Four Factors That Make Or Break An Expat Startup
What works – and what doesn’t – when starting a business in Latin America
Entrepreneurs looking for fertile ground may want to plant their startup seeds in Latin America.
For those willing to build a Spanish-language business in this area of growing international commerce, the exciting magnetism is undeniable. Economic growth, increased globalization and free trade enterprise, and public sector reforms all speak to the huge regional changes over the past few decades. War and unrest have given way to democracy, and business is booming.
American expats starting businesses see a number of reasons to put down commercial roots in Spanish-speaking Latin America. Some factors which can be beneficial have a flip side to consider. Regulations and cultural differences require full business localization. Speaking the language—and Spanish translation which resonates with your customer base—will set you up for a successful launch.
#1 Know Your Market
Expats who have lived in a Latin American country for some time will likely have a good idea of their potential customer base, but those who haven’t spent a significant time in the area prior to starting a business may experience some level of disadvantage.
Most Latin American countries play host to significant wealth disparity. Areas which might attract Americans due to their low cost of living usually boast a lower GDP and less buying power. Whether the boots on the ground are your own or those of a carefully chosen local partner, entrepreneurs should be certain of their target market’s ability and desire to purchase those specific goods and services. Localizing is key—be sure your business vision translates to its new Spanish-language home.
#2 Adjust Your Expectations and Plan Accordingly
America is known for its fast-paced business sector. Companies want that project done yesterday, employees pride themselves on a machine-like ability to complete tasks. Latin American culture carries a reputation of more laid-back expectations and relaxed deadlines.
Aspiring entrepreneurs should not expect the cultural norms of their American business experience to exactly match those of their new host country. Remember: the “right” way to do things will be the local way. An existing community and market doesn’t often respond positively to a new face coming in looking to “fix” things—it may be helpful to view your venture as something amphibious until you’re comfortable and familiar with the way business is conducted locally.
Excellent Spanish translation of your website, documents, and services will help you gain access to the local market, but success will be determined by a real understanding of the people and culture.
#3 Don’t Count on Deep Pockets to Clear a Path
Whether from fundraising, grants, angel investments, or your own bank account, that initial investment is very valuable. People starting companies in Latin America may be prone to the notion that money will carry them through difficulties, resulting in a net loss of investment and a failed business. Yes, startup costs are often much lower in Latin America than they might be in the US, but unforeseen regulatory and legal problems, or counting on something that doesn’t materialize, can eat away at those funds and leave entrepreneurs in the red. Be prudent in your cost estimates and risk analysis. Make certain that you fully understand the all the legalities, compliance, and necessary investments. Find an English-speaking attorney or legal counsel, and use Spanish translation to lessen the possibilities of legal confusion down the road.
#4 Be Careful in Your Hiring
Bringing on new workers—as well as letting them go if it’s not a good fit—can be a very different animal than it would be in the States. An impeccable ability to “read” people may not translate across cultural lines. Taking your time will allow for greater confidence in the expertise and reliability of your new international workforce.
Many Latin American countries have labor laws designed to protect workers. These laws defend laborers against wrongful firing practices, but have the potential to cause legal trouble for even the most well-meaning of employers. To prevent difficulties down the road, 1) hire carefully and 2) know the laws. Proper Spanish-English translation of contracts and documents is crucial. And good legal representation will help you navigate the murky waters of employing people across cultural, language, and legal lines.
Latin America beckons to entrepreneurs wishing to explore new territory in their business ventures. Americans wishing to leave the US for a change in lifestyle and occupation will find the Spanish-speaking countries South of our border attractive options. Careful planning, market knowledge, excellent localization practices and Spanish translation pave the way for companies to succeed in this very different market, where the options —and opportunities— are limitless.