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April 9, 2013

Tips On Conducting Business Abroad

Most people find doing business in a foreign country (even in many western countries) and the bureaucracy associated with starting a business, to be onerous and frustrating. The red tape can be almost impenetrable, especially if you don’t speak the local language.

It’s only when you come up against the full force of foreign bureaucracy that you understand what it really means to be a foreigner. Patience and tolerance are the watchwords when dealing with foreign bureaucrats.

The following are a few tips on conducting business abroad.

1. Prepare in advance

Generally speaking, you shouldn’t consider running a business in a field in which you don’t have previous experience. Always thoroughly investigate an existing or proposed business before investing any money.

In most countries many people choose to be self-employed for the lifestyle and freedom it affords, rather than the money. It’s important to keep your plans small and manageable, and work well within your budget, rather than undertaking a grandiose scheme.

Don’t overestimate the potential income and, more importantly, don’t believe everything a person selling a business tells you. Nobody sells a good business —least of all one making huge profits — for a bargain price.

2. Legalities

Before establishing a business or undertaking any business transactions in a foreign country, it’s important to obtain expert legal advice from an experienced lawyer and accountant to ensure you will be operating within the law. There are severe penalties for anyone who ignores the regulations and legal requirements.

Expert legal advice is also necessary to take advantage of any favorable tax breaks and to make sense of the myriad rules and regulations. It’s imperative to ensure that contracts are clearly defined and water-tight before making an investment.

Businesses must also register for local sales, purchase or value added tax. Most people require a special license to start a business and no commitments should be made until permission has been granted.

3. Location

Choosing the location for a business is even more important than the location for a home. Depending on the type of business, you may need access to motorway and rail links or to be located in a popular tourist area or near local attractions.

Local plans regarding communications, industry and major building developments, housing complexes and new shopping centers, may also be important. Plans regarding new motorways and rail links are usually available from local town halls.

4. Employees

Hiring employees shouldn’t be taken lightly abroad and must be taken into account before starting a business. You usually must enter into a contract under local labour laws and employees often enjoy extensive rights.

If you buy an existing business, you may be required to take on existing staff that cannot be dismissed, or be faced with paying high redundancy compensation. It’s very expensive to hire employees in some countries, where, in addition to salaries, you may need to pay social security contributions, bonus months’ salary, four to six weeks paid annual holiday, plus pay for public holidays, sickness, maternity, etc.

5. Type of business

The most common businesses operated by foreigners abroad include holiday accommodation, caravan and camping sites, building and allied trades, farming, catering, hotels, shops, franchises, estate agencies, translation and interpreting bureaus, language and foreign schools, landscape gardening and holiday and sports centres. The majority of businesses established by foreigners are linked to the leisure and catering industries, followed by property investment and development.

Many professionals such as doctors and dentists also set up practices abroad to serve the expatriate community. There are also opportunities in import and export in many countries, for example: importing foreign products for the local and expatriate market and exporting locally manufactured goods.

6. Grants and Incentives

A range of grants and incentives are available for new businesses in many countries, particularly in rural and deprived areas. Grants may include European Union subsidies, central government grants, regional development grants, redeployment grants and grants from provincial authorities and local communities.

Grants may include assistance to buy buildings and equipment, research and technological assistance, subsidies for job creation, low-interest loans and tax incentives.

7. Wealth warning

Whatever people may tell you, working for yourself isn’t easy and requires a lot of hard work; a sizeable investment and sufficient operating funds, good organization, excellent customer relations, and a measure of luck — although generally the harder you work, the more ‘luck’ you will have.

Don’t be seduced by the apparent laid-back way of life in some countries- if you want to be a success in business you cannot play at it. Bear in mind that some two-thirds of all new businesses fail within three to five years and that the self-employed enjoy far fewer social security benefits than employees.


Yo Noguchi is an experienced freelancer, guest blogger, and frequent contributor to a blog hosted by Benchmark E-mail, one of the world’s global provider of event marketing services.

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