How to start a business in Colombia: 5 things you should know

Colombia is fast emerging as a top spot for entrepreneurs, thanks to its strategic location, booming economy, and skilled talent pool. Thinking about setting up shop there? Here are 5 essential tips from our local business experts to help you launch your dream venture in Colombia.

Why Colombia should be your next business destination

As the fourth-largest economy in Latin America, Colombia is a hotspot for investors and a land of opportunity for entrepreneurs. Micro, small, and medium enterprises, which make up a whopping 99% of all businesses, are the main drivers of growth, innovation, and jobs in the country.

Colombia’s location near the Panama Canal makes it a gateway to diverse markets, linking North and South America and offering direct access to booming Asian markets. With connections to over 60 countries, entrepreneurs can reach 1.5 billion consumers. Plus, Colombia’s trade deals with big economies like the European Union, the United States, and Canada mean lower tariffs and easier entry for global businesses.

The country offers investment opportunities in tech, renewable energy, agriculture, and manufacturing. Cities like Bogotá, Medellín, and Cali are emerging as bustling tech and start-up hubs, with skilled professionals and supportive business climates. These cities offer business parks, accelerators, and start-up centres, where companies can connect, get mentorship, and plug into the entrepreneurial community.

The Colombian government backs entrepreneurs and foreign investors with various programmes. Each region hosts councils for small and medium enterprises, which bring together local and national governments, business groups, and chambers of commerce. Public agencies like INNpulsa and Ruta N help businesses grow, secure funding, and expand their networks. Colombia offers incentives for green projects, tax breaks in agriculture and renewable energy, and special tax rules for major investments. Plus, with a digital nomad visa, remote workers can live and work in Colombia for up to two years.

5 tips for a successful business in Colombia

1. Do your research

Thorough market research is key to understanding the Colombian market. 

Look into market trends, consumer preferences, and cultural norms to make sure your business meets local needs. Here are three key areas to focus on:

• Market trends. Start by exploring Colombia’s economic outlook, industry growth sectors, and consumer spending habits. Tools like Euromonitor International, Mintel, and Statista publish regular reports on Colombia’s industry, demographics, and market forecasts.
• Consumer preferences. To grasp Colombian consumer preferences, go beyond demographics. Dig into what features local consumers value, how brand-loyal they are, and which channels they prefer for shopping. For example, ecommerce is growing fast in Colombia, with the market projected to reach 6.9 million online shoppers by 2029.
• Cultural nuances. Colombia’s culture shapes how people shop and consume. Knowing these nuances will help you tailor your products or services to local tastes. Family gatherings, for instance, are a key part of Colombian life, so if you're in food delivery, offering family-sized meals or group deals could make your service more appealing.

2. Understand the legal and regulatory framework

To run your business smoothly in Colombia, it’s important to understand the country’s legal and regulatory framework.

Here are key areas to focus on:

• Registration procedures. Different business structures, such as sole proprietorship and simplified society, require specific registration processes with the local Chamber of Commerce. The Ministry of Commerce, Industry, and Tourism website offers step-by-step guidance on the registration process.
• Tax obligations. Colombia’s tax system includes national and regional taxes such as income tax, value-added tax, and sector-specific levies. To avoid surprises, consult a local tax advisor or refer to resources like LexisNexis for up-to-date tax information.
• Labour laws. If you're hiring employees, get familiar with Colombian labour laws. These cover minimum wage, working hours, vacation rights, severance pay, and more. The Ministry of Labour website is a reliable source for details and compliance tips.

3. Explore financing options

Securing funding is vital when starting a business. Here are three common ways to get support in Colombia:

• Government grants. Colombia offers grants through programmes that support innovation, entrepreneurship, and industry growth. Check out institutions like Bancoldex, the country's development bank, and ProColombia, the national export promotion agency. Each grant has its own criteria, so be sure to check if your business stage, industry, and goals match the requirements.
• Loans. Major banks like Bancolombia and Banco Davivienda offer business loans. To qualify, you'll need a solid business plan, clear financial projections, and possibly some collateral. Microfinance institutions such as Promigas and Fundación WWB offer flexible, smaller-scale loans and often focus on supporting local entrepreneurs.
• Venture capital. If your business has strong growth potential, venture capital can provide larger funding. Investors typically look for businesses with a proven track record, a strong team, and a clear path to profit. You’ll need a compelling pitch deck that highlights your business model, market opportunity, and growth strategy.

4. Mitigate risks

Colombia’s dynamic market offers opportunities but also challenges for entrepreneurs. Here’s how to handle key risks:

• Political instability. Stay informed through trusted news sources and local business networks to manage uncertainty. If possible, spread operations across different regions to reduce the impact of local disruptions.
• Regulatory changes. Keep an eye on legal updates from the government and industry bodies. Work with a local business lawyer to stay compliant and join trade associations that advocate for business-friendly policies.
• Security threats. Boost safety with security systems, employee training, and strong local connections. Stay informed on current risks and collaborate with local law enforcement and community groups.
• Economic volatility. Colombia’s economy fluctuates, and that can affect small businesses. Prepare financially with strong cash flows and reserves. Diversity your customer base across industries or regions to manage sector-specific downturns.
• Corruption. Corruption can harm businesses through bribery and unfair competition. Adopt strict anti-corruption policies, vet partners and clients for integrity, and train staff on ethical standards.
• Infrastructure. In some areas, poor roads or utilities can slow you down. Choose locations carefully, plan for backups, and use digital tools to boost efficiency.

5. Build strong relationships with local stakeholders

Building strong connections with local partners is essential for success in Colombia. Here’s how you can do it:

• Join industry trade shows. Trade shows are great for networking, showcasing your products, and staying on top of industry trends. For example, Colombiatex de las Américas, held annually in Medellín, is one of Latin America’s largest textile and fashion trade shows. Expo Agrofuturo is a key event for the agriculture sector, while Expoartesanías spotlights Colombian handicrafts like pottery and weaving.
• Use business-to-business online platforms. Platforms like Connect Americas help you connect with trusted suppliers, distributors, and partners across Latin America and the Caribbean. They also offer useful resources like articles, webinars, and podcasts.
• Join industry associations. Organisations like the National Business Association of Colombia (ANDI) and the Colombian Association of Micro, Small and Medium Enterprises (ACOPI) host events, offer insights, and provide regulatory updates. Some even offer sector-specific training programmes, like Fedesoft for the IT industry.
• Work with a chamber of commerce. Chambers like the Colombian Chamber of Commerce or AmCham Colombia provide access to networks, market insights, business development programmes, and internationalisation support. You’ll also boost your brand’s visibility, build trust, and be part of a community that backs your business interests.
• Partner with Enterprise Europe Network. Enterprise Europe Network Colombia, managed by Impact Hub Medellin, helps small and medium businesses innovate, expand globally, and build strong partnerships. It connects Colombian and European companies, offers advice on EU funding and regulations, and hosts workshops on business development. The Network’s business advisers work closely with the Delegation of the EU to Colombia, chambers of commerce, business associations, universities, and innovation hubs. Since launching in 2022, the Network has helped over 90 companies expand and find international partners.

Interested in how the Network can support your business? Contact your local contact point today!