A Quick Guide to Starting a Business Abroad
It all starts with a dream – a dream to have a business, contribute to the community, contribute to the economy, make a profit, and make a difference. Most of the business people and entrepreneurs start with their businesses and startups in the countries they are born in — which makes sense since they know the laws, culture, and customers.
But there’s a good probability that your business might be better located in some other country — maybe because other countries have more lenient business laws compared to your country or maybe the cultural norms of other countries sit well with your offerings. For example, setting up a business is quite easy and only takes about 2 weeks of time if the business person shows the ability to invest a substantial sum in the country.
There’s also a possibility that your business might become more prominent and beneficial by expanding to different countries with a diversified product portfolio.
In today’s globally intertwined economies, the possibilities are endless. That’s why we are going to explore how to start a business abroad, what are the benefits, challenges, considerations to take into account, legal requirements, and more.
To make this article more relevant and inclusive, we are not taking any base country and keeping the sections like legal requirements, considerations, and tips all-encompassing.
Let’s start with the benefits of starting or expanding a business abroad.
Benefits of Starting a Business Abroad
- Taking the distribution and operations abroad gives businesses an opportunity to break the limitations set by the boundaries of a country, thereby taking growth to the next level.
- There’s a possibility that you’ll be able to achieve lower operational and labor costs by moving/expanding to countries like China, India, Bangladesh, etc. Of course, there are some economic indicators to consider like GDP, consumer price indices, investment policies, etc. before finalizing anything. Lower operational costs are lucrative but a country that’s not business-friendly will end up costing you heavily in the long run.
- When you enter a new country, you also get access to a newer talent pool of skilled workers which can help you achieve your strategic and expansion goals faster and effectively.
- This one is more of a tip than a benefit – try and set up businesses in emerging markets/economies – they are usually off the radar of big corporations giving SMEs a fair chance to become pioneers and tap into the potential of these untapped markets.
These are among the main benefits of expanding or starting a business abroad and as always, there are two sides to this coin. So, let’s explore some of the challenges you might face while planning and executing to build a business abroad.
Challenges of Starting a Business Abroad
- Earlier, one of the main challenges of starting a business abroad used to be managing global workforce/operations. But now, after a few waves of this deadly coronavirus, businesses are immune to remote working. It has also boosted the cloud application industry which is enabling businesses to conduct business as usual from the comfort of their homes.
- English is understood and accepted globally but people in most of the countries and cities around the world don’t converse in English. And they would definitely not like to be pitched for products and services in a language that they don’t understand. This would be highly counterproductive. It could easily be avoided by procuring certificate translation services to translate the business certificates and other documentation for your new business entity’s establishment abroad.
- Currency exchange rates – most businesses forget to add this point to their checklist when setting up a business abroad but it’s quite important. The value of your products, profits, and costs would highly depend on the currency exchange rates between your country and the country you are planning to set up business in.
All in all, the benefits overpower the challenges and since we are living in the digital era where work happens online, starting a business abroad and tapping into the global economy is the right move if you’ve achieved substantial success in your home country.
Now let’s equip you with the legal requirements and proven tips to start a business abroad.
Since we are not exploring a particular country’s legal requirements, we would be giving you an overview of the legalities you would need to pay attention to before setting up shop anywhere.
- Check if the country is asking for a residence visa of business owners or the directors of the company. The more business-friendly countries offer Startup Visas. Here are a few examples: Canada’s Startup Visa Program, USA’s International Entrepreneur Rule, Chile’s VisaTech Program, Startup Visa Lithuania, French Tech Visa / French Tech Ticket, etc.
- Documentation of a business is quite tedious but one of the most important steps, so make sure you are getting all the documents right before submitting them to the authorities.
- Make sure to keep yourself updated on the post-registration processes tax identification, VAT numbers, register the employees, including the directors, for social security, pension purposes, healthcare, etc.
5 Quick Tips to Keep in Mind Before Starting a Business Abroad
- Evaluate the market you are about to enter. Market research is quite essential to successfully set up your business and be well-received in the new country.
- For all your communication and digital marketing operations, hire freelancers to get a hang of working with native talent. Build your team mindfully and strategically to utilize the resources optimally.
- Expand your network, connect with local business people who understand the surroundings and cultural norms. This will help you understand the business landscape in a particular country easily and quickly.
- Apart from networking locally, it’ll be quite beneficial to hire a local agent that can show you the ropes of running a business in their city. You can also hire an accountant who’s well-versed with international business laws to help you with all the legal stuff.
- Pay attention to logistics issues and resolve them before you set up shop there. This would include understanding the current infrastructure of the country and the complete movement of your goods.
Lastly, let’s see which are the best and worst countries to start a business in 2021.
Best & Worst Countries to Take Your Business in 2021
- Singapore with $313 Billion GDP
- Norway with $399 Billion GDP
- New Zealand with $211 Billion GDP
- Mexico with $1.1 Trillion GDP
- Switzerland with $679 Billion GDP
- Afghanistan because of political unrest
- Chat with -6.4% GDP growth rate
- Libya with -1.3% GDP growth rate
*The GDP numbers are as of 2017.
Read this article for the complete list of best and worst countries for a detailed understanding of their economies.