A Guide to Expanding Your Business Into Latin America

There are regions around the globe where business people prefer to expand or start their companies. Entrepreneurs typically focus on first-world countries like Singapore, Hong Kong, Canada, and the United States. Still, there are other good locations to tap into, such as Latin America.

Latin America has been growing into a nation with a favorable business climate. For instance, Columbia, Mexico, and Panama are starting to establish their middle class. Other developments are in technology and infrastructure. More roads and railroad networks are being made, which is beneficial for businesses that involve the transportation of goods.

The proximity to big countries like the U.S. and Canada plays a significant part in business expansion. An improved inter-country system adds a greater advantage because smoother transactions and transportation across borders can be expected.

Benefits of Business Expansion in Latin America

• Less congestion in the markets

Latin America’s markets are not yet packed with many options compared to other regions. There is less competition as some of its industries are still developing. Being a pioneer allows you to maximize marketing efforts and establish relations with potential customers.

• Common language

Spanish is the shared language of almost the entire population of Latin America, save for Brazil. Thus, the language barrier is eliminated, allowing you to promote and make transactions more efficiently for business growth.

• Demand is rising

Latin America’s middle class is continually growing, which inherently calls for a rise in demand in varying markets. When you expand or start a business in Latin America, there is a good chance of meeting targets and making profits. 

• Ecommerce is thriving

The ecommerce industry has been booming since the pandemic. It has brought numerous customers the convenience of online shopping, expanding the market to 63.3% in 2020. If your business is involved in ecommerce, Latin America may be an ideal location.

• Leverage the different seasons

A business that sells seasonal items such as swimwear, camping gear, umbrellas, etc., can continuously keep inventory moving by retailing in Latin America. Other countries that have multiple seasons have downtime during some periods.

Challenges to Your Business Growth

• Low bank account ownership

Most of Latin America’s population does not have a bank account. Brazil and Chile are the only countries that have more than half of their residents with bank accounts. Although this can imply much growth to happen in the future, it may interfere with current business transactions.

• Ecommerce difficulties

Ecommerce may be thriving in Latin America, but the industry has some struggles, such as logistics issues and poor online payment security. The payment infrastructure makes consumers doubt if their data are safe, which can significantly reduce sales. Low bank account ownership also affects ecommerce.

• The workforce is still developing

Finding the right people for your team might be challenging because Latin America’s talent pool is limited. Their workforce is yet to bloom, and it may take some time to settle with individuals that can help you with business expansion.

• Different bureaucratic procedures

Setting up a business in Latin America may scare away some entrepreneurs because of the complex bureaucratic processes. Laws, regulations, and compliant practices may be different. The lack of online platforms makes it inconvenient for business people as they have to present documents in person.

Tips for Successfully Developing Your Business in Latin America

• Tap into the culture

Most Latinos are considered regionalists of customs but are still open to exploring international products. You can use culture to your advantage by incorporating Latin American ideas in your promotions. The usage of their language, local characters, and customization help establish rapport and familiarity with potential customers.

• Partner with the locals

One of the best ways to get around a foreign place is to connect with locals and ask for their advice. Local NGOs can also show you the ropes. Forming relationships and growing a network helps in expanding your business to Latin America.

• Understand the environment

Although about 90% of Latin America speak the same language and share some traits, they have their differences. It is important to understand each country’s environment to reach customers effectively.

Their practices, customs, consumer habits, laws, etc., may vary for each location. When you grasp these things, it is easier to function, adjust, meet client demands, and attain business goals.

Latin America: The Base of Your Business

There are many locations to choose from, whether you are laying roots or enlarging your business territory, and Latin America may be the one for you. Although it is still growing, it has room for more advancement and progress. Its developing technology, infrastructure, and market demand present multiple business opportunities.In starting or spreading your business, ensure that you are managing your finances wisely, be knowledgeable of complaint practices, and consider other essential aspects.