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I am not a businessman or lawyer so my comments may not be entirely helpful. First, looking online Armenia is not in the EU, so I believe in order to do business in Spain you would need to be an EU resident and need a Spanish NIE, or residency card number. Not sure how easy that step is. I got mine when I was a student 22 years ago. Next hurdle is the language. If your customers are primarily Spanish speaking, like say in Alicante, where I live, then you would need to speak Spanish fluently or hire someone that speaks English and Spanish to attend the customers, while you do the technical work. It may be possible to set up a shop in an area where there are a lot of foreigners, such as Torrevieja or Altea in this region, without being fluent, but you will need to learn Spanish. Finally, there is the problem of competition. This may be difficult to judge. You might use google to try to estimate the number of shops that fix cellphones, but I know in Alicante there are shops that don't come up on a google search.

Language wise I have no problem as I am fluent in spanish also as I forgot to mention.

Cellfee wrote:

........ I currently live in Armenia and got a schengen visa allowing me to freely travel to Europe in and out.
......... I have saved up enough money to pay for a year of my accomodation and open up a business. ..... would like to know, which city is the best place for that type of a business?
Which city will also have lower cost of living? I need the city to be crowded so I will have lot of customers.

I have picked out some points I would like to answer from your post.
Unfortunately you cannot stay in the Schengen area for the amount of time you want to.

To get permission to live and work in Spain you may need to obtain a golden visa. Maybe you should ask the Spanish embassy in your own country about this requirement.
In normal circumstances you will need a National ID number(NIF/DNI) to rent, open a bank account, to run a business too. Even going to pay a house hold bill will mean you need to present that number. You cannot obtain one without permission to stay in the country.
What is best is not going to be an easy question for a forum member to answer. We all have own own ideas on this. However, if you want a busy location that is never going to be the one with a low cost of living. The busier the location the higher the rents are going to be.

Ok lets assume I have everything I need but for instant is Alicante a busy place to open up shop?

Now it is time to do some research yourself. Here is a list of phone repair shops in that city.

It is a busy sea side location but the question you have to ask yourself is how do I do set up a successful business there?

Keep in mind there may be places that are not found in the search. We use Winnersat in Alicante for PC and mobile phone repair and they don't appear in the list. It might be useful to look at cities like Denia, Elche, Altea, or Torrevieja for example. Torrevieja, in particular, is very inexpensive for renting an apartment, for example. Well, good luck with your research.

Thanks for the responses. How do you guys find these phone shops? For instance in USA people use YELP often or rely on google to search for services they are interested in. How do you guys find services that you look for? Is there a classifieds or any other form of advertisement people follow in general?

Thank you