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Starting a Business Abroad: Have You Your Papers?
When you have completed all your preparation and made the jump across the border, you’re finally ready to start up your new business in a new country. But don’t forget the last-minute details that you have to deal with in person before you can congratulating yourself and concentrating on making the business a success. And yes, it requires yet more paperwork!
By now, you are tying up the final loose ends before your new business starts operation. You should have your funding in place, have secured premises, and completed the personal immigration procedures you need in order to run your business legitimately. You should also have completed interviews and hired your first employees, under contracts that conform to the national laws. From a personal perspective, you should also have somewhere to lay your head at night, means of transport and (if mandated) private health insurance.
You may be required to register with your local council or administrative department once you have a permanent address. It shouldn’t be a complicated process if your visa and other immigration documents are in order, and may be necessary if you need to access certain public services, such as healthcare. In addition, it isn’t a bad idea to register as a resident national at your own country’s consulate either, so that you can be easily contacted in case of any emergencies.
One of the most important things for any business is their banking facility, and this is one of the things that you will want to get in place as quickly as possible. If you were not able to set up an account without a local address, you now need to make sure that you have both a business account and a personal account for your individual needs. Make sure you understand the terms and conditions of the account you are opening, and that you are aware of any fees that may be imposed. It is important that you know exactly what you are getting into, so don’t sign anything until you’re happy. If in doubt, ask your accountant.
Depending on the kind of business you’ll be operating, you may need certain licences, registration or permits in order to operate legally. For instance, some countries insist that anyone running a bar or a business dealing with financial transactions must pass a “fit and proper person” test, to keep less savoury types out of the industry. While you may be able to fill out some of the applications for these bureaucratic niggles remotely, you may still need to present yourself in person for it to be completed. Make sure everything is in order before your grand opening. Once again, this is something your lawyer should have informed you of.
Some countries also require you to have an individual registration for tax contributions and social security. In addition, you may have certain obligation to any employees you are taking on, in the form of payroll or pension contributions. Make sure that all of your staff have their paperwork in order (have your accountant check it out) before you begin operations. The last thing you want is an audit or tax inspection when you have barely gotten started.
Before throwing open your doors to the general public, there are also a certain number of things you need to check on, though these would be the same for any business, regardless of where you are starting it:
- Ensure all the utilities (electricity, internet, water, gas, etc.) in your business premises are functioning. If electricity supply in the country where you are operating is variable, invest in a backup generator.
- Run through your business processes with your employees. Make sure everyone knows what their job entails, what is expected of them, and how to handle customer enquiries.
- Check that all your marketing materials and branded goods are spelled correctly. If you still aren’t fluent in the language, have a trusted employee go over it for you. It would be embarrassing to look less than professional as soon as you open for business.
- Double-check all of your paperwork. In certain countries, the opening of a new business if the perfect opportunity for unscrupulous officials to pay a visit and levy “fines” for incomplete licences or badly-fined permits. Don’t give them the chance.
Finally, you should be ready to have your first paying customers. Depending on the type of business, you may choose to have one big dramatic launch, complete with media publicity blitz, or you may choose to go for a softer approach. This could involve only opening to invited guests for the first few days, before gradually opening up to more of the general public. Regardless of the approach you choose, you won’t get any customers if nobody knows you exist, so make sure you have a marketing plan in place to announce your arrival, whether it be as simple as a set of flyers printed up and handed out, or a more comprehensive month long television and newspaper advertising campaign.
Starting a business is difficult enough, but when you are in a foreign country it can be even more complicated, as you deal with unfamiliar rules and regulations. Nevertheless, if you have done your homework and completed your preparations, the process of getting ready for operations will be much the same as in your own country once all of the paperwork is complete. Bureaucracy can be tediously dull, but it is there for a reason. Get the paperwork in order, and the rest should fall into place.
[Image by Nick Wheeler]
Starting a Business Abroad: Ducks in a Row
So you are absolutely certain that you are going start a business in another country. You’ve done your research, investigated the market, visited the country, even made a few contacts. But how to bring it all together? You don’t just need a business plan; you need a strategy.
One of the first things you should be doing, regardless of what kind of business you’re going to be starting, is taking language classes if you are not already fluent in the tongue of your future home. Even if the majority of your interactions are going to be with expats or other foreigners, it helps to speak the language where you live. Plus, you need to understand the paperwork you’ll be filling in, and to be able to read the press that brings you news that might affect your business. Don’t assume you’ll be able to muddle along with what I call “bar-level” language skills; you will not always have a translator or interpreter at hand to help. Make the effort and take steps so that you can communicate competently.
