This article is the last article in our 4 part series which examines the economic ties between Australia and its neighbors on the other side of the world – Latin America.
Our previous article ´5 Essential Back Offices Services: Australian Investment in Latin America´ highlighted the importance for Australian companies to outsource their back office services in order to improve efficiency. This article will provide readers with ´consejos´ (tips in Spanish) on how Australians can make the most of their Latin America investments.
These tips include:
- Understand the Local Market
- Know the Business Culture and Customs
- Develop a Rigorous Business Plan
- Remain Flexible and Seek Guidance
- Recruit Professional and Competent Individuals
- Work with a Trusted Back Office Supplier
There is no denying that there is a great range of opportunities in Latin America for Australians. The tips provided in this article can help to add to your existing knowledge in Latin America to ensure you make an informed decision with respect to your investment in the region.
Doing Business in Latin America – Ensure you Understand the Local Market
A thorough understanding of the local market is essential for all Australian investors thinking of entering and operating in Latin America; the future success of their investments will be based on the ability to analyse and respond to the behavior of the target market. There are vast cultural and language differences between Australia and the various countries that make up Latin America, for this reason, consumer trends between the two regions vary greatly in regards to preferences and expected prices.
Know the Business Culture and Customs in Latin America
The varied history, language and geographical proximity mean that the business cultures between Australia and Latin America vary greatly. Due to the sheer size of Latin America, it is hard to generalise about business culture and customs for all the countries. However, there are some similarities between the regions. While an in-depth explanation of the differences in business cultures between the regions would take a long time, below you can find a brief overview.
- Directness: Latin Americans tend to be indirect and often have difficulties in saying no. This is quite the opposite of Australians who are quite straight-forward.
- Time: Latin Americans do not tend to be punctual; this should not be taken as a sign of disrespect. Being up to 30 minutes late is not uncommon for a business meeting. Learn to be patient with business associates.
- Relationships: Latins are more likely to do business with someone they know and trust; for this reason, forming a relationship with a potential Latin America business partner will be greatly beneficial.
- Formality: Latins tend to be more formal than Australians. This formality includes conversations (use of sir, mam, Mr Lopez etc.) and clothing.
- Physical Distance: Latins tend to be very warm and friendly people, this is true for personal distance and physical touching. Don’t feel awkward if a Latin puts a hand on your shoulder or pats your back.
A sound knowledge on the business cultures and customs in the country you will be investing in will ensure that your business has a greater chance of success. In addition, you will be looked upon more favorable by locals who will appreciate you taking time in getting to know their country beyond the business environment.
Develop a Rigorous Business Plan
The need for a rigorous business plan is essential for all businesses – great or small. It could be in the form of a simple 1 page document explaining the company objections and how they can be achieved, through to a 100 page detailed report including finances, market statistics, recruitment processes etc. This business plan becomes more important when operating in Latin America. The expression ´failing to plan is planning to fail´ could not be more accurate. A lack of focus on business strategy will do nothing but increase the chance of investment failure. On the other hand, a well thought out business plan based on local market knowledge will improve the chances of market success.
As a company operating across Latin America, Biz Latin Hub understands the importance of developing a rigorous business plan. Too many times we have seen Australian investors lacking business vision and forward planning; resulting in failure. The most disappointing part is that in most of the cases, there had been great opportunities available.
Remain Flexible and Seek Guidance
One of my favourite sayings is by Heraclites who once said ¨the only thing that remains constant is change¨. This can be applied worldwide and across areas of society and the environment such as romance, friendships, climate, politics etc. This is just as relevant for Australian investment in Latin America.
The ability to be open-minded and embrace change is a great quality to possess in Latin America. Things go wrong, and the better you are prepared to deal with these, the more market success you will have. Some examples of this include:
- Delayment of merchandise at customs
- Business partners changing plans or pulling out of agreements
- High levels of bureaucracy– time taken to get things done; visas process, company formation, financial reporting etc.
For this reason, should you encounter challenges during your Latin American investment, whether that be with your market entry or operation within the region, you should be open to seeking guidance from professionals. Consulting or outsourcing services can provide the link between investment success and investment failure. For example, before investing in a Latin American business, an Australian investor could seek diligence services to gain a background check of the owners of the company in addition to the checking the legal standing of the company, including any outstanding debts. The resulting information can then be used to make an informed decision regarding the investment.
Recruit Professional and Competent Individuals
A great understanding of the local market, business culture, a diligent business plan and guidance from a professional local company is very important to investment success. However, assuming you not are a sole-trader without contact with local partners, you will need to recruit or work with locals to assist in the entry and growth of the company. Without a team of hard work and honest employees who share your company vision, chances are, the company will flop. The process of recruitment will remain difficult if one does not have a sound knowledge of the local market. For this reason, some investors choose to outsource part, or all of the recruitment to a 3rd party.
Work With a Trusted Back Office Provider
An Australian individual or company who is interested in investing in Latin America may be able to drive this investment without any assistance. While possible, realistically it is unfeasible to assume that you can take on all thee burdens involved with then entry and operation of an investment in Latin America. The outcome if you do is simple; inefficiency resulting in lost time, money and lower profit margins.
Australians: Get in touch withBiz Latin Hub. We are able to provide you with a whole suite of tailored and affordable back office services to ensure your Latin America investment is successful. Contact Craig, our Australian Entrepreneurial CEO at here and see how we can add value to your business.
If you want to learn more about business opportunities in Latin America, please take a look at this video and subscribe to our youtube channel. We have tons of videos to help you get your company set up in Latin America!