Questions about starting tourist-related businesses...

Challenge

JohnBoyTheGreat said:

My wife, my partner, and I would like to start a business renting out some villas on a daily or weekly basis, give tours around the D.R., and maybe start a scuba-diving tour and/or take tourists out fishing.
This would be a small operation.

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Welcome.
I always like to meet millionaires with a hobby. :cheeky:

JohnBoyTheGreat said:

Can you tell me what problems we might run into?

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I could.
But I am afraid the forum would run out of bandwidth listing them... :tired:

JohnBoyTheGreat said:

How about renting rooms to tourists? Would that be considered a hotel?

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You can call it whatever you like.
They are your rooms, aren't they?

Rooms for tourists... hmm, I have heard about this before...

JohnBoyTheGreat said:

We'd like to have some idea of the problems we might run into ...

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Let me put it this way:
It will be a challenge.
Even for "JohnBoyTheGreat".


donP

DR1 Daily News -- 16 May 2012:
Why it makes sense to be an informal business

Francisco Capellan, president of the Confederation of Small and Medium-sized Companies (Codopyme) says that government regulations discourage small business from entering the formal business sector. He said that around 600,000 micro, small and medium-sized businesses are in operation, of which less than 50,000 are registered with social security.

In an interview, he agreed with comments by Mario Davalos and Marina Ortiz of Fondo Micro about the lack of incentives for formalizing small companies. He said that once a small business becomes a formal company, it will needs to make payments to the Department of Taxes, Social Security Treasury and the National Institute for Professional Training (Infotep), new costs it did not have to undergo when operating informally.

Capellan said that is why few businesses have preferred to stay operating informally, and as a result many workers do not have medical insurance, for one.

"A way for small companies to go formal needs to be found, because there are thousands of shops and workshops that are not," he said. Likewise, he said in farm areas there are many medium-sized businesses that fear going formal due to the high government costs. He said that if the government would offer advantages to small and micro-business owners, many would go formal. He proposed the establishment of a single-stop-shop for this category of business.

Government business regulations have frequently been criticized for being established for large businesses, when in reality most businesses in the Dominican Republic are small.

In an interview with Hoy, Mario Davalos criticized the fact that rather than stimulating small business to go formal, the government does the contrary. He mentioned that the government issues the Senasa medical cards under the subsidized regime for people on a low income, making it unnecessary for companies to go formal in order to provide medical insurance for their workers. Davalos said that the government has not designed public policies that are suitable for small business.

Davalos said that while Law 479-08 on company formation has improved the situation, becoming a formal company is still complicated and costly for micro-businesses.

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Start with your friends and test the waters. Stay lean and agile. Benchmark going scuba diving with other companies. Stay at places similar to what you propose to get feedback as to the apparent and not so apparent costs. Go slow.

Capell?n simply stated what Peruvian economist, Hernando de Soto, has been saying for years. He even published a book about this, "The Other Path." I highly recommend it. Its mostly based on a study that was done on the informal economy in Lima, Per?; covering various sectors (housing, transportation, etc). Much of the explanations and findings are easily transferable to the DR.

A Costly Hobby

Dolores said:

DR1 Daily News -- 16 May 2012:
Why it makes sense to be an informal business

Francisco Capellan, president of the Confederation of Small and Medium-sized Companies (Codopyme) says that government regulations discourage small business from entering the formal business sector. He said that around 600,000 micro, small and medium-sized businesses are in operation, of which less than 50,000 are registered with social security.

In an interview, he agreed with comments by Mario Davalos and Marina Ortiz of Fondo Micro about the lack of incentives for formalizing small companies. He said that once a small business becomes a formal company, it will needs to make payments to the Department of Taxes, Social Security Treasury and the National Institute for Professional Training (Infotep), new costs it did not have to undergo when operating informally.

Capellan said that is why few businesses have preferred to stay operating informally, and as a result many workers do not have medical insurance, for one.

"A way for small companies to go formal needs to be found, because there are thousands of shops and workshops that are not," he said. Likewise, he said in farm areas there are many medium-sized businesses that fear going formal due to the high government costs. He said that if the government would offer advantages to small and micro-business owners, many would go formal. He proposed the establishment of a single-stop-shop for this category of business.

Government business regulations have frequently been criticized for being established for large businesses, when in reality most businesses in the Dominican Republic are small.

In an interview with Hoy, Mario Davalos criticized the fact that rather than stimulating small business to go formal, the government does the contrary. He mentioned that the government issues the Senasa medical cards under the subsidized regime for people on a low income, making it unnecessary for companies to go formal in order to provide medical insurance for their workers. Davalos said that the government has not designed public policies that are suitable for small business.

Davalos said that while Law 479-08 on company formation has improved the situation, becoming a formal company is still complicated and costly for micro-businesses.

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Whatever.
The OP will not be able to operate his businesses "informally" under the radar of the 'MdG', 'Politur', 'turismo', 'taxistas', competitors, DGII, etc.

Given that and the economic situation the country is in, five peoiple will not be able to live on the remaining income.

donP

same business

hi, glad that you are here....i am in the same business and i have to tell you that it has it's bad and good days.

