Argentina: Ripe Market for Entrepreneurs

As part of our company diversification, I had the unique opportunity to look into opening up the CellAntenna market in Argentina. For the most part, many U.S. companies have been reluctant to do business there due to the country's history of economic turmoil. It is not encouraging that a few years back the Argentinean government defaulted on loans and sent their credit rating down to nothing. As a backlash, banks were unable to obtain funds to allow small businesses to borrow money to fund payrolls and projects. To most Argentinians, what we are going through with our economy now is nothing compared to what they went through. At least we have a government that can bail out the banks.

Borrowing money in Argentina is almost impossible with rates at three percent per month. You heard it -- more than 36 percent per year. So most businesses operate on a cash basis, with no mortgage capability; houses and assets in general are all paid for. Chances are when you are dealing with a company that has a factory, or their own building, you know that there is no debt! (Something to consider when looking at our current financial collapse, right?)

Entrepreneurship in Argentina is thriving. Based on my own business experience there, I discovered that there are many opportunities both in the exporting of U.S. goods and services to Argentina, and in the importing of quality products -- leather goods, for instance -- to the U.S. marketplace. The country has many well-trained workers, and there is a high level of education that equals, if not surpasses, some of our standards. Add to that a good infrastructure, safe environment, and modern atmosphere, and you have a country that is quite sophisticated.

When looking into doing business in Argentina, I would recommend that you have within your organization someone who speaks Spanish, and preferably that person is from Colombia, Ecuador, Chile or Venezuela. The Spanish spoken in these countries is very similar to that of Argentina, with some distinct slang and pronunciation differences. Although most Americans can get by with just English, you will be surprised how quickly and eager most businessmen will be to work with you if you take away the language barrier. In general, when you are dealing with a global business, having personnel that speaks the language is something that is not only respected, but is also appreciated.

The U.S. Department of Commerce has a great team of experts in Buenos Aires headed by Sylvia Yaber. They offer a Gold Key service that I highly recommend. You pay a fee for having the DOC introduce you to qualified businesses, possible customers, and government agencies. It goes a long way in having the DOC call up a business and say Uncle Sam wants you to meet someone special.

You will need a strong banking relationship as well. If this is the first time you are expanding into another country, make sure you current U.S. bank is knowledgeable enough to do business in Argentina. One of the first moves we did when we started to expand internationally was upgrade our bank. HSBC is a good choice because they have offices in almost every country of the world. Citibank didn't want our business because I wasn't borrowing any money. I only wanted to deposit! Stay away from the savings and loans, and the small regional types of banks. Chances are they will be weak on advice and procedures. That will only get you into trouble when it comes to transferring funds.

Another point to remember is not to transfer money using the currency exchange at the bank. Use a reliable currency broker like XE.com or FOREX. In Europe, XE.com provided me with the best rates that were within two percent of the actual currency rate shown on the market. We saved hundreds of thousands of dollars when we were transferring funds to our U.S. bank. Most banks nail you with 8 to 12 percent in fees.

Finally, Argentina is a big country, with pride in its beef and wine industries. Remember to always order Argentinean wines. In other countries wine is an industry. In Argentina wine is a culture. All of your business will revolve around dining! Get used to it. I know I have!

If you have any concerns about expanding your business outside of the U.S., post a comment or email me at hm@cellantenna.com. I look forward to hearing from you!

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You Don't Have to be Lucky to be Successful

Luck is no friend of mine. I am the CEO of CellAntenna, a multi-million dollar, multi-national telecommunication solutions company, and I am proof that you don't have to be lucky to be successful. As a new blogger for Inc.com's Global Business Resource Center, I have been asked to provide advice to entrepreneurs who are doing business in the global market, and to those who may be wondering how to venture into this space. My advice may be considered untraditional; I don't claim to have the "secret to success" as if there is some mystical mantra that you can chant to somehow make luck go your way. My message is simple -- luck has nothing to do with success. And, given our current economic condition, this message is more relevant than ever.

