I just saw the promo for a special edition of Marcus Lemonis’ The Profit.
Lemonis goes to Cuba to check out the entrepreneurial scene there. It’s airing on November 15th at 10 PM eastern.
The promos reveal a big part of the story.
The Cubans are hard working people dealing with tremendous limitations.
I can’t think of a single country that is less “small business friendly.” In the best of cases, governments leave small businesses alone, but that’s not the case in Cuba (or the United States for that matter.)
The difference for Cuban small business people is that in addition to the limitations put on them internally, they’re also the victims of what can only be called a crazy trade embargo.
By US law, American manufacturers cannot export anything to Cuba.
Here’s what that means in practice:
Havana, the country’s biggest city and main port, is only 90 miles from Key West, but Cubans can’t get anything from the US. And we’re not just talking about consumer goods.
No machinery – new or used. No parts. No raw materials. No packaging.
Nothing.
Even worse, Cuba can’t export any of its products to the US, its most logical trading partner, so even if Cubans could import materials from the US, they can’t afford to pay for them.
Imagine trying to start a business under these conditions.
But it gets worse
Like all governments, Cuba has very strict laws that regulate small business.
Unfortunately for Cuban entrepreneurs some of these laws regulate how big your business can become. For example, if you own a store, you can only own one store.
This is obviously a problem especially if you want to and are able to grow.
The theory behind not letting companies get too big is that big companies often become abusive. There’s some truth to this. Just think about the Wall Street banks or companies like Monsanto or the Big Pharma corporations.
But applying this on the level of a bakery shop owner who would like to open more bakery shops?
That’s a bit extreme.
Why is Cuba the way it is?
The answer is history. Cuba has a very different history than the US.
I hope Marcus covers this but given the limits of TV, he may not, so here goes:
First, Cuba is a small country, not even as big as Florida with a population about the size of Ohio.
Second, for for more than 400 years it was under the brutal thumb of Spain. In contrast, the Pilgrims arrived in 1620 and Americans declared their independence from England in 1776.
In a crucial time when the world became “modern” – the late 1800s – the United States was a free country while Cuba was a much-abused colony getting ripped off daily by Spain.
Third, Cuba does not have the variety or abundance of natural resources the US has.
We have oil, coal, natural gas, iron, nickel, copper, gold, silver, and hundred of millions of acres of prime farmland that can grow all kinds of crops. Resources like this are a big help when a country is trying to build wealth.
Cuba has resources too, but nowhere near as abundant. Also, because it was a colony, first of Spain, then of US bankers, its economy did not develop broadly and was focused on one export crop: sugar.
Agriculture, which is the foundation of any sound economy, did not have the chance to develop in a balanced way.
Because of this, for its entire history, Cuba has never been able to feed itself. The country’s food supply has always been dependent on imports.
Fortunately, this is starting to change and this is one area where the Cuban government is a positive force. Marcus talks to some farmers and people in the food business for the show.
Cuba gets many things right
First, many negative things we take for granted in the US – drugs, violent crime and pornography – are much rarer in Cuba than they are in the US.
Drugs are outlawed as is pornography and if you’re caught with either of them, you’re going to jail for a very long time.
Violent crime exists in Cuba as it does everywhere, but without a big drug trade it is at a much, much lower level than in the US. Also, unlike in the US, violent criminals receive very long jail sentences.
In short, in Cuba the people are better protected from violent criminals than people are in the US.
Second, the government is in control of the making of pharmaceutical products. Since the making of drugs is a scientific and medical issue – not a money-making issue – this makes a lot of sense.
In the US, we’ve allowed ourselves to become colonized by big pharmaceutical corporations.
These company’s only motivation is profit and if, in the course of making that profit, they sell things people don’t need and/or injurious to them, so be it.
Just as it has protected its people from violent crime, Cuba has protected its citizens from the Big Pharma racket.
On the medical front, even with all its extreme conomic challenges, life expectancy in Cuba is equal to that of the US and Cuba’s infant mortality rate is 20% lower than the infant mortality rate in the US.
Third, Cuba educates its young very well. It has one of the highest literacy rates in the world – higher than the US.
This is the country that Lemonis brought his show The Profit to.
It’s young. It’s hopeful. It’s willing and able to work hard.
Conclusions
The Cuban government gets a lot of things wrong, but it also gets a lot of things – a lot of very important things – right.
Imagine if the US had rich a neighbor 30 times bigger than us that had a government that was openly hostile to our development and sabotaged us economically.
That’s what Cuba has faced the last 50+ years and for 400+ year before that is was a colony of the rapacious Spanish empire.
Lemonis going to Cuba is a very smart move on many levels.
One: Cuba is hot. Now that it’s opening up, a lot Americans are very interested in it.
Two: The plight of the small Cuban entrepreneur deserves our attention.
In addition to being a good businessman, Marcus is a compassionate man and it’s clear from the promos that he’s bringing that compassion to Cuba.
Cuba is our neighbor, a neighbor with tremendous promise.
Its people are intelligent, hard working, resourceful and creative and we should be working with them, not against them.
It’s great to see The Profit shine a light on Cuba for all of us.
P.S. The System Seminar – where we cover topics like this all the time – is alive and well but only for members of the System Club. We’ve taken the annual seminar and spread it out over the entire year and put it behind a private firewall.
Easier to digest, more convenient, and a whole lot more affordable: System Club details are here.
– Ken McCarthy
P.S. For over 25 years I’ve been sharing the simple but powerful things that matter in business with my clients.
If you’d like direction for your business that will work today, tomorrow and twenty years from now, visit us at the System Club.
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