Starting a Leather Goods Business in Northwest Argentina
Many people dream of moving abroad, for a better climate, to explore new business opportunities, or simply to experience life in another culture and society. A common obstacle to realizing this dream, however, is what to do for work once there. With a little vision and perseverance – and ideally some savings – there’s absolutely no reason why this obstacle should be insurmountable.
In 2010 I moved from the UK to Salta in northwest Argentina in search of space, experience and opportunity. I had been working developing property in the UK, but following the financial crisis of 2008 house prices were falling, credit was harder to obtain, and good investment opportunities were becoming rare. Predictions for the housing market were of several years of stagnation at best. With my children under the age of three, moving abroad wasn’t going to disrupt their education the way it might for older children, and new horizons beckoned.
I had visited Salta two or three times before, and loved the people, the place, and the culture. We crossed the Atlantic with just seven suitcases and the clothes on our backs. Two of those suitcases were full of children’s toys! To begin with, we rented a holiday flat for a couple of weeks while we looked for somewhere for the longer term, and little by little, we started to settle in.
I arrived knowing that I wanted to start a business, but with an open mind in terms of what sort of business. I initially considered several ideas. Salta is a popular tourist destination, and there are various Brits, Americans and other foreigners running tour agencies and hotels here. Competition is tight however, and you need to find a specialist niche. I thought about offering trips for gap year students (who spend a year travelling after finishing school), with flexible schedules combining tours, Spanish classes and volunteering, and did quite a lot of research into this idea before eventually discounting it due to low projected profit margins. Another idea was to export wine, as the town of Cafayate, Argentina’s second wine producing region, is just up the road from Salta. Thanks to recent modernization of local wine making techniques and technology, Cafayate now produces some great wines. Others were already doing this though, and I couldn’t figure out how to do it differently or better.
My parents used to travel to Argentina from time to time when I was a child, and they always came back raving about the wonderful Argentine leather goods, amongst other things. This memory resurfaced in my mind after I moved to Salta, and ultimately provided the inspiration for Estados, the e-commerce business that I set up that sells beautiful, handmade, Argentine leather goods in the UK.
There are other companies that import Argentine leather goods to the UK, but generally they buy goods produced in Argentina and then hope that they will sell well in the UK. In some cases, such as gaucho belts, this approach works; in others, less so, such as leather place mats and magazine racks for example. It seemed sensible to me to approach it the other way round, to see what sort of leather goods already do well in the UK, and then make products to compete with them using the best Argentine leather.
Crucially, I had savings, both to live off and to invest in a start-up. This gave me time, as well as saving me from having to negotiate the world of business finance in Argentina after having just arrived, which would have been challenging to say the least. All bureaucratic and financial transactions here require both a philosopher’s intellect and the patience of a saint.
Before I could even look into the financial viability of the business though, I had to find someone who could produce what I wanted to my specifications, including purses and wallets large enough to fit British notes (which are bigger than pesos, Euros and Dollars), and iPad and Kindle cases.
I approached this by persistently asking around. Saltenos are famously friendly, and one person would recommend that I talked to another, who might know another, and so on, until somewhere down the line I met Adrian. Adrian is from Buenos Aires, and has been crafting leather since childhood, as it was a hobby of his mother’s. He moved to Salta for a better quality of life compared to Buenos Aires. The Fundacion Impulsar, the Argentine affiliation of the Princes’ Trust, provided him with funds to set up a workshop in Salta. Adrian understood what I wanted to do, and produced some fantastic demos for me based on my mad, scribbled diagrams. That he was also training apprentices as part of his deal with the Fundacion Impulsar was a bonus, as my investment in Adrian also contributes in a small way to the economic development of the region.
I realized early on that I was going to need a partner in the UK. Aside from manufacturing and marketing, there would be various aspects of the business that needed someone at the other end, as a point of contact during shopping hours, and to talk to the press and retail outlets. By chance, my sister was looking for a project at the time, as her children were growing up and getting more independent, and after trawling through my business plan she also became my business partner.
Since launching almost a year ago, Estados has faced and overcome various challenges relating to doing business in Argentina. One example was that I discovered Argentine regulations forbade me from exporting due to my temporary residency visa. The answer was to register the company in the UK rather than in Argentina, as a foreign company didn’t suffer from this restriction.
Another ongoing challenge is managing the impact of the differing economic problems of the UK and Argentina on the business, low consumer confidence in the UK, and high inflation in Argentina, and the effect these have on cash flow, sales projections, and the peso/pound exchange rate.
Culturally, there’s a world of difference between doing business in Argentina and in the UK. Argentina – or Salta at least – has in this respect similarities to parts of southern Europe, where deadlines constantly shift, and people are used to lower standards of product quality and customer service. Clearly communicating my requirements and expectations, and spending time developing personal relationships with business contacts have so far proved the most effective ways to bridge this particular cultural divide.
If I had to offer advice to someone wanting to move abroad and start a new business based on my experience, it would be: find out which industries or types of business are already thriving where you are going, and identify a niche where you can add value; have finances in place in advance, both for living and in terms of a start up budget for your business; brush up on the language and quickly get to grips with local culture and business customs; and most importantly, once you know what you’re going to do, persevere with it no matter what. Every problem has its solution.
Hugo Lesser is an Anglo-South American based in Salta in northwest Argentina. In 2010 he founded of Estados (www.estados.co.uk), which sells beautiful leather goods handmade in Argentina in the UK.