Top Mistakes Expat-Owned Small Businesses Make in Costa Rica

We’ve been part of the expat community in Costa Rica for over 4 years now, and we work closely with many expats who are starting small businesses. Over the years we have also attempted quite a few small businesses of our own, and seen friends and acquaintances go through multiple business ideas as well. We always say that Costa Rica is an entrepreneur’s dream land, because there are so many opportunities in this developing country, and a booming tourist economy. But you have to take some things into consideration that may not seem obvious at first if you want your business to succeed.

Here are the most common mistakes we’ve seen:

1. Thinking what works in the U.S. will work in Costa Rica.

It’s true that certain business trends that took off in the states are now taking off in Costa Rica, too. With such a large expat population and influx of tourists, it seems obvious to start a business that caters to foreigners’ tastes. But you can’t forget about the differences in lifestyle, climate, accounting for import tax, the swing from high to low season, income and spending habits. For example: poutine is super popular in Canada, right? Well, no one wants a plate of hot greasy french fries and cheese curds covered in gravy when it’s 99 degrees out. Or an online store? Well, the postal service isn’t known for it’s reliability (there aren’t even proper addresses in Costa Rica). Delivery service? Gas is expensive here, things are quite spread out in most areas, and coastal roads are often bumpy, unpaved, or interrupted by a rushing river. Take time to consider your target market and all the factors that will contribute to your business running smoothly.

2. Living like you’re on permanent vacation.

This is a big one! Countless numbers of people come to Costa Rica with a business dream… and they just keep on dreaming as they lay on the beach with a cocktail, or surf the day away. We get it. It’s the land of “pura vida”, it’s gorgeous and relaxing, and there is absolutely no sense of urgency – ever. Unless you’re a trust fund kid or wealthy divorcée – and there’s plenty of those around – you’re eventually going to need your business to start making a profit if you want to continue hanging out in paradise. But if you think starting a business is going to happen on it’s own and not take some serious work and focus, you better keep on dreaming.

3. Not understanding the laws, culture or language.

This one is similar to number one, where expats move to Costa Rica thinking everything is going to work just like it did at home. You need to take into consideration the different business laws and procedures like employer responsibilities and employee rights, limitations for foreign business owners, and taxes. Then even when you do understand everything, don’t assume things will be processed or approved in any sort of timely manner by North American standards. We quickly learned that when someone tells you they will call you back to finish up business or when something is ready, they rarely mean it. You will constantly be having to follow up and check in to get things done.

Another huge issue is not knowing any Spanish. You will become very frustrated very quickly if you speak no Spanish and are suddenly faced with banking and legal paperwork in Spanish, customers, employees and suppliers who only speak Spanish, etc. Don’t be that gringo at the bank who thinks speaking English at an obnoxious volume to the teller will make them understood. (If this is you, check out our post on how to learn Spanish the fun and natural way!) You’re in a Spanish-speaking country now, and you are the foreigner. Gringos have a hard time remembering that for some reason.

4. Thinking your “good vibes” alone will bring in business.

Let us paint you a common picture. You’re living the dream. You just moved to Costa Rica after a life-changing [ayahuasca] trip here last year, and you’re starting a surf and yoga hostel. You got your bunks set up, the rental boards and mats stacked, and most likely a hand-painted sign outside including one or all of the following: a perfect wave, the namaste symbol, and the words “pura vida”. You’re sure the universe will provide you with some clients soon if you just have a positive outlook and keep meditating on your vision…

See where we’re going with this? Your good vibes will most certainly help your business succeed, but you have to have some kind of marketing plan in place, too. So many people open a new business and just sit with their doors open, waiting … just to close them permanently in a few months when they can’t pay their rent. You have to be more proactive if you want your business to succeed. If you haven’t the slightest idea how to market your business- contact us!