If you’re lucky enough to have a successful small business, there may come a time when you’ll want to expand your business abroad.
Branching out internationally can bring huge benefits. You stand to gain a whole new client base, a bigger business profile, fresh tax options, potential new partners and, most importantly, more profits.
But exploring unfamiliar business territories can also bring risks. You may have to grapple with language barriers as well as differing banking and business systems. So how can you expand your business abroad without jeopardizing all the hard work you’ve put into building up your company on your own turf?
1. Client Base
When starting a business abroad, many entrepreneurs make the mistake of choosing a country that might look good for their profile but doesn’t hold the sales potential. It’s all very well dreaming of having the glamorous words ‘Paris – New York – London’ under your business name but if those cities don’t hold a solid client base for your product then you’re likely to be eating into the profits of the company in your home-country.
Find out all about the cultures of the countries you’re interested in and the people who live there. If you have some idea of the trending products of the country or popular pastimes of the residents, then you’ll be on track to be able to cater to their tastes.
The name of your company may mean something in your home country but does it say the same thing abroad? Watch out for words or slogans that could get lost in translation.
Some examples of disastrous branding translations include an Iranian company who produced a soap powder called ‘Barf’(which means snow in Iran) and the KFC slogan ‘Finger Lickin’ Good’ which didn’t go down so well in China where is was translated as ‘Eat Your Fingers Off’!
Double check with a native speaker that your brand name and advertising slogans hit the right note and won’t offend or turn off potential clients overseas.
You might be the only person in your country who is offering your particular product or services but across the waters you might find that your business idea is not as unique as you thought. Make sure you check up on your potential rivals first and see how you can tweak your business to stay one step ahead of your competitors. Sometimes the very fact that you’re foreign is seen as exotic or special for some customers, so find ways of accentuating those points in order to cash in on your distinctive brand.
4. Tax Options
Finding out which countries offer the best corporate tax rates is easy enough – with just a bit of time on Google you can discover that Bulgaria has a very pleasing low rate of 10% but Japan by contrast has an eye-wateringly high corporate tax rate of 38%. But a word of warning: simply shifting your business to a country just for tax reasons could leave you open to tax fraud investigations.
Opening virtual offices is a practice that has become very popular amongst international entrepreneurs who don’t want to base themselves permanently in a country, but in order to take advantage of the low tax rate of certain territories you’ll need to be able to prove that you either have an established client base there, the prospect of potential customers and sales leads, or that you have employees on the ground. And watch out for hidden costs too. Some countries offer low corporate tax rates but will make their money back on other taxes and charges.
5. Support System
One way to make sure you have all the relevant tax information is to find yourself an accountant or lawyer who is fully versed in the finance and law of your chosen country. It’s much wiser to pay for the services of a professional at the start, than run the risk of complications later on down the line which may cost you an even bigger wad of your company cash and also your precious time (that could be better spent on your business).
If you’re setting up in a country where the language is different to your own, you may find that hiring a company formations agent is a smart move. Not only will they do all the paperwork for you, but they can also set you up with lawyers, accountants, banks and serviced offices.
All the best pioneering international entrepreneurs have at least a small support system of professionals to smooth the way, so follow their lead and build a team of trusted people you can rely on for facts and advice.
6. Bon Voyage!
Before you pack your briefcase, try to read up on the company creation requirements to ensure you have all the correct documentation to hand. Some documents need to be translated by a certified office or verified by a lawyer so double check the forms before you submit them if you want to minimize delays.
Whatever country you decide to expand to, ensure your entry into international business by keeping an eye on your chosen country so that you avoid the pitfalls and reap only profits and success by expanding your company overseas.