When talking about the essential qualities of the entrepreneur, two are often cited – passion and persistence. However, there is much more behind these two attributes to developing a successful startup. Often, entrepreneurs in developing countries, such as Costa Rica, have a more difficult time finding the support they need to realize their business dreams, but, despite certain challenges, finding the right solution isn't impossible. Randall Castillo Ortega, the founder of small- and medium-sized enterprise (SME) investment firm RACO Investment, discusses what entrepreneurs in Costa Rica need to get started on the path to success.
In Costa Rica, Law 8262, Law for the Strengthening of Small and Medium Enterprises, its regulations and reforms, came to develop a regulatory framework to promote the comprehensive development of SMEs in Costa Rica, as well as the promotion of programs that strengthen innovation and technological development of these.
Once the need you want to meet has been defined, order the ideas, structure them and give them an economic value so that a business plan can be developed that includes the steps to follow, as well as the objectives and goals. The business model, the delimitation of the service or product and marketing strategies, among others, will allow you to be clear about the way forward.
Says Castillo, “Design a corporate structure that allows you to develop both entrepreneurship and the formalization of agreements, credits and strategic alliances. This corporate scheme must be tailored and, at a minimum, it must include the constitution of the commercial company, the signing of partner agreements and the registration of one of the most valuable intangible assets: the brand. Other processes prior to the operation will be essential to obtain certain benefits, being a very important one to register SMEs with the Ministry of Economy, Industry and Commerce, which will facilitate, among others, to participate in bidding processes and will grant them certain tax benefits such as the exemption of the payment of the Tax to Legal Persons.”
An essential element for the business will be to define its financing strategy, which they usually start with their own resources (bootstrapping), resort to triple FFF financing (Friends, Family and Fools) and later with more solidity and having experienced initial business success, opting for other types of financing such as the search for angel investors, seed capital, or resorting to custom credit options, granted by some banks.
Developing a marketing and communication strategy (social networks, email, chats) allows entrepreneurs to have a long-lasting relationship with customers. For this, it should be considered, which are the channels that best suit the customer and always keep all the information updated in order to provide a correct service, without duplication or errors.
Make efficient use of technology. Asserts Castillo, “For this, the rules of use and marketing in social networks must be well known, as well as a correct implementation of the terms and conditions that must be present in the platforms created to market products and services and develop contracts for their use. Within this area, proper management of the personal data collected is essential, all in accordance with the Law on Protection of the Person Against Personal Data, Law 8968 and its Regulations.”
In the case of products, it becomes essential that home delivery (if offered) is efficient and on time, as customers long to have their purchase as soon as possible. If the delivery is not made by own means, it is essential to create alliances that allow a correct and prompt delivery. An example of this is the alliances with existing courier company networks or creating a new delivery network.
Offer different payment options, using traditional means such as electronic transfers to other reliable payment gateways such as PayPal, Safety Pay and the different options for payment with credit or debit cards, especially with contactless technology.
Once up and running, never forget to take care of the consumer. Explains Castillo, “The entrepreneur must know well the obligations imposed by the Law for the Promotion of Competition and the Effective Defense of the Consumer and its Regulations, not only in the rights that must be guaranteed to the consumer, but in the obligations that the entrepreneur has to the correct commercialization of the products. They should consider from the exact description of the products and services to the payment method, return and exchange processes, application of the guarantee and an optimal indication of how discounts and promotions are applied, all of this, to facilitate the consumer's purchase.”
In the case of eCommerce platforms, other obligations that the Regulation to the Consumer Defense Law establishes in order to protect the consumer in the context of electronic commerce should be considered, including the duty to inform about the price, open a channel that allows the consumer to provide suggestions, inform clearly and completely about the terms and conditions of the transaction, as well as the indication of the payment method, the confirmation of the purchase and delivery times of the products, among others.
Consumers increasingly demand the development of products and services that contribute to sustainability and to respect environmental regulations in order to be socially responsible. The size of the enterprise is not a limit to develop strategies and processes of corporate social responsibility; it is enough with small steps that can go from providing jobs to sectors little considered in society, to using recyclable or reusable packaging that reduces the environmental impact.
These recommendations, a great passion and persistence, together with due planning, discipline, innovation, a constant interest in training and reinventing themselves, as well as being accompanied by the best work team, will allow entrepreneurs to evolve from a startup to a large company.
About RACO Investment
RACO is a financial investment firm serving small- and medium-sized companies in Panama and Costa Rica. It was founded by Randall Castillo, an expert financial adviser who has his roots in the import and export industry in Latin America. The firm has helped numerous startups find the financial support they needed to get off the ground, and has also contributed bridge loans to assist those looking to restructure or improve their operations.
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