How to Start a Business Abroad
Starting a business is tough. Starting a business abroad is even harder. Any business conducted on foreign soil means additional regulations and taxes. Different countries' customs guide prospective customers' and tastes and preferences.
- Difficulty:
- Challenging
Instructions
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Analyze Competition
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Identify competitors. Your competition will indicate whether your field is already saturated or your niche company has room for growth. While the market for inexpensive MP3 players might be too crowded in the U.S., such a business might be received well in Portugal, where there are fewer competitors offering them at a low cost.
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Document competitor strengths. If an Italian shoe company has been in business for 50 years, and you want to set up a footwear company in Italy, assess why this old company is successful. Note its marketing strategy, distributors and materials suppliers so you have a pre-built list of contacts.
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Document competitor prices. Calculate your business's cost of production and match it to the retail value in the country. This will give you your profit margin if the retail value is less than production cost. If your costs are higher, you will need to find cheaper materials, lower wages or change other business decisions to make a profit and be competitive.
Research Countries
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Assess which countries possess necessary resources for your business. Identify each step in your supply chain and match which countries best satisfy those needs. For example, target countries with the lowest wages for manufacturing. Select countries with the highest market to sell your product.
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2
Research government regulations. Record tax rates of operating a business. Taxfoundation.org indicates which countries of the Organization for Economic Cooperation and Development (a group consisting of developed countries in Asia, the U.S. and Europe) have the highest tax rates. Japan has the highest corporate tax rate, the U.S. has the second-highest rate, while Ireland, Hungary and Iceland have some of the lowest. The tax rate will affect your company's bottom line.
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Note economic conditions. Even if a company promises the lowest cost for materials or wages, if the company lives in a country where its warehouse might succumb to a military coup, the lower cost is not worth the instability. Choose locations with a stable political landscape.
Design Your Business Model
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Coordinate groups. Set up communication methods between your departments. This is especially important if your business extends between multiple countries. Delegate head contacts in each group and request daily feedback to better oversee operations.
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Strategize your sales and marketing. Assess tastes and preferences of consumers in each market. Though the Japanese like ice cream, they may not like traditional American flavors. One marketing website, iMediaconnection.com, suggests visiting the country beforehand for the best picture of how consumers make purchasing decisions.
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Select business partners. Hire a native of the country to be your partner. She will know more about the language, culture and laws than you. At the very least, hire a consultant to assist you while you become comfortable with your new business abroad.
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