mexico business

Starting a Business in Mexico: What Business Owners Can Expect South of the Border

Cultural and other differences between the USA and Mexico run far deeper than one might expect. Starting a business in Mexico requires careful investigation.

George invested his savings in a U.S. franchise which he had checked out with the greatest of care. As a self-employed person, he wanted to invest in a business that could provide him with income after retirement.

George put his money into a franchise that was about to expand into Mexico. The franchisers had been highly successful in the USA, but failed to investigate the customs and culture of its southern neighbor. After a few years, George had to sell his new business at a huge loss and he never got back his investment. Why?

The answer may lie in the fact that many U.S. business people only travel abroad as short-term visitors or tourists and never come to know foreign cultures in depth, as would residents, exchange students or Peace Corps volunteers. This naturally results in a plethora of false assumptions, which can spell disaster for businesses which cross the border.

Here is a very brief sampling of differences in services and outlook which might surprise an American starting up a business in Mexico.

  • Mexican Voltage is 127 Volts. This is just high enough to “fry” many US-made products, especially electronic. Voltage regulators are de rigueur in Mexican homes and businesses.
  • You Need an Accountant. Mexico’s confusing and constantly changing fiscal laws are too complicated for non-accountants to follow. Even the smallest home businesses have accountants.
  • You Don’t Want to Use the Post Office. Mexican mail is so unreliable that all service bills must be paid by standing in line. If you want to be sure a letter will get through, you have to use an expensive courier service.
  • Appointments Require Last-minute Confirmation. An apparently “definite” plan to meet at a specific time and place is merely considered tentative until a final confirmation phone call is made just before the event.
  • Family and Friends Make all the Difference. To find a competent electrician, a good plumber, an honest accountant, and so forth, Mexicans rely on the personal recommendations of relatives and close friends. Without such a network, foreigners will fare badly indeed. Solution: marry a Mexican.
  • You Need a Factura for Everything. A factura is something like a combination receipt and invoice. In Mexico, this must be an official, numbered document issued to registered taxpayers. If you can’t produce a legal factura, you haven’t a prayer to collect monies owed you, but once you are registered, you enter a bureaucratic morass from which you can only escape with the help of an accountant (See above).

This list is not meant to be complete, but hopefully will give the reader a brief glimpse into the complicated world of Mexican business. Hopefully these few observations will bring across one main point well worth remembering: every culture is unique and every time you make an assumption, you are actually making a fool of yourself.

Investigate deeply, investigate carefully and proceed cautiously. Without a doubt, you will learn a great deal.