First, a little background about me: I started CellAntenna Corporation in 2002 out of Coral Springs, Florida, and over the course of the last five years, I have opened offices in Kings Langley, England, and Lodz, Poland. CellAntenna Corporation sells American made products and USA engineering services all around the world. I am currently working on establishing new offices in Argentina, Colombia, and Chile. I pride myself on helping to reduce the trade deficit and I am a supporter of free trade, especially in areas such as Colombia. My passport, I joke, has to be thicker than James Bond's!

I have always considered myself an entrepreneur. After graduating with an engineering degree from McGill University, I immediately opened my own construction company. Along the way, I have constantly reinvented myself, adapting to the changing economic conditions and the current business climate. At one time, I was an impresario bringing in shows to a small 1,100 seat theater. I was involved in senior residences, computer consulting, and the restaurant business. I just published my first book entitled The Science of Opportunity, proclaiming that luck has nothing to do with success. I provide a common sense approach to recognizing opportunities and putting them to work for you.

I practice what I preach, as I advise in my book. I am a patient person, and someone who doesn't go quickly into a bad deal, but instead who takes time to go slowly into a good one. I never look back to complain about what could have been or should have been. I instead look forward to what may be possible; my radar is always on and seeking opportunities that will help me improve.

I believe that success cannot be mathematically modeled, nor can it be simulated in a computer program. It is a measurement that you can only develop through common sense, and of course, the way you tackle opportunities. Why then, do so many people who are looking to improve their economic condition resort to what I call "snake-oil-style sales approach," where everybody tries to sell you on their own particular method of success? The book The Secret written by Rhonda Byrne, tells you to think hard about what you want in life and it will appear. Think as hard as you want, but unless you are willing to grab the opportunity and explore it, you will have nothing but your own thoughts and you will miss your chance at success. The magic here is nothing more than learning how to recognize an opportunity and then knowing how to explore it. That's my secret. Now it's yours.

Through my postings on this blog, I hope that you will get a feel for how to seek out an opportunity and how to explore that which can lead you to being a successful entrepreneur. I have a lot to talk about. Next time I will explore how I started doing business in Western and Eastern Europe, and in another post, I plan to discuss the common downfalls entrepreneurs face after they have reached a critical point in their business. Of course, you can e-mail me at hm@cellantenna.com, or post a comment here, and I will answer what I can in order to help you with your opportunities and experiences. I am quite certain that you will benefit from my out-of-the-box thinking and hopefully you will find it relevant to your own business endeavors.

I am looking forward to talking to you through my column and sharing the opportunities that it may provide for both of us.

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Small Loans, Big Results

Thanks to a microloan from half a world away, a Cambodian rice winemaker named Phal An is ready to expand her growing business.

On the day that Phal An is interviewed about her business, her modest home in the village of Damnak Sankae, Cambodia, is crowded with excited family members. Phal An is a rice winemaker in her late 50s -- and one of thousands of entrepreneurs listed on Kiva.org, a website that facilitates microloans to entrepreneurs in developing nations all over the world.

This past December, Inc.com embarked on an editorial project to cover the rapidly growing phenomenon of microfinance. As a staff, we contributed a modest sum and became lenders on Kiva.org, sponsoring a diverse group of entrepreneurs that includes Phal An, as well as business owners located in Peru, Ecuador, Uganda, Tanzania, and Tajikistan. Updates on these entrepreneurs and their businesses and how they are using their loans are being posted frequently on a new Inc.com blog called "The Kiva Connection."

The following Q&A with Phal An (pronounced Paul Anne) was conducted with the help of Jessica Young, a Kiva fellow in Cambodia, and with Ponnak Kiry Pa, who is Phal An's loan officer in Cambodia. Young has been working on the ground in Cambodia for several months to help bridge the gap between Maxima, the microfinance institution that disbursed the loan to Phal An, and Kiva borrowers in the region.

The interview questions for Phal An were sent via e-mail to Young, who along with loan officer Kiry, visited Phal An at her home in late March. Young posed the interview questions to Kiry in English, who in turn translated the questions into Khmer, Phal An's native language. When translated Phal An's answers back to English for Young to record, he referred to Phal An in the third person, acting in effect as the narrator for Phal An's story.

