What You Need to Know Before Starting a Business in Another Country

Yesterday, a couple of friends and I were discussing what we would do if a) we won the lottery, or b) the next British government turn out to be a bunch of incompetent scumbags. As winter is going to be here soon, my first thought was emigration to somewhere warm, with decent broadband speeds. But where? And if I didn’t win the lottery, what would I do for money? It then occurred to me that while it’s all very well wanting to set up somewhere new, it’s very difficult to know how to go about that without quite a bit of legwork.

For instance, in the country I picked as a happy compromise between good weather and good IT infrastructure, it is almost impossible for foreigners to buy property. There are ways and means around the rules, but I only know that because I know people who moved there. But that’s all I know about how business works over there: I don’t know if the working habits are particularly different from the US or UK, I don’t know what the average wage is, I don’t even know if they allow Sunday trading. Quite frankly, even if I did win the lottery, that money wouldn’t count for anything if I tried to put it to work.

It’s all very well wanting to move to pastures new, but you need to be able to navigate those pastures once you get there. It’s a daunting prospect; not only do you need to make sure that your business plan is sound in principle, but you also need to be sure that it could work in the regulatory, political and social framework where you hope to insert it. So you will need a good grounding in the society, customs and laws where you want to operate, and that is something you can’t possibly hope to gain in a couple of days’ worth of fact-finding. There is always the option of hiring a local lawyer and accountant to make sure that you stay on the straight and narrow, but you’ll need them once you’re set up anyway, so why throw good money at them before they’re actually doing anything for your business? You could try to go it alone, but there are all sorts of rules that tourists don’t need to pay attention do that you most definitely will if you are going to be living and working in your new location.

If you’re thinking about heading off into the great unknown, there are certain things that you will need to know before you can even start plotting on how to corner your chosen market niche. These include, but are not limited to:

  • Immigration regulations for those wanting to set up their business
  • Rules governing foreign investors owning property or businesses
  • Any financial rules for the amount of money you can bring in or take out of the country
  • Restrictions on foreigners owning property
  • The tax regime in the country and any laws governing wages
  • Rules governing the employment of foreigners over local workers
  • Any restrictions on the import and export of materials and equipment
  • The social mores and customs in your new location
  • Transport links to and from any other locations you may deal with
  • The general spending habits of the populace in your new location

I’m not saying that you can’t get by without paying exhaustive attention to any of the above, but if you did try to start a business whilst ignoring them and it failed, my sympathy bone wouldn’t so much as twitch. Then again, it is an awful amount of information to take in and assimilate. Luckily, these days, government websites for most countries have information sections for potential investors where you are walked through the basics, so they should be your first port of call. They will give a brief rundown of how to go about getting yourself up and running, and you can then do a bit more digging on your own.

My favourite place to figure out how the land lies is the Foreign and Commonwealth Office website here in the UK. Yes, I know it’s a government agency, but they really do seem to care about entrepreneurs getting a foothold somewhere; anywhere even. Simply visit the website, type “doing business in [country of your choice]” into the search box, and you get a wealth of information that is geared towards UK investors, but is still relevant to anyone who is considering the country. Once you have done that, it’s off to the CIA factbook to make sure that your next investment opportunity is not a war-torn hellhole with a serious democracy deficit.

That is almost as much running you can do on the internet. If you manage to escape the information overload unscathed, you then need to find a local who will give you the inside skinny on how things actually work. It is time to take a holiday. Forget the short trip. You need to be there for at least a fortnight in the area where you hope to set up. Talk to the small businesses: the newsagents, the bakery owners, the bar managers. They know how difficult local bureaucracy is to deal with, and they will relish the opportunity to bitch and moan.

Once you have done all that, now you can hire a lawyer, and an accountant to do your donkey work. Be very clear about what you want done, and don’t be afraid to raise any questions about how your business will be affected by local rules. Just remember, nobody is on your side until you are signing regular paychecks. They don’t need to be good to you until you are a sure thing. When choosing your professionals, try to go for personal recommendations, but if you can’t, don’t be afraid to visit expatriate forums to ask for (or find) tips.

Setting up a business is a scary enough proposition at the best of times. Doing it in a foreign country, where you might not actually speak the language, is an even bigger challenge. If you can stay cool, keep your head, and think of your escape to a better places as just another business decision, you can do quite well. Just make sure that you do as much work as you can before you leave to ensure that you are not ripped off the moment you arrive at the airport.

Update: This blog post has since been built upon by the blog series I did, Starting a Business Abroad. If you’re interested, you might like to check it out!

[Image by Mroach]

2 Comments

Filed under Business, Entrepreneurship, Small Business

2 responses to “What You Need to Know Before Starting a Business in Another Country

  1. sean

    I realize that the elite in America seem to be able to make more money with greater ease due to the fact that they have a greater amount of money. As they always say it takes money to make money. I was thinking setting up a business in a foreign country might be more worth while then in America. The return maybe quicker and less consuming. Does anybody have any ideas of a good business to set up in another country? Lets say hypothetically speaking a start off of 500k. I saw a business that actually was dedicated to skydiving for tourists. I’ve looked in to booze cruises, hotels, even banks. Would anybody have more insight or suggestions for other businesses?

  2. i have a idea but it is personal. I am a student i have no money for doing business.my family background is not good. so what im do i don’t no.

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