Your next step should be to take all of the information you have collected about the business environment in the country where you hope to start a business and plug this into your business plan, being as accurate as possible. You may need to swap a couple of emails with your lawyer and accountant to get a clear picture. Nevertheless, the business plan should reflect the regulatory framework in which you will be working, any special conditions that will be imposed on you as a foreigner and how this will affect not only the operations but also the profits of the business. This will impact directly on your personal income, so it is in your interests to make sure that you are not unwittingly impoverishing yourself.
One important aspect of your business plan is how your new venture will fit into the existing commercial landscape of your chosen country. You will need local suppliers and contacts if you’re going to get anything done, and some might be imposed on you by law. For instance, the Philippines demands that any foreigners setting up a business in the country must have a local partner. Now, they might seem like the ideal candidates, but in the name of whichever higher power you believe in, if you find yourself in this situation I am begging you not to choose your lawyer or accountant as a silent partner. Who would you turn to if the partnership went sour? Naturally, this is something that you should have picked up on, either in your initial research, or on your investigatory trip to the country, so you should have someone in mind by now.
In addition to all the usual paperwork involved with starting a business, you are probably also going to have extra paperwork to fill out to fulfil the immigration and visa requirements for the new country. While your lawyer there can probably handle the more mundane things that have to be done locally, it is likely that you will have to make an appointment at the embassy to be interviewed, present evidence that you have enough funds in place to not only invest but also to survive without government help and generally satisfy the foreign government that you are the sort of person who they want to allow to settle in their country. Be prepared to be asked for originals of everything, from your birth certificate to your vaccination records. Also make sure you have several (verified, if possible) passport-sized photos available, in case you are asked for them.
Now, it is time to take another trip to the country where you have decided to start a business. You need to do this so you can lay the groundwork so that you can hit the ground running when you make the move permanently. On this trip, you’ll be double-checking all of the information you gathered the first time round, following up any leads you managed to get from the contacts you made, and also conducting meetings and interviews with potential partners and employees. Once again, it is not a holiday, so keep your eventual goal in mind. You also need to consider your own living arrangements for when you make the move. Can you open a bank account before you have a local address? What about getting your driving licence endorsed or transferred? Have you investigated which area you’re going to be living in and what sort of property you can afford to buy or rent? This is the trip where you are not only making enquiries, but setting things in motion.
Provided you have done your homework, getting to the stage where you are not just sure about starting a business in a new country, but are on the brink of making the move will not be too stressful. While each country’s bureaucracy had its own idiosyncrasies, by now you should have had enough contact both at the embassy and in the country to know what to expect. Don’t imagine for a moment, however, that it is smooth sailing from here on in. Continue to expect the unexpected, and with each new piece of information, go back and rejig your business plan.
Tomorrow: finally setting up your new business in a new country!
[Image by Nick Wheeler]
Starting a Business Abroad: Getting a Team Together
Right, if you’ve made it this far in the series, you’ll have not only completed your preliminary enquiries into going about setting up a business abroad, but will also have visited the country of your choice to carry out more detailed investigations. By now, you should have a local lawyer and accountant on board, but what about the other employees you might need?
Recruiting staff is a time-consuming and complex exercise at the best of times, but it gets even more complicated when you are in another country and are trying employ people for a new business that doesn’t exist yet. It’s tempting to think of recruiting at least your senior employees in your home country and taking them over with you, but some countries have strict immigration rules on what kind of employees can be brought in, and may even have rules about the number of foreign employees a business can have. If this is the case, it’s time to get back on the ‘net and start hunting.
Once again, it’s back to the expat boards, which I mentioned in the post on gathering information. This time, you’re not asking for personal recommendations, but for the names of any recruitment agencies or employment brokers in the country. Alternatively, you want to know which are the biggest local websites and forums for those who are job-hunting, and also which newspapers carry the most job advertisements. It’s up to you whether you go with an agency for all your staffing or whether you’ll be conducting the search entirely by yourself, but regardless, there are a couple of things you need to keep in mind.
Language issues
If you don’t speak the language in the country where you’ll be operating, it is essential that senior employees can communicate with you. Anything else is a recipe for disaster. In addition to the skills and experience needed to carry out their role, emphasise that language skills are essential. For employees in more junior roles, whether they also need to speak a second language will be dictated by the business you’ll be operating, what kind of customers you’ll be serving and where you’ll be operating. Language skills will always be an advantage in the tourism sector, but if you’ll be running a business services firm catering to the local population, it becomes less of a consideration.
The optimism of distance
It’s easy to promise anything in an email, or over the telephone. Both recruitment agencies and any potential employees you contact directly could look absolutely superb on paper, but try to read between the lines and watch out for any signs that they may have embellished their resumes. As you are not in the country, it is vital that you double-check all details and references given. Familiarise yourself with the education system too, so that you’ll be able to judge grades and diplomas. It shouldn’t be necessary to ask for scans of all of these when you initially start looking for employees, but when you do finally start interviewing staff, they should be able to provide proof of all of their qualifications. That means originals, not photocopies.
