Starting a business in Costa Rica – Advantages / Disadvantages
Of 115 countries, Costa Rica came in first in Latin America and ninth in the
world with respect to nations offering the greatest commercial freedom and
protection for private business, according to Freedom and Development, a
Chilean research institute.
As a foreigner, you can invest in Costa Rica and even start your own
business with only a few restrictions.
If you plan to go into business here, it is very important to be aware
of the local consumer market in order to succeed. Most of the country’s
purchasing power is located in the Central Valley. A total of 75 percent of the
country’s population resides in the central provinces of San José, Alajuela,
Heredia and Cartago. About 60 percent of the population is under 30 years
old. Intelligent businesspeople will try to meet the needs of this group.
You may also think about targeting tourists and upper-class Costa Ricans.
A wealth of opportunities is available in tourist-related businesses. Upper class
ticos have a lot of disposable income and the greatest purchasing power.
They do not mind spending a little more on good quality products.Just look
at their expensive designer clothing, their expensive imported automobiles
and many palatial homes.
The majority of the country’s middle-class consumer values are now more
akin to their U.S. counterparts. You can see this starting to take hold with
a number of shopping malls being built around the Central Valley and the
popularity of stores such as Radio Shack and mega-warehouses like PriceSmart
and the Latin American Walmart, Hipermás. Middle and upper lower class
Costa Ricans seem to want all of the goodies so much that sales of cellular
telephones sometimes exceed the availability of cellular phone lines.
One group to target is the lucrative foreign-resident market. There are
approximately 50,000 full-time foreigners living in Costa Rica. All you have
to do is look for a product to fill their needs. Most yearn for hard -to-find products
from home and would rather buy them in Costa Rica than go to
the United States to shop.
Costa Rica is ripe for innovative foreigners willing to take a risk and start
businesses that have not previously existed. Start up costs for small businesses are
less than in the United States or Canada. Many of the same types of businesses
that have been successful in North America will work if researched correctly.
There is definitely a need for these types of businesses. You just have to do your
homework and explore the market. Be aware that not everything that works
in the United States will work here. Also you may have to adapt your idea
due to the vagaries of the local market and different purchasing power. Don’t
get any grandiose ideas since the country only has about 4.5 million people.
You cannot expect to market products on a large scale as in North America.
Costa Rica’s local artisans make scores of beautiful handcrafted products
such as furniture, pottery and cloth. With so many choices, a smart person
can find something to sell back home.
Real estate speculation can be lucrative if you have the know-how and
capital. You could buy or sell small homes for middle-class Costa Ricans or
foreigners. Here are other potential business opportunities worth exploring:
an import-export business, desktop publishing, computer services and support,
U.S. franchises, importing new foods, specialty bookstores, restaurants and
bars, an auto body and paint shop, consulting or specialty shops catering to
North Americans and upper-class Costa Ricans. Upscale bed and breakfasts on the beach, such as Coral Hill Bungalows Boutique Hotel can make the adventurous some good return on their money in the short term, and greater return in the long term.
Costa Ricans love anything novel from North America. Many stores
sell both new and used trendy U.S.-style clothing. Costa Rican teenagers
dress like their counterparts in the United States and even watch MTV and
VH1. U.S. fast-food restaurants such as Taco Bell, Burger King, Pizza Hut
and McDonald’s are extremely popular here.
Success Stories in Costa Rica
By Christopher Howard
A Coffee Baron
Cafe Britt was founded by American Steve Aronson. Today the company
has gone international with their many products. They grow, roast and sell
some of the best “Mountain Grown” coffee in the world. They even make
a coffee liqueur. Their coffee farm tour is one of the most entertaining
half-days you will spend in Costa Rica. It takes place on a beautiful farm
nestled in the verdant hills of Heredia. You will learn about the history
of coffee, see how it is grown and purchase many interesting products in
their gift shop at the conclusion of the tour.
A Service for Expats
About 15 years ago, Jim Fendell realized the need for a fast reliable mail
service as an alternative to the regular Costa Rican mail system. Thus
Aerocasillas was born. Today they offer similar services in Panama and
several other countries in the region. See Chapter 9 for more details
about the history of this company and the services they offer.
A Company that Protects Nature
In 1978 Michael Kaye founded the first whitewater tour company, Costa
Rica Expeditions, when tourism was in its infancy. The company was
started to help the sophisticated traveler explore Costa Rica – its flora and
fauna, its people and culture, its wildlife and beautiful places. Their goal
is to create unique travel experiences.
An American-Style School
Country Day School was started by American Woodson Brown around
twenty years ago. The present campus is located in the hills of Escazú
overlooking San José. You cannot beat the school’s beautiful setting. The
actual campus evolved from a few buildings into a huge complex which
rivals any private U.S. school. The owner is a visionary who recognized
the need for a first-rate U.S. type English-speaking school to cater to
both the local and foreign population.
A Newspaper for Foreigners
Many years ago the late American journalist Richard Dyer founded
TheTicoTimes newspaper. It has become Central America’s leading
independent weekly covering news, business, tourism, culture and
developments in Costa Rica and Central America. The classified ad section
is comprehensive, and there is now an on-line version of the paper. Fifteen
thousand copies are printed weekly with some being shipped overseas.
Reiny and Kathy have lived in Costa Rica for 14 years. After having
visited 43 countries on a two-year trip around the world, they decided
Costa Rica was the place to live. For years they ran a small restaurant in
Jacó Beach. However, four years ago they started Sun Sat TV Services,
a satellite dish company, which offers American TV programs to people
living in Costa Rica. Now viewers can watch their favorite TV shows on
NBC, CBS, ABC, FOX, ESPN, HBO and many more networks.
A Hotel Fit for a King
Three people run one of San Jose’s most successful hotels. They spent
a couple of years and a lot of money refurbishing the old building.
Their hard work paid off. Today this downtown hotel boasts one of
the highest occupancy rates in the country. It is a haven for fishermen,
tourists, expatriates and many local characters. The bar on the first floor
is the most successful operation in Central America. At night the place
really heats up. The ladies of the night are the main draw and are solely
responsible for the hotel’s success.
A Place to Learn Languages
American David Kaufman is the founder of Conversa, Costa Rica’s oldest
and most successful language school. David earned a Masters Degree in
linguistics and served in the Peace Corps in the Dominican Republic. At
his school’s two campuses, Spanish is taught to foreigners and English to
Costa Ricans. Please see more about Conversa in Chapter 11.