Build A Business Abroad: Key Considerations Part 1
Previously Published on TheBlackExpat.com
One thing the pandemic has made painfully clear is the fragility of global industries. For some ex-pats caught abroad on an employment contract that was suddenly canceled and forced to leave the country, there is an understandable desire for more stability or at the very least more control in their professional and financial future.
This has led more and more people interested in living and working abroad to consider starting a business while abroad. Although I’m a huge advocate for entrepreneurship, I understand that it is not for everyone. Therefore I have created a non-exhaustive list of things you should consider before and during the process of starting a business abroad.
Type of Business
Online or Brick and Mortar. Deciding whether or not to have a digital business, be it services, digital products or drop-shipping is an important consideration. Will you have a physical location, with physical inventory that will need to be accounted for, stored and logistics managed? You’ll need to consider the cost of and the ability to rent or purchase property for your business. There may be regional differences in rental contracts, conditions, and terms, like guarantor requirements, you may not be familiar with/accustomed to. If you decide to have an online business, management of inventory in another location may still be a consideration. Internet connectivity, availability, and dependability of power and cybersecurity are other considerations.
Infrastructure
Investigating your target country’s infrastructure is vital in assessing whether to start a business there. Be it connectivity, internet speed, electricity, and generator availability, mail service, roads, and other transportation routes. Considering your potential supply chain and distribution network needs will prevent headaches in the future. For example, if you are a candle maker, consider how you will source your raw materials; is the delivery of these materials dependable? Do you have access to the tools needed to produce the candles? Will maintenance of the tools be possible, regular, and dependable? How will you sell the candles? In-person, online? Do you have access to dependable, strong internet to manage orders and communicate with customers? How will you deliver these items? Will the candles be produced and delivered locally using local delivery methods or will they be produced and delivered in a different location or country? Perhaps the country where your target market resides?
Visa Requirements and Limitations
It is incredibly important to consider whether the visa you have or the visa you are looking to obtain will allow you to work in the country (even if online). It’s also important to research whether you will need a different visa to start a business or run a business within a country. Having a valid visa to reside in a country is not sufficient; remember that visas are legal documents that state explicit conditions for your presence within a country. Therefore, if you engage in activity outside of the conditions stated in your visa, you run the risk of your visa being deemed null and void, incurring fines, and being deported.
Business Registration
Deciding in which country your business is registered and under which entity scheme is something to consider with the consultation of a lawyer and a tax advisor. It is important to consider the legal exposure of doing business within a country, even if your target market is not within the country. It is equally crucial to be aware of the tax implications of conducting a business within a country. Again, just because your business does not ‘make money’ or have customers within the country you are residing in does not mean you are not subject to taxation in some form. It is extremely important to understand your tax exposure before you decide to start or run a business from a country and make sure you are filing all necessary documents and paying all necessary taxes.
Seeking the counsel of business lawyers and business tax specialists that work specifically with ex-pats will be crucial because there are often many country-specific nuances that will need to be addressed. Also, consider if the country where you’re hoping to start the business will require you to take on a local business partner (oftentimes someone who is a citizen of the country). Taking on a local business partner could be beneficial in many respects as you now have someone who (ideally) understands business registration, can help you navigate the taxation process, and is providing access to a local network. It might end up cheaper as well, having someone that helps you avoid common pitfalls and can help navigate complex or bloated bureaucratic processes.
Business Culture
You should try to become as knowledgeable as possible in the local business culture- simply put, how does business get done in this country? What are the spoken and unspoken rules of business decorum? What are social norms when it comes to conducting business? How is trust earned? How are authenticity, sincerity, and dependability demonstrated? What are the national aims regarding the business sector? What industry is the country trying to build or emphasize? Is there anti-foreigner sentiment within the business community? If so, how and why is it expressed? Consider if this is something you can navigate.
Language
Do you speak the local language? At what level of proficiency? Again, even if your business is not marketing to the local population, you may still need to deal with paperwork regarding the running of your business and it will most likely be in the official language of the country. If you do not have the proficiency to handle official, legal, and tax documents in the local language, hiring a business professional that handles this for you will be critical. Also consider that if you do have a business that targets the local population, what language or languages will you need to have on your packaging or in your marketing materials? This type of translation work cannot be handled by Google translate, so consider hiring an accredited translator and a reputable multi-lingual copywriter.
These are just a few key elements to think about when contemplating starting a business abroad. In part two, we’ll look at other crucial factors to consider, such as labor laws, intellectual property, tax requirements, and more.