Cuba is the largest country in the Caribbean, so there are exciting possibilities.
For perspective, “Every year, the U.S. economy loses out on $1.2 billion in missed sales, according to the U.S. Chamber of Commerce. The Cuban government says it misses out on $685 million each year because of the embargo.” (Source: CNN Money)
Expanding into a new market, like Cuba, can be an effective way to leverage your core business for growth. If you are considering doing business in Cuba, when (and if) the embargo is lifted, keep these five expansion tips in mind:
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Make sure you’re thriving at home first.
If you are an established business, make sure you’re hitting key metrics (KPIs) on domestic soil before venturing abroad. Shifting resources into a new market, without proper planning, can cannibalize your brand domestically and leave gaps for your competitors to fill.
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Mitigate significant risks.
There are risks that are inherent to entering new markets—not to mention it can be costly on all fronts (e.g., time, cash, human capital, etc.). While the embargo is not formally lifted, small businesses can get their foot in the door early by establishing new partnerships and seeking out alliances in Cuba through social media and pre-existing networks.
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Do your homework.
It’s costly to succeed in a new market, more importantly to fail in one. Conduct thorough market research and keep your finger on the economic pulse of Cuba with resources like Bloomberg, The Economist, and The Index of Economic Freedom. More importantly, gain insights into the demographic makeup of Cuba. The Huffington Post suggests “Cuba has an emerging middle class. And it continues to grow and prosper.” However, the numbers are “adjusted to acknowledge the very low rate of income inequality on the island.”
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Don’t forget product-market fit.
Some industries will have a more obvious win when it comes to the changing climate in Cuba. For example, “’American companies that make consumer products … are likely to benefit first,’ said Andres Diaz, a former Obama administration trade official who now does management consulting in Latin America. ‘They’re inexpensive, and the Cuban population can’t currently afford much.’” (Source: CNNMoney) You’ll have to examine the degree to which your product or service satisfies the market. As Y Combinator’s Paul Graham says, “make things people want.” How do you achieve it? According to Steve Blank, a “repeatable and scalable sales model” will do the trick. (Source: Practice Trumps Theory)
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Learn the market, first hand.
Learn about Cuba and get the inside scoop on wants, needs and desires of residents from people who have traveled there before. These raw insights, provided on popular travel sites, like TripAdvisor, can provide invaluable data on market opportunities. Not to mention, travel sites offer a wealth of free information that can aid in your travel and future business plans. And when you’re ready, travel to Cuba. Apply for a Cuba Travel License from the U.S. Department of the Treasury and travel under Provision 564 ‘Professional Research/Meetings’ or the applicable provision pertaining to your line of business. Review the comprehensive guidelines for detail.
Ultimately, small businesses can grow and expand via international waters. The flexibility and agility of small business makes it a viable win for adventurous entrepreneurs looking for a challenge.
Read more on How to Build a Global Business.
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