5 Top Tips for Starting a Business Overseas in 2017
Posted by Josh Jeffery on April 4th, 2017.
After a turbulent 2016 and a 2017 that’s shaping up to be just as hectic, giving your business a leg up on the global stage is becoming increasingly important.
But taking a business international in the current economic climate isn’t necessarily as difficult as you might think. Following a few key tips on how to make the most of starting a business overseas – or expanding an existing one – can make all the difference and ensure the process is smoother for you and your potential employees.
One thing you should bear in mind however is that starting a business abroad may not suit everyone or every business and it’s better to realise that early on. It will require a lot of dedication and time – it can take up to twice as much of both in order to successfully establish an overseas business compared to a local one.
With that noted, here are our five top tips to help you get started when establishing a business overseas.
1. Choose a Suitable Country for your Business
This is unsurprisingly the single most fundamental consideration when looking to start a business abroad.
One of the reasons it’s so important to establish this from the off is because it will help you decide whether building your business overseas will pay off. This isn’t just about deciding where you want to be and the kind of lifestyle you want to have, but where would best suit your business and its long term goals.
Your first task should be making a shortlist of the nations that you’re most interested in working in. How fast is the economy growing? What types of businesses are in most demand there? Will the local taxes and regulations work for or against you?
Then, once a shortlist of ideal locations is in place it’ll be time to do some in-depth research to whittle down which is best. Similar guidelines to before, but it really is important to benefit from local knowledge and do some networking to help you establish contacts in the region. This will help you figure out if your services will be in demand and whether there’s much opportunity for growth.
It’s not just important to keep in mind the business laws and tax regulations of a country but also how the culture of that country may affect your business. If the culture is not interested in your product or service, the chances of the business being successful are slim.
Doing some research into your competition will help with this too. What have competitors tried in the past in that region and why have they succeeded or failed? It’s actually vital to study failure in situations like this to make sure your own business doesn’t suffer as a result of the same pitfalls.
Studying current and active competition can also help you hit the ground running by ensuring that you’re offering competitive products/services for local consumers.
Here are some handy starting points. The World Bank’s economy rankings include a list that can be organised by ease of starting business or doing business. Some of the top countries for starting new businesses are predictable, such as New Zealand, Singapore and Hong Kong. Others may be a little more surprising, like Georgia and Ireland.
2. Learn the Country in Detail and Make Connections
Eventually, you’ll be able to narrow your shortlist down to one primary pick. One country with tax laws and regulations that suit your business ideas and finances, as well as a populace that will be interested in what you have to offer. From there it’s time to learn that country and learn it well.
Among the most important steps to take will be starting to learn the language of the nation you’ve picked and to begin making connections. A mentor or investor in the area could be vital in helping you get used to the rules, regulations and culture of that country.
You should also be prepared to fully immerse yourself in the culture if you want to become a liked and supported part of that community. Embracing and valuing the culture you’re moving into is an extremely important part of establishing your business.
Learning the country also means studying transport, utilities, internet speed, economic stability, the weather, and so on. Local connections would certainly help you here too, so you may even want to consider finding a business partner who already knows the nation well.
Experience with social media platforms like LinkedIn will be useful, and online expat communities are also handy for meeting people who can provide you with invaluable insight and support.
3. Know What Skill Sets You’ll Need to Tap Into
A business needs employees, and once you’ve familiarised yourself with the country and how your new business will operate on a basic level, it’s time to start thinking about how to find the skilled labour needed to run it.
It’s common for businesses set up by expats to use expats as a strong part of its workforce. This is a good way to grow the local economy as good employment opportunities can make the nation more appealing to those from other nations.
When it comes to expat workers, it’s worth noting that pay and benefits will need to be considerable to attract people from overseas. Expat workers may want assistance in finding lodging, moving and acclimatising to the new culture. They might also want a guarantee that they’ll be able to transfer back home if the position doesn’t work out for them. While expat employees may understand your working culture and business plans better than local ones, it’s also important to consider the integration of local skills and culture.
Your business could see more success in being embraced locally if it appreciates resident talent.
Employing locally could also be cheaper for your business, although you will need to check whether the kind of skills you’re are abundant or in short supply.
You might find that having a mixture of local and expat workers strikes the right balance. You would do well to research what kind of skills are available locally and spend time assessing which roles are best filled by locals and which may be better suited to expats.
4. Manage Your Business Finances with Expert Support
There’s so much to think about when starting a business abroad that it can be easy to overlook the importance of finding a cost-effective method of managing your international money transfers. The amount of money transfers you’ll be making from your base to your new business overseas could really add up over time – so it’s good to look into your options early on and find a money transfer provider that helps you save money and avoid frustrating fluctuations in exchange rates.
Using a high street bank is one option, but it’s certainly not the most cost-effective one. Most banks charge transfer fees and offer poorer exchange rates than other providers.
These extra costs could have a significant impact on your profitability and cash flow.
A trusted currency transfer specialist, on the other hand, could help you save time and money when building up a business abroad by offering excellent exchange rates and working on a fee-free basis.
Some currency transfer companies also offer a range of options so you can send money overseas in a flexible way that works best for you.
For example, while you may want to use a ‘spot contract’ to make an immediate currency transfer at the current exchange rate, you might also want to protect your funds from future shifts in the currency market by using a forward contract to fix the exchange rate up to two years ahead.
As well as seeking expert support and guidance in the area of foreign exchange, you may also want to connect with professionals who know your new country and its business practises – like local lawyers, solicitors and business owners. The chances of your business thriving overseas will increase if you have the support of a good team around you.
5. Take Time to Plan Your Next Steps
So you’ve picked a location, you’re getting to know it and you’ve begun to find professional connections that can help you get your business up and running. What’s next?
The next step is to take it easy. Even with extensive preparation there’s no guarantee that your business will be a success and because of that it’s important to have a few very fundamental safety nets in place for you and your business.
Some of these are obvious but they’re nonetheless vital and shouldn’t be overlooked – in today’s changing economic landscape even business veterans should take precautions!
If possible, maintaining an established base of operations in a nation you’re comfortable doing business in could help support the launch of your overseas venture by generating consistent revenue for you to plough into your expansion. Additionally, if your new business fails to take off, you’ll still have your original business to fall back on.
Similarly, when you choose your overseas business premises, bear in mind the fact that you might be better off going into a rental space first rather than buying a premises outright. While this might mean having to relocate in the future, it reduces some of the financial risks attached to getting a fledgling business off the ground.
You also need to ensure that you’re allowing yourself enough time to acquire the knowledge you need to give your business the best possible chance of surviving – and this includes setting time aside for networking and courting potential employees.
It’s also worth establishing yourself in expat communities, local communities and on social media platforms early-on so your network can grow in tandem with your business.
Ultimately, starting a business overseas or expanding an existing one into new territories is a big and often intimidating prospect. However, with the right preparation and professional support, you can limit the stresses and risks involved and give your business the best possible chance of making it on foreign shores.
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