Nicaragua’s budding tourism and real-estate markets, coupled with a pro-business government that is eagerly seeking foreign investment, have created a favorable atmosphere for starting related businesses.
In addition, Nicaragua’s new reforms to Law 306 are making it easier for small businesses to invest in tourism development (see separate section).
Foreigners, in recent years, have started successful businesses in Nicaragua in the following areas: midrange/high-end restaurants and bars; hotels; real-estate services; real-estate development; franchising; foreign language bookstores; gift shop; fishing tours/charters; transportation; mining; free-trade zones (textiles, tobacco); exports (handicrafts, lumber, meats, agriculture); imports (finished products, machinery, auto parts, food products); and English-language magazines/newspaper publication.
Geography, topography, infrastructure, population distribution and demographics are the major determining factors for which businesses go where. Mining is in the rural north-central part of the country, fishing charters are focused on Lake Nicaragua, the south Pacific beach towns and the Río San Juan; free-trade zones tend to be within close proximity to the airport; and restaurants are centered in Managua and the tourist spots of Granada and San Juan del Sur.
Businesses don’t necessary have to rely on tourists and a foreignexpat clientele. There is a minority core of wealthy Nicaraguans who have more disposable income than most tourists. Most successful businesses attract both a Nicaraguan core clientele, while appealing to visiting tourists and foreign residents. In other words, everyone with money to spend.
For example, several bars/restaurants in Granada fill on weekends with groups from all over the world: tourists visiting Granada, and well-to-do Managua folk who drive an hour to Granada to get dinner or party, despite the abundance of options in the capital.
The trick to starting a successful business in Nicaragua is the same as everywhere else in the world: find your niche. Nicaragua 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 U.S. or Canada, but successful businesses in North America or Europe may not be cash cows in Nicaragua.
For example, it is very difficult to make money in the bar business in Nicaragua – profit margins are very slim and only a select few bars turn comfortable profits. Most restaurant/bars make their money on food, not beer. Opening a bar in Nicaragua is not the same as opening a bar in New York, even if your sale volumes are the same. Do you homework before investing, and consult business chambers and other more-seasoned investors to get a better idea of what works and what doesn’t. |
