Immigrants learn hard lessons doing business in S. Florida

www.sun-sentinel.com By Doreen Hemlock Business Writer Posted March 10 2003

Back in Argentina, business owner Eduardo Citcioglu operated without a credit card.

Like most Argentines, he bought and sold goods for cash or with checks, some postdated for deposit later. Few wanted credit cards anyway, since banks tended to offer them only to people with hefty collateral. And with Argentina's history of high inflation, interest rates were sky-high, often more than 30 percent a year.

So, it's understandable that when Citcioglu started exploring opportunities in South Florida five years ago, he failed to take a friend's advice and immediately establish credit. He focused on other pressing tasks: scoping out businesses and opting in 2001 to buy a dry cleaner/laundry in Davie, One Low Price Cleaners on South University Drive.

But Citcioglu is paying a price. When he bought his business, he paid a big cash down payment and financed the rest through the sellers -- at interest rates higher than at most banks. And while he now has a credit card, he had too low a borrowing limit and too little credit history to qualify for loans for a car. He recently had to ask a friend to co-sign for a car loan.

"I should have listened, but there was so much new to learn at once. Now, I understand that credit here depends on your payment record, not on your assets," said Citcioglu, 39. "When you come to the United States, it's like being reborn. You have to learn all over again."

Such woes are increasingly commonplace across South Florida. U.S. census data show that Greater Miami-Fort Lauderdale has the highest concentration of foreign-born residents of any major metropolitan area in the United States. And the immigrants tend to be wealthier and better educated than those in other areas, likely increasing the chances they'll start their own businesses.

Many missteps are predictable, however, as immigrants try to do business as they did back in their homelands.

For South Americans long used to high interest rates, mastering credit is but one common headache. Many also stumble by over-hiring, accustomed to far lower costs for labor. And too often, they act with little market research, coming from nations where business information tends to be tougher to get and more expensive than market data widely available in the United States, business consultants say.

"There's a joke going around, `How do you go back to Latin America with $1 million? Come up with $2 million and lose the first,'" said accountant María Antonieta Díaz of GBS Group in Weston, which specializes in immigrant businesses.

"I keep telling people, `This is a new beginning,'" she said. "It takes time and money to adapt. Folks have to be careful with every dollar."

Cutting the fat

Industrial engineer Carolina Rojas learned the hard way that Florida is more than just miles from Colombia, where her family makes beauty-treatment machines used in spas and gyms that lift and massage the skin and aim to reduce the appearance of cellulite.

Problems began for the family's Dermocell Inc. when an acquaintance from Colombia casually suggested he might help market the machines in the United States. But it turned out the equipment needed approval first from the U.S. Food and Drug Administration -- a process that took a year.

Unfamiliar with U.S. taxes, credit, labor laws and other business practices, the family then entrusted its U.S. start-up to a group of Colombians in Florida more experienced in U.S. business.

But that group ended up spending more on salaries and other start-up costs than the family liked. So the Dermocell group from Colombia ended that union and opted to operate the U.S. business directly.

"Our sin was confiding too much in other Colombians, because we were wary of a new system," said Rojas, 27, who splits her time between Miami and Bogota as her brother remains full-time in South Florida. "But now, we're getting advice, doing research, and getting training, so we can adapt to the U.S. market ourselves."

Helping out the Rojas family is a nonprofit group: the Americas Community Center in Weston and Miami, which helps immigrants, mainly Latin Americans, adapt in South Florida. The group has found that lots of newcomers, like the Rojases, stumble over government licenses and approvals, coming from nations where regulation and enforcement of rules tend to be less strict.

"Many times, folks successful in their home countries figure they know what to do -- until they face fines for not having the right paperwork or their business just doesn't take off," warned Colombian-born Fabio Andrade, the center's president.

Tour troubles

Venezuelan banker Alberto Sánchez-Banard learned a lesson in liability, customer protection and competition when he moved to South Florida in 1996 and decided to try his hand at the travel business.

Sanchez set up Fort Lauderdale-based Amazing Tours International to help his family market a small hotel they own on Venezuela's plains. He figured: "Venezuela's exotic. People will come."

But his South American homeland turned out to be a relatively expensive destination, with tourism networks little developed and sometimes unreliable. U.S. customers insisted on quick refunds if a taxi failed to show up or other things went wrong. Yet recouping cash from Venezuelan suppliers in the wrong proved a colossal frustration -- with customer protections far weaker in his homeland.

"When you're in Caracas, you have no idea how tough it will be," the 48-year-old banker said.

Sanchez eventually left the travel business and took a job as chief financial officer for a Latin music dot-com. But when the Internet bubble burst, he returned to his finance roots. He now owns a Fort Lauderdale mortgage brokerage, York & Goldman Mortgage Corp., and also works with several big financial groups, offering financial services largely to Latin American immigrants.

"You think it's all the American dream," Sanchez warned. "But it's not easy. If you have an accident or unforeseen problems, if you don't have insurance and lawyers, if you don't have money, it can be the American nightmare."

A helping hand

Indeed, so many immigrants have stumbled in starting businesses in Florida that there's a cottage industry developing to help the tens of thousands of Latin American newcomers.

Set to have its debut this summer, for example, is a Spanish-language guide to doing business in Florida, prepared by the staff at AmericáEconomía, the veteran Chile-based business magazine with South Florida offices. The book will cover such varied topics as visas, networking and market research, said Miami-based senior correspondent Carlos Molina, a Peruvian who also has lived and worked in Europe.

"Our goal," said Molina, "is to help Latin American immigrants navigate between two cultures."

Doreen Hemlock can be reached at dhemlock@sun-sentinel.com or 305-810-5009.