Checklist: Doing Business in Mexico
- Know what you want to get out of an expansion (i.e., new markets, lower production costs).
- Clearly define success for the company and its stakeholders.
- Align stakeholders on the potential risks and rewards of expansion, and ensure they can and will provide the required support.
- Understand stakeholder expectations, know what they will want to do if targets are not met.
- Determine cash needs for start-up, inventory build-up, collections from customers, and operating expenses.
- Determine the timing of cash needs — all at once or several tranches over time.
- Identify funding sources (i.e., cash reserves, commercial lenders, outside investors, shareholder investment).
- Find out if there are minimum capitalization requirements and other local business start-up issues.
Look at people and resources
- Analyze current employees and resources to determine if you have the depth to commit to an expansion.
- Be realistic about the commitment of time.
- Hire the people and acquire the resources you need.
- Consider what you need from suppliers and clarify how they will support your remote operation.
- Decide who will call the shots in the day-to-day operation in Mexico.
- Determine if leadership is available within the company.
- Check out local leadership resources.
- Seek advice on important cultural differences and business customs.
Don’t forget taxes
- Develop strategies for repatriating earnings out of Mexico.
- Understand the U.S. and Mexican tax implications of your decisions.
- Set revenue and cost targets for six months, one year, two years, and five years.
- Have a backup plan if revenue falls short and/or costs are higher than expected.
- Determine who will measure results and how it will be done.
- Develop processes and controls to ensure accuracy and completeness of information.
- Determine your level of involvement with the local management team.
- Define how you are going to provide oversight to any remote operation, and what outside assistance might be helpful.
Read "Doing Business in Mexico: What To Do Before Crossing the Border" to learn more.