Tag Archives: invest

Starting A Business Abroad

Standard
“Hi I enjoy your blogs, I am African-American from the States and would like some information about your experiences in Cuenca and if it is a big challenge for blacks to start a business over there. You stated your experience and I thought that was great. I want to experience the life of Ecuadorians and especially Cuenca, what must my expectations be? Is it really true that $300.00 can get you a nice place to live?  Your help will be greatly appreciated.”

__________________________________________________________

I am one of those people who does not know how to take a true vacation. Laying around beaches or passing the days completely self-indulged is an absolute challenge for me (which is one of a number of reasons why I hate cruises).  While my travel may seem random to an outsider, those in the know, know that there must be a specific interest I have in that country or city and that it is in some way tied to a business idea.

So when I travel to a new place, be it in the United States or anywhere else, I always have an eye out for the business environment and opportunities for entrepreneurship.  I also have a personal principle of not wanting to work for anyone other than myself and my clients, so I definitely try to consider all the possibilities.

That said, over the years I have realized some universal truths for doing business abroad:

  • Take your time. Doing business abroad can be a slow process and you want to make sure not to sink everything you have into a business proposition that is unteste;
  • Travel with an open mind and have no preconceived notions, because they are probably wrong;
  • Get to know a place before you start thinking of business there because what may work where you currently are, may not be feasible in another environment (this requires time);
  • Get to know the people before you put plans in place because their needs and desires may be completely different based on culture, religion, region, etc. (this requires time);
  • Keep your ears and eyes open and your mouth closed (regarding business plans).

On this last point, the minute you voice that you are interested in doing business in a place, everyone will (1) immediately know that you are not from there i.e. you are a “gringo” and (2) everyone will present you with a “great” business proposition.

On the challenge of being black and starting a business in Cuenca –  No one cares what color you are…black, brown, purple, neon blue. As a North American foreigner your money is green (yes, you too Canadians), and that is all that matters.  Anyone who runs a business has to hustle and take care not to be hustled, especially when working in developing countries.   You could be in the blackest country in Africa, surrounded by folks you think look like you…but they know you are a “gringo”, “toubab”, “pumoy” foreigner from the West, and trust that they will be first in line to take advantage of any naiveté.  Now that I think of it, that sounds just like New York.

So are there any particular challenges with being a black, North American, person, starting a business in Ecuador? Not particularly because you are essentially a black gringa/o.  What will present a challenge is language.  You will always fare better if you know the language enough to get around and to ensure surrogates are not leading you by the nose. The second challenge is finding trustworthy surrogates, which takes time because everyone has their own agenda.

Next, travel with no expectations, just go… you will never be disappointed and will almost always find something joyful.  Okay, correction. I had no expectations when I went on that cruise and I was still thoroughly disappointed…actually revolted.  So maybe “never” is too absolute, please substitute, “almost never”.

Finally, yes it is possible to find a place in Cuenca that I think is nice for $300.  The operative phrase being “I think”.  I like to be comfortable  but I have simple tastes, I appreciate zen decor and I like living with locals, like a local.  Yes, I have been known to hand wash the family laundry, but  I also require things to be clean, secure and welcoming.    Normal Cuenca apartment pricing means not living in the expat buildings or neighborhoods, negotiating stated prices, and having the ability to speak just a wee little bit of Spanish (you’ll have more leverage).

In the immortal words of Jay-Z and Pharrel (yes..I am going there)

“I’m a hustla baby, I  just want you to know –
It ain’t where I been, but where I’m about to go…”
Advertisements

A Word on Banking in Ecuador

Standard

The benefit of Ecuador being a US dollar based economy is that, for the US investor, it eliminates the inherent risks associated with foreign currency exchange fluctuations and it allows us to take full advantage of significantly higher short-term interest rates.

I am still learning about the Ecuadorian banking system and I am not an investment professional; however, if you are considering a long-term stay in Ecuador, there are some clear advantages to short-term (1 year or less) investing there.  Just compare the interest rate on your current savings account or any CD’s you may own.  The rate is probably somewhere close to zero versus 6.0% (on average) for a one year CD in Ecuador.

