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We Purchased a Business in Ecuador [& Our Learnings So Far]  

Last Updated: 16th May 2022
Written by Jason Scott
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2021 was a year of massive change for our family. We welcomed our newest son, Billy, into the family & one month earlier we finalized the acquisition of our 1st business in Ecuador. We’ve spent a lot of time adjusting to these changes but we’re super grateful for the lessons we’ve learned along the way. 

This article digs into these learnings and also serves as a bit of an update as we haven’t been able to produce as much content as we’d like for Expats Ecuador lately. 

Why did we buy a business in Ecuador?

Good question. Doing business in Ecuador is notoriously difficult - particularly for expats that need to come to grips with how business is done here. 

I’ve done business in many countries, but this would be the first time I’ve specifically set up a company in a developing nation. I knew I’d have a lot to learn, but was confident that with Michelle and her family & other connections by my side, we’d be able to wrangle our way through any unknowns. 

So far, this has proven true. Not to say there have been no hiccups, but they have been manageable. 

The case against buying a business

I normally don’t recommend expats come to Ecuador with the hope of opening up their own business. At least not right away as you can easily become unstuck. 

We generally recommend expats focus on obtaining remote employment - either from their home country or the US. Why? The pay will generally be considerably more working for an employer in a developed nation than trying to find opportunities in Ecuador. Especially if you have limited Spanish, your chances of finding liveable employment in Ecuador are very slim. 

If you do open a business, target locals not expats

The other suggestion we normally provide to expats that want to open a business in Ecuador anyway is that you should target the Ecuadorian community, not expats. 

Even in Cuenca, which has the highest concentration of expats in Ecuador, opening a business that caters almost exclusively to expats is normally a quick way to lose money. The expat market is small and whilst hard data is hard to come by, I’d put expats as making up less than 2% of Cuenca’s population. 

So, you can toil away and try to market to this 2% of the population or you can target a much juicier 98%. The difference is perhaps best exemplified by the impact of COVID. Numerous expats left Cuenca when COVID hit, leaving businesses that relied on expat customers really struggling to keep their doors open. Some didn’t. 

Those that targeted locals had a much better chance of surviving through this difficult period. 

So, our key suggestions are to focus on remote employment or if you do want to open a business, make sure it’s one that targets locals. Got it?

We acquired a business that not only targets expats, but was named after them. 

Yes, we completely ignored our own advice. But, hear me out! We purchased this business because we understand it. So, even though there is a lot to learn about doing business in Ecuador, at least we fundamentally understood the business & the levers to push to make it grow. 

Enter GringoTree

GringoTree was an expat-focused online magazine & discount card program in Cuenca. They were one of (if not the) longest-running expat magazines in Ecuador. 

The magazine was very popular during the years 2012 to 2017. It was sold to a new owner in 2017 that didn’t really do anything with it which is a bit of a shame.

However, I saw the need to bring back quality English content for the large Cuenca expat audience, and given my background in marketing, I knew that with effort, we’d be able to restore the publication back to its former glory. Building community is an important goal for Michelle & me and we’ve been using this new business as a vehicle for doing so in Cuenca. 

Goodbye GringoTree, Hello YapaTree

One of the very 1st things we did once we acquired GringoTree was to rebrand it to YapaTree. You can read the full details behind our decision, but it really boils down to the following:

  1. The word “gringo” unnecessarily alienates local Ecuadorians. YapaTree is an inclusive community. 
  2. We wanted to expand our advertising & discount card program to the local, English speaking market. 
  3. Changing the brand gives us full ownership of it. 

Our Progress & Learnings To Date

Since acquiring GringoTree YapaTree in September 2021, we’ve been extremely busy creating our community by concentrating on the following activities: 

Looking back at this work we are proud of what we’ve achieved to date. But, I feel like we are still only scratching the surface of the value that we can help bring to the Cuenca expat community. 

But, it hasn’t been smooth sailing. Aside from welcoming baby Billy into the fold, we also have two kids in primary school. So, we are trying to do a lot with not much time. 

Apart from practicing extreme time management, we’ve also learned some important lessons. 

It’s who you know

Yes, this applies anywhere that business takes place. But, I feel like it’s taken to another level here in Cuenca. 

Running a business here without local connections to help you is very tough. I’d suggest you probably won’t survive without these connections. 

In our instance, we’re able to lean on our: 

  • Ecuadorian family & friends for things such as accounting, legal & business administration advice. 
  • Partners in our Discount Card Program. These contacts have been very supportive of YapaTree and what we are trying to achieve. 