You are dealing with people
I know that setting up a business abroad is your personal project, but you need to bear in mind the implications of your actions on other people. Be honest with everyone about the time-frame involved in getting the business set up, how much pay you are offering, and what will be expected. While it can be easy to think about putting off your launch for a couple of months when you’re far away, if you have already promised jobs to people that means there are families out there depending on you for their livelihood, and you getting a case of cold feet or hitting a last-minute snag will directly impact on them. By agreeing to wait and work for you when you set up your business, that means they may turn down other opportunities or be leaving other jobs. Be absolutely sure that you have all your ducks in a row before you start handing out job offers.
After assembling a list of possible candidates, you will of course want to interview them. It would be great if you could manage all of this via Skype and know that everyone would be in place and ready for when you get started. Sadly, however, these things still are still best done face-to-face, so you should schedule another trip that will involve conducting interviews and tying up other loose ends before you begin business operations.
Finding the right people to work for your business is difficult enough at the best of times, and being hamstrung by having to begin recruitment at a distance can make it seem an even more daunthing prospect. But if you are very specific about what you want, and take extra care when checking references and credentials, you will avoid the worst of the chancers and should be able to whittle down a pool of candidates to just a few who you want to investigate further with follow-up interviews.
In the next post, I’ll be describing in more detail the type of planning that you need to be doing before setting up a business in a foreign country.
[Image by Nick Wheeler]
Starting a Business Abroad: Fact-Finding Mission
Now you can finally book a flight to the country where you hope to set up your new enterprise! You’ll be staying for at least a week, ideally a fortnight. Forget the straw hat and flip-flops, however; you are not on holiday.
The first thing you will want to do when your flight touches down is to pick up copies of the local newspapers, and any specialist business publications that are available, if you understand the language. Read them; while the international press only tends to report on foreign business involving one of “their” firms or when there is cause for alarm or celebration, the local press will know all about the stalled deals that have been in limbo for years, the fastest-growing local startups or new regulations that are being planned. If you want to stay in the loop when you return home, consider adding the publications that have proved the most informative to your RSS feed reader or taking out a print subscription.
If the language barrier will be a problem, consider hiring an interpreter or translator to help you while you are in the country. It needn’t be hideously expensive; one economical way of getting a local fixer is to place internet ads before you travel looking for business or management graduates with language skills who are looking for a (very) temporary job. Sometimes they might even offer to double up as your driver! Make sure that their daily rate and petrol allowance is agreed in advance, though. Alternatively, your local consulate will be able to provide you with a list of approved interpreters and translators, though they will be significantly more expensive.
The next thing you should do, once you are settled in your lodgings, is to make an appointment to visit the local Chambers of Commerce. Once again, feel intimidated; if you are going to be bringing money into the area by setting up a new business, that is to their benefit too. It’s at the Chambers of Commerce that you will be able to ask questions about zoning laws, any regulations that are industry-specific to the new business you hope to set up and all the other things that you will have been unable to cover in your basic internet research at home. You may also get some useful information about tax rates, wage expectations, property prices and the general business attitude that prevails.
If you have already have a vague idea about which areas might be suitable for your new business, be sure to visit them all. You need to visit at different times of the day too, to get a feel for whether the character of the area changes with the hours. Be sure to note how busy the area is, the level of foot traffic in comparison to vehicles, and whether or not the area is a business district or mixed use. See how many other similar businesses are in the same area, whether they are all grouped together or more hapharzardly spaced out. Until Google Streetview has mapped every inch of the planet, this is the kind of research that you can’t do at home. At all times, think about what each area would mean for your new business and how any factors that stand out to you may affect your business plan.
Now, thinking specifically about your business, check out the existing market. Is there the demand for it? Who are the buyers? Do they make several small purchases or a few big-ticket buys? Do not confuse supply with demand, as it is infinitely easier to open a trinket stall than a full-service media agency; there will always be more of one than the other. Similarly, which existing firms are likely to be your closest competitors? How popular are they? Are they a national brand, or just one or two outlets with a loyal customer base? Are there enough suppliers in the market to support all of you, especially if the economy enters a downturn? Remember, you are starting a business in a foreign country, and the terms of your visa or work permit may not permit you to simply shut down and swap to something else if things don’t work out.
This trip is also your first chance to start assembling your local team. At the very least, you will need an accountant and a lawyer, just to ensure that you have all your paperwork and funds in order when you decide to take the plunge and set up. The expat boards you’ve been using for your basic research may be able to put in you in touch with professionals who also speak your language, while the Chambers of Commerce will be able to provide you with the details of those who specialise in commercial affairs. Arrange meetings with all those that seem most suitable, and hire those who have the best credentials. Don’t go for the friend-of-a-friend or the pushy shark who urges you to get started right away. The first meeting is their audition; you can break the happy news to them at the follow-up.
