Are you planning to start a business in Latin America? This region offers great business opportunities and countless natural resources. However, if you're to open a business here, expect to experience a number of challenges before fully penetrating the market. These challenges are different from other regions, and it requires business owners to be brave and smart.
This region has various administrative and economic policies with bureaucracy taking center stage. These requirements can make it difficult to thrive if you're unfamiliar with how businesses operate there. Consequently, you need to understand the challenges of opening a business in Latin America. So, let's get started.
Abiding by the Different Bureaucracy Requirements
One of the major problems you'll experience if you want to start a business in Latin America is the several strict bureaucracy requirements. You will have to engage the local government before establishing your company here as a new business venture. Doing this may take time since there are no online platforms for such processes. This means you'll have to submit your application in person to the various authorities. For this reason, you need to comply with the obligations to have a chance of dominating the market. Develop a proper action plan to know the details of regulations related to your business and the resources that'll help you meet the compliance requirements on time.
Using the “Fly In Fly Out” Business Model
Even though the "fly-in, fly-out" business model is popular globally, it may give you a hard time when establishing your company in this region. Latin America has a business culture that values personal relationships, which requires you to relate with clients and partners. In addition, the various bureaucracy requirements may also limit you since you've got to have a longer physical presence in the country before the business model becomes effective.
You may also be requested to formally translate and certify your documents through their embassies before they're sent to relevant institutions in Latin America. Moreover, you may wait longer as the processing time for commercial activity requests outside this region takes time. We recommend working with an international advisor to help soften the hurdles while streamlining the entire process. You should also invest your time to help the business grow while building relationships with your staff, partners, and clients in the region.
Overcoming Language and Cultural Barriers
Another challenge you'll face in Latin America as a foreign investor is the language barrier. This region is dominated by Spanish, French, and Portuguese-speaking locals. So, if you're interested in any of the countries in this region, it's advisable to learn their languages beforehand.
Additionally, you can conduct background research on the cultural norms of the people in this region. It will help you build a professional and personal relationship, which is crucial for your business prosperity. For example, in Colombia, you need to understand that communication is indirect and subtle, which can impact business negotiations.
Again, as Latin America is more status-conscious, you need to be careful with names and titles in this region. It would be best if you addressed people by their titles at the workplace. Also, expect to receive more hugs and kisses while doing business in this region as it's the norm here. You'll need to adjust if you come from an area where the traditional greeting is by a handshake. And don't forget to dress formally for business meetings in Latin America as it shows your authority and creates a good impression on your partners.
Understanding the Economic Disparities
Even though every country has its own unique business challenges, some countries are hurt by economic disparities. This can be attributed to rigid economic policies and structures. So, you have to understand the economic inequality in this region and know the best way out.
If you start a business in Latin America, look for the best way to involve all social classes without creating a rift. Plan to engage those with different education and income levels in your business. Bring local investors on board, which will help you understand how the company runs in the region. Doing this will enable you to win the trust of both social classes. In the end, you'll have a market for your goods and services, helping you penetrate the market with ease.
Understanding the Laws Around Hiring Employees
If you intend to invest in this region with a rich talent pool, you're likely to have challenges while hiring employees. In Latin America, you need to establish an employment relationship with employees when they work in exchange for monetary compensation. However, you might find it difficult working with contractual workers in case of a compensation conflict. A lack of employment contract, while there's proof of an employment relationship, will make the worker be classified as a permanent employee by the courts. This means that your company has to include the part-time employee in the payroll and allow the employee to get healthcare, pension, and termination security. If possible, work with global advisors to help you establish your work relationship with employees. They can also help you with your accounting and taxation requirements.
Start a Business in Latin America the Easier Way
As an investor who wants to start a business in Latin America, it must be your goal to get higher profits and a large base of customers. However, this goal may take longer to materialize as you'll need the best techniques to overcome the region's complex hiring regulations and bureaucracy. In addition, you'll have to brave some of the country's cultural practices and learn the new languages you'll use in your preferred country.
Fortunately, there are myriad ways you can apply to help mitigate these risks. It is highly recommended that you work with the best global advisors while establishing your business abroad. So, get in touch with us to see how we can help tackle these challenges with a lot of ease, as we've got the right know-how and experience it calls for.