Entrepreneurship, Madeira style

This one is just the two of us, talking about one of Mark's favourite topics. He has been running his own small businesses for almost 25 years, first in the Netherlands and with clients all over the world. Catherine started a local business on Madeira with her co-founder, Annika. So we compared notes: what's different about doing business here, which gaps we see on the island, and how AI is changing the picture.

One thing up front: we're talking about small businesses. Things you build yourself, perhaps with a small team, working directly for your clients. Not big companies with shareholders and long-term strategies.

The Chamber of Commerce in Funchal

In the Netherlands, Mark says, the Chamber of Commerce is a real help. You can get information about administration, tax, financing and hiring staff, it's a network, and it can even put you in touch with a coach. Madeira has a Chamber of Commerce too, in Funchal, but it feels very different. It's more about the rules you have to follow than about how it can help you build your company.

Catherine had the same experience with her own business. There were so many rules, and they hardly felt human. If you had a similar document with the same signature but not the exact one they asked for, it wasn't accepted. It all felt more complicated than it needs to be. There's also little support for young people starting their first business. Startup Madeira now offers funding, events and workshops for local start-ups, but that's quite new, and you have to apply with a specific idea. In Switzerland, the support network for first-time founders is much bigger.

Mark's advice: you need to know the rules, but so you can work with them. If this is your first business and you start it on Madeira, it's easy to fall into the trap of thinking you have to tick every box before you can begin. You don't. Some rules can be interpreted in more than one way.

Tax rules that can work in your favour

If you already run a business whose clients are outside Portugal, there are rules that can work in your favour, especially in the period before you register as a resident. They don't apply to businesses that serve local clients. There are also arrangements for people who bring knowledge to the country that isn't there yet, particularly in IT, with a flat tax rate of around 20%.

The rules are detailed and change from time to time, so take this as a nudge to dig in, ideally with a good accountant, not as tax advice.

Mark also sees an advantage in growing up somewhere else, especially if you come from northern Europe. You see things locals might not notice. But if your idea is better than the local standard, give people time to see what you see before pushing ahead against the energy of the island.

Offline networks and businesses without websites

In the Netherlands, Mark could build a business purely by being active online. On Madeira, you need to go to networking events and know people. When he first set up his home here, he found almost nothing online. Everything happened in Facebook and WhatsApp groups, or by leaving the house and talking to people.

That links to something that has always amazed Catherine: most businesses here don't even have a website. For her, a website is the most basic tool there is, like a business card with everything you need to know. Here, a business with a website is seen as professional, even if the website looks bad. Many small businesses only have a Facebook or Instagram page. The ones that do it well are those that know they need to reach tourists: travel agencies, surf schools and the like.

The upside: if you know how to work online, you don't have to be in Funchal. You can live in the north and run your business from there.

Think beyond the island

Madeira is small. Together with Porto Santo it has around a quarter of a million inhabitants, so if your customers are all local, your pool is limited. Catherine's advice is to think from the start about the biggest version of your idea. Once you know how far it could grow, you'll probably see it needs a proper online setup, and that a local market stall might not be your first sales channel. Unless, of course, you'd rather stay small, which is fine too.

Mark gave two examples. A German couple in their sixties sell homemade snacks at markets across the island, from Machico to Funchal and smaller villages, and tell people where to find them through WhatsApp groups. It's a lovely way to run a business, but it's hard to grow. Then there's a successful local company that makes sure Airbnb homes meet the safety rules, with fire blankets, signage and so on. It's doing well right now. But if Madeira ever stops issuing new holiday rental licences, as has happened elsewhere in southern Europe, there won't be much left for it to do.

His conclusion: the most successful entrepreneurs on the island tend to be the ones whose clients are on the mainland or anywhere else in the world, not only on Madeira.

Gaps we've spotted on the island

Newcomers are often good at spotting gaps, because locals grew up with things the way they are. A few that we've noticed:

  • Public laundrettes. When Catherine arrived, they were hard to find, and not every Airbnb had a washing machine. About a year ago, self-service laundry machines finally started appearing at supermarkets and in car parks.
  • Toilets at hiking trails. Catherine's uncle came from Switzerland for a hiking holiday. He loved it, but missed what Swiss trails have: toilets at the start or end of a route, so walkers don't leave toilet paper along the path.
  • A bike shop in Machico. Cycling there is easy, but Mark could only find one man who repairs bikes, and nobody selling them.
  • An indoor ski slope. Mark's (very Dutch) dream. The mountains are there, the snow isn't. Catherine, being Swiss, finds the idea a bit absurd. But Dubai has one, and Madeira already attracts adventure lovers with zip lines and extreme sports.

There's also the question of whether people are ready for an idea. The homeschooling hub Catherine set up was a great concept, but homeschooling is not well known among locals. The target group shrank from all of Madeira to expat families with children, and in the end there weren't enough families to keep it going.

How AI changes doing business here

For tourism, Mark doesn't see AI taking over any time soon. People come here for nature and real human connection. A Japanese family he met through the Bitcoin community had only a few days on the island and wanted a hiking guide, a real person, not an app.

Where he does see change coming is transport. Self-driving taxis are already on the road in the US. Once they can handle Madeira's steep, narrow roads, renting a car might feel unnecessary.

Catherine thinks AI gives you the same tools wherever you live, as long as you have internet. She doesn't use it to replace her creativity or her thinking, because that's the essence of the work. People are becoming almost allergic to things that sound or look like AI. She uses it for the boring, repetitive tasks, so she has more time for the actual thinking.

Mark uses it to build dashboards for the numbers he tracks every week, something he used to do by hand in Excel, and to make websites. When he started his first company, he had to hire an employee after his very first client. Today, that's not necessary so quickly. On Madeira, AI also helps with something very practical: translating all the rules and paperwork that are only available in Portuguese. Just double-check what it tells you.

We use AI to edit this podcast and get it onto social media. Without it, this podcast probably wouldn't exist.

Work-life balance and growing faster

Will AI give entrepreneurs more free time? Mark doesn't think so, at least not for long. If you're early, you can keep your prices and enjoy lower costs for a few years. After that, competitors who used AI to lower their prices will push you to do the same. He uses the head start to create more, not to work less, the same way he did when the internet arrived. And to really understand AI, you have to keep asking yourself the uncomfortable questions.

Catherine's view: first decide what success means to you. For her, it's being rich in time as well as money: time with her son, in nature and for herself. She had already decided on that balance before AI came along. AI doesn't give her more free time. It means she makes faster progress in the same working hours.

So what should you start on Madeira?

Mark's answer: start with what makes you happy. If you love being with people and making them happy, tourism is a great choice. Visitors have worked all year for their time off and come here to enjoy nature. If you want to build something bigger than yourself, use the power of the internet, and now AI.

Either way, things usually take longer than you expect, and if you don't love what you're doing, you'll give up when they do. We don't earn anything from this podcast, but we love making it, so we keep going. Mark is sure that people will find you if you do something you really love.

And in a world full of AI-generated noise, authenticity is what people look for. We think those businesses are the ones that will thrive.

If you're an entrepreneur on Madeira, or thinking of becoming one, we'd love to hear your experience in the comments or by email.