4 Enterprises

Jerryon said:

....i am in the same business and i have to tell you that it has it's bad and good days.

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Great insight.
May I ask which of the 4 businesses the OP mentioned you are in?
All of them?

donP

hi, do you come to the DR alot?
adidasisaac21@gmail.com

Please Invest!

JohnBoyTheGreat said:

(..) would like to get some honest advice. Yours was...how shall I put it?...somewhat less than helpful...

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John, I admit it was not helpful.
I gave you my honest opinion which, between the lines, and in a nutshell is: don't do it.

JohnBoyTheGreat said:

Why would you want to discourage people to invest in the D.R.

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Exactly the opposite.
I'd like you to invest and buy my 'finca' (rose-coloured glasses come free with the purchase). :classic:

JohnBoyTheGreat said:

You aren't in the same business, are you?

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May the Caribbean gods forbid, no! (Sorry Chip).

JohnBoyTheGreat said:

Trying to eliminate a competitor? It hardly seems that such a small operation would inconvenience you. aranoid:

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Not in the least.
Since my retirement 20 years ago, no need to compete....

JohnBoyTheGreat said:

Picking on my alias? Geez. It was an old online gamers handle, and I've found it is unique. No need to pick on me!

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I apologize.
And yes, it is unique.

JohnBoyTheGreat said:

If you do have any useful information or advice which you could summarize briefly, I'd greatly appreciate it. Nice to meet you Don!

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We haven't met yet.
But we can.
I can even hook you up with someone who runs a successful diving and excursion business in Saman?.

Best we do that once you have been in the country (and Sos?a) for a few years.

Saludos
and all the best.

donP

The best thing you could possibly do is LIVE IN THE AREA YOU PLAN TO WORK IN FOR AT LEAST 6 MONTHS, BUT BETTER A YEAR. That means RENTING!!!!!!!!!!!! You have two MAJOR variables; one is living an a new culture, the other is your business. If you start your business and find out later that, oops, this is not quite the area for me- then you have grave problems. Do your homework (living)- best of luck!!!!!!!!!!!!!

Helpful Book?

JohnBoyTheGreat said:

I'm having a bit of trouble finding the book you recommend. Any idea where I can locate it online?

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Amazon.com: The Other Path: The Economic Answer to Terrorism (9780465016105): Hernando De Soto: Books

Even less helpful (for your plans) than my pieces of advice...

[http://en.wikipedia.org/wiki/Hernando_de_Soto_Polar]

donP

And now DR

JDJones said:

Before I give any sort of opinion, I'd like to have an idea of what your claim to fame is, John.
By that I mean, what have you done to get where you are now? Nothing specific, just to get an idea of what you can do.

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He wrote:
"I'm a writer, an inventor, and a computer technician with 28 years of experience; and my wife is a photographer.

donP

If you want to operate in Punta Cana you will need to go legal. As was correctly pointed, Marina de Guerra, Politur, Turismo, and especially the competitors (who will denounce you with the government) will make your life a living hell if you are not legal. If you will be in some less "on the sight" area e.g. Cabarete, Rio San Juan, Barahona, etc. you might go unnoticed for some time. But Punta Cana, Puerto Plata and Samana, forget about it, at lats in the "visible" business - excursions and scuba diving. You might go unnoticed with a small hotel operation.

Again, the competitors (in excursions and scuba diving) will denounce you withe the competent authorities if yu are not operating legal.

I give you an example: Otium, a medium-sized receptive TTOO had to FIGHT HARD against the transport unions in order to be allowed to use its OWN VANS to pick up ITS OWN CLIENTS from the airport. They had, of course, all the permits, paperwork, legally constituted business, license from Turismo, etc. and they still HAD TO FIGHT HARD with transport unions. (Usually the receptive TTOO "rent" vehicles from transport providers who are under the union umbrella, either on per-service basis or on wet lease* basis).

* Aircraft lease - Wikipedia, the free encyclopedia (written about airlines but applies to ground transport as well)

"Why would you want to discourage people to invest in the D.R. Is it possible that perhaps you have an ulterior motive? You aren't in the same business, are you? Trying to eliminate a competitor? It hardly seems that such a small operation would inconvenience you"

I would also discourage you. Renting rooms to tourists? That depends on the area. Most areas in The DR have ways too many accommodations that can't be filled not even to half capacity. Lots of closings. If you go to areas that have fewer accommodations, then you have almost no tourism.

Suva diving shops, plenty of them too. You are up to heavy and stiff competition in all businesses you mention.

Think of some creative tourist product that is not yet offered here or where the market is not yet crowded. Make sure you have an income that can support you for a couple of years at the very least.

The barriers to entry are high here. Not just because of well established competition, but because as a foreigner totally unfamiliar with the way of doing business here, you are up for a surprise.

I was going to say basically the same thing as expat... I think your primary challenge will be to corner a big enough share of the market to survive. The nuts and bolts can and should be taken care of by your lawyers. My guess is that the "obvious" services are already saturated. Maybe some kind of niche business would be good... but you'd have to market the hell out of it to a very targeted clientele. Good luck.. give it some serious brainstorming... and maybe it will work ou.