Cuba has been sitting in the corner with its nose to the wall for quite a long, arduous and extended time out. Why? For a variety of reasons. But times are changing.
On Wednesday Dec. 17th, President Obama announced sweeping changes to our policy with Cuba. Changes that will loosen travel and trade restrictions there. In, eventually, ending our embargo--a Cold War Policy that has been in effect since 1961--the U.S. will make inroads by re-establishing an embassy in Havana, relaxing banking restrictions against the country, and ultimately making it easier for Americans to travel and conduct business there.
As a small business owner, you're likely wondering, "What's in it for me?" Here's a list of key deal points, reported by Vox.com, that will indelibly impact foreign business relations with Cuba in years ahead.
- Diplomatic opening: The U.S. will take steps toward restoring diplomatic ties with Cuba, severed since 1961. The travel ban will still be in place, as will the embargo, but the embargo's impact will be eased. And some preexisting exceptions to the travel ban will be expanded.
- Embassy in Havana: This will include the goal of reopening a U.S. embassy in Havana in the coming months. The embassy has been closed for over half a century. ...
- Easing business and travel restrictions: The U.S. will make it easier for Americans to obtain licenses to do business in Cuba, and to travel to the island. CNN reports that the new rules still won't permit American tourism, but will make it easier to visit for other purposes.
- Easing banking restrictions: Americans will be able to use credit and debit cards while in Cuba. ...
- Increased Internet access: Cuba will allow its citizens increased access to the Internet. The U.S. has long sought this as a means of increasing pressure within Cuba for democratic reform.
It seems apparent how large companies have experienced immediate gains. Share prices rose across certain industries and we'll certainly see more Cuban cigars and rum circulating in the U.S. than ever before. But that doesn't mean the big guys will have all the fun. Cuba is the largest country in the Caribbean, so there are exciting possibilities. Expanding into a new market 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:
- 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 competitors to fill.
- 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.
- 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. Huffington Post contributor Johanna Forman 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."
- Don't forget product-market fit.Some industries will have a more obvious win when it comes to the changing business 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: CNN Money) 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)
- 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, they 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.
Learn more on How to Build a Global Business at YFS Magazine.