It is important to keep in mind that running a business in Nicaragua is not like managing a business in North America or Europe; Nicaragua has a different labor code, work ethic and business culture.
In order for a foreigner to own a business, a Nicaraguan corporation or Sociedad Anónima should be formed (see above).
We also recommend that you do a thorough feasibility study before investing. Spend several months – at least – thoroughly analyzing the potential, and getting acquainted with the country and its culture. Don’t assume that what works in the U.S. will work in Nicaragua. Check out restrictions and the tax situation. And most important, choose a business in which you have a vast prior experience. It’s much more difficult to familiarize yourself with a new type of business in a foreign country.
Remember, a trustworthy partner or manager can mean the difference in success and failure. Make sure you choose a partner with local experience. Don’t trust anyone until you know him or her and have seen him or her perform in the work place.
You will be doomed to failure if you intend to be an absent business owner. It is hard enough to run a successful business while you are here and on top of the day-to-day transactions and happenings. Doing so from abroad is near impossible.
Familiarize yourself with the labor code and your responsibilities and obligations under the law. The law is in place whether or not you are familiar with it. Ignorance of the law is not a valid defense for not complying with it.
Be sure you have enough money in reserve in case of an emergency. You should have an ample reserve of capital to fall back on during the initial stage of your business in case things get rough.
Talk to people, especially the “old timers,” who have been successful in business. Learn from them; there is a reason they are still in business and they have probably committed errors that you can learn from and avoid.
Don’t rush into anything that seems too good to be true. Trust your intuition and gut feeling at times. However, the best strategy and rule of thumb is: “Test before you invest.”
About three in ten foreigners succeed in business in Central America. For every success story, and a lot of failures (in areas as diverse as bars, restaurants, car-painting shops, language schools, real estate, tourism, bed & breakfasts to name a few). Don’t assume that business success will come easily in Nicaragua, just because there is a vast supply of labor, low operating costs and a budding tourism market. Many businesses, even those that have been well run, have failed. You have to be determined, knowledgeable, sensible, patient and flexible to succeed here. Proficient in Spanish is also a huge benefit.
If you decide to purchase an existing business make sure that it is not over priced, or failing miserably. Investigate the reasons why the previous owner is selling out. And make sure there aren’t any pending lawsuits, debts, unpaid creditors or liens against the business. Don’t buy someone else’s problems, or passage on a sinking ship.
Otherwise, purchasing a previously existing business can be a good opportunity, if you can buy a business with potential and all the required licenses and permits already in place, and a name that brings people in off the street.
Always consult with a knowledgeable attorney. Ask other successful businesses in the area of they can recommend an attorney, or warn you about others to avoid.
Finally, if you plan to invest or do business in a Spanish-speaking country you should definitely purchase Wiley’s English-Spanish Dictionary, Barron’s Talking Business in Spanishor Passport Books Just Enough Business Spanish. All of these guides contain hundreds of useful business terms and phrases. |