I have a particular focus on CDs (certificates of deposit) because I like the fact that it is a relatively liquid asset and I know exactly when my money will be available to me, without any withdrawal penalties (however, early withdrawal penalties can be about 2%).  CDs are like temporary savings blocks.  You can invest for a minimum of 30 days to 1 year and you earn interest as a reward for locking up your money with the bank for that amount of time.   The reward, or interest rate, increases with the amount of time you are willing to let the bank(s) in essence “borrow” your funds.

With Ecuadorian bank investments, CDs are a great choice because you can stagger your investment across different periods of time and in varying amounts, based on your comfort level/risk tolerance.  In addition, the minimum investment is low, $1,000 or less.  This flexibility can be a safeguard so that you know, for example, your money will not be tied up at the end of 60 or 180 days.

To understand how to calculate the amount of interest you can earn in a given period, take the following steps:

  1. Determine how much your initial investment will be, for this example let’s say it is $5,000
  2. Determine how long you want the CD in place for, let’s say 30 days at a rate of 3.50% (Banco del Austro as of Jan. 2012).
  3. Multiply your investment amount by the interest and divide by the number of periods in 1 calendar year (30 days = 12, 60 days = 6, 180 days = 2, and 360 days = 1) So,  $5,000*3.50%/12 = $14.58
  4. This means your interest earned at the end of the 30 day period will be $14.58
  5. You can then decide if you want to do another CD or just take your money and do something else.

Two final thoughts

  • The difference between banks and cooperatives is similar to the difference between banks and credit unions in the US.  Both are financial institutions offering similar products, however cooperatives (like credit unions) are governed by a different set of laws and regulatory bodies.  As a result, cooperatives may be perceived as inherently more risky and they therefore offer the highest interest rates on CD investments.
  • The requirements to open a bank account will vary between institutions. Some require only a passport, others require an Ecuadorian resident card and a utility bill.  All require you to open the initial account in person, so get to know your bank and the investment professional you will be working with, because when you are away, they will typically be able to help via phone or email.

For a list of some of the banks and cooperatives available in Cuenca, Ecuador and their respective interest rates, click on the Ecuador Investments page.

Cuenca Day 5 – In the land of Spanish

Standard

Interested in starting your own business and pursing dreams of entrepreneurship?  Cuenca may be the place for you.  Unlike the United States, there seems an economic renaissance in Cuenca.  Business seems steady, there are help wanted signs in windows and people seem to be living well. Today’s adventure in the Spanish was all about being the master of your own destiny.

Today was one of those days when we choose to be girly and get our nails done for $1.50 per person. My travel partner was excited since this is an activity we never engage in at home.

Here in Cuenca there are all sorts of businesses, from the extremely affordable to the “almost the same price as home”. That said, after are girly interlude, we were presented with the following proposition (in Spanish) –  “Why not start a new hostel?”

Start a New Hostel/Restaurant/Cafe/Shop!

  • There is a very strong tourist industry here and it keeps getting better as the reviews on Cuenca pile in;
  • North American (ex Mexico) travellers, in particular, tend to feel very comfortable and gravitate toward “American” owned businesses;
  • English speakers like to deal with English-speaking venues;
  • There is a large permanent community of expats that patronize attractive, well-run businesses;
  • Cuenca has visitors year round and profitable pricing for  you may still be affordable pricing for your visitors, relative to their home country.

Are you interested?  Well, these are the points that I was given, not by a real estate agent but by the owner of the property who happens to be one of the first Cuencanos I met here.  Now, to be fair, I have no plans on investing in real estate at this moment; nor do I have plans to become a real estate agent…just for the record.  But, I was curious.  I love seeing traditional architecture and the use of space and like, and he did make some good points.  Also, as the owner of the property, I think he was giddy about showing it to an “Americana/Gringa”.  (Yes folks, just proves the point that it doesn’t matter what color you are, if you are North American (ex Mexican) you’re a gringo…not pejorative, just a fact.)

So if you have ever considered running your own bed and breakfast, hostel, cafe, bar, etc., etc. – here are some pictures of what you can pick up for an asking price of $275,000 (which after negotiations and write downs, could be a bit less).

This slideshow requires JavaScript.

Muy interesante! A little Spanish knowledge will get you very very far.