Cuba May Be Opening, But There are Big Challenges Building a Business There

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Jan 15, 2016
This article is part of a series called Editor's Pick.

Cuba is awe-inspiring and timeless.

I traveled to Havana over Thanksgiving with a team of HR and recruiting executives. Our goal was to learn more about the economic climate of a country that’s been closed to American citizens and businesses for over 50 years.

First, a little history.

When you step off the airplane in Havana, you enter a universe where time stopped. The United States severed ties with Cuba in 1962 and implemented a commercial, economic, and financial embargo. Exceptions have been made for food and medicine, but everything from cars to clothing reflects an era where John Kennedy was president and the Soviet Union was a huge threat.

However, times are changing. President Obama announced that America would re-establish diplomatic relations with Cuba, which subsequently happened in 2015. Nearly 300,000 Americans visited the island in 2015. This year, travel restrictions will ease but probably not disappear. Sources expect approximately 1 million American tourists to show up in 2016.

Challenges in opening a business in Cuba

I went to Havana wondering how an American entrepreneur would navigate Soviet-style bureaucracy and start a business in Cuba. I wanted to know how an owner or operator would train and motivate a workforce that still believes in a revolution that was fought against American allies and commercial interests over 50 years ago.

I also wondered, “How the heck are you going to feed all those American tourists?”

Here’s what I learned.

If you want to be a pioneer and open a restaurant in Cuba, it is going to cost you.

As a tourist in Cuba, there are different ways that you can eat. You can dine at a state-run restaurant or street vendor. You can also eat in an entrepreneurial cooperative where ownership rights and profits are distributed among all workers (and with oversight from the government).

Alternatively, you can make a reservation and feast at someone’s home. (The best Cuban food is at someone’s home.)

It’s slow going – especially at the start

There is no model where a franchise owner swoops in from America, opens shop, hires people off the street, and feeds all of those American tourists who are expected to flood into Cuba in 2016.

Owners and operators will need to navigate a tense intersection of government regulations, union rules, and lingering resentment against Cuban business owners living abroad. Furthermore, it means that opening up a restaurant chain and cashing in on those American tourists will be slow at first. Be prepared to hire local emissaries and spend a lot of cash just trying to figure out the rules, which will continually change.

“Forget your gluten issues — you eat what’s available.”

Once you get a permit of some kind to open a restaurant in Cuba, don’t just think you can serve chicken nuggets and jalapeño poppers. I ate at some of the finest restaurants in Havana, but depending on the growing season and what’s on the container ships from abroad, the food supply chain is quite restricted.

I’m vegetarian, so I ate lots of rice, beans and plantains. I stopped asking if my rice had chicken stock in it because, honestly, I was hungry and I didn’t want to know. So forget your vegan, soy-free, gluten-conscious lifestyle.

When you eat in Cuba, you eat what’s available.

“You serve the collective, not the customer”

Cubans are proud, resourceful and resilient. They drive cars from 1957 and create Internet hotspots by stealing wifi from government buildings. However, while there’s an entrepreneurial spirit, there is also a sense that competition is for baseball and not for business.

Nobody is better than anybody. Doctors are paid $50 a month. Being a teacher is a duty and privilege. Citizens are given an apartment and a food ration card. Your utilities are subsidized by the state.

I have no idea how franchises and owners will create compensation plans and store incentives based on customer service scores.

If the culture tells Cubans that everybody is responsible for picking up his or her trash, and some American family comes in and makes a total mess, I am not exactly sure how easy it will be to manage that conversation.

I am bullish on Cuba, however

Despite the initial concerns on the talent pipeline and cultural differences, I am bullish on the Cuban employment market and economic climate. I am also bullish on you, too.

Whether you are feeding troops on a military base or opening a franchise in Beijing, being a pioneer is not easy.

You don’t do it for the cash. (Well, at least not at first.) You go to emerging markets to blaze a trail and make it easier for the next entrepreneur. That is what makes you amazing, by the way, and it is precisely what makes you American.

Good luck, and I hope to visit your Cuban restaurant on my next trip to Havana!

This was originally published on the TDn2K blog,

This article is part of a series called Editor's Pick.