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Ten Tips for Starting a Business in Mexico

Updated 6 Oct 2011

After starting a business in Mexico and running it for 10 years, you’d think you’d be an expert, but I'm afraid myself and my husband, Kim, still feel like beginners.

We live in the area of the Costa Maya, a region north of the little cruise ship destination of Mahahual, Quintana Roo. Those that find their way here are charmed by the Caribbean and the jungle that rushes to meet the waters, and are often lured back year after year by fond memories.

We run Mayan Beach Garden Inn and restaurant, a hotel and eatery that we built up from bare ground. Along the way, we learned from making every mistake possible – most of them costly; as the area is new and there haven’t been very many mentors around to help us.

What follows are the lessons taken from starting a business in Mexico, and even if you don't own a business, the information below can be of value. Most expats will find themselves as business clients or in the position of hiring a caretaker at some point, and the principles are the same.

10 tips to starting a business in Mexico

1. Ask questions

Always consult with multiple sources, and ask lots of questions when you are looking for information. Maybe you have already discovered that Mexicans (at least here in Quintana Roo) will tell you what you want to hear. Also, be wary of the information found via certain resources, like Internet message boards.

I can’t stress how important it is to make pointed enquiries. For example, we had an experience in which we hired a carpenter to put in some windows and doors. The woodwork arrived and was beautiful. To our dismay, we not only found that the estimate didn't include installation, handles, locks or hinges, but the carpenters had not brought tools nor enough labourers to complete the job. When we made the order, we made far too many assumptions about what it included without asking key questions.

2. Find an accountant you can learn to love

This is harder than it sounds, but it may be the most important choice you make as a business person. It took us three attempts to find our accountant, Jose. When previous "Contadors" were referred to us, we didn't know the right questions to ask.

A foreigner doing business in Mexico works under different documentation rules than a national. There are additional forms that have to be filed, and the immigration laws and documentation requirements change yearly. Most people starting a business in Mexico are primarily worried about an accountant's honesty. This is important, of course, but if they are incompetent in knowing the tax laws that foreigners face – it could cost you an exorbitant amount of grief, if not money.  

3. Don't expect bills

When you agree to services with someone, don't expect them to contact you for payment, they expect that you’ll make payment without a reminder. Expats often unintentionally hurt a Mexican's feelings because they forget about a bill.  

If you have a good business source, don't offend them by putting off payment. You could find yourself looking for a new supplier (heaven forbid that person is the accountant that you love!).

In Mexico – it is your responsibility to know when it is time to settle an account without receiving a bill. You probably already know that one pays their property taxes here at the beginning of the year. Although no one in Mexico receives a bill for the tax, everyone knows that they must go and pay them. 

This form of not receiving bills extends to many things, including car insurance. Keep a calendar for important bills. This is something you can't always expect your accountant to advise on.

4. Be patient

Mañana does not mean "tomorrow"; it means "just not today." Take this as a mantra to live by in Mexico, or you risk forever being disappointed.  

To the majority of craftsmen and businesses in the Costa Maya, time is relevant only to today. You must help your vendors by creating deadlines. Set a date for delivery of goods and services, and confirm it in writing. 

A verbal date of "two weeks" or 15 days is not something you can count on. When pushed, if they have to write down a delivery date and sign it, most will think a little harder about the date. Show the vendor the calendar too, so they can see that 15 days might land on a Saturday, and, oh... by the way... that 15 days included two weekends and a holiday that they didn't consider (let alone a cousin's 15-year-old birthday). If time is critical – follow through regularly to make sure things are on time.

5. Research your communication strategy

Find out the best way to contact your Mexican vendors and clients. Don't assume that they will read your carefully drafted email invoice. Although they may have an email account, they may only check it when they feel like it, or when they can stop at a friend's house to use a computer.

They are far more likely to respond to you on Facebook or via text message.

This is something many foreigners don't take the time to find out, and it’s often wrongly assumed that the vendor or client doesn't want to work with you or has left town.

6. Know the law

Assume that all rules and regulations pertaining to your business must be obeyed. This is not the "wild west" where anything goes, but sometimes it is difficult to know what the rules and regulations are.

Foreigners may watch as their Mexican neighbours seemingly do what they want without any regard for certain laws, but while the nationals may get away with it at least for a while, the foreigner most likely will not.

Rather than get fixated on the fact that it isn't fair – use all the skills, education and abilities that brought you to Mexico, learn the laws and do your best to follow the rules.

The wonderful accountant you took so long to choose can really help you in this respect. They often have a vast network of skilled clients that can help you navigate the legal system. If necessary, consult a lawyer, especially when it comes to contracts. Lawyers are inexpensive as compared to the US and Canada, so don't wait until you are in trouble.  

7. Pay social security on your employees

You could be opening up yourself to troubles later if you don't. Work with your accountant to minimise the taxes you need to pay, and if you value your employees, you will be happy to give them this benefit. It supplies healthcare, some retirement and workman's compensation, plus makes them eligible for low-cost and subsidised loans on major purchases, such as homes and appliances. 

A good employee will stay longer if you pay this for them. Think of it as insurance you don't want to be without. If an employee were injured at your place of business, and she wasn't covered, you could be responsible for her healthcare and compensation, potentially for the rest of her life. 

8. "The worker is not your friend."

This is one of the hardest lessons I've learned. I have employees who have worked for me for several years and I love them, but my accountant Jose keeps telling me this. Just because you love them, doesn't mean they won't try to file a demand against you when it comes time for them to move on. There are a tremendous number of labour laws in Mexico, and it is important to know the ones that will keep you out of trouble.

We have been sued by workers because we were trusting, ignorant of the law, and because we didn't understand the culture of work. For most employees, work is a job, not a career, regardless of what they think about you personally.

For example, in Mexico, when a person quits, it is mandatory to pay them any accrued holiday and Christmas bonus. If you fire them, you must also pay them severance. This is similar to rules in other countries. The difference in Mexico is that they might quit and then make a legal claim that you fired them unjustly. If you don't have any proof that they quit – they will win in mediation, claiming you are lying.

Moral: Learn the labour laws, especially when it comes to money. Find out from your accountant what you can do to protect yourself, and when it happens (and it will), take it as a lesson learned and move on, after all, employee issues are universal.

9. Get to know your vendors and clients

Trust is established over time, by familial relationships and over a meal between friends. If you are the vendor, take the time to go out to lunch, shake hands and ask questions about the other person's family. Invite them to your home and social gatherings. A Mexican trusts and does business with those who are friends.

10. YOU are responsible for your business

I can't speak for other countries, but in the US, we expect things to function a certain way, and we expect people to follow through when delegating authority or when paying someone to do something for us. Our business depends on it, and when it doesn't happen, we feel justified in blaming others. It doesn't necessarily work that way in Southern Quintana Roo, Mexico, and my guess is it isn't that different in other parts of Mexico.

If you arrange with someone to do a task for you and that task doesn't get done – YOU are responsible because you didn't go with that person to make sure it got done.

Above all else, don't get discouraged. We almost quit several times the first three years – mainly because everything was so foreign to us. Now I can't see myself going back. We love Mexico, the Mexican people and have found a way to make a living here, despite the challenges. You will too!

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