The interview took place at a central gathering place for the family -- a table used for cooking, eating, and sleeping. In an open, covered space in the back of the home, Phal An has her winemaking equipment set up. It is common for Cambodian entrepreneurs who live in the countryside to operate their businesses out of their homes, because it requires less start-up capital and travel expenses are reduced. In addition, family members often contribute heavily to the business and female entrepreneurs are able to stay home and care for the household while working.

Here's her story:

How long has Phal An been making rice wine?

She has been making rice wine for four years, and all of her siblings do as well. During the Pol Pot regime [1975-1979], her family went to Thailand and stayed at a U.N. camp. While there, her younger brothers learned how to make rice wine and have since taught her.

Phal An received a $700 loan funded through Kiva. What is she using the money for?

Phal An has 10 middlemen in her village who rely on her production. Often, she can't produce enough to meet the demand of all 10, so she borrowed money to buy more rice in bulk. She also used the funds to purchase rice wine from her brothers. They have only one middleman in their region, so she buys their surplus and resells it to her middlemen.

Who are her primary customers?

She sells to local middlemen who then sell her wine to small pubs in the countryside.

Does Phal An have any local competition?

There are five to six other producers in her village, Damnak Sankae. It's a large village with a population around 3,500, so the rice winemakers aren't heavily concentrated.

How long does it take to produce the final rice wine product?

The entire process takes six days and four hours.

Can Phal An describe the process?

The longest step is the preparation. For six days, a mixture of rice, water, and a chemical called Tam Bae soak in a bucket. Then, the combination is transferred to a boiler -- the first main piece of equipment. The tin boiler is sealed air tight, with only two exits (one serving as a chimney through the roof of the house, and the other as a pipe to transfer the liquid as it evaporates). A fire is lit with hay underneath the tin container, and rice husks are shoveled inside to fuel the fire. For two hours, the mixture must boil.

As it evaporates, the steam travels through the pipe to the second piece of equipment -- a clay storage container -- where it condenses. (The rice is thus left in the tin boiler, and the wine is transferred to the clay container.) This process takes an additional two hours. Tubing attachments let the wine drain from the large container into smaller jars, and from one evaporation cycle 60 liters of wine will be produced.

How much wine can she make in a day?

Ninety liters.

What is her daily income?

This is complicated, as her rice wine sales (135,000 riel/day or $33.75/day) only cover the cost of the wine production. Her family income is generated as a result of using a byproduct of the wine (the enhanced rice) as pig feed. The family owns and raises several pigs in addition to their rice wine business. Once the rice and wine separate, the leftover rice is combined with factory-produced pig feed. The combination helps their pigs grow faster so they will yield a better market price.

It takes four months to raise the pigs, and Phal An sells them three times a year at 12,000 riel ($3) per kilo. Usually, she can sell between seven and eight pigs to earn $1,680-$2,160 every four months. After covering the $50 start-up cost per pig, the family business makes roughly $400 per month.

Do her husband and other family members help with the business?

Yes, her husband and one of her sons help. They all share the same responsibilities so that if one is absent, production can continue. Often Phal An oversees production alone while her husband and son gather firewood.

What is her biggest challenge in running the business?

The biggest challenge is being able to maintain a profit relative to her increasing costs. The price of rice keeps increasing and the middlemen's purchasing price for wine isn't rising at a comparable rate. The other difficulty she faces is that occasionally, her pigs will die before she is able to sell them. Because this is where her family income is generated, the health of the pigs is critical to the family's livelihood.

What has the experience of receiving a loan through Kiva been like for Phal An?

She has greatly benefited from Maxima's services and its door-to-door policy. Maxima's home visits have saved her from spending time and money traveling to Phnom Penh. It would take 10,000 riel ($2.50) and two hours for her to make the trip. More importantly, she feels safe knowing her loans are disbursed at home and she won't have to travel carrying such a large sum.

The loan funded through Kiva has also had a considerable impact on her operations. Before the loan, she had to buy and transport rice every other day. Now, buying in bulk, she gets a better price and has cut transactions back to one purchase per month. She now has the capacity for increased production and is able to meet her customers' demand. Her production since the loan has tripled from 30 liters per day to 90 liters per day. Using the new sales, she's purchasing more rice to maintain the higher production level. She now makes more pig feed than she can use, and has generated a side business of selling the excess feed to her neighbors.

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