Building a Business in Ecuador: Challenges, Lessons, and What One Expat Entrepreneur Learned

Entrepreneurs building businesses in Ecuador face a specific set of challenges: bureaucratic red tape, limited access to credit, a large informal economy, recurring power outages, and rising security risks. This page breaks down each challenge — and draws on the real experience of expat entrepreneur Peter Stromberg, who built a hospitality business on Ecuador's coast.

Bureaucracy and corruption are among the most consistent obstacles entrepreneurs face in Ecuador. Obtaining permits, licenses, and regulatory approvals involves processes that the U.S. International Trade Administration describes as overly burdensome and unpredictable. Bribery and facilitation payments are widespread, and entrepreneurs who interact with public agencies can face pressure for unofficial payments to move routine approvals forward.

Ecuador's public services and procurement sectors are reported to suffer from endemic corruption, which creates real costs for businesses that depend on those systems. The U.S. State Department's 2025 Investment Climate Statement for Ecuador identifies corruption as a significant barrier to doing business in the country.

Peter Stromberg ran into this reality when he bought the Surf Shack in Canoa. He didn't speak Spanish and didn't know the unwritten rules. "You do not just walk in and hand over money and everything works," he said. Navigating local systems took time, relationships, and a willingness to push back — not just paperwork.

Access to finance is a major constraint for entrepreneurs in Ecuador, especially for small and newly established businesses. More than 30% of small and medium enterprises in Ecuador report financing constraints as a key obstacle to their operations and growth, according to the International Finance Corporation.

Young firms face a particular disadvantage. Lenders see them as higher risk and have limited financial history to assess. Many microenterprises and small businesses in Ecuador also operate informally, which cuts them off from formal credit entirely — banks require registration, verifiable financial statements, and collateral that informal businesses can't provide.

Women entrepreneurs face additional barriers — lower collateral ownership, limited financial literacy, and geographic distance from financial service providers. The IFC earmarked part of a $50 million loan to Banco Internacional specifically to expand financing for women-owned businesses in Ecuador, which signals how significant the gap is.

Stromberg's approach to this constraint was practical: he paid above-market wages, built loyalty, and reinvested in his staff rather than chasing outside capital. His highest-paid employee was making 27 cents an hour when he bought the Surf Shack. He raised everyone to two dollars an hour on day one — including the women, who other owners had excluded. Most of that original staff stayed with him for 15 years.

A large share of entrepreneurs in Ecuador operate informally, and the barriers to formalization are real. Bureaucratic procedures to register a business are perceived as cumbersome and costly, which pushes many small firms to stay informal rather than go through the process.

Staying informal has trade-offs. Informal businesses can't access formal credit, government support programs, or the legal protections that come with registration. They also leave workers without social security coverage. The OECD links high informality in Ecuador to weaker competition and greater inequality — it's not just a paperwork problem, it's a growth ceiling.

For expat entrepreneurs, formalization adds another layer. Licensing and regulatory requirements vary by sector and municipality, and the process of getting approvals can involve multiple agencies with inconsistent standards. Building relationships with local officials and hiring people who know the system is often more effective than trying to navigate it alone.

Energy shortages and utility access

Ecuador's power supply depends on hydroelectric generation for 70–80% of its electricity, which makes the entire grid vulnerable to drought. During the severe drought of 2024 — described as the worst in 60 years — the government implemented planned outages of up to 14 hours per day in some periods.

For businesses, that means production cutbacks, increased operating costs, and in some cases layoffs. Manufacturing, food processing, and hospitality operations are hit hardest. The problem isn't only climate-driven — structural underinvestment and poor maintenance in Ecuador's power infrastructure mean reliability risks persist even in normal rainfall years.

Entrepreneurs running hospitality or food businesses — like Stromberg's operation in Canoa — need backup power plans. Generators are common, but they add cost and complexity that most business plans don't account for upfront.

Public security and insecurity

Ecuador's security environment has deteriorated sharply in recent years. The country has become a corridor for cocaine trafficking, and competition among criminal groups has driven homicide rates to among the highest in the region. For entrepreneurs, the practical effects include extortion, reduced foot traffic in commercial areas, and a general climate of fear that constrains consumer activity.

Extortion by criminal groups has become a growing burden on local businesses, adding non-productive costs and discouraging formal investment. Small businesses in coastal towns and cities are not insulated from this — the reach of organized crime extends well beyond major urban centers.

The GEM Consortium notes that rising insecurity in Ecuador has undermined consumer confidence and constrained growth prospects for small and medium enterprises. Entrepreneurs who built their businesses during Ecuador's more stable period — as Stromberg did — are now operating in a fundamentally different risk environment.

Peter Stromberg left a mortgage career at Countrywide in 2007 — before the collapse — and took a kayaking trip to Ecuador with his wife Maija. They stumbled into the beach town of Canoa, and he never really left. What followed was 15-plus years of building businesses in a country where the rules are different, the systems are slower, and the stakes are real.

He bought the Surf Shack and immediately made enemies by paying fair wages. He hired single mothers — the workers other owners overlooked — and built his operation around them. When the 7.8 earthquake hit the coast in April 2016, three months after he'd finished construction on a new property, he had to rip the walls back out to check the beams. No government relief came quickly. What came instead was trust — from locals, from the paragliding community, from backpackers who'd passed through Canoa years earlier. His place became a distribution hub for supplies.

His advice for entrepreneurs thinking about building a business abroad: "You have to be comfortable with failure. You are going to fail. You will need plans B through F. You will make it to F." That's not motivational filler — it's an accurate description of what building a business in Ecuador actually requires.