Why Starting a Business Abroad May Not Be Right for You: Considerations Before You Take the Plunge

Previously Published on TheBlackExpat.com

Moving abroad can provide a variety of professional opportunities. I’ve written about some of the many considerations you should think through before starting a business abroad, now I’ll go over the reasons why starting a business abroad may not be for you.

If You’d Really Prefer to Work for an Employer Abroad

Excellent business ideas and businesses may be formed by people who are unexpectedly laid off from their employer or simply out of necessity. However, if you would really rather be working for an employer abroad for financial stability or any other reason, that is valid and you should do that. You may have to be flexible on location, position, salary, or a whole host of other factors. 

But if you’d prefer to work abroad with an employer, I strongly urge you to seek out a qualified headhunter or recruitment agency to make that happen. Too many people believe that finding a job abroad is or will be too hard so they think that entrepreneurship is the easy way forward. However, that is definitely not true for many. Making a business successful, acquiring and sustaining profitability is not necessarily easier than getting a job abroad. I’d only suggest embarking on entrepreneurship if it is your desire to leverage your skills and talents into your own venture.

If You’re Looking To Make Fast Cash

Entrepreneurship is not a get-rich-quick scheme; ask the people who seemingly have overnight success (read: just became more visible due to a major feature in a magazine or on social media or a television program). Even people who are met with immediate demand once they hang their shingle for business, know that demand and interest do not necessarily mean fast cash. Great sales often require the expenditure of funds to maintain or expand systems to deliver the products or services. 

Many factors may take a ‘big bite’ out of your dreams of a fast cash endeavor, such as your overhead costs, like the cost of developing or manufacturing your product or service, delivery costs, marketing, and so on. Overhead costs could balloon directly with an increase in sales, which means immense sales don’t necessarily translate into immense profits, depending on your margins. Some profitable business owners don’t take a salary from the business for years because of the need to reinvest profits into the business to continue growing. Obviously, this is extremely dependent on the type of business you have, among other critical variables, but most legitimate business endeavors are not fast cash schemes.

Your Finances Aren’t In Order

If you are experiencing financial instability, I would not recommend starting a business abroad full time. It may be in your best interest to start with a side hustle, gain some financial breathing room, then try to go full time. Due to my aforementioned belief that most businesses are not and should not be thought of as get-rich-quick schemes, experiencing financial instability with the pressure of ‘having to make a business work’ is often too much for anyone to bear. It works for some people but not for others, therefore I suggest making sure you have a financial safety net (savings or a full-time job) that can support you and your family while getting started.

Low Tolerance For Risk

Entrepreneurship can be a gamble, there is some amount of risk you must be able to stomach.  Depending on the venture and the investment required, you should ask yourself (or write up in a business plan) when you project:

-to break even (when you will recoup your initial investment).

-you will be profitable (making money in surplus to your cost of running your business). 

-you will be able to pay yourself (for real). 

Not everyone can withstand this type of uncertainty or can only withstand it for a specified amount of time (and not a day more). Even with the most carefully laid plans, the unthinkable can still happen – like a global pandemic, for example – so assess your and your family’s tolerance for risk to determine if launching a business abroad is for you. Perhaps determine a deadline for profitability that works for you, such as ‘if this business is not profitable, meaning making x dollars (and I’m able to to take x dollars out of the business to pay myself) by six months or one year, then I’ll find a job, go to school, pivot in some way’.

Unwilling to Pivot

If you’re unwilling to be responsive to the market, your business won’t succeed. Remember, you’re providing a product or service that in essence should solve a problem faced by your target market. Refusing to listen to the people you hope will become customers, take their feedback into consideration, or refine in a way that your audience requires will not be fruitful. 

In addition to it being a poor way to treat prospective clients, you may lose out on valuable insights by being inflexible and also miss out on your next great business opportunity! So although you may have the next great big idea or you just know a certain business will really take off, if you are inflexible or unwilling to be molded by market feedback, if you’re unwilling to pivot your business to be responsive to the market, then you shouldn’t launch your business. A business is constantly iterating due to external factors like trends, audience taste, logistics, taxes… If you’re unwilling to be flexible then you will most likely break and business is not for you.

