Taxes, social and employee commitments, bureaucracy, bank fees, “fiscal” (governmental audits and/or regulatory visits) and the general overall time it takes to accomplish simple tasks needs to be fully understood before starting.
If one is looking at the “Ag Sector”, we are in a grey period as of early 2011 as per the quantity of land a foreigner can own. My personal view on this is that one must look for partnerships with local Brazilians or permanent residents inside Brazil. There is a way/style that local influential Brazilians can finesse a given situation.
As an outsider, you may be taken advantage of in one form or another. The fee or charge may increase because of one’s lack of command of Portuguese, knowledge of local markets and business practices and little international business experience. The hiring of legal consult or a confidant to assist you must be done with care. They may not always be working in your best interest. To sense these types of issues, it takes a long time to get up to speed in Brazil.
The key to success in Brazil is to find a niche that does not already exist here in Brazil. This might be in the form of IP (intellectual property), value added services, liaison capacities (enhancing understanding across borders), or adding processing capacity to existing infrastructure. (Ideally this would be accomplished by providing low cost capital in conjunction with Brazil partner)
There are no easy answers for starting a new business in Brazil. From my experience watching other GRINGOS, it seems as though one must SURVIVE in order to THRIVE. From my experience, I highly recommend that one has a secondary source of income while you are setting up shop. This can sustain you during the “dry pockets” when zero revenue is coming in. I also think it is important to put in a TIME AND DOLLAR AMOUNT stop loss order on your Brazilian endeavor.
I have witnessed many foreigners fall into the “BLACK HOLE SYNDROME” in Brazil. They come with the intention of investing X dollars in Brazil with the dream of double digit returns. More often than not, the initial investment was 2X or 3X what they planned on (start up cost surprises). Murphy’s Law kicks in and the investment hits a bump in the road. Because of pride, ego, stubbornness and ignorance, the investor hires additional legal counsel to process (sue) the parties involved to recoup his investment. Time, dollars, travel, lawyers, and opportunity cost of money over time tend to bleed all parties dry.
Legal action in Brazil is not quick. It is normal for a legal action to take several years or more.
Denial, anger and frustration increase to exponential levels. Victimization and blame become common themes with the investor. Negativism about the country grows and new “Real” opportunities are missed while doing battle on other fronts. If you are reading this and do not understand the subtle hints I am giving you, you are not ready for Brazil. If you feel you can handle the landmines and are willing to immerse yourself into language and culture while learning Portuguese, give me a call. Maybe I can be of value to you. Until some of the initial hoops are jumped through as eluded to on intro page, I think further consultations are a waste of my time and yours.
There are numerous opportunities here, but prepare first.