“Which country is the most attractive market for my expansion in Latin America?” –
“What is the best strategy to enter and conquer this market?” –
“How do I find the right partner to support my business in Latin America?” –
“What are the costs and risks involved in our market entry and how can we control them?”
If you are in charge of expanding your company’s presence in Latin America you will inevitably be confronted with questions such as these. And you will have to come up with the right answers. Every case might result in a different answer, yet there are some generally valid points that every company or investor should keep in mind when planning to do business or invest in Latin America.
Here’s what I have learned in 9 years of advising and supporting foreign companies and investors as Market Entry Specialist in Latin America:
Step 8: Let the Fun Begin: Taking the First Steps in the Market
With an approved budget and a clear timeline for your market entry, you are ready to execute and with the help of local experts you will hit the ground running. Make sure to outsource all activities that are not part of your core business to specialists so you can focus on finding the winning strategy as fast as possible. Time is money!
The question is: do you go ‘all in’ or are you the more careful type that prefers a ‘soft landing’ that allows you to ‘fail fast’ at a predictable risk and cost? ‘Fail fast’ does not necessarily mean complete failure and subsequent market exit but rather to evolve through trial and error, learn from your mistakes, adjust your business model if necessary, and once you are ready roll it out on a larger scale.
As usual, which strategy is best depends on the company, market conditions and other criteria. A large global player with the strategic objective to dominate the market and the closest competitor breathing down his neck might not even consider failing and will have plenty of funds to make its market entry work, no matter the cost. This type of company will most probably choose the ‘all in’ option.
Meanwhile, companies with a more careful approach, of smaller size and budget would be well advised to take things a bit easier and apply a ‘soft landing’ approach. This implies a more gradual market entry with a business model that can change in each phase until reaching maturity. This can mean for example hiring your first staff through an HR Outsourcing or Personal Employer Organization instead of creating a legal entity straight away. Or doing a pilot project with a showcase customer to gain real world insight into the market and get a first reference on which to build your reputation. Or using a flex-desk option in a co-working space instead of renting your own full-blown office and everything that comes with it. The general idea is to limit your budget, risk and exposure while approaching your target market gradually.
You can compare the ‘all in’ vs ‘soft landing’ approaches to marriage: either you are in an arranged marriage (‘all in’), or you start seeing each other, go on dates, then propose and get engaged before actually making the covenant of life (‘soft landing’). Personally, I am a fan of the latter.
Summary: How to take your first steps in the market
- Use local experts for all non-core business activities to hit the ground running and focus on finding the winning strategy as fast as possible.
- Choose between the ‘All In’ and the ‘Soft Landing’ approach.
- In the ‘Soft Landing’ approach, start by testing the market while limiting the risk, cost and exposure related to the mistakes you will almost certainly make.
- Stay flexible and open-minded in regard to your business model: Learn from your mistakes and adapt your business model if necessary.
- Apply the lessons learned in other markets but do not forget that each market is different and follows its own rules.
- Consider flexible solutions that are easy on your budget and limit your financial exposure during your market entry phase (e.g. personnel outsourcing, co-working office, pilot projects).
Following the 9 steps during your market entry process will bring you a big step closer to success. At Ongresso, we help you unlock the potential of Latin America by assisting you with successful market entry and long-term growth in the region.
Contact us to set up a free consultation to talk about how we can help you succeed in Latin America.
Daniel Breitenmoser is the Founder and CEO of Ongresso, a Market Specialist in Latin America who assists foreign companies with market entry and the achievement of long term success in the region. In his 9 years in Latin America, Daniel has helped an extensive list of clients across a variety of industries understand local business culture and implement their business model. His passion is to share his knowledge with like-minded people to jointly unlock the potential of Latin America. Originally from Switzerland, Daniel has found his new home in Medellin, Colombia.
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