(Article published in Diário Insular and Correio dos Açores)
This month, to get the year off to a great start, I decided to write about the first time I went to the (old) Estádio da Luz. I remember it perfectly. I must have been about 10 years old and although I had visited Lisbon before, this is one of the first times I remember being in the Portuguese capital. I was with my dear Grandad Manuel who, after pestering me so much (he's a die-hard Sporting fan), agreed - grandparents will do anything for their grandchildren. He took me to the stadium to try and buy tickets for the match that was to take place a few days later. Not that it matters, but while we were looking for the ticket office on the outskirts of the stadium I spotted Vítor Paneira, a star at the time, with whom I ended up taking a photo. Beginner's luck, I know.
When the big day arrived, we went to the match in a stadium that was packed to the rafters. I had already been to the Sanjoaninas festivities with my parents. I'd already experienced the day of the marches with intensity and I'd even been to bullfights in the parishes of the island where you see “people with animals”, but I confess, seeing that stadium bursting at the seams left me speechless. At the end of the day, just before the match started, and as I watched the eagle fly past thousands of scarves waving to the sound of Benfica's anthem, I asked my grandfather how many people were there. He replied: “Well, here they are...” - he looked around, adjusting his glasses, almost as if he were counting them and, after a few seconds, shrugging his shoulders, he said - “about 100,000 people. I remained silent, not really understanding what that number meant. He continued, ”...if you put the entire population of Terceira Island here, the stadium wouldn't fill up. Almost half the tickets go unsold".
I was perplexed and trying to absorb the immensity of what he had told me. My mind couldn't understand how there were more people there than on the day of the Sanjoaninas marches or the St Charles bullfight. It was unthinkable. It was the first time I realised that, in fact, Terceira Island (and the Azores) is a sparsely populated place.
And why is this relevant for entrepreneurs located in the Azores or in low-density regions like the Azores?
Because the fact that Terceira Island doesn't fill the Estádio da Luz shows that the internal market is small, very small, in fact. 55,000 people, in the case of Terceira Island, is a micro-market. On any other island, even on S. Miguel where 130,000 people live, it's still a small market. Worse still, the Azores as a region is a market that is not only small but also fragmented. Investing in a business - any business - aimed at the domestic market is (with very few exceptions) uncompetitive, with limited returns and high vulnerability to changes and alterations that may occur in this market - how many local entrepreneurs have told me, “the restaurant did well for the first few months, but then the ‘fad’ passed and the customers stopped coming. We had to close down.
The customers haven't stopped coming, the customers, past the excitement of trying something new, aren't there in sufficient numbers for the business to be sustainable.
Does this mean that creating a business in the Azores is impossible given these (and other) structural handicaps? Of course not! We do need to be aware of these challenges so that when we are preparing the business model we can define appropriate strategies. Therefore, I suggest that you try to: 1) direct the business towards exports (in whole or at least in part), which will allow you to “increase” the size of the market. Take the example of Beira-Mar restaurant‘ on the island of Terceira, where there are residents, but which is also an obligatory stop-off point for tourists to eat plenty of limpets and crácas in a typical restaurant with a superb view, thus managing to increase the “size” of its market, reach other target markets that don't exist in the region and, of course, reduce dependence on the domestic market. 2) Develop highly differentiated, specialised and ‘branded’ projects (preferably linked to the region). Product/service projects that position themselves in the markets as “top of mind” and, in essence, generate high margins so that we can cover the transport costs inherent to being on an island, the production costs (achieving economies of scale on the islands is another clear handicap in the Azores) and, of course, make a profit that makes the project in question sustainable.
If this is done, we'll be able to have more projects that create value in the region, that are sustainable, that make the most of what the region has to offer, instead of constantly squandering - yes, that's the word - support on projects that are not economically sustainable and that, more than support for the initial investment, will require constant subsequent support in a cycle of subsidisation that is not beneficial to anyone.
Many years on from that glorious trip to the Stadium of Light, and having dedicated myself in recent years to the study of entrepreneurship and business creation, I regularly use in lectures and training sessions this story with its simple message but valuable teaching that my grandfather Manuel, perhaps without realising it, gave me that day. I even have the idea, which I have presented and defended in various forums in Portugal and abroad, that we should be a Gourmet Region - with small-scale products / services, but high differentiation / quality and, of course, high prices. But perhaps I'll leave this topic for a future article. After all, today was the day to talk about my first trip to the Estádio da Luz.
André Leonardo
