Think about starting a business abroad? In this guest post by Richard Lacey (bio) you'll learn about ten things to consider – both potentially rewarding and challenging.
10 Pros and Cons of Starting a Business Abroad
Starting a new business is always a challenge. Whether you are a seasoned entrepreneur or this is your first crack at the whip, you will likely face the same issues and problems in getting your enterprise off the ground. From dealing with the early stages of your business plan to finding a niche within your particular industry, the journey is long and precarious, taking plenty of hard work and effort.
However, for entrepreneurs looking for a different type of challenge, or who are considering expanding an existing business, looking a little farther afield might offer a new perspective on the problem.
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As a general rule, setting up a business abroad is much easier today than it was 20 years ago, with global connectivity at an all-time high thanks to the internet and a rise in international investment. Having said this, there’s no denying that starting a business abroad has its own set of specific challenges when compared to starting a business at home.
As a global entrepreneur myself, I’ve had experience starting businesses from scratch in multiple countries. Here then, are some of the pros and cons I have discovered when starting a business abroad, and what they might mean for you as you expand.
5 Pros of Starting a Business Abroad
1. You’ll have a whole new market to explore
Whether you are starting a new business, or you want to expand an existing one with a foreign branch, setting up abroad gives you the chance to explore a new market for your products or services. This means, whatever the current trends or needs in your home country, you can identify untapped markets abroad and start your business with less competition.
Of course, this largely depends on the type of business you wish to operate, however, helping your business stand out from the crowd may be much easier in a country that is crying out for your products or services.
2. There might be incentives for foreign investors
Some countries currently offer incentives for foreigners looking to set up a new business. Often designed to stimulate the economy using outside investment, incentives are broad-ranging and specific to each nation, or even locale. It is important to research whether you qualify for any potential tax cuts or grants before you set up shop, since you may no longer be eligible if you apply retroactively.
However, with the help of a local accountant, you can ensure you take advantage of everything your chosen country has to offer and get your business off to a flying start.
3. You can increase your brand visibility
Particularly when you are expanding an existing business overseas, adding another branch or office can help increase your brand visibility significantly. The same can be said if you set up abroad and then translate your business idea into a viable operation back home.
Having international visibility is a sure fire way to boost your brand profile while still benefiting from local distributors, staff, and knowledge from each separate operation.
4. You can still reach customers in your home country
Today, businesses increasingly operate in international markets, and with the internet, this globalization will only expand.
Depending on your business type, you can set up shop in a country where overheads are lower, or there are tax incentives, and still promote your business back home to expand your customer base. This works well for a broad range of businesses from e-commerce to those within the real estate sector.
5. You’ll experience a new culture and enjoy a different lifestyle
One of the most important factors to consider when starting a business abroad is your personal experience of the country and the benefits it may bring. Embracing different cultures and lifestyles is a great way to broaden your horizons, however, it also gives you the chance to find a better work/life balance that may not be available at home.
While you may want to throw all of your energy into your new venture, many countries have various national holidays throughout the year, and it may simply be futile to go against the grain—so why not take a break!
5 Cons of Starting a Business Abroad
1. You’ll need to learn new market intricacies
The benefits of a new and untapped market are clear, however, the intricacies and cultural idiosyncrasies of any country can be challenging to master. Before you sink all your effort into starting a business in your chosen market, ensure you research the competition, the viability of your products or services, and double check your business plan has accounted for cultural and historical factors that may become a problem further down the line.
2. There could be a language issue
While English is now international and ubiquitous, there’s no escaping the fact that language barriers still exist and can provide a significant hurdle to new business ventures.
It certainly pays to hire a local, English speaking attorney and accountant to help you translate complex documents and paperwork so you can then complete them correctly.
Speaking of bureaucracy, its something you can never escape—no matter how far you run. What’s more, many countries are still very much in the dark ages when it comes to electronic systems for dealing with necessary paperwork and applications.
Be prepared to discover a maze of new rules and regulations that may seem obtuse and opaque. It pays to be patient, but also to have an English speaking professionally on your side to help you with things like business registrations and permit filing.
More reading: Do I have to pay US Taxes as an Expat?
4. Exchange rates could eliminate profits
Changes in exchange rates can be problematic, particularly if you are sending money home. Volatile currencies in certain countries are particularly at risk, and in some cases, you might lose any profits you make by exchanging your money.
Of course, ideally, you should put profits back into your business or use them in the country that your business operates, however, if you do need to send money home keep an eye on exchange rates and send it when conditions are favorable.
5. You could become homesick
Referring back to our previous point on embracing the local cultures, this is a great way to beat the urge to pack up and head home. Alternatively, try to make connections with expats who are also in your area and grab your chance to reminisce about the good old days back home.
Resilience is key when starting your own business abroad, and these pros and cons are very loosely based on my own experiences. Of course, you may find that many simply do not apply to you, however, conversely, you may discover a whole new set to call your own. Whatever you find on your journey, just remember to focus on your business plan and your end goals, work hard and you will surely reap the benefits of your new venture.
About the Author
Originally from Nottingham, England, Richard Lacey set up multiple businesses abroad and is currently helping expats and foreign investors find high-end real estate as the CEO of Coldwell Banker Ibiza. Richard is dedicated to providing customers with realty services that showcase the very best of Ibiza while balancing the needs of the island and its longstanding communities.
Hungry for more? Check out: Travel Deeper: A Globetrotter's Guide to Starting a Business Abroad.
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