Improved security and a high-growth economy are driving ever more people to try to fulfil their dreams — and fill their pockets — by working for themselves in Colombia. Olly West talks opportunities and prospects with some of Bogota’s entrepreneurs
A puff piece on the so-called Colombian “economic miracle” in the Daily Telegraph in February claimed that the country’s “entrepreneurial spirit” had locals “choosing” to sell goods in little stalls or on the streets.
“Old jeans and used shoes are sold alongside trinkets and food […] One seller has around 100 dolls piled up on a tarpaulin,” wrote the UK paper.
A more seasoned Bogota-resident may interpret this alleged entrepreneurial spirit as ‘selling whatever you can get your hands on wherever you can’. Yet wandering the streets it is easy to admire the ingenuity of Colombians attempting to make a living — the selling of minutos perhaps being the best example.
According to the Global Entrepreneurship Monitor (GEM), there is some truth to this portrayal of Colombia. GEM’s latest survey, published this February but covering 2013, ranks Colombia eighth in the world for “early entrepreneurial activity”.
GEM claims 23.7 percent of Colombians aged 18-64 are either “nascent” entrepreneurs, meaning they have a business less than three months old, or are “new” entrepreneurs, meaning their business has been going for between three and 42 months.
Anecdotal evidence suggests that foreigners are joining the trend. Just visit the hostels and cafés of the Candelaria, look at the team who started this very paper, or go to a Bogota Entrepreneurs Society event.
“Colombia has this can-do personality and attitude,” says Tiffany Kohl, a US citizen who helped set up the entrepreneurs society and whose list of past and present start-ups runs into double figures. “Ever since I arrived I felt everything was possible here.”
The Colombian dream?
Kohl, one of the owners of La Villa nightclub, says that while historically immigrants would go to the US looking for opportunities, “there’s nothing new in the US any more”.
An emerging economy such as Colombia, however, provides all the tools necessary to develop new ideas in a relatively untrodden territory.
“Colombia is living its own golden age now,” she says. “You can see it is modelling itself after the US and certain European countries in some ways but the market is still developing. This gives it the ability to achieve anything.”
For example, Kohl “grew up” with wifi in public spaces in the US, she says, but remembers the excitement when, what to her was a common-place phenomenon hit Bogota.
“If you are a foreigner who understands the local culture you can often anticipate trends and come in as a first mover to do something very successful. This can help develop the community too.”
The GEM survey provides further reasons for optimism. The increase in “early entrepreneurship activity”, from 21 percent of the adult population in 2011 to 24 percent in 2013, was caused by an increase in “new” rather than “nascent” entrepreneurs. In other words, the growth is not due to more Colombians attempting new businesses, but to more entrepreneurs sticking with their businesses beyond the tough first few months.
GEM says “There are better mechanisms to support this transition” from new to nascent entrepreneur than there were two years preiously.
Our survey says
Not content to take GEM’s word for it, we at The Bogota Post decided to conduct our own survey. We heard back from 59 respondents on their experience of showing their own “entrepreneurial spirit” and starting a business in Colombia. Here’s what we found.
Firstly, there’s no hiding that many of Colombia’s immigrant entrepreneurs stumbled across the country as a place to do business. Two of the entrepreneurs who replied to the survey said that “marrying a Colombian” was the reason they were in business here, while several more cited family connections. Yet once here, many find the opportunity compelling.
This was the case for Simon Terrington, who worked with international students at UK universities for 15 years before starting MAS Education. It was his Colombian sister-in-law who got him thinking about Colombia and arriving at the realisation that South America was an “untapped” market.
MAS Education promotes British universities to prospective Colombian students and advises the students on all aspects of their study trip to the UK.
“We noticed that more students were applying to universities [abroad] but weren’t getting the advice they needed,” Terrington tells us in an interview.
Indeed, as Colombians have become more able to travel abroad in recent years, so they have created a more diverse domestic market.
This is something that Carolina Salamanca is looking to capitalise on with her organic baby food Baby Faves Organics. Salamanca herself was inspired to bring the products — starting with 100 percent fruit pear and apple compotes, free of additives, artificial colouring or preservatives — to Colombia after seeing organic products in the baby section of an Australian supermarket.
“A lot of mothers who have seen similar products abroad are now looking for the same thing in Colombia,” says Salamanca. “Our business model — focused on healthy eating and organic food — has been very successful in places like the US and Europe. Now we are bringing this differentiated product to try to change the traditional values of the Colombian market.”
Yet though the market is evolving quickly, business practices may be slower. Before drafting that resignation letter from your nine to five (or should that be seven-to-six?) job, remember that respondents to our survey gave an impressive collective rant on the frustrations of setting up and running a company here.
Practical differences with business partners, bureaucracy, slow sales processes and late invoice payments headed the list of complaints. Even Salamanca was surprised at how slow certain processes were. Planning for these slow turnarounds is key, she says.
If you are ready, maybe you’ll get as lucky as Terrington, who said that setting up his business was smoother than expected.
“If you prepare yourself for it it’s not as bad as you think,” he says. “Employ local people who know how to set up a company, deal with accountants and deal with lawyers. Culturally things work very differently so it’s too hard to do alone even if you speak fluent Spanish.”
Our survey suggests that a good level of Spanish is vital if you’re hoping to make money out of your business; indeed, all the respondents who said they were able to live and save using the income from their business spoke at least “fairly fluent” Spanish, while 85 percent of these said they were totally fluent.
But another pattern in the survey’s results is more worrying: the struggles of foreigners to adapt to doing business in Colombia.
Twenty five percent of the respondents said their income was either non-existent or doesn’t cover their living costs. This is perhaps to be expected for a brand new business and 37% of those who have non-existent income have been in business for under a year. But the other 63% have had their businesses between two and five years and are still not making a peso.
On the upside, 30% said they were able to live and save – yet what was interesting in this group was the disparity of how ownership of their businesses is shared. Only two of 17 respondents in business with another Colombian fell into the ‘living and saving’ category. This stands against seven of 17 going it alone and four of nine partnered with expats.
“I had great and terrible business partners in the past and the two worst business partners I’ve had have been foreigners,” she says. “Problems with Colombians have not been about business ethics but certain cultural differences like what’s considered good service and the importance of punctuality.”
If the patterns emerging from our admittedly limited data are right and foreigners are indeed struggling to team up with locals, perhaps they fail to see the advantages of working with Colombians?
“As a foreigner it is much easier for someone to take advantage of you in business,” Kohl says. “No matter how long I stay, I’ll never know the culture like a Colombian, and I’ll never negotiate as well as one. Despite frustrations, I choose to live here and wouldn’t trade it for the world.”
Maybe it is a quality inherent in entrepreneurs the world over, but this irresistible optimism is common among Bogota’s new business owners. Now the priority is making sure this heady mood lasts.
“The market is dynamic and there are plenty of innovative products and investors looking for projects,” says Salamanca. “I just hope this is a moment that takes root long-term and allows young companies to really develop.”
By Olly West