You want pitfalls? You got ’em, by the bucketful. Five, six, seven and more tips to help successfully launch a business overseas?
You’ve got them too. Whether looking to finance a start-up in Bahrain in the Persian Gulf, or chin-wagging in China to build up a network of suppliers, the Internet can be a gung-ho entrepreneur’s best friend or a nightmare for the undecided slowly drowning in a quagmire of indecision.
So which are you, gung-ho or undecided? Jeff Wuorio over at Microsoft Business, obviously writing with an American audience in mind, suggests there are a number of salient issues that apply to all overseas ventures, no matter the country or the business. Without doubt, his tips are a good starting point, all of them aimed at getting you off on the right foot.
Basic Nuts and Bolts
Jeff’s top tip? Begin any entrepreneurial journey at the U.S. Department of Commerce. And that goes for everybody looking to set up a business anywhere, whether at home or abroad. The advice on offer at the Department is free, which is nice, and covers a huge range of topics, too, from tax implications to overseas agents. It should be stop No. 1, suggests Jeff.
The second tip, says Jeff, is not to assume international markets are wholly different to the U.S. market. Yes, some may be, for example in certain Latin American jurisdictions, but there are many other countries where the basic nuts and bolts of business isn’t that far removed from the U.S. experience.
However, that doesn’t mean that every overseas market is, in essence, a mirror image of the United States. Anything but, writes Jeff, adding, “That makes hooking up with competent advisers, locally based, absolutely critical. Whether it’s an attorney or a banker, make certain that they’re located in the market where you want to set up shop.”
If market research is important at home then it’s as important overseas, perhaps more so. A potential land mine for Americans looking to do business overseas is the mistaken assumption of novelty – that a product or service, by virtue of being “American”, is somehow unique enough to sell itself no matter where or how. That, warns Jeff, is a potentially fatal mindset.
Gemma Aldridge, writing for the website Startup Overseas, says poor finance is the most common reason a business fails. From inadequate planning to misguided cash-flow management, finances can suffer at many points in a company’s life-cycle. And the worst thing is, it’s usually preventable.
Starting up a business abroad may also require up-front payments for relocation, licensing, visas, legal and/or translation fees. It’s also important to consider where the money is coming from, whether from your own savings or through borrowing from a bank.
She adds, “If you take your own money out of savings and push it into your new business, you stand to lose not only the capital, but the potential interest you would be earning on it elsewhere. If you chose to borrow the money, however, you may find that it is currently difficult to find a loan with a good interest rate, meaning you may end up paying back much more than you borrow.”