Take some time to collate all the information you have gathered, and start tweaking your business plan. If you seem any weaknesses in your strategy, you need to think about how to fix them now, before you start spending any serious money. But enjoy yourself too! You local consulate may have meet-and-greet nights for locals and visiting citizens, so sign up for those and see if you can start making some useful contacts. Also, if there are any relevant conferences or conventions whose dates fall during your stay, those might be worth a visit too. Keep thinking about how useful all these new people might be to you in the very near future.
By the time you head back to the airport for your return flight, you should have a local lawyer, an accountant and some business cards from people you have met. You should also have a clearer idea of where your business will fit in the local economy, the area it would be located, and which firms are your likeliest competition. If you feel that you haven’t quite got a handle on how business runs and what your prospects are in your new country, go home, rethink everything from the beginning and if necessary book another trip. If, on the other hand, you are feeling fairly confident, you can now start plugging your newfound insights into your business plan to make it more realistic.
Tomorrow, I’ll be talking more about recruiting local agents, especially the difficulties faced when you may not be able to meet them face-to-face more than once.
[Image by Nick Wheeler]
Starting a Business Abroad: Get Some Background Information
So you know where you want to go, and you have a vague notion about what you’ll be doing when you get there? What’s next? Well, you don’t need to pack a bag and book some flights just yet; that will come later. First, you need to get a little more information about your target country.
The one thing I’d ask of you, even if you are planning to set up in the sector, is to avoid any travel websites. They are in the business of selling you the country as a destination, so aren’t exactly going to be forthcoming about anything you ought to be worried about. This goes even for those sites that carry reviews and comments from the public. Travel websites, by their nature, are for people who are on holiday, just passing through. They are not for those who are making a permanent move overseas.
The best place to get information on starting a business in a foreign country is at that country’s website. Your local embassy may even have its own dedicated portal to help potential foreign investors hoping to set up a business, such as the Doing Business in Kenya page at the Kenyan High Commission in London website. Don’t be afraid to follow up with a phone call or email for any questions you may have. They may not work on commission, but most embassy staff are more than happy to help out someone who wants to invest in their country. Also, don’t forget your own country’s embassy in the other country; they will also have a wealth of information, specifically geared towards people like you, and will also be able to refer you to any trade bodies at home who help people set up businesses overseas
While the embassy will probably only give you just enough information to make their country seem like a paradise for your money, you would also be well-advised to seek out some other views about how to start a business overseas. Luckily for you, there are some big hitter and online communities to help you out. The World Bank and the International Finance Corporation recently released their 2011 Doing Business economy rankings, that measure the ease of doing business in 183 countries. More usefully, you can download a report for each country listed by clicking on the country name to reach its profile, which also outlines the procedure for starting a business in that country. Brilliant!
There are also a number of forums for expats who are already living and working abroad. If you’re thinking of starting a business in another country, it might be worth your while joining one of these to ask for advice on day-to-day life in your chosen country. One of the most active boards I’ve found is at Expat Blog. Don’t ask for specific business advice; the majority of expats have moved with extant jobs and may not be fully aware of all the rules and regulations concerning setting up a business abroad. Also, immigration and visa requirements are different for employees and entrepreneurs, so the paperwork they’ve been dealing with could be very different from the bureaucracy you will have to deal with. Nevertheless, expat boards can be useful for learning what life is like in a different country, from the difficulties in transferring your driving license to whether you can find a real ale pub where you have decided to relocate. So sign up, but beware: if anyone offers to hook you with with a deal on anything business-related, make sure you investigate them as thoroughly as possible. Scammers are everywhere these days.
Other sources of information to give you an idea of the economic and the political landscape of the country where you hope to set up your new business are the regularly-updated CIA World Factbook and the UK government’s Foreign and Commonwealth Office pages for various countries. While these will not give you specific advice on doing business in a foreign country, the CIA’s country entry’s provide useful background information on the state of the economy and the political structure, while the FCO covers issues such as local laws and customs and precautions to take for your own safety and security. While they are fairly honest, try not be to too alarmed at the FCO’s about crime, terrorism and disease; they are designed principally with British holidaymakers in mind, rather than adventurous entrepreneurs setting off to make their fortune. Once again, don’t forget that your own country’s foreign office may offer its own advice.
All of the information you glean from these sources will be helpful in building up a picture in your own mind about starting a business in another country. It may confirm your belief that the country you have chosen is right for you, it may send you back to the drawing board to look for an alternative location. But what it can’t do is give you a proper feel for what it will be like doing business abroad, which is what I will be covering in my next post.
[Image by Nick Wheeler]
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