. Furthermore, the Portuguese textile and clothing industry is characterized by solid exports, around 85% of their production. Considering the information above, the textile market is an excellent profitable business opportunity in Portugal since these sectors, despite being traditional, remain among the most relevant ones in the country.
Sustainable entrepreneurship has become a global trend, and Portugal corresponds in this direction. The idea behind sustainable entrepreneurship is to work with sustainable products and businesses that combine profit-making with attention to the social and environmental impacts of the company's mission. The main characteristic of sustainable entrepreneurship is humanized management, which considers the consequences of its services and products for the world and the environment. To be recognized as a sustainable entrepreneur, one must avoid waste and invest in conscious consumption. In addition, an organization aiming at sustainable entrepreneurship must pay special attention to the people affected by its activities, whether they are consumers of its products, employees or residents of the region. Sustainable entrepreneurship is another profitable sector in Portugal. Investments in this sector can range from consulting companies that help other companies plan and implement more sustainable strategies to creating businesses connected to recycling and circular fashion (in other words, sustainable or circular fashion is the use of clothing, footwear and accessories through recycling, repurposing or re-wearing) and preventing food waste.
Is it worth starting a business in Portugal?
Finally, we have come to the most interesting question, is it even worth establishing a business in Portugal? If you are an experienced entrepreneur enthusiastic about investing in Portugal and exploring a new market, then starting a profitable business in the country is your right choice. The Portuguese economy is showing good signs of recovery from the coronavirus pandemic, which has affected the world. Economists' forecasts for this in the coming years are encouraging. Thus, according to the estimates of the European Commission, in 2022, Portugal's GDP should grow by 6.5% compared to the previous 2021 year. Therefore, Portugal has the highest economic growth forecast among all countries that make up the European Union (EU).
However, in the Portuguese economy, as in almost all economies of European countries, some things could be better, and inflation is the reason. Portugal is at a reasonably comfortable level of 9.1% compared to other EU countries, while the UK has 10.1%, and Spain - 10.8%. The average inflation rate in Europe is 9.8%. But, it is worth emphasizing that inflation has been progressively growing since January 2022.
As for the unemployment rate, significant improvements are noticeable here. According to the National Institute of Statistics (Instituto Nacional de Estatística, INE), the lowest value in the last 20 years was recorded in September 2022, with 5.8% of the population without work.
The forecasts for the Portuguese economy for 2023 are as follows. The European Commission predicts GDP growth of 1.9% in Portugal in 2023, inflation will rise by about another 3.6%, and the unemployment rate in the country, on the contrary, should fall to 5.4%. Therefore, considering the current state of the world, as well as the state of the Portuguese economy at the moment and forecasts regarding it for the future, we strongly recommend investor to study the Portuguese market of the sector where he is going to invest in all details. In addition, you will need to surround yourself with reliable information and good professionals who can help you with this assessment.
Reasons to start a business in Portugal.
Many reasons can justify starting a business in Portugal other than the desire to invest in the country. Here are some good reasons to establish one of the most profitable enterprises in Portugal:
- Government encourage investment in the country through various support measures, namely the program Portugal 2030. Portugal 2030 is a joint initiative between Portugal and the EU that aims to help Portuguese companies with administrative training, social inclusion, and sustainable growth;
- The possibility of obtaining a visa and, subsequently, a residence permit. Suppose you are thinking about starting a business in Portugal but need to know what papers you can expect. In addition, if you have a family, the country will encourage you to reunite with your family members. If this is your case, then be sure to check out our article on the topic "Family reunification in Portugal on a D6 visa";
- making a profit in the euro, which is currently considered, one of the most stable currencies in the world compared with the Ukrainian hryvnia, pound sterling and the Russian ruble, behind the US dollar and the Chinese yuan.