Top ten tips for starting a business abroad
Many people dream of living abroad and becoming an expat. Most people also realize that to do so then you need a fair bit of cash. For many, that’s where the dream ends, but others take it upon themselves to travel to the places they love and seek out niches where they can create business opportunities. In this post we take a look at the top ten tips for starting a business overseas.
For many foreigners, starting a business in a foreign country is one of the fastest routes to bankruptcy. This is mainly because many entrepreneurial expats fail to effectively research their chosen area. Make sure you visit your chosen location before making a permanent move and ask around, see if there is demand for the business you hope to establish. There’s no point starting a business that won’t attract any customers.
If moving to a relatively poor country it’s also advisable that you target your business at other expats as they often have higher spending power than the locals. However, if you, for example establish a business in the USA target your business to what the locals want. If you’re a Brit the Americans love anything to do with the royal family or ye olde England. Play to your strengths.
2. Get the assistance of Professionals
There’s a very high chance that when you attempt to start a business in a foreign country you will encounter a wall of local laws and bureaucracy. To avoid too much stress dealing with the authorities in paperwork, hire a local specialist in such matters. They can act as a buffer between you and official interference. They will sort out any tax issues as well as other necessary paperwork.
3. Get legal advice
Before establishing a business or undertaking any business transactions in a foreign country, it’s important to obtain expert legal advice from an experienced lawyer and accountant (who speaks English or a language you speak fluently) to ensure that you will be operating within the law. You don’t want to go to all the trouble of establishing a business only to fall victim to the authorities for something you didn’t realise was illegal. Different nation’s often have different rules after all.
4. Be aware of the exchange rates
If you want your business to be successful then you have to beware of the foreign exchange rate market. The cost of goods and labour can vary hugely depending on where in the world you chose to set up in.
Transferring money abroad will be a necessity to ensure your businesses success and knowing the foreign exchange market could save you a small fortune. The foreign exchange market is massive and is continuing to grow with a daily turnover of trillions of Pounds. To save money on your foreign exchange transactions use a specialist currency broker such as TorFX. They deal directly with the currency markets which means they can offer highly competitive exchange rates on all major currencies, often beating the rates of the high street banks by as much as 3%.
5. Location, location, location
Choosing the location for a business is even more important than the location for a home. Depending on the type of business, you may need access to motorway (freeway) and rail links, or to be located in a popular tourist area or near local attractions. Local plans regarding communications, industry and major building developments, e.g. housing complexes and new shopping centres, may also be important. Plans regarding new motorways and rail links are usually available from local town halls.
6. Learn the local customs
It is advantageous to learn local customs and work habits. It’s important to fit in with locals to facilitate good relationships and avoid miscommunication. Local employees have a greater chance of respecting a manager who takes an effort to learn local customs instead of enforcing habits from the home country.
7. Don’t be too optimistic
Be prepared to struggle. Optimism is all well and good but when starting a business in a foreign country it pays to play it safe.
8. Be wary of crooks
In addition to problems with the authorities, you may also come into contact with assorted crooks and swindlers who will try to relieve you of your money. You should have a healthy suspicion regarding the motives of anyone you do business with abroad (unless it’s your mum or spouse), particularly your fellow countrymen. There have been many instances where already established expats have prayed on the vulnerabilities of newly arrived ones.
9. Can you get monetary help
Before you establish your business make sure you look to see if you can receive financial help from the countries government. Some countries offer incentives to entice foreign businesses to go there. Grants may include European Union subsidies, central government grants, regional development grants, redeployment grants, and grants from provincial authorities and local communities. Grants may include assistance to buy buildings and equipment (or the provision of low rent business premises), research and technological assistance, subsidies for job creation, low-interest loans and tax incentives. Contact Chambers of Commerce and embassies for information.
10. Be prepared to work hard
Starting a business is always a challenge, but in these tough economic times it can prove to be a colossal undertaking. Make sure you are prepared for the hard graft that will be needed and make sure your family is too, the last thing you want to do is to throw yourself into a business and ruin your relationships with your loved ones.