Cuban Entrepreneur Discusses His Business Ventures and Profits: "What I Have Here Works for Me"

A Cuban entrepreneur, known as Ale, shared a TikTok video on Monday detailing the inner workings of his merchandise trading business on the island. He explained his earnings and strategies for navigating a market characterized by soaring prices and intense competition.

The business model Ale describes is straightforward: he purchases goods in Havana and resells them in his hometown, achieving a profit margin of approximately 30% on his initial investment.

"The businesses I run here in Cuba work for me," Ale states in the video. "They don't make me rich, but they provide enough to eat, to maintain my household, to support my family, and to live somewhat better than others."

He cautions that profit margins are slim because prices on the island are "extremely inflated," leaving little room between the cost price and the selling price.

Nevertheless, Ale emphasizes the relationship between investment and return: "If you invest a little, you earn a little," he summarizes.

Starting a Business in Cuba: Initial Investment and Challenges

For those interested in replicating his business model, Ale estimates that an initial capital of 3,000 to 4,000 dollars is necessary: "With three or four thousand dollars, you can roughly start a small business like mine."

One of the most significant challenges he faces is competition in the food sector, where some vendors lower their prices so drastically that they force others to follow suit, eroding overall profits.

"The competition is fierce here in Cuba," he remarks. "Many people come in with substantial capital and significantly reduce their prices. And what happens then? It forces other businesses to lower their prices too."

To counter this, Ale adopted a different strategy: maintaining "reasonable and affordable" prices and expanding his sales points across the city rather than engaging in price wars.

"I changed my strategy and started opening more points with the same prices. This way, I sell a little at each point and don't have to reduce my prices drastically," he explains.

The Current Economic Landscape in Cuba

Ale's testimony surfaces amid the most severe economic crisis Cuba has faced in decades, with independent estimates putting inflation over 220%, the dollar trading at 680 pesos on the informal market, and power outages lasting up to 20 hours a day, affecting small businesses as well.

In this challenging environment, the private sector dominates retail commerce in Cuba, accounting for 55% of sales recorded in 2024. Models like Ale's—buying in the capital and reselling inland—have become increasingly popular among self-employed individuals.

In June, the Cuban government approved reforms allowing individuals to import goods for commercial purposes and removed the 100-employee limit for private companies. These measures partially legalize practices that have long existed informally, akin to those described by this entrepreneur.