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Doing business in Colombia: Tips from a Medellin-based entrepreneur

Jun 7, 2013  

Doing business in Colombia: Tips from a Medellin-based entrepreneur

posted by Jim Glade     Doing business in Colombia: Tips from a Medellin-based entrepreneur

Bob Reisenweber (Photo: Joel Duncan Photography)


















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Starting a business in a foreign country will always bring challenges, but how you react to those challenges could affect whether your business sinks or swims. Bob Reisenweber, a former New York investment banker turned Medellin-based entrepreneur, shared his experiences doing business in Colombia, one of Latin America’s fastest growing economies.

Reisenweber is a University of Pennsylvania graduate who spent two years as an investment banker in New York. Fed up with the banking industry, Reisenweber decided to move to Colombia’s second city, Medellin, where he had previously spent some time. He started his first successful business two years ago, the popular Barrio Colombia nightclub, Luxury, and he has since started three other businesses in Colombia including a franchise of restaurants called Peru Mix and a line of beauty products called Sparkly Girls. According to Reisenweber, all of his businesses are profitable – Peru Mix has contracts signed to open five new locations this year, and Sparkly Girls is currently sold in 15 countries around the world.

Reisenweber spoke with Colombia Reports about some of the obstacles he has encountered and some of the lessons he’s learned starting his small businesses in Colombia over the past two years.

“Having a trustworthy local [Colombian] partner is key to being successful in Colombia,” said Reisenweber, who readily admitted that some gringos will be mad when they read this.

The Ivy League graduate first came to Colombia straight out of college to do volunteer work after the financial crisis hit the Untied States and his job on Wall Street was differed a year. That is when he met his would-be partner at his first discotheque, Inferno. Reisenweber attributes part of the club’s success to his partner’s excellent networking skills. He explained that word of mouth is a big form of marketing in Colombia and also noted that families here are big. When a friend or family member opens a new business, relatives crawl out of the woodwork to go buy from and promote the new venture.

In addition to the vast personal network that Colombian partners bring to the table, they also know more about conducting business in Colombia than any gringo could learn in 20 years said Reisenweber.

“The best thing you can do here is one, talk with someone with experience, and two, just put out the cash, get an expert, get a lawyer, get a good accountant, get someone who actually knows the ins and outs of the law here,” according to Reisenweber, who along with a partner began their first business venture, Inferno nightclub, all on their own.

“If I could do it over again, I would hire a good accountant and a good lawyer right off the bat. We did a lot of things on our own … But by doing that you’re running the risk of missing certain things on the list that you need to get done … An accountant and lawyer here is worth every single penny.”

Reisenweber’s experience starting his first club in Medellin was peppered with unexpected legal and procedural roadblocks, and he noted that access to information for entrepreneurs is still limited in Colombia.

“All of a sudden you’re doing business here and a random, very archaic law comes up,” Reisenweber said. “The United States has small business associations that really provide a lot of information and local government provides information to local entrepreneurs … Here, they’re making strides to make it more entrepreneurial, but there are still a lot of roadblocks here.” A couple of entrepreneurial organizations that Reisenweber does recommend reaching out to for information and networking in Medellin are Ruta N and Espacio.

According to Reisenweber, the entities that grant small business permits are so ”inundated and overwhelmed because there is so much capital flowing in, there are so many locals starting businesses, it’s not as organized as it should be.” He added, “It’s a little chaotic starting a business right now, but I always think that within chaos, breeds opportunity.”

The Pennsylvania native also warned of the inefficient system of transferring money from foreign banks into Colombia. He described a long, inefficient process of checks and balances to ensure that the money entering the country isn’t being laundered for drug cartels. “It’s like you have to keep going back further and further and further and there is no explanation good enough, and it’s just such a long process before they say, ‘OK this money is not laundered.’”

Despite the government’s shortcomings to support local entrepreneurs, Colombia, especially Medellin, has a very entrepreneurial culture, explained Reisenweber. Kids grow up working in the family business. An entrepreneur coming to Colombia will find no shortage of people who want to partner up. The hard part is vetting each individual to ensure that they are the right person for the job. Colombians are some of the best salesman in the world and according to Reisenweber, “They’ll sell you on a dream even if they have nothing to back it up.” It’s important to do your due diligence and investigate a potential business partner – talk with people they have done business with in the past.

The business culture in Colombia isn’t as “cutthroat” as in the U.S. said Reisenweber. However, in Colombia, things run at a much slower pace.

He warns anyone who wants to come down to Colombia and open a business right away, to come and live here first. Get a feel for the business culture and grow a network. And for God’s sake, learn to speak Spanish!

Families are the core aspect of business in Colombia and it isn’t surprising to have a potential business partner consult his or her family first before entering into a business deal. Also, Paisas (people from Antioquia, Colombia) are conservative business people, so any Americans gung ho on diving headfirst into a business upon arrival should expect to wait a while before the ball gets rolling.

“People here are some of the most friendly people you’ll meet in your life … That’s good and bad,” said Reisenweber, who explained, “I send out a Blackberry message asking for some help and I get 20 responses back. Maybe one of those is a response where someone will actually take an actionable step. People here are so friendly they don’t want to say no to you.” The Medellin businessman is quick to point out the lighter side of Colombian amiability, saying that solving disputes here is done in a much more civil manner and often out of court.

Lastly, Reisenweber said that funds are available in Colombia for small business start-ups however they are not promoted well. Once again, coming to Colombia, doing proper research, meeting people and familiarizing yourself with the business culture is paramount to being successful.

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