Ecuadorians are not very entrepreneurial

Yes, this is a bold stereotype that has obvious qualifications. But, I’m happy to stick by it for the most part. I think it has it’s roots in the preference to keep with the status quo, rather than risk change. 

Either way, the end result seems to be a stagnant ecosystem where businesses would rather copy each other than make authentic improvements. 

As someone that is very entrepreneurial, it is frustrating to see so many growth opportunities that are not being realized. 

Beware of vertical integration

Think you’ve got a great product to sell with a good margin? Don’t be surprised if a much larger company takes your product idea, and recreates it at much lower prices that either completely destroy your margins or your business altogether. 

Labor laws are skewed towards laborers

I’ve seen numerous businesses get tripped up by their non-compliance with the local labor laws. I’m not going to go into detail, but some items to be wary of include: 

  • 2 additional months to pay (sometimes called months 13 & 14)
  • Firing employees can be very difficult
  • Severance pay can very quickly add up
  • Obligated to share company profits with employees

You’d definitely want to investigate the above well in advance of opening any business here. 

Finding motivated employees can be difficult

Running a motivated team can be particularly challenging in Ecuador. Perhaps it’s coupled with the lack of entrepreneurial spirit, or maybe not. I’m not entirely sure. But, just know that you’ll likely be spending a lot of time trying to find quality employees. This is especially true if you’re running a business that requires English speakers as they can be pretty rare and/or significantly more expensive. 

It’s hard to make a livable income

Whilst we’re committed to making YapaTree a success, I always knew it was going to be difficult to generate the same level of income that I can generate via client-based marketing work. 

And, I accepted that. But, I guess I underestimated the income difference based on the effort. For example, for the same amount of effort that I’ve put into YapaTree, I would have generated 10x more revenue by working remotely for marketing clients. Yes, 10x. This isn’t a brag or anything of the sort, I’m mentioning it in the hope it acts as a reality check for those thinking of doing something similar. 

Future plans for Expats Ecuador & YapaTree

Whilst a lot of our recent focus has been on growing YapaTree, we still have lofty goals for Expats Ecuador. 

They are different publications that serve different audiences. YapaTree mainly focuses on Cuenca-based content aimed more at those that are already living in Cuenca. 

Expats Ecuador targets all of Ecuador and is more aimed toward those that are in the decision making or exploratory stages. 

So, keeping them both running side by side is our immediate goal. 

YapaTree Goals

We love the impact and connections we’ve been able to create through the YapaTree project. Over the next 12 months, our goals are to: 

  • Continue to add more businesses to our Discount Card Program
  • Build our contributor base to 10 writers (we currently have 5)
  • Grow our real estate portal
  • Investigate online bookings (incl payment) for events on our Cuenca online events calendar
  • Create a physical tourist map of Cuenca that also highlights businesses on our discount card program

Expats Ecuador Goals

The growth of this blog has been great in 2021 & 2022. To continue our growth, our goals are: 

Final Words

Thanks for taking the time to read this thorough update. We wanted to keep you in the loop with everything that’s been happening this year. 

Of course, if you’re considering a move to Cuenca then we recommend signing up for YapaTree’s newsletter and the Yapas & Friends Facebook Group. 

We know that running a business in Ecuador can be intimidating and just downright difficult. Do feel free to reach out to us if you have specific questions or you can also leave them in the comments below. 

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2 comments on “We Purchased a Business in Ecuador [& Our Learnings So Far]  ”

  1. Jason & family,
    I have no desire to start any business anywhere, but I just read this update and I got SO MUCH out of it. God willing, I will retire in Ecuador (Cuenca, most likely) in 2024. I can’t tell you how blessed I feel about finding your videos, website, etc. Your enthusiasm and positivity is contagious, and you’re blazing trails that will and are making this whole process fun and easier for so many! I can’t wait for 2024!! I hope to bring my sister with me, though I can’t be sure she’ll qualify for any visa, but I’ve already reached out to Joseph to check. Maybe I can set up a trust through my financial advisor that will allow her to qualify based on my pension/investments. She needs not to get left behind. What an adventure in the near future! I’m sorry about your custom built coffee stand, and I’m headed now to donate to the farm, and I’d LOVE to visit someday. I miss the country and farms (grew up on one here in Texas). Keep up the great work! Looking forward to what I’ll see when I sign up for Yapatree. 🙂 You have a beautiful family! Take care and ciao! Toni

    1. Hi Toni - thanks for your supportive comments & the coffee tree donations! Very kind of you. Great that you're getting value from our content, it helps us to continue to produce more.

      I'll reach out to Joseph to check on the status of your visa inquiry too. Hopefully, you and your sister can indeed setup a home here in Ecuador. Do feel free to reach out with any other questions you may have.

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