Entrepreneurship can be a tropical headache in Nicaragua

Starting a small business here is a process filled with pitfalls, but it is possible to do if you are persistent, get good help and follow some simple advice from someone who learned the hard way. First in the series: ‘Challenging Innovation in Nicaragua’

Have you ever had an awesome idea? One of those ideas that you gladly stay awake for to the wee hours of the night? One of those “the world needs this” ideas?

Trying to bring good ideas to life in Nicaragua is not easy. The process sometime feels like, “Awesome idea, meet your doom.”

I’m not a stupid person. I made it through high school, graduated from a top U.S. college and have a Master’s degree from one of the best international business schools in the world. I’m 25 years old and full of ideas about how to improve my country. Yet I still can’t seem to navigate the Nicaraguan entrepreneurial landscape without a boatload of money and ethically questionable decisions.

The first few months of a small business are probably the hardest. There are many setbacks, most of which make no logical sense. In the words of Thomas Jefferson, ”I’m a greater believer in luck, and I find the harder I work the more I have of it.”

As I worked to establish my small technology startup company in Managua a few months ago, I faced so many ridiculous rules and regulations that my head was spinning. Just registering the name “Marca Labs, S.A.” as a company was a journey I never want to relive. If the direction of the company or anything related to its name ever changes, I vow to never venture back into the legal hassle of public registries and lawyer-speak.

But that wasn’t all. I calculate I’ve lost thousands of dollars and maybe 10 hours of my life due to a lawyer who never answers the phone and disappears/reappears quicker than Harry Potter. Deadlines shmeadlines! Who came up with such foolishness?

Now, after finally clearing that hurdle, I am confronted with a bank that refuses to recognize that the startup is registered legally! Four months in to this process and I still have no checkbook, forcing me to pay my staff with small bags of cash. I feel like a drug dealer, when all I want to do is make iPhone apps.

Here’s what I’ve learned, though — it is possible to make ideas happen. Making it through the legal and financial jungle in Nicaragua isn’t easy, but it’s totally possible. If you are going out on your own to explore Nicaragua’s new business landscape, you can learn from my headaches.

Here are some common blunders that I recommend you watch out for. If you can learn to manage these, the rest might fall into place.

Multiply by two and add a week

Timetables and deadlines in Nicaragua don’t adhere to the same rules that the rest of the world lives by. After a few years of working in Nicaragua, this is something I’m relatively accustomed to, but my business partner found tardiness and late work extremely frustrating. Instead of letting missed deadlines mess up your project, account for that time in your project calendar. Lower your expectations and assume everything will be done late. And don’t forget to reward (and keep!) any team members that deliver work on time. 

If only I had paid based on incentives and deliverables, my projects and iPhone apps would be ready for you to download right now! I learned this lesson a bit late, so the world will have to wait a few more weeks for my masterpiece.

Don’t go cheap on legal advice

Most small business are focused on building a great project, and they’re good at it, too. What they’re not good at is everything else related to starting a new company. Legal issues are the tangle in which that I got remarkably lost. If there is one piece of advice I’d give to a burgeoning entrepreneur in Nicaragua, it’s this: Spend the necessary money on legal advice. Bad and cheap legal advice will be much more expensive in the long run. 

I figure I’d have a checkbook and more financial security if I had paid for quality legal advice from the start. More importantly, though, I’d have peace of mind that the startup company in which I’ve invested thousands of hours and dollars is secure and stable.

As with most things in life, there is a definite upside to the difficulties. Navigating the entrepreneurial world in Nicaragua does have its bright and fascinating benefits, some you wouldn’t even imagine. Here are some of my favorite things I’ve learned about this beautiful country:

Great (and underappreciated) talent in abundance

At my startup, we are determined to build everything we are working on with Nicaraguan talent based in Nicaragua. We could choose to grow outside of the country, but we are committed to seeing what can be done here. There is amazing talent throughout Nicaragua, and it isn’t necessarily concentrated in Managua. I found my star designer on Twitter—he lives in Estelí somewhere. When you find talent here, hold on to it.

Everyone knows someone who knows that other person you need

Nicaragua may be a small country, but it’s a strong one in its sense of community and social network. At every turn, I met people who happily connected me to clients, mentors, and even competition that proved crucial in my journey. Most people are eager to help, once they know what you’re up to. (Note: Beware the naysayers and the grumpy old men. They exist, but they’re also easy to ignore.)

Most people I’ve encountered are relieved and excited to hear about something new and innovative ideas happening in the country. And most will try to help as much as they can. I found that, as long as you are helpable and explain your needs, people are happy to lend a hand — and a connection.

The good comes with the bad, however, so it’s up to each person or team to tough it out. Making it through requires a dedication to the project that outlives any setbacks and delayed deadlines that are unfortunately all too common in Nicaraguan culture. Whenever I hit one of those roadblocks, I return to Jefferson’s wise words: word harder, find more luck.

So to all the burgeoning entrepreneurs and small businesses out there, keep on truckin’.

 

Marcella Chamorro recently released a book on authenticity in marketing, titled To Be or Like to Be, and she also writes for her blog on lifestyle & marketing. She is a blogger, speaker, and consultant based in Managua, working on developing technologies to help people be more creative. 

 

  • http://www.elportonverde.com Mike @ Farmstay El Porton Verde

    Excellent article and thank you for sharing your lessons learned. Also, great work with BlogsNI. I was not able to attend the BlogsNI conference but in keeping up with some of the tweets, the participants got a lot out of the event. cheers, Mike @ Farmstay El Porton Verde

    • http://www.marcellachamorro.com Marcella

      Thanks, Mike! BlogsNI was fun, and I think TEDxManagua will be another great event for the community. Will you be around for that in September?

