Business practices differ from country to country, and if you’re planning on opening a company abroad you’ll want to know all the right steps to take. Check out these tips for starting a business in another country so you don’t run into any mistakes along the way.
If you’ve launched your own startup in your homeland, you might think you already know all the tips for starting a business.
While establishing a business in your home country is difficult and you need to incorporate all the tools to do it, opening a business abroad is considerably more challenging.
Take the struggles you encountered setting up your business, then multiply them by ten and you’ll have an idea of what you’re facing.
To lessen the impact of those challenges, there are some things you’ll need to know before you launch.
Tips for Starting a Business Abroad
No need to abandon your visions for establishing an international business.
If you have that entrepreneurial spirit, growing your business internationally is hugely fulfilling.
You’ll just want to do some preliminary footwork and execute the following:
1. Research Business Practices
From country to country, business laws and practices, taxation and banking will differ. This is part of why it takes considerably longer – weeks or even months – to set up shop in another country.
It’s important to study the laws and requirements for the country in which you’re interested. You should have some concept of how much it will cost to acquire property, incorporate your business and start operations.
You’ll also want a clear understanding of what motivates local workers. What flies in your current country may not in the country where you’re looking to incorporate.
For example, a lot of employees in the U.S. are interested in having equity in the company. But in other countries such as China, the residents are more interested in salary and bonuses.
This is important to know because it will make a difference in how you negotiate. Being sensitive to these preferences goes a long way toward establishing a strong employee base.
Plus, compensating employees and consultants with securities could even violate local laws. And you definitely don’t want that to be the foundation of your new business.
2. Study Cultural Differences
How will cultural differences affect your company’s viability?
It’s crucial that you research the culture surrounding your product or service to ensure there’s a market for it.
For example, say you’re going into business to sell fitness clothes. What flies off the shelves in Europe may be immediately passed over in the Middle East where modesty plays a bigger role in buying decisions.
Once you’ve done some research on the culture and feel certain it will be a good fit, plan to take some trips to your desired destination.
3. Seek Global Tax and Legal Counsel
Make no assumptions that the tax and legal protections you enjoy in your current country will apply worldwide. They often don’t.
And also don’t assume that your current accountant has the grasp on international laws and taxation that will be vital to you.
You need counsel that’s well-versed in the laws of both your current country and the one you’re considering.
For example, this company helps entrepreneurs navigate their way through the complexities of the Latin American business environment. Their company is owned and managed by an experienced team of local and expatriate professionals who understand the tax regulations of multiple countries.
You can start your search by checking with regional business incubators and accelerators for recommendations.
4. Understand the Country’s Political Climate
This really should go without saying. But if you currently live in a politically stable country, you might take this for granted.
Some international startups have learned the hard way that governments in turmoil can be involved in some crooked practices. They may end up taking a hefty amount of money from you and simply call it a “tax.”
You do not want is be in a position where your profits are “taxed” or your assets seized because the political climate is under duress.
5. Seek Guidance from the Locals
When you set up a business, one of your first orders of business is to get involved with a small business association. In the U.S., this would be something like the Chamber of Commerce.
So it makes perfect sense to get involved with other business owners in the country where you plan to open your business.
On your travels to your intended country, work to establish connections with other small business owners there so you’ll have some trusted friends who you can help you with questions once you proceed to open your business.
6. Commune with the Locals
An expat is always going to experience some level of difficulty fitting into a foreign business community, so get familiar with where you’ll be and the people who live there.
And do as much as you can to learn the language. While some languages are easier to learn than others, at least making the effort will score you points and help you earn trust in the business community.
As tempting as it can be to limit yourself to the company of other expats, it’s really important to meet your customers and participate in cultural experiences. Take in as much as possible.
When you visit, consider using a service like Airbnb rather than staying at a hotel. You’ll have a far more genuine experience when steeped in the traditions of the locals.
7. Find a Native Business Partner
You can really simplify things if you’re able to enlist a trustworthy business partner who’s native to the region.
For example, working with someone who’s familiar with the local business climate can help you to navigate the country’s human resources intricacies – from salaries and bonuses to social security costs and severance packages.
And if language is a barrier, having a native business partner will allow for you to oversee the front end while he or she handles complicated contracts, accounting and financial transactions that require a mastery of the country’s language.
Are You Ready to Take Your Business International?
We hope these tips for starting a business abroad help lessen the difficulty of this challenging but rewarding venture.
And for more helpful tips on business startups – both in your home country and abroad – keep checking back with our blog.
You’ve got this!