Island Economics: The Realities of Running a Biz on an Island

Running a Business on an Island

Many people have the dream of living on an island and running a business. There’s nothing like living close to the ocean while having entrepreneurial freedom. However, you should be aware of island economics. There are certainly advantages to running a business on an island. However, there are certain limitations as well. Being aware of the realities of running a business in such an environment and strategizing about certain factors will increase the likelihood of your success.

Limited Choice of Industry

Many islands are small and relatively sparsely populated. Because of their proximity to the ocean, they often are great tourist spots. Tourism, real estate, and construction are the main industries on many islands. This might mean opening a hotel or restaurant catering to tourists could be a good idea. It would help if the island already has an established tourism industry. If so, your business can piggyback on the efforts of others and be less of a startup risk.

On the other hand, islands usually do not have access to top talent. Opening a biotech research lab that needs scientists with PHDs would not make sense. Likewise, islands typically have high transportation and importing costs. Starting a factory might not be the best choice of a business venture.

Access to Capital

This will vary depending on you and what island you plan on moving to. Many entrepreneurs from developed areas will have easier access to capital than those in remote locations such as islands. Angel investors and venture capitalists are very rare in emerging markets. Bank loans in emerging markets often have extraordinarily high-interest rates and come with many strings attached.

How much capital you need will of course depend on the type of business you want to start. A low-interest house refinance on your home might be all that you need.

This access to cheaper capital will give you advantages over local entrepreneurs. You can afford more capital expenditures. If you have a hotel, your room furnishings can be nicer. If you own a restaurant, your kitchen equipment will be newer and more advanced. Additionally, you’ll be able to ride out downturns longer. When there’s a global recession, those extra funds will come in handy.


As previously mentioned, islands have very high shipping costs. This will be especially true when transporting specialized equipment, which is often heavy and bulky. According to Montway Auto Transport, a Hawaii car transport company, shipping a car or vehicle to an island such as Hawaii is less complicated than most people imagine. Shipping a vehicle from most states usually takes less than two weeks and this type of service is offered at reasonable rates.

It’s important to keep in mind that as a business owner in remote places such as these, you have many options for outsourcing of services so that you can focus your business plan mainly on your area of expertise. This leaves you free to focus on the things that generate your business revenue. Become familiar with the things you can and can’t do for yourself in your business.

It’s very advantageous if you and your staff develop a do-it-yourself mentality for many areas within your business, however. Skills like basic carpentry, mechanics, and welding will be especially valuable. If your refrigerator breaks, there is the temptation to just get it replaced. But if you can get it repaired, you’ll save money and avoid having to wait for delivery.

Cost Structure

You must familiarize yourself with your costs. Everything costs more on an island. The vast majority of the food is imported. Housing often is quite expensive relative to the mainland. A lack of understanding of the cost structure can doom a business. Make sure you understand what type of lifestyle you can afford with your level of income.

Consider an Online Business

The internet is the great equalizer. A person with the right skillset can work wonders with just a laptop and a solid internet connection. Whether you’re in Hawaii, Sri Lanka, or Ukraine, if you can connect, you can work and make income.

An internet business might be the best choice for many entrepreneurs. If you need help, you can hire talent from across the globe. Startup costs can be minimal. You won’t need to deal with local red tape. You’ll have all the benefits of an internet-based business. If you want to take a personal day and sip Tahitis on the beach, you can do it. There will probably be fewer headaches than running a restaurant.

There is a tremendous variety of online businesses that you can start. Some might utilize skills you already have from previous professional experience. In the end, you can have the best of both worlds this way: the island lifestyle combined with participating in the internet economy.

Being an entrepreneur can be a great choice. Likewise, living on an island can be a great lifestyle decision. Combining the two can offer a great life for you and your loved ones. By understanding the economics of living on an island, you can set yourself up for great success in your business ventures.


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