Author: Journeyman Jack Ecuador

Today is the 4th installment in the series “Starting a business in Ecuador”.

“Damn, that sucks for that guy.” I said, standing across from a mentor of mine, an older Ecuadorian friend.

“Yep, it does.” He responded in Spanish.

We were in the street looking at a sparkly new hotel finished to the tee, but vacant and empty.

The location was great in the northern part of Guayaquil. The building was nice. They must have invested somewhere around $150-200k just in the construction.

And they could have done very well.

Yet why was the place vacant?

They couldnt get their permit.

You see, in Ecuador, before you start any street-side business that will require a sign, you will need to get a permit from the local Municipality called a “permiso de funcionamiento”.

After you determine your funding source, decide on your legal business type, and get your RUC, the next step in Ecuador when starting a new business should be to get your permit from the municipal.

Most foreigners think there are no zoning laws in Ecuador, actually there are, they just may be looser than what you’re used to in your home country.

Without a permit, yes, they can shut you down.

But…

I’ve seen that on the coast of Ecuador and in the countryside all over the country it is much easier to get business permits and not as necessary as in the big cities like Quito or Guayaquil. But its still a good idea.

The permit is granted based on the tax ID number of the property (predio), so if you’re renting a place that had a previous business similar to the one you want you might already be good.

Specifically in the bigger cities, if the property is zoned residential, like the beautiful, yet vacant building I was standing in front of in Guayaquil, it could be VERY difficult to get business permits for certain businesses.

In this case, someone invested heavily in the building I was standing in front of without securing the proper permit ahead of time. Now due to being zoned residential, it was too late.

To figure out what a property is zoned for request the USO DEL SUELO of the property before you invest heavily.

Now, the use of the property or USO DEL SUELO can be changed, but it can be tedious and expensive to do so.

Money talks in Ecuador, in these cases a good lawyer with contacts just might be worth their weight in gold.

I’ve seen that if zoned correctly, most permits can be very cheap (often under $100) and usually take around 2 months to get approved.

No big deal.

The Municipal is the first place you should start. When applying for their permit they will tell you based on your business type what other permits are necessary. For instance, for a hospitality business you’ll need to pass inspections by the fire department and the environmental board besides getting the Municipal permit.

You would also need to get registered in the Ministry of Tourism, but this isn’t as urgent as the Municipal permit.

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You don’t need money to start a business.

You need balls.

It’s true, for the right idea, the money seems to appear.

I arrived in Ecuador a little over a year and a half ago… a few thousand in debt from years of travel abroad.

Upon arrival I rented a hole-of-a-room in Quito with a shared bath for $60/month.

So how’d I get the money for my first venture, an intermediate-priced hostal in Guayaquil?

I used the good credit I had established to that point in my life to apply for several low-interest credit cards.  About 6 of them. I then paid a friend to their PayPal account to turn the money on the cards to cash.  It cost 2.2% in fees but cash advances had much higher interest rates than purchases. Melbourne weekly eastern provide you this kind of updates related with business earlier.

Then I got a personal unsecured line of credit from my bank in the US for $15k.  If you’ve been a bank customer for a while just ask and you’ll probably get one too.

And I picked up a partner.  Not just anyone, but an Ecuadorian friend of mine who also happened to be a hotelier.

And off I went.

Then I sold that business after a little over a year, and started a new hotel near the airport in Quito.  

To buy the furniture, I pre-sold my product before I was open… in the form of coupons for future stays at a discounted rate.

It worked.

So well in fact my long time payment processor closed my account without prior notice cause they didn’t understand the spike in sales.  Big pain.

Then I bought most of my expensive furniture in the same places, giving me leverage to negotiate discounts and payment plans. I was not much concerned about money, as to achieve perfection in one shot I was on the GetCash website looking for a loan. I was fortunate enough to come across a personal loans canada website, wherein I procured it.

I also looked into business loans for foreigners in Ecuador.

But the options were slim to none for a new arrival.  The big banks require you spend a certain amount of time in the country AND that you have your residency before they will even touch you.

Ultimately, I did find one institution that would lend a foreigner money for a business start up… my Ecuadorian credit union… Coopera Ltda.  The Coopera typically loans money to small businesses and if you have at least a few months of deposit history with them they don’t care much that you are a foreigner, they’ll lend you money.

Plus, I mean lets face it, your buck goes a lot farther down here in Ecuador.  In the US at my age I would probably be fetching coffee for somebody spending my days in a cubicle surfing sites while planning my next vacation to Latin America.
So there you have it.  You can’t use money as an excuse anymore!  The security you feel as an employee is only an illusion.  Don’t climb the corporate ladder to an $80k a year job or whatever… start multiple income streams that co-exist without you even being there.

And Ecuador is a great place for that!

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Want to get pumped for an upcoming trip (or move) to Latin America?

Sometimes there’s nothing better than a good movie to do the trick.

Here are 12 of my top picks to really get you in the mood for Ecuador (or anywhere south of the border).

12. Yuniol – This hilarious Dominican film is based in Santo Domingo and really does a great job showing the cultural divide that separates the rich and poor in a typical Latin American culture and how the two sides interact and in this case how two college kids interact.  Very entertaining.

11. Man on Fire – This Denzel Washington film gives a great look into one of Latin Americas less attractive sides, the kidnapping trade in Mexico.  Still a great movie for the shots of Mexico.

10.  Soñar no cuesta nada – This Colombian film gives an outstanding look into the corrupt side of Latin America (Colombia in particular) when a group of soldiers finds millions buried in the jungle.  Good movie, a great peek into Colombian culture.

9. Get the Gringo – This newer Mel Gibson movie is a flick that shows the not-so-commonly-seen side of Mexico from the viewpoint of a gringo inside a jail in Mexico.  Very good movie, highly recommend.

8.  Rosario Tejeras – This classic Colombian film is an outstanding gander into the everyday life of a typical, beautiful, young woman in certain circles in Medellin, Colombia.  Very interesting.

7.  The Motorcycle Diaries – Hard not to get excited about South America when watching this film based on a trip Che Guevara took on motorcycle through South America in his youth.  Played by one of the best, Gael Garcia, this film is another must.

6. María Llena Eres de Gracia – Another excellent Colombian film, this spot gives a very real, unique look into the world of a female drug runner in Colombia.  No mistake about it, drugs have impacted Latin American culture and this film is a great preview.

5. Amores y perros – A Mexican film that is too graphic for most, this movie depicts the underground world of less affluent youth and dogfighting in Mexico.  Still gives an interesting look into mexico Hollywood could never duplicate.

4. Once upon a time in Mexico – OK, now the Hollywood action-movie version of Mexico, this film is still a fun look into what we all dream Mexico to be (and it usually doesn’t dissappoint).

3. El Cantante – A captivating film based on the real life of Salsa singer Héctor Lavoe.  I like this movie mainly for the shots of Puerto Rico and the lively Salsa scene in the Caribbean.

2. Captain Ron – Sincethis movie first came out 20 years ago, every time I watch it gets me excited for my next Latin American adventure.  Based on a typical Chicago family caught in the rat-race who drop everythig to go sail the Caribbean in a crappy boat the father inherited from a little known uncle.

1. Blow – My all-time favorite movie with a Latin American connection.  This Johny Depp movie is about an ambitious, North American entrepreneur and how he gets neck deep in the drug trade with Latin America.  OK, so he chose the wrong product (drugs), but it’s still an entertaining and almost motivating flick for entrepreneurs going south of the border.

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