Businesses are continuously looking for ways to maximize cost savings without sacrificing quality or efficiency in today’s global market. Creating alliances with shelter companies is one successful approach that companies are using, especially in the manufacturing industry.
Most importantly, this strategy is especially advantageous for businesses wishing to establish operations abroad, who are not familiar with local regulations and wish to start operations as soon as possible.
What is a Shelter Company?
A shelter company offers international businesses a way to set up operations abroad without having to worry about local laws and regulations, including involved risks and complications of handling legal, administrative, and compliance-related matters. With this model, businesses can concentrate on their core business, such as production, quality control, inventory, and the shelter company will take care of the rest.
Key Benefits of Using a Shelter Company:
-
Reduced Start-Up Costs: Under Mexcentrix shelter services your company can save up to 40% during the pre-operational phase and up to 20% after startup. This is due to economies of scale, the already established administrative teams, and local expertise and experience that help you maximize cost savings.
-
One-stop shop: Most shelter services fully support investing in Mexico. From feasibility studies and cost analysis, site selection, company incorporation (if applicable), and visas for expatriates, to all administrative tasks upon starting operations.
-
Streamlined Administrative Processes: Shelter companies manage all local compliance requirements, such as taxes, labor laws, and environmental regulations. This reduces the need for a company to hire specialized administrative staff or consultants, resulting in substantial cost savings.
-
Labor Cost Advantages: Shelter companies manage the recruitment process, and provide recommendations on wages, benefits, and compensation packages to ensure lower turnover rates that lead to cost savings, in addition to finding employees at competitive wages.
-
Access to Established Supply Chains: By partnering with a shelter company, businesses can tap into existing networks of suppliers and service providers, reducing procurement costs and improving operational efficiency.
-
Risk Mitigation: Shelter companies assume many of the operational risks, including legal and financial liabilities. This allows foreign companies to enter new markets with reduced risk exposure.
Real-World Example: Mexico’s Shelter Program
Moreover, Mexico is a prime example of a country where shelter companies have significantly benefited foreign investors. Additionally, he country offers an attractive blend of low labor costs, a skilled workforce, and proximity to major markets like the United States and Canada.
- Labor Costs: Labor costs in Mexico are significantly lower than in the US and Europe. The average manufacturing wage in Mexico is between 50% to 70% lower than in the United States.
- Operational Efficiency: Shelter companies in Mexico, such as Mexcentrix, have a proven track record of helping businesses achieve operational efficiency. They provide comprehensive support services, including HR management, payroll, customs, and foreign trade compliance, among others.
Steps to Maximize Cost Savings with a Shelter Company
- Select the Right Partner: Choose a shelter company with extensive experience and a robust network of local contacts. In addition to a partner that offers customized solutions tailored to your specific industry needs.
- Leverage Local Expertise: Utilize the shelter company’s knowledge of local regulations, market conditions, and business practices to navigate the complexities of the new market smoothly.
- Focus on your Core Business: Let the shelter company take care of all administrative and compliance tasks, which is what they do best, allowing your team to concentrate on core business activities that drive value and growth.
- Continuous Improvement: Regularly review and assess the partnership with the shelter company to identify areas for improvement and additional cost-saving opportunities.
Therefore, for businesses looking to nearshore will take advantage of maximizing cost savings, partnering with a shelter company can be a game changer. Businesses can achieve operational efficiency by leveraging local expertise, cutting start-up costs, and streamlining administrative processes.
Furthermore, for more insights into how shelter companies can help your business, consider reaching out to Mexcentrix, exploring case studies of companies that have successfully leveraged this model. Contact us!