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Many web sites tout the low cost of living in Ecuador. Many assume that because it’s a poor country in South America, it somehow might be cheaper than where ever else they are. And Ecuador does have lower overall living costs than many other countries in South America, especially if you live outside of the major urban centers of Guayaquil or Quito. But living in Ecuador is still not cheap. Operating a business in Ecuador, despite lower labor costs, is not as cheap as one might expect. Everything has its price. And the low prices in Ecuador are long gone. Sure, fresh fruits and vegetables are very cheap. But most everything else isn’t. Why not? The costs of doing business are passed on to consumers in the form of higher prices. These costs include:

  • 24 hour armed guards needed at most business locations (or paid for through higher per square meter costs for commercial space) are a given nearly anywhere, driving up the cost of doing business.
  • The same goes for living in a decent neighborhood, especially in Quito or Guayaquil-24 hour guard service or at least a daytime presence of a caretaker is required in many areas to fend off crime, and this cost is added to your HOA or condo fees.
  • High tariffs on many imported goods and machinery drive up production costs and thus overall cost of goods.
  • Low productivity, onerous labor laws, and obligatory “13th” and “14th” salaries per year make low labor costs much higher than they appear at first glance.
  • Small user pools make health insurance costs high for very little maximum coverage (most policies max out at $19,000 per year). While medical care is generally much cheaper than say in the US, it is still a heavy burden.
  • Obtaining licenses and permits is time-consuming and onerous, often taking several entire days. Businesses are often forced to close while obtaining these permits, and thus can only make up the lost income but adjusting prices.

Think twice and plan carefully for your next trip or if you are planning on moving to Ecuador for an extended period or permanently.

When I first opened my chocolate business in Ecuador,  I naïvely assumed that getting paid would be a reasonable and not too time-consuming task. How wrong I was. Getting paid for your goods or services is not only onerous, but arduous and time-consuming. My experience is that  this is the rule and not the exception, just like dealing with paperwork. It will always take 10 times longer than you think, and you will have to visit at least two or three more offices or service windows than you expected. It’s hard to get paid, whether it’s chocolate or anything else. I have confirmed this issue with many of my business colleagues.

Need to get paid? Be prepared for hassles, waiting, and often, responses lacking in kindness or warmth, to your inquiries. If you can’t adjust to this form of doing business, don’t bother starting a business in Ecuador.

Companies will usually ask for 15 to 30 days credit. No one uses credit cards as the bank commission fees are ridiculously high. If you’re fortunate enough to have a unique product that people really want, and you are well established, you can ask for cash on the spot. Still, some businesses will balk. This is our strategy after 5 years. We may lose some business because of this policy, but I’d lose more sleep at night and have more stress all day trying to collect from deadbeat accounts.

Or, as some of our purveyors do, you can make the process for requesting credit so onerous that it is well nigh impossible. Bank references, commercial references, last three months of tax filings, financial statements-you can ask for all of these. It’s a polite way of simply not extending credit, though you might lose business, or you might find yourself reviewing a lot of paperwork and having no good reason to deny credit-though arbitrary decisions are usually not questioned here.

It’s a fine line to walk when it comes to collecting. The Ecuadorian way is to use cutesy, kind phrases as if you’re asking for a favor when collecting on invoice. “No seas malito, ayúdeme con esta factura,¨which translates roughly to “Please, lend me hand, help me out by paying this invoice.” If you’re straightforward about it, you may find yourself being stonewalled, delayed, and just basically ignored. If the pay date comes and goes and the company is behind on payments, and requests more product or services, there’s only one safe way to play it. Politely tell them they have an outstanding invoice and that the account is suspended until it’s paid in full. Don’t extend credit for multiple invoices for large amounts of money.

Never ever be rude or threatening, it will get you nowhere. In general, be prepared to be treated by your clients as if they were doing you a favor buying your goods or service and an even bigger favor by paying you. Respond only with courtesy, patience, compassion and humility, and cut your losses early when necessary.

There are a couple of options for mobile Internet service in Ecuador.

If you’re here just a few weeks or months and not permanently setting up house somewhere, I’d recommend the USB dongle for wireless service from Movistar, the country’s main cell phone provider. I haven’t tried Claro’s service, but many say the cellphone service is better than Movistar’s, so my guess is their wireless Internet service can’t be too bad.

I had my first experience with it just a few weeks ago on our trip to the beach. It’ll get reception anywhere there’s cell phone service. We even carry the dongle in the car now when going and coming from Quito. Stuck in traffic and you need to work-especially handy when someone else is driving. Pull out the laptop and work away!

You can pick one up at just about any of the Movistar or Claro stores throughout Quito and the country. They are not hard to find. Service is pretty efficient.

Paid $69 for the 3.5G modem-they also have 4G for $110, which is even faster and has 500 MB thrown in free at the start, but the 3.5G was more than adequate for my needs and worked great for email and general web surfing. I think it’s $3 for 1 GB of downloading, and you can fill up your assigned cell number for the SIM card at just about any pharmacy, grocery store, or mom and pop shop in under a minute.

Without a plan, your download limit of 1 GB is good for 30 days, if I understood correctly. So you can refill for just $3, and 1GB can easily last several days or weeks if you only login when needed. I later realized I could have bought the $30 modem online-but here they won’t sell you just the SIM card for the modem as far as I know, so there’s no cheaper alternative but to pay the one time fee and buy the Movistar or Claro branded USB modem.

They tell you the software preinstalled on the modem only works on a Mac pre-Lion, suggesting that the dongle won’t work on a newer Mac. This much is true-the software does not work on a Mac. But I plugged the modem into my MacBook Pro, opened up Network Preferences and added a new service using the “default” configuration, it recognized the modem and I was good to go. On a late 2006 white Macbook, it would not recognize the modem and it woudn’t work.

Later on we’ll discuss fixed line Internet services in Ecuador for home or office-CNT, the national phone company’s service, and TV Cable, the cable company’s internet service.

Make chocolate, sell chocolate, design new products, meet with partners…we’ve been swamped with work the first three months of this year.

We considered giving it up and leaving back to the US-again. We canned the idea for another year.

Things are still tough, but improving. I’m finally almost convinced this is going to work. The income is good enough to keep us going for now, and there are lots of opportunities on the horizon.

Hope to be back with more news soon. Stay tuned!

Finding high-quality reasonably priced computer accessories is not possible in Ecuador. Since I run two blogs, two websites, and store all my business info on several computers, having good backup is crucial. Over the years, I’ve hand carried several hard disks back from the US to use as backup storage, but sooner or later they have failed, been damaged, or run out of space. This conundrum led me to use Sugarsync for sometime. I know this is not a technology blog, but my experience has been so poor with Sugarsync that it merits a posting.

When using just one computer, Sugarsync was a decent service. But as soon as I added multiple computers, I began getting improperly synced files, backups of backups all over the place, and it soon became unmanageable. For lack of a better solution, I stuck with it for some time, and used backup drives. Ultimately though, I was unsatisfied with these solutions.

Dropbox came around a few years ago and I began to play with their free plan. I finally subscribed to a 50 GB plan a few months ago, and it has worked flawlessly since then. If you’re looking for an online storage solution that’s easy to use, reasonably priced, and will work across all your devices and operating systems, I recommend Dropbox.

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Welcome to Destination Ecuador!

Welcome to Destination Ecuador! My family and I have been living in Ecuador for the last four and a half years. We’ve dealt with the worst kinds of red-tape, searched out or ended up making hard-to-find ingredients ourselves, imported equipment for making chocolate confections, learned the import-export business...Continue >>

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