There is a lot more groundwork that needs to be done if you wish to achieve your dream of establishing your business in a foreign country.
Although some countries encourage foreign investors, others like the US can be quite strict with taxation on international establishments. Nonetheless, setting up a shop in a foreign land can be financially rewarding when done properly.
This article will explain how to do that.
1. Conduct proper research
Indeed, the point stated above is genuinely valid, for it is the cornerstone of all you are going to encounter as you set up your business.
Your research should cut across various points and industries like taxation, politics, business laws and practices, etc.
For instance, a country like South Africa is relatively easy for foreign investors to come in, buy a property, and start a business. The cost of living is on the low side, and you have access to a large workforce.
However, after conducting proper research, you will discover that the country has a history of xenophobic attacks, a high rate of corruption, and political unrest.
Crime is high and seldom successfully prosecuted. Labor laws distinctly favor workers, and unions have a lot of say in the country.
Furthermore, there is an unstable power grid and poorly maintained infrastructure. These and many more factors combine to hinder the ease of doing business in the country.
Also, you want to research the market of the country you are coming into for business. You have to be aware of competitors and what you need to do to stand out.
It will take a lot of marketing power to convince locals on why they need to buy from you and not their very own already established homegrown brands.
2. Seek professional legal advice
Irrespective of where you come from, the laws that govern your nation can never be ultimately the same as those governing the country where you wish to establish your business.
For this reason, you need to seek legal counsel from the get-go.
Trying to assume that the legal protections and tax you enjoy as a citizen in your country is the same as those from other nations can cost you dearly after you must have established your business.
Also, waiting for government organizations in charge of tax collection and other legal duties to visit your business before you seek legal counsel can be detrimental to the growth of your company.
Where possible, seek counsel from legal practitioners and advisors who understand both local and international laws – especially the laws of your country of interest.
3. Hire local help
As a new entrant into the market, it is almost impossible for you to immediately understand all that you need for your business to thrive.
For this reason, you need to hire local help – preferably, a successful business owner who is familiar with the ways of handling transactions in that region.
In the long run, this relationship should favor you as you seek to understand the rudiments of conducting business in your new environment.
Also, should you face any challenges along the line, you will have someone who already understands the system to guide you out of it.
4. Understand cultural differences in the new countries
This is another area that outlines why you need a local partner who understands the rudiments of doing business in the country.
Something as simple as a handshake can make or mar your business negotiations with a client.
Also, you need to analyze the product you wish to introduce and see if it fits with the cultural beliefs of the local people.
5. Determine your budget
Starting a local business in your own country is hard, but setting up a business in a different country is three times harder.
One of the significant challenges frequently encountered while setting up businesses in a foreign country is a lack of proper budgeting or capital.
No matter how much planning you carry out, unforeseen expenses will always occur, and without the right budget, your business may suffer.
That is why experts advise that you budget more than your total calculations to ensure you are left with enough backup capital to tackle any problem or delay that may occur.
Best countries to start a business as a foreigner
It is easier to set up a business in some countries than it is with others.
Below is a list of the top 10 countries identified by the latest World Bank Ease of Doing Business Report, their GDP, and some of the reasons why businesses could be easily set up at those places.
These countries are arranged in order of decreasing ease of doing business.
1. New Zealand
GDP: $205 billion
New Zealand ranks as the best place to do business in the world, according to the World Bank. The government actively encourages foreign investment by offering tax incentives and other rewards.
Also, the country has a well-developed infrastructure and offers a stable environment for growth.
GDP: $364.2 billion
The government has embraced globalization and provides a safe, high-quality business environment. It is known for its integrity and for being strict when enforcing intellectual property rights.
3. Hong Kong
GDP: $363 billion
The region is multicultural, with several large international firms using it as a base of operations. It’s ideally located for business in the Asia Pacific area as a whole.
GDP: $352 billion
In this country, you can get your business off the ground in a few hours, owing to the highly efficient government.
You also have access to a highly-educated and productive workforce. Encouraging foreign business ranks highly in this country.
As of 2018, foreign direct investment totaled $112 billion.
5. South Korea
GDP: $1.6 trillion
- The workforce is highly skilled
- The government offers many incentives for foreign investors.
6. United States
GDP: $20.5 trillion
- The United States accounts for a quarter of all economic activity in the world
- Foreign direct investment in 2018 totaled to $4.34 trillion.
GDP: $16.2 billion
- It’s simple for foreign investors to start a business here.
8. United Kingdom
GDP: $2.8 trillion
- Strong and stable economy
- Encourages foreign investment
- Foreign direct investment in 2017 totaled just over £92 billion.
GDP: $434.8 billion
- Stable economy
- Encourages foreign investment
- Highly-skilled workforce.
GDP: $551 billion
- Highly-skilled, efficient workforce
- Corporate taxes are low (but bear in mind personal income taxes are among the highest on Earth)
- Stable economy
- Foreign direct investments into Sweden in 2017 totaled at $325 billion.
Before setting up your business in a foreign country, be aware of the risk involved and watch out for events that may derail the smooth running of the business.
Also, take into consideration individuals and agencies you work with to help you understand how businesses are conducted in that region.
Taking advice from the wrong source can kill your business before it even gets established.
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Andriana Moskovska is proud to call herself SmallBizGenius’s community manager. Her mission is simple: to connect small business owners with the best tools and resources to help them thrive. When she’s not working, Andriana likes to go for walks with her two pet dachshunds and binge-watch documentaries, usually not at the same time.