Starting off on a path towards business success is all about having a great idea. Once you put your idea to test it might not perform as great, but this doesn’t necessarily mean that the idea is bad – only that the market isn’t right at the moment. This means that you have three options. The first one is to modify your idea a bit and try to reach another target demographic with it. The second choice is to wait until the situation in this market gets better, which is probably the worst of all of these ideas, seeing how this “right time” you are waiting for might never come. Your third option is to consider starting a business abroad and here are four things you need to know about it.
1. Seek legal advice
The first thing you need to keep in mind is that all your knowledge of local business regulations isn’t necessarily going to help you abroad. Because of this, you may want to ask for a local legal advice. Furthermore, some countries are offering incentives in order to attract foreign investors, which might be worth your while. Nonetheless, even though no one is disputing your ability to conduct a proper independent research, you need to be careful of the fine print. This is why it might be for the best to hire a local legal agency to represent you.
2. Don’t make assumptions
One of the most common mistakes that a lot of inexperienced business owners make is assuming that the foreign market is one homogenous environment. However, this attitude is as wrong as it gets. Some larger countries span whole continents, which means that different regions may have a completely different cultures or demographics and therefore a different market. For example, if you plan on starting a business in the U.S. you need to think carefully whether to do so in Los Angeles, New York or even Hawaii. For this, however, you better consult your local destination management agency that specializes in the USA.
3. Learning the local culture
Regardless of what some people may think, the money you bring to one’s country isn’t the only thing that matters to the local businessmen. By acting disrespectfully towards their country or culture, you can drive away potential partners or local investors. This is why you need to learn a thing or two about the regional etiquette. For example, in China, you are accepted to bring a gift to a business meeting, but it is also customary for its recipient to refuse it up to three times before accepting. It is quite easy to understand how this can cause a misunderstanding or even a frustration in someone coming from the Western Hemisphere.
4. Risk is a double edged sword
Finally, countries that are the most desperate for local investment are usually those with low political stability. This, however, can be both a good and bad thing. First of all, most of your competitors will probably avoid it, which means that you will have quite the advantage in the local market. On the other hand, countries with low political stability tend to have a bit higher corruption rate, which can make running a business much more difficult. Aside from this, in some parts of the world, there is always a present risk of a war breaking out or political turmoil which could potentially halt your business for an undefined period of time. He who dares wins, but sometimes the risk will simply be too great.
By taking a closer look at these four factors you will be well on your way to determine if starting a business abroad is the right choice for you. Sure, you could profit greatly from such a move, but keep in mind that even with all the best wishes you might not be able to afford such a thing. Hiring a legal team, a DMC, investing in the research of a foreign market and working with an unstable local government might end up being more than you bargained for. In any way, this choice is yours to make.