You Don’t Have A Clear Vision, But The Idea Of Having Your Own Business Sounds Appealing

I believe in having a well-researched and tested business idea. I don’t think a lot of people have the capacity to be able to move to a different country and fling themselves into entrepreneurship without a vetted idea, community support, or target-market knowledge. If you’re interested in launching a business but you’re not sure just what business it will be or you’re lacking clarity, don’t just fling yourself into it. I recommend taking more time to think about the problem you’re trying to solve and the people you want to service. Perhaps interview some of the people that you think are your potential target market to really assess their needs and desires.

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Build A Business Abroad: Key Considerations Part 2

Previously Published on TheBlackExpat.com

More and more people are looking to live/work abroad, but preferably without being tied to a company or organization. In Part 1 of Building a Business Abroad, we looked at a variety of things to consider, including the type of business, infrastructure needs, visa requirements, language, and more. Here, we build on that with a few more indispensable factors to be aware of if you’re thinking of starting a business abroad.

Intellectual Property

According to Black’s Law Dictionary (US law), intellectual property refers to a category of intangible rights protecting commercially valuable products of the human intellect. Some of these protections are copyright, trademark, patent, and trade secrets. Intellectual property rights (what is protected, how it is protected, and for how long it is protected) can vary from country to country. Understanding what steps you can take to protect your intellectual property in the country you’re doing business in is a necessary step in considering if you should start a business. Consulting a local attorney that specializes in intellectual property will be your best bet in getting the information you need to make an educated decision.

Labor Laws

If you plan to employ people from the local population, it is vital that you understand the local labor laws – what are the rights and protections afforded to you as an employer, and what are the rights and protections of your employees that you will be expected to respect. Consider what is a livable wage in the country, what are the laws around hiring and firing, what is a workday, and what holidays, traditions, and customs will need to be recognized.

Working Currency and Currency Exchange

It is equally important to consider what will be your working currency. With what currency will you purchase supplies, produce the product, pay contractors or employees, accept in exchange for your products or services, and use for business purchases, savings, and to pay yourself? If you will need to be exchanging currency frequently, it is important to have a currency exchange strategy so that you do not incur unnecessary fees or lose money in the exchange. Consider having a business account that holds multiple currencies and a bank that has low exchange rates and wire transfer fees.

Tax Exposure and Implications

As mentioned above, understanding what taxes you and your business will be subject to is an important consideration when deciding to start a business abroad. Consulting a licensed accountant in the local country and a licensed accountant with experience working with ex-pats with businesses will be your best bet to ensure you are well-versed in the tax implications of your business. It is also important to consult a licensed accountant to develop a tax strategy that makes sense for the type of business you have, your lifestyle, long-term residency goals and ensures you honor all tax obligations. 

Target Market (Local vs Outward-Facing)

One of the foundational steps in developing a business is understanding who you will be serving, what you will be serving them, and how you will deliver that service to them. This is equally important when deciding to have a business abroad. Will your product or service be directed to the local market or a market abroad? This decision may affect the price of your product or service, how you market your product and whether you have an interested audience, and ultimately, a viable product at all. Not all markets have the same problems or are looking for the same solutions (or your unique solution). Cultural differences dictate what is deemed a problem, deemed a necessity, deemed a luxury, or deemed unnecessary. Once you have decided who your target market is, conducting the requisite target market analysis is key for a successful entry into the market.

Support Network (Local and Abroad)

Being a business owner can be a difficult and lonely endeavor, but especially when embarked upon abroad. Seeking out and cultivating a support network can make or break your business. Having a support network provides not only encouragement but also a community for you to ask questions, refer business to each other, gain understanding about cultural norms, taxation requirements, and more. Be sure to seek out community support both within your local community and abroad. A good place to start is the local chamber of commerce or equivalent and the local chapter of an ex-pat group, for example, the American Society of Barcelona. It makes a world of difference.

Moving abroad should always be embarked upon with intentionality and respect, but deciding to conduct business abroad should especially be approached with intentionality, respect, and a heightened sensitivity toward the local community. Consider how your business will affect the local community. How can your business be a positive influence within the community? How will you intentionally engage with the community? As a guest within a country, it is important to think and behave in a manner that is inclusive of the local community and has reciprocal benefits.

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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.

Interested in Building a Business Abroad? Grab the Build A Business Abroad Guide

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