4 Rules for Starting a Business in Mexico
“Opening up a brick-and-mortar store just doesn’t cut it anymore”
Two years ago I decided to give my life a twist. I brought upon myself the biggest challenge yet to solve — starting a business. Although, I am yet to become the businessman or the person that I envision, throughout these past two years of education, personal growth, and self-awareness I can say that I am capable of sharing my experience with you.
In Mexico, starting up is a whole different story than if you were to start in the US. When we expanded our business model from San Diego to Mexico City, it didn’t work. The barriers and struggles are different. So I want to share with you a bit of my experience venturing in Mexico and how you can start your next billion dollar business.
Solving a Problem
First and for most, you need to solve a problem. I’ve had conversations with recent graduates about how they are excited to open up their business. I understand we are the new generation and having a boss no longer works for us, but the ideas I hear are just too…ordinary. The ideas I hear from 90% of the people I talk to are about opening up another gas station, another Oxxo, another hipster bar, or another thing that already saturates the market.
Don’t get me wrong, having an idea is much better than not having one at all, but we need to understand there is a huge difference between having enough to pay the rent or having enough to make an impact in your life and the life of others. We are facing unstable markets, inflation is off the roof, and technology is growing at exponential rates. So how can anyone successfully launch a business in Mexico? Solve a problem.
Audit your daily routine and analyze the problems you are dealing with. Once you detect a problem, find out if it’s something your friends are having issues with as well. Find a solution to the problem, create a prototype, give it to your friends for free and accept their feedback. If it fails on the first run, remember it is only a prototype and that you are working towards improving the life of others — DON’T GIVE UP!
Understanding Your Market
Understanding your market goes along with solving a problem. Before launching a business you have to research your target audience. You need to know everything about them. What gets them up in the morning. What they like or dislike. How they interact with society. What their education background is. The list goes on.
Why was the iPhone a game-changer? Steve Jobs and his team understood what we needed. They understood that the world was going through a hectic technological era so they gave us simplicity. With the iPhone, we literally have everything on a touch of a button. Everything is so simple.
Take one day off from you busy routine, go out and interview people. You will never know what people need until you ask.
Technology…what a beautiful thing. You can launch a website or an app and the whole world can view your content. I don’t need to spend much time talking about technology — it speaks on its own — but for those who do not see the importance of it, allow me to speed you up to date.
- Uber, the world’s largest taxi company, owns no vehicles.
- Facebook, the world’s most popular media owner, creates no content.
- Alibaba, the most valuable retailer, has no inventory.
- Airbnb, the world’s largest accommodation provider, owns no real estate.
“Sure, whatever. I don’t need technology”
Let’s say you want to franchise a new vegan-style-modern-serve-yourself diner. You’re probably thinking that you’ll open up a few dozen diners in every city nationwide. That’s a huge business, you’ll be improving the diet of the most obese country in the continent. However, let me tell you that it only takes for your competition to build one diner in every city that is connected to an Uber-like app for vegan food delivery in under 30 minutes.
The beauty about technology is that the costs are minimal compared to brick-and-mortar businesses. The revenue margins are large enough allowing businesses to reinvest, therefore driving the competition out of business. Also, who doesn’t want the newest app in their phone!
Making a Difference
In Mexico, it is easy to see the wide social gap. The few rich have lots of money, the poor have barely any, and the small middle class is just struggling to not fall off the wagon.
Mexicans have been raised under a competitive culture — education is mainly the problem — so we grow up focusing on what others are doing instead of focusing on ourselves.
There is a reason for why the corner lot in your block is constantly opening up and closing up shop. When you open a business in a saturated market, you end up competing, driving your prices down to almost having no profit. Without profit you can’t grow and without growth you’ll either live day to day or go bankrupt.
It sounds harsh, but in order to have a successful, billion dollar business you need to make a difference. You need to add value to the market, and if you have to create a new industry don’t be scared to do so. Do not focus on what everyone is doing. Find a problem, understand your audience, execute with technology, and provide a service never seen before. This, my friends, is called innovation.
To finalize, I want to close with this…It’s easy to copy another business model, anyone can do it. It is extremely hard to invent, and start something from scratch — that is why most of us prefer to sit behind a desk where we can count on a weekly paycheck. However, I want to encourage anyone reading this post to look at all your options. Entrepreneurship is not about opening up a business, it’s about solving a problem and adding value to an economy.
Why does it only have to be Silicon Valley? I encourage you to follow these 4 steps and create the next billion dollar Mexican startup.
Agree? Disagree? Leave a comment below and tell me what you think.