About Time: You Started a Business AbroadBy Angelica Malin
There could be many reasons why an entrepreneur would be looking to start a new business in a foreign country. Perhaps the tax situation is more favourable over there, or running costs (property, labour, etc.) are cheaper. Perhaps it is an untapped market in terms of a particular product or service. But whatever the apparent advantages, it’s worth bearing in mind that there may be disadvantages too. In any case, thorough research and planning is advised before starting a new business abroad.
Different business practices
Be aware of how business is conducted differently from one country to the next. Practices you take for granted may simply not apply in the other country, and there might be things they do as standard which you find surprising and inexplicable. This could include everything from the legal system to cultural mores and customs.
Research the country you’re hoping to start a business in thoroughly. What laws will affect you? What is the tax situation, especially for foreign nationals starting a business? You’ll need to be cognisant of the country’s politics and also its religious beliefs, and how strictly they are adhered to.
Different countries also have different standards regarding what is considered to be good manners. Success may depend on personal meetings and making a good impression, but the way to do that may be very different in enthusiastic, go-getting North America compared to formal, reserved Japan.
Research the market
Look for a country with a stable economy and where there is a market for your product or service. If no-one is doing anything similar to your business idea then it may seem as though the field is wide open, but there could be a good reason for that. Perhaps the idea you have in mind goes against cultural standards, and would be considered shocking or immoral. You wouldn’t try to open a chain of hamburger restaurants in a predominantly Hindu country, for instance.
It’s also possible that the country you have in your sights already has a popular local alternative to your product that you have little chance of unseating. If there is one successful product and no competition, ask yourself why that might be. If other entrepreneurs have decided it isn’t worth their while to muscle in, then you might also want to leave well alone.
Opening a bank account
If you’re serious about doing business in a foreign country then you’ll need to open a bank account there. That could prove trickier than it at first appears. The best way may be to open a nostro account through your home bank. Certainly, you should look into what the banking regulations and practises are in the country you’re considering, particularly how they apply to you as a foreign businessperson. You’ll also want to find out how easy it is to transfer funds back home, and if any additional charges or taxes apply.
Get to know the place
It’s always a good idea to visit the country several times, or over an extended period, before setting up in business there. No amount of research in books or online can substitute for actually immersing yourself in a culture in terms of finding out how it really works. Engage a legal expert you can trust who has experience of working in that country, and get to know other businessmen there. There may be business clubs or societies that you can join. Not only will these local businessmen be useful contacts, but they can also advise you informally on how things are generally done over there.
Give yourself plenty of time
There’s no doubt that setting up a business abroad will end up taking longer than you anticipate. In addition to all of the research that you need to do there may also be the matter of applying for visas and licenses, delays in opening bank accounts and so on. If you need to buy property then finding it and completing the purchase will also take a while. Suppliers may also operate at a slower rate than you are used to. Altogether give yourself far more time than you initially think you will need, and make sure that you can cope if there are still further delays.
We all do business in a global marketplace and there are indeed many advantages to starting a new business abroad. But your success will be determined to a large degree by the groundwork you do. Preparation is the key, but once you know the territory you can proceed with confidence.