More and more people are looking to live/work abroad, but preferably without being tied to a company or organization. In Part 1 of Building a Business Overseas, we looked at a variety of things to consider, including type of business, infrastructure needs, visa requirements, language and more. Here, we build on that with a few more indispensable factors to be aware of if you’re thinking of starting a business abroad.
According to Black’s Law Dictionary (US law) intellectual property refers to a category of intangible rights protecting commercially valuable products of the human intellect. Some of these protections are copyright, trademark, patent and trade secrets. Intellectual property rights (what is protected, how it is protected and for how long it is protected) can vary from country to country. Understanding what steps you can take to protect your intellectual property in the country you’re doing business in is a necessary step in considering if you should start a business. Consulting a local attorney that specializes in intellectual property will be your best bet in getting the information you need to make an educated decision.
If you plan to employ people from the local population, it is vital that you understand the local labor laws – what are the rights and protections afforded to you as an employer, and what are the rights and protections of your employees that you will be expected to respect. Consider what is a livable wage in the country, what are the laws around hiring and firing, what is a workday and what holidays, traditions and customs will need to be recognized.
Working Currency and Currency Exchange
It is equally important to consider what will be your working currency. With what currency will you purchase supplies, produce the product, pay contractors or employees, accept in exchange for your products or services and use for business purchases, savings and to pay yourself? If you will need to be exchanging currency frequently, it is important to have a currency exchange strategy so that you do not incur unnecessary fees or lose money in the exchange. Consider having a business account that holds multiple currencies and a bank that has low exchange rates and wire transfer fees.
Tax Exposure and Implications
As mentioned above, understanding what taxes you and your business will be subject to is an important consideration when deciding to start a business abroad. Consulting a licensed accountant in the local country and a licensed accountant with experience working with expats with businesses will be your best bet to ensure you are well-versed in the tax implications of your business. It is also important to consult a licensed accountant to develop a tax strategy that makes sense for the type of business you have, your lifestyle, long-term residency goals and ensures you honor all tax obligations.
Target Market (Local vs Outward-Facing)
One of the foundational steps in developing a business is understanding who you will be serving, what you will be serving them and how you will deliver that service to them. This is equally important when deciding to have a business abroad. Will your product or service be directed to the local market or a market abroad? This decision may affect the price of your product or service, how you market your product and whether you have an interested audience, and ultimately, a viable product at all. Not all markets have the same problems or are looking for the same solutions (or your unique solution). Cultural differences dictate what is deemed a problem, deemed a necessity, deemed a luxury, or deemed unnecessary. Once you have decided who your target market is, conducting the requisite target market analysis is key for a successful entry into the market.
Support Network (Local and Abroad)
Being a business owner can be a difficult and lonely endeavor, but especially when embarked upon abroad. Seeking out and cultivating a support network can make or break your business. Having a support network provides not only encouragement but also a community for you to ask questions, refer business to each other, gain understanding about cultural norms, taxation requirements and more. Be sure to seek out community support both within your local community and abroad. A good place to start is the local chamber of commerce or equivalent and the local chapter of an expat group, for example, the American Society of Barcelona. It makes a world of difference.
Moving abroad should always be embarked upon with intentionality and respect, but deciding to conduct business abroad should especially be approached with intentionality, respect and a heightened sensitivity toward the local community. Consider how your business will affect the local community. How can your business be a positive influence within the community? How will you intentionally engage with the community? As a guest within a country, it is important to think and behave in a manner that is inclusive of the local community and has reciprocal benefits.