After spending a decade living in this generous country, it has occurred to me to write a decalogue of what, in my opinion, are the most frequent mistakes that we Latin Americans make when setting foot on North American soil. Let's see.
- Since the common Hispanic is totally unaware of how to "beat copper" in the US, he does not evaluate various alternatives when processing his immigration papers. If by bad luck you get an unscrupulous consultant, he will end up paying a lot of dollars for translations, a “chimbo” business plan, express mail, taxes and fees designed for “third world” citizens. The result is that the applicant, if not scammed, obtains an inconvenient visa for his life purposes or a visa with precarious support for renewal purposes. After one or two years, depending on the type of visa, he will be “sweating ink” when the immigration officer summons him to evaluate his file.
- In our countries, the mortgage system is practically non-existent, so homes are purchased with long-term financing much less than 30% of the price. When we arrive in the US, we are amazed that we can acquire a home with that inverted relationship, terms of up to 30 years and ridiculous interest compared to those from there. So, to take advantage of this bargain, the novice will quickly proceed, for not having local references, to cancel 30% of the price plus closing costs. Then, moving with his family to his new home, he will start looking for the business of his dreams, which will allow him to generate enough cash flow to live with dignity. Up to this point, everything would go very well if that long-awaited business was a few miles from home, but it happens that, in some cases, home and work are separated by several leagues of strenuous traffic. Then there will be no choice but to advance the alarm clock in the morning and sacrifice hours of home performance in the evening.
- In Latin America any car costs a fortune because, if the vehicle is locally assembled, the cost of imported materials makes the final product substantially more expensive and, if it is imported, taxes are responsible for putting it at a gold price. Stepping on this bountiful land, we realize that the prices and payment conditions are relatively much more favorable than those that prevail in our country and, excited, we go to the dealership that a friend recommends. As the novice does not have credit references because he does not yet have the assigned social security number, he will then proceed to acquire a vehicle in cash or, if he accepts abusive financial conditions, on credit.
- Once our figured novice has found a tremendous home and a powerful vehicle, with the remaining balance of his assets, he will then go out to look for a business that generates adequate cash flow to survive. If the amount for the initial payment of the business is not enough, the investment could be "chucuta" and, consequently, unfeasible.
- A frequent mistake made by many inadvertent countrymen is setting up a new business, starting from scratch, assuming that the behavior of the local market is similar to that of the market in their country of origin. Big mistake because here the mortality of new businesses, within the first three years of operation, is 80%.
- The consumption patterns of Latin Americans vary substantially when we drop from the Rio Grande to Patagonia. However, some romantic entrepreneurs even think that, since the US Hispanic population is around 13%, their business may depend fundamentally on these consumers.
- The reality is that Hispanics have traditionally been very trusting of the word of others, which is why they frequently venture to buy an ongoing business without first performing the due diligence of analyzing and verifying the accounting books, permits, and current contracts. I have heard several sad stories as a result of these "fast transactions".
- Many neo-entrepreneurs have the idea that when setting up a franchise they will find that they have the “peeled potato”. They do not know that the franchise, in addition to having the risks of a new business, carries the heavy burden of royalty payments that, in some cases, amount to 11% of gross sales.
- Not to mention those who want to apply "one of vividness" in terms of the declaration of income for tax purposes. The tax regulations, despite being extremely strict, allow a series of allowances and deductions that substantially sublimate the weight of the tax burden on small and medium-sized companies. Here the Internal Revenue Service (IRS) is nothing like our tax systems.
- Finally, when our character has managed to materialize his business, he could hire one or several Hispanic workers without immigration documents to achieve some "savings" by paying them lower salaries than those of the labor market. Having this "loose end" there will be no lack of a competitor or a dissatisfied client who is in charge of alerting the Labor Department to the irregularity and, consequently, one of its prosecutors will delight in granting an inspection visit.
Although they say that no one learns in someone else's head, my message is not intended to discourage or scare anyone but, on the contrary, to make my novice fellow countrymen understand that in the US one must walk "by the book", without applying many of the remnants that we bring from our beloved terroirs to local circumstances. Personally, I have learned that here the virtue that generates the greatest business results is, without a doubt, perseverance. There is no other...
*Business Broker. E-mail: firstname.lastname@example.org
Very good and useful comment, I believe from what you say that the moral would be the most convenient to Buy a business that already works taking all the precautions that it is profitable, has permanence in the market and can be improved.
Thanks, I'll take your advice.