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Costa Rica Business 101: The Business of SeasonsCosta Rica is perfect for both large and small businesses. Entrepreneurs from all over the world come to the mountains and the seas here with dreams of living pura vida. Whether it’s the bustling renaissance port of Limón, the Greater Metropolitan Area of San José, cultural hubs like La Fortuna and Arenal or the numerous coastal towns teeming with tourists and expats, they all need goods and services. Joining powerhouses in the league of Amazon and Walmart, who have operational outposts in the country, are thousands of small business owners.

One of the first considerations for anyone launching a small business in Costa Rica should be seasonality. Yet, it may be easily overlooked in writing a business plan if the owner has not lived here for very long. Too often, entrepreneurs leap into their exciting new business without realizing the impact that an ever-shifting population can have.

In these wise words of author J.R.R. Tolkien, “It does not do to leave a live dragon out of your calculations, if you live near him.”

While Costa Rica may not have live dragons — unless you count giant iguanas — all areas of the country do experience extreme business seasonality. This is a “live dragon” that should always be factored into anyone’s small business plan. One of the first drastic adjustments that newcomers don’t always see coming is the vast seasonal deviation from what seemed universally normal in their country of origin. The market demographics of Costa Rica are tied to tourism, weather and expat transiency. Time after time, business owners recall being caught off guard by what is known as the “season within the season.”

High season also coincides with an
expat exodus out of the country

 

Unhiding the dragon

However unfamiliar the concept is at first, it can take time for the “high” season and “low” season that people commonly talk about to make sense. This refers to the tourism peaks and valleys based on a combination of weather and travel patterns.

High season typically runs from November through April. Local businesses see an influx of tourist traffic due to the Christmas holidays, New Year’s and Easter/spring break vacations. This is also when the weather is sunny and hot at the beaches — namely, the perfect time for travellers fleeing chillier northern climes to enjoy a Costa Rican getaway. What newcomers may not account for when planning around high season business trends, however, is the reverse outflux. High season also coincides with an expat exodus out of the country. Similar to global vacation patterns elsewhere in the world, many expats make travel plans to leave paradise during the holidays and school breaks. In effect, one population changes out for the other.

Low season, conversely, lasts from May through October. This is otherwise known as green season or rainy season. Depending on what area of the country you’re in, the rainfall can be substantial. Generally, it’s the coolest and most lush time to travel in Costa Rica. However, with many tourists scared off by the threat of rain, businesses typically see a significant drop in revenue. These are the months when it is critical for business owners to build income plans that compensate for the loss of tourist traffic. While there is a relatively small surge of tourists during the June through August period, it usually falls far short of what new business owners anticipate. That is why so many experienced business owners typically close for a portion of low season.

Critical first two years

Failing to understand and properly plan for our live dragon — aka seasonality — can cripple a new business in the first two years. It’s not enough to plan for Costa Rica’s high and low tourist seasons alone; you must also have a very clear understanding of how the expat community ebbs and flows in each specific area … the season within the season.

Take the time to talk with business owners who have been open for more than two years. They can provide the kind of insight that a business plan cannot. Get to know the population shifts before opening for business to ensure the highest rate of success.

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Applying for Costa Rica Residency
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Tax Time, Corporations and Property Owners
Corporate Tax Update
Power of Attorney in Costa Rica
Annual Tax Over Costa Rica Corporations
Due Diligence, Purchasing a Vehicle in Costa Rica
Costa Rica Income & Sales Tax
Estate Planning
Purchasing a Condominium
Buying a Business

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