07 Dec

8 Things to Keep In Mind When Doing Business in Brazil

8 Things to Keep In Mind When Doing Business in Brazil

Dear Reader,

Ah, Brasil! When you say you live in Brasil, it truly captivates the imagination—Brasil is a place, a vision, natural beauty, a lifestyle, a culture, a people, music, cuisine and much more. In short, Brasil is a feast for the senses.
Brasil truly is a land of opportunities that is blessed with abundant natural resources, a beautiful climate, a huge, diverse landmass and an industrious population of over 200 million. It’s a place of huge potential and home to limitless contradictions.

Thank you so much for taking the time to download the first in our series of Brasil 101 white papers. This first paper will present some of the main considerations I would consider carefully when opening a business venture in Brasil. There are so many fluffy lists out there that say very little and certainly aren’t specific to the planning and discipline required to open a successful venture in Brasil. I will try to lay out some fairly straightforward, concrete items that are essential to think about that hopefully will help formulate a plan and spark some imagineering on your part.

So without further adieu, here are the Top 8 Things To Consider Before Opening a Business in Brasil.

1.) Hope for the best, but plan for the worst

It’s important to dream big and think about all you want your venture to achieve as it expands into one of the largest and most dynamic emerging economies in the world.

But don’t kid yourself—everything will take longer and be more expensive than it would in many places. Take a systematic approach to planning and be realistic in your goal-setting so you don’t start off on the wrong foot (over budget and behind schedule).

Develop an objective, detailed business plan and schedule so you can use it as a roadmap and update it regularly.

2.) Don’t take anything personally

There are a lot of steps, complexities, bureaucracies and battles that have to be waged on a daily basis to keep things moving forward. Don’t take any of it personally because it’s not about you. Brasil is Brasil, and things will not be like what you are used to.

There’s no boogeyman trying to make your life miserable and singling you out for special treatment. Everyone has to deal with the same mind-numbing red tape! Relax and work your way through what needs to be done. Don’t get upset thinking that because you aren’t “Brasileiro” you are being singled out. Save your time and energy for more important things.

3.) Be ready to wage a daily battle on entropy and chaos

It’s the proverbial double edged sword. Unlike many places in the world, Brasil was settled by the Portuguese and much of the day to day business environment is still based on that foundation established centuries ago. Brasil, as a society, does not try to protect the idiots of the world from themselves.

There are no guardrails or waivers of responsibilities to sign every time you want to do something. While you will have incredible freedoms to do and interpret how you do business, there is a very strong cultural bias towards chaos, compared to a North American perspective. The “jeitinho brasileiro” or the Brazilian Way around rules and regulations is everywhere. Keep your eye on the finish line and make sure you aren’t drifting off course.

4.) Keep it Simple Stupid (KISS)

One of the wonderful cultural nuances here is that you greet every one of the opposite sex with a kiss on the cheek, and depending on where you are, a kiss on each cheek.

From a business perspective, applying the KISS principal, at least initially, is a great way to wade in without getting bogged down with a bunch of complexities and bureaucracies that take unnecessary time, resources and energy to keep track of. Take my advice, enjoy the kisses and keep it simple to start off.

Generally you can always adapt and change things as you get more experience and more knowledge about doing business in Brasil

5.) Get a good accountant

Taxes and business accounting are extremely complex and changing all the time. Your accountant is going to become one of your biggest assets or your biggest headaches. There are no shortcuts and there are a million different types of accountants out there.

If you are a fortune 500 firm and you want a Big 4, they are present in most big cities. If you want an intermediate size firm that is part of an international network of accountants, there are plenty of mid-size firms in capitals throughout the country. There are also plenty of very good, smaller accounting offices that are based in your city of choice.

Do your homework to understand the basics, interview 3-5 accounting firms, get references and pick the one you have the best gut feeling about. Prices will naturally be all over the place, depending on what you want or need. A couple things to keep in mind:

  • Do they have other international clients?
  • Are they fluent in English (or the language of your choice) and can produce reports in both?
  • Do they understand IFRS and complete your quarterly and annual accounting for Brasil and internationally?
  • Do they communicate well and help you understand all the filing/tax requirements in Brasil?
  • Do they have experience in your industry or sector?
  • Do they have experience with importing and exporting?
  • Do they have experience with transfer pricing?
  • Can they coordinate and administer you payroll?

6.) Communicate clearly and often, and have systems in place to verify

It’s a hands-on approach here that gets things done on schedule and budget. Just because you think that something has been agreed to or everyone is on board with the approach, doesn’t make it necessarily so.

The best way to make sure that things are progressing according to plan is to have a systematic, consistent approach with clear, frequent communications and verifiable, objective milestones. It’s very Brasilian and very much part of human nature to nod your head in agreement during meetings while in your mind saying “no way in hell.” The path of least resistance is alive and well here so be on top of it.

7.) Question everything and be prepared to negotiate

Everything is negotiable, and it’s important to do your homework so you understand how things should be done and how much they should cost. There certainly is a bias towards the “gringo pricing scheme”, where you get extra special pricing because you’re a foreigner.

Again, don’t take it personally and be open to the idea of negotiating everything, and I do mean everything. Many times there is also inertia that needs to be overcome: “We always do it that way.” Or, “That’s how much things cost.”

Don’t believe it. If it doesn’t make sense or it seems absurdly inefficient, don’t back down. Question it, poke it with a stick until you’re satisfied and be prepared to negotiate along the way.

8.) Get out and smell the roses

I have always felt like Brasil today must be similar to what the US was in the 1950s. Wide open spaces with infinite possibilities and opportunities for an entrepreneur with a vision and conviction. Get out there and visit different places and competitors. Travel and see what is going on, investigate the normal way of doing business in your sector, and map out the markets.

I’ll bet you come away with a similar feeling as me—infinite possibilities and opportunities for a business with vision to get excited about and provide growth opportunities.

I want to hear from you. If you have questions, comments or issues you would like to bring up, please don’t hesitate to get in touch.