Entrepreneurship is anything but easy. Has anyone ever told you that starting a business is a walk in the park? It is especially more difficult if you are planning to start a business abroad. Lots of entrepreneurs consider subsidiaries overseas to tap into a new talent pool or optimize costs. Many of them can be seen traveling overseas to begin new ventures. However, don’t get excited, at least not yet. Before you decide to venture outside the U.S, EU or any other well-known market, there are lots of points to consider. Still, starting a business in a foreign country can be both emotionally and financially rewarding.
Here are 5 tips on starting a successful business overseas:
1. Put your expectations right ( and quantify them if possible! )
You can start your efforts by looking for suitable parallels in the markets you are already serving. Ideally, you need to choose the countries or areas where it is possible to supply your products and services without having to change anything to fit the local laws and standards. You need to have a tentative plan in place for moving forward with due diligence. Generally speaking, it is a good idea to start small to expand the business later. For instance, you can offer just a couple of your products to this foreign clientele.
2. Consider the business environment
Some experts think that starting a business in a foreign country can be less risky, a lot easier, and economically more beneficial than in your home country. But it is a good idea to expect the problems rather than assuming that everything will go as planned. If you are thinking about company incorporation in Singapore or some other country, here are some areas you need to take into account,
- Regulatory climate.
- Economic potential.
- Political stability.
- Cultural differences.
All countries have their own set of rules and regulations and political turmoil is pretty common all across the world. Due to the recession worldwide, many countries are experiencing tax burdens and social unrest. Apart from the language barrier, there are many other things such as cultural behavior and attitudes that affect your business.
3. Nail your budget
Although many businesses fail for a range of reasons, one of the more common reasons is insufficient capital. This problem arises from optimistic projections of the business owners regarding profits and growth. Starting a new venture is tough in the best of circumstances, it is even tougher when you are involved in remote operations and uncertain environments. When you are developing your projections, you need to be conservative in the estimation of revenues and liberal in estimating expenses. If you review some public projects, you will find that humans are terrible at project estimation timelines and costs.
4. Sort out all the logistics issues before starting
Several countries lack the proper infrastructure that we are used to seeing in industrialized countries. Although the movement of goods is not restricted physically, you might have to face regulations that will affect the free flow of your products in the country. There are other things to consider as well such as duties, taxes, and export taxes. In many cases, you will have to bribe the government officials. There is a law in the U.S. that prevents people to make payments to foreign officials for assisting their business. You will need legal advice in countries where bribes are a normal way of doing business.
5. Employ a local agent
This local agent you will employ can many times be an accountant or an attorney that is experienced in international law. The help offered by this person can be invaluable in establishing a physical presence in a country that is new to you. Of course, you don’t want your products to get seized or have your operations shut down due to some non-compliance reasons. There is always a possibility of misunderstanding or miscommunication with the local government officials. So, it is a good idea to get some experienced local help while setting up shop in a new region.
Before you venture into a new country to fuel your growth plans, you need to have an exit strategy in place. Be aware of the indicators that should trigger your retreat. In case something goes wrong you must be in a position to salvage as much of your investment as possible. Find out the restrictions on the valuation and selling of your business. Find out the prospective buyers if you run into impossible problems. Being prepared for any outcome brings peace of mind and a competitive advantage over your rivals.