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Business Ideas South America Startup Advice

Best Tips for Starting a Business in South America from Local SMEs

Here's what 26 SMEs surveyed from Brazil, Argentina, Chile, Colombia, and Uruguay had to say

  • We surveyed over 26 local small and medium-sized enterprises (SMEs) across consulting, finance, IT, food, hospitality, tourism, and importing in Brazil, Argentina, Chile, Colombia, and Uruguay
  • Often, foreigners make the mistake of thinking that Latin American countries have almost identical cultures
  • Mostly all South American countries have entered trade agreements that also govern different markets. The Pacific Alliance and The Mercosur governs free trade zones
  • Be prepared to become less irritated when business operations are late or take longer to complete and be more flexible with your timekeeping

We surveyed over 26 local small and medium-sized enterprises (SMEs) across consulting, finance, IT, food, hospitality, tourism, and importing in Brazil, Argentina, Chile, Colombia, and Uruguay. Asking only one question, “What are your five essential tips for anyone, local or foreign, wanting to set up a business in your country and city“. Below are the most frequent pieces of advice that kept coming up. We couldn’t settle on five so added the sixth as it was also a common survey response. 

Carefully choose your startup country and city

This advice was almost always number 1 or 2 by all our respondents. South America is vast, with 13 different countries. Often, foreigners make the mistake of thinking that Latin American countries have almost identical cultures. This could not be farther from the truth. Each country has its own distinct culture, and some are so diverse or big that different regions have entirely different cultures. Sao Paulo in Brazil is very Euro-centric, but Bahia is Afro-centric. Buenos Aires in Argentina is modern and artistic, but the Pampas (grassland) are almost rural-like and have a heavy Gaucho (South American cowboy) culture. 

When choosing the country, it’s not just the culture that defines business etiquette, norms, and customers that startups must deal with, it’s also the country’s geography. All South American countries have diverse geographies affecting the climate and infrastructure. The Amazon and Andes rainforests, protected grasslands, desserts, and cold mountainous regions across South America, will affect transportation, logistics, and infrastructure available for your business to reach more customers.

Know your market laws inside and out

This is very important for businesses or entrepreneurs who want to trade internationally and setup within big South American cities. Some countries have an extensive amount of laws governing companies and specific areas, especially those protected. Brazil has over 90 business taxes, with some only applying to companies in Rio de Janeiro specialising in tourism, or companies working in the Amazon, home to protected species and isolated tribes. 

Mostly all South American countries have entered trade agreements that also govern different markets. The Pacific Alliance governs trade in Chile, Colombia, Mexico and Peru, which all border the Pacific Ocean. The Mercosur governs free trade zones in Argentina, Brazil, Uruguay and Paraguay. Make you understand what agreements govern the market the and country you operate within. 

Learn the language

Spanish is the official language spoken most South American countries, apart from Portuguese in Brazil, Dutch in Suriname, French in Guiana, and English in Gayana. There also other local tribal dialects and world languages in specific regions. Babbel has a great breakdown of these here.

English may be the worldwide business language, but it is rarely spoken across the region. Babbel estimates, there are only 5.4 million English speakers in South America, and most of them live in Argentina (2.8 million), Colombia (1.9 million), and Guyana (680,000). Most South Americans often only speak one language. This means that entrepreneurs have to learn to speak the language to operate. Local and business partners also much appreciate foreigners that try to learn and prefer working with them.

Get friendly and personal

Throughout most of the year, tropical and hot weather means that South Americans are generally outgoing, sociable, and friendly. This translates into business etiquette. Personal relationships greatly influence business, which is often strongly linked to private life. Building rapport with business partners is often very informal. 

Partners will want to get to know you first in social and relaxed settings like going for drinks, watching a football game, food, and other social events. Don’t turn invitations down. Once the relationship is formed, this is often long-lasting and will mean more favourable prices, products, contracts, or being first to hear and get a great business deal.

Cash is king

This is changing with the growth of contactless payments, particularly in larger cities like Sao Paulo or Buenos Aires, and especially during the Covid-19 pandemic, which encouraged social distancing policies and reduced physical contact. Nonetheless, many customers and people often pay in cash for products and goods. So be prepared to do this when working with local or international partners inside your chosen country. 

Get used to the pace

A word of warning, this piece of advice is one that SMEs pointed out specifically for foreigners or expats moving to South America.

Compared to Europe and North America, the pace of life and business is slower. People and business partners may not always turn up on time to meetings, and projects or deals may take longer than anticipated to be completed. Be prepared to become less irritated when business operations are late or take longer to complete and be more flexible with your timekeeping. 

Final thoughts

South America is an excellent location for businesses. Economies and industries are thriving in many countries across the region, which could be perfect for you to startup. 

Take the next step in your journey by completing a Business Plan, or analysing your country and industry PESTLE ecosystem.

If you want to be involved in our next survey, contact our team on surveys@companyhand.com.

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