      • http://www.elportonverde.com Mike @ Farmstay El Porton Verde

        Yes, wow I did not now a TedX was going to be held. I definitely would like to be a part of that, those are fascinating events!

  • http://www.nicaragua-guide.com Darrell Bushnell

    Good, relevant article and even better to hear this from a young person. I hope you will follow this up with another article on some details of starting a business in Nicaragua. There are so many opportunities here but the obstacles can be daunting.

    • http://www.marcellachamorro.com Marcella

      Daunting is an understatement. I can’t tell you how many times the frustration has gotten the best of me — but then something great happens, and the setbacks melt away (for a little while). My staff has been a great motivator, actually. Working on fun projects with them makes the hassles easier to handle. Cheers, Darrell!

  • Robert Smith

    It’s great to hear stories like yours and I think Nicaragua is worthy of a person such as you. Keep up the good work and let’s hear more of your adventures.

    • http://www.marcellachamorro.com Marcella

      Thanks so much, Robert. I hope my projects end up helping more and more great talent find worthy jobs, too. It’s been very fun to connect with talented individuals in truly unexpected places.

  • Henkel

    Excellent description of what it takes to get a business formed and off the ground in Nicaragua. And this is for a CITIZEN! Only thing I would add is if you are a resident and not a citizen, multiply by 8 and add 4.

    ProNicaragua should stay focused on helping entrepreneurs in Nicaragua to kick start their ventures – there is amazing talent in the country that is going untapped on a global level because of so much red tape and outdated processes…

    • http://www.marcellachamorro.com Marcella

      Entrepreneurship definitely is too difficult in this country. If there was a legal firm focused on small businesses, I’d be their first client! I imagine low-key services for lower rates. The red tape is…exasperating. Cheers, Henkel!

      • http://www.bpn.ch Luisa

        Hi Marcela, I work for a local/international office helping SMEs in developing countries (entrepreunership, traing and coaching), part of it is legal advise. Feel free to get in contact mduron@bpnnicaragua.org

  • http://resolutionspc.blogspot.ca/ Terence

    Thank you for sharing your experience concerning your business start up. I have been researching opportunities to invest in your country. Your article gives me a much greater understanding of the business and support services culture. Looking forward to visiting your country with in the next year. Best of success with your business.

    • http://www.marcellachamorro.com Marcella

      Thanks so much, Terence! I hope you take into consideration both the good and the bad in your decision. Having the right team, though, is invaluable. Cheers and the best of luck!

  • Edgard Cruz

    Good article! I think I should have written a similar article some years ago so no one else would have gone through the same pain, although I don’t have good writing skills. It will be good if you can translate into Spanish to help more Nicaraguans entrepreneurs.

    It is sad to hear that nothing has changed since I went through all this 7 years ago. In fact 7 years ago the government had an office called VET (Ventanilla Unica del Inversionista) where you could do all the legal work to establish your corporation, even though you could do the paperwork for several offices such as DGI, Alcaldia, Registro Publico, Mific, it still used to take some time. I’m not sure if this office still exists. I’ve seen that current government is doing a great job on bringing foreign investment to the country but I don’t think they are promoting the local start-ups.

    Fortunately we did not have troubles with lawyers. I know there are some lawyers who even recommend unethical practices. What I totally regret is not hiring a recognized firm to get advice on Accounting, Taxes and Labor Law. There are some tax incentives for start-ups that we did not know about until it was too late.

    I would advise any entrepreneur that doesn’t have a background in financials or accounting to take a course. I did not know a thing about accounting when I started my company; finally I ended up taking a 3 weeks course that was worthy every single penny.

    Hiring an ethical and experienced accountant is very important. If your company is too small and doesn’t require a full time accountant, it’s better to hire a firm to take care of it. Having nice and clean financial statements would be good if at any point your company is interested on a loan or VC investment.

    Developing a relationship with a bank it’s very important. It’s good to introduce yourself to a branch manager and talk about your business and needs, they can also help you to speed things up with legal departments. Legal departments from every bank always find an excuse for delaying the process. . It’s a shame that financial institutions only lends you money if you have an asset that covers the loan amount, forcing entrepreneurs to use personal assets (house or vehicle) as a guarantee.

    If you have been luckily to find good talent, retain it. Good programmers are very difficult to find.

    Finally, don’t let these things make you lose your passion for what you do and for what you want to accomplish with your company.

  • vero neira

    Very inspiring words, I will keep all this advises in mind. I wish there was free consultants in this kind of topics. Thank you.

  • Edwin A. Mendieta

    When I started reading your article I thought that you were not making justice to the real business environment, which although it presents many challenges, currently, it is probably the best in Central America (I can tell you from my cross-border experience). I was really pleased when I finished reading it because this is exactly what you transmit to the reader; nice way to wrap it up. I also liked that you recognize the importance of getting “good” lawyers on board from the start.

    Slds, Edwin A. Mendieta

    • http://www.marcellachamorro.com Marcella

      Gracias, Edwin. There’s always good and bad, no? The only way to represent the true environment is to accurately tell the tale of both. Cheers!

  • http://www.therealnicaragua.com Randall

    Good for you and your continual battle.

    Remember the tougher the battle the sweeter the reward.

    I personally wish you much success.

  • http://nxtarrow.com John Howell

    My sympathy. It’s much easier to start a business in Buffalo, NY, USA, and your launch expenses can be waived or deferred for a year. I’d love to have you visit us and see what we’re doing here.

  • http://tigerstudiodesign.com Jon M

    Marcella – Nice article! Thanks for sharing your experiences. I am working with a young entrepreneur in Esteli, Nicaragua. Would you be willing to speak with us about our business? Our partner just graduated from UNAN. He could use some good advice. We will be in the area soon. Let me know and maybe we can connect.