{"id":38819,"date":"2013-08-11T01:52:26","date_gmt":"2013-08-11T05:52:26","guid":{"rendered":"https:\/\/www.escapeartist.com\/?p=38819"},"modified":"2020-09-15T03:52:32","modified_gmt":"2020-09-15T08:52:32","slug":"small-business-in-ecuador-the-challenges","status":"publish","type":"post","link":"https:\/\/www.escapeartist.com\/blog\/small-business-in-ecuador-the-challenges\/","title":{"rendered":"Small Business in Ecuador – the Challenges"},"content":{"rendered":"

The Daily Brief – Challenges in Starting a Small Business in Ecuador<\/strong><\/p>\n

When considering a small business in Ecuador, it is far too easy to get excited by all the wonderful opportunities.\u00a0 It is a largely virgin market, where a variety of products and services would be brand new players, in an open arena.\u00a0 Even where existing product and services exist, plenty of opportunities exist to expand upon marketing options and to enhance service levels.\u00a0 It is a business entrepreneur\u2019s paradise, especially when one considers the nascent and burgeoning middle class.<\/p>\n

However, pour yourself a good cup of coffee, pull up a chair and let me tell you why some obstacles still remain.\u00a0 Paradise has its virtue, but a bit of vice, as well.<\/p>\n

The first concern for a small business entrepreneur in Ecuador, quite candidly, is in the process of being fixed.\u00a0 However, for larger businesses, or for small businesses in certain sectors, the process to establish a new business in Ecuador is archaic and bureaucratic. In fact, it has been a 13-step process to date.\u00a0 However, in a separate Daily Brief update, I recently noted that President Correa has ordered a streamlined operation, to include a one-step process, handled online, lasting at most…six (6) hours!\u00a0 Now, that is rapid improvement, where needed, at maximum capitalist efficiency.\u00a0 Still, I cite the concern, because until the process is fully implemented, Ecuador\u2019s new business start-up process will be a work in transition and a possible minor obstacle.<\/p>\n

Secondly, there is the language and cultural barrier of entering the market in Ecuador.\u00a0 No matter how much I emphasize it, I am always surprised by how often small businesses forget to truly address this reality in detail, when constructing a business plan.\u00a0 How will your company address communicating to a workforce and a target commercial market, which is Spanish-speaking and views the world from a Latin cultural perspective?\u00a0 Marketing strategies that work at home, may not work in Ecuador.\u00a0 Product market placement may need to be adjusted, as the local market audience may prioritize your product differently here, or may even utilize the product somewhat differently than accustomed. In marketing, one must be careful to avoid imagery or wording, which could have a negative connotation in Ecuador, but be completely benign in your home market.\u00a0 These are very real concerns, which need to be addressed in a business and marketing plan.<\/p>\n

Lastly and, likely, most importantly, how will you get your business funded?\u00a0 Just like in the real estate arena of Ecuador, there is no mortgage market for foreigners, in any consistent sense, in the business start-up arena, bank funding is non-existent.\u00a0 Traditionally, even Ecuadorian companies have been hard-pressed to obtain bank funding, let alone a start-up with foreign origins.\u00a0 Even secondary funding markets, such as \u201chard-lenders\u201d or \u201cincubators\u201d are a nascent industry sector in Ecuador.<\/p>\n

 <\/p>\n

How, for example, have Ecuadorian start-ups managed?\u00a0 Actually, the answer to that question may offer some insight as to an option that can be applied by the expat community, in order to facilitate their funding needs.\u00a0 Most Ecuadorian owned small businesses are either the byproduct of a previous successful business, whereby funds from that venture are applied to the new, or a collective familial effort of pooling financial resources together, in order to raise initial seed capital.\u00a0 In the latter example, we may find hope for the funding requirements, of the newly arrived expat, looking to fund a small business.\u00a0 A popular trend, oft overlooked.\u00a0 Just one word: crowd-funding.<\/p>\n

Crowd-funding is a relatively new funding model, perhaps quite ironically, tracing its roots to a 1997 effort, by a popular British rock band to fund its reunion tour solely based on contributions from fans.\u00a0 This then radical concept took flight and a scant 12 years later was somewhat institutionalized as a cogent and heavily promoted funding model, with many variants.<\/p>\n

In short, overcoming the funding shortfalls of Ecuador, you can crowd-fund your new business.\u00a0 Prior to departure, perhaps you can get friends and\/or relatives to pool financial resources, if you can sell them on your entrepreneurial vision.\u00a0 Likewise, you can go the informal route of targeting general market investors, via webpage…blog…forum postings, or all of the preceding.\u00a0 Perhaps, formalizing the process, you can consider the entities that now exist that help you source crowd-funding options, or directly provide crowd-funding financing.<\/p>\n

Two last options, in this sector, even less considered.\u00a0 When you arrive at your new expat destination of choice, what are you likely to find there?\u00a0 Yep…more expats.\u00a0 Many of them, like you, wouldn\u2019t mind a nice little investment or two.\u00a0 Be patient…ask around…see what the coconut telegraph of your local expat locale is telling you.\u00a0 Need a new bakery in town? Coffeehouse? Internet cafe?\u00a0 Chili joint? Consider starting one as your new small business venture and inviting the local expats to crowd-fund invest in your project. Think about it.\u00a0 You provide a needed service or product, while making some of your new compatriots a buck or two on the side.\u00a0 What could be better?<\/p>\n

Well, what could be better, of course, is why not make your new small business venture a crowd-funding operation?\u00a0 You move to your new expat hangout, knowing that just like you, many are yearning to start a new business, but are at a loss for seed capitol.\u00a0 Why not become the guy that sets up the crowd-funding entity, which provides the seed capitol?\u00a0 Your business, becomes making the entrepreneurial dreams of others, become a reality.\u00a0 What can be more satisfying, rewarding and potentially profitable?<\/p>\n

Wherever your particular business dreams take you in Ecuador, be weary that pitfalls exist.\u00a0 However, here in the new land of opportunity, those pitfalls are generally offset by staggering opportunity, especially for those willing to do their homework and think outside the box.<\/p>\n","protected":false},"excerpt":{"rendered":"

Small business in Ecuador face the start-up challenge of the bureaucracy, language and culture and financing. Here is an innovative way to work around them.<\/p>\n","protected":false},"author":308,"featured_media":38733,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","om_disable_all_campaigns":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3],"tags":[],"yst_prominent_words":[32124,1977,32118,32123,14216,32122,7731,18853,32127,32125,1732,10321,32128,32120,3915,32126,4857,32119,32121,8569],"acf":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/www.escapeartist.com\/wp-content\/uploads\/2020\/08\/Getting-Residency-In-Ecuador.jpg","_links":{"self":[{"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/posts\/38819"}],"collection":[{"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/users\/308"}],"replies":[{"embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/comments?post=38819"}],"version-history":[{"count":1,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/posts\/38819\/revisions"}],"predecessor-version":[{"id":38848,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/posts\/38819\/revisions\/38848"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/media\/38733"}],"wp:attachment":[{"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/media?parent=38819"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/categories?post=38819"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/tags?post=38819"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/yst_prominent_words?post=38819"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}