Dreaming of starting a business overseas? It doesn’t have to be a far-off fantasy. For many top US firms, going global is not a passing trend. According to CNBC, the US corporate tax rate–35%–is the world’s highest, and that’s why many of the Fortune 500 companies are offshoring. Google and Apple both get more than half their revenue overseas, according to the Harvard Business Review.
Lower tax rates and higher revenues are just a couple reasons to branch out abroad. Even small business ventures can succeed internationally if they learn the steps to take. We’re breaking down five tips for taking your business overseas.
1. Pick Your Location
When you envision that new store location or the fantastic start-up, where are you? Who’s there with you? Are you in warm climates or high elevation? Decide where you want to be.
Now, look into the country/countries which fit your description. The federal government has important resources for doing business safely abroad. Opening or expanding a business is always a risk.
Minimize the risk of doing business overseas by checking out these agencies:
- The US State Department’s Overseas Security Advisory Council (OSAC) lists countries that are posing safety risks for US travelers abroad.
- US Passports and International Travel has great tips on their “Before You Go” page.They offer advice on overseas health and safety in their traveler’s checklist. Similar to OSAC, they provide safety information on your specific destination. Also, they have information on health insurance abroad and details on health risks to watch out for.
- US Embassy Offices around the globe each have different resources for people doing business in that specific country. Click on your country of destination for the particular office’s contact and resources.
2. Check the Market
In their article “7 Traits of Companies on the Fast Track to International Growth,” Harvard Business Review (HBR) reports that analyzing international and domestic sales and marketing stats is vital to success overseas. Companies that make the grade are willing to do their due diligence in this area.
They also get excited about the opportunities. According to HBR, “High-growth companies…talk about global business as an investment in the future, a way to diversify and achieve scale. Companies that aren’t as destined for global success will interpret the same data negatively, viewing global markets as more of an annoyance.”
Look into your chosen country’s economy. While opportunities may abound in developing countries, you’re more likely to excel in a country that has a stable economy, a growing middle class, relatively low inflation, and increasing incomes.
3. Get to Know the Locals
Check out the online resources of your destination. For instance, if you’re going with a country that speaks your language, check out the British Companies House. Their resources include:
- Finding company information
- Filing your company accounts
- Starting a company
- Running a company
Next, look into the commercial hubs and real estate markets. Recently, Business Insider published “The top 9 cities for business in Britain.” They reported startup survival rates, employment rates, and office prices per sq. ft. The top three contenders were Brighton, Oxford, and Cambridge (London came in at #4).
Book a trip, network in your venture city, and check out the venues for yourself. Talk to local business people. They’re more than likely to offer you detailed information and help you find resources.
When you open your business, you’ll want to hire a local or an American expat who is familiar with area trends and customs, especially spending habits and ways your business might fit into the area based on the value you provide your customers.
One of the seven traits published by HBR is optimizing customer relations. Top-performing companies abroad are “customer-centric,” and they “go the extra mile” to make their customers know they’re numero uno. They view these efforts for what they are — opportunities to gain an advantage over the competition, provide greater value to consumers, and turn their target customers into “advocates for their brands.”
4. Know How to Operate Overseas
During your market research, check into the operations that meet your needs. Will you want to franchise or license in your port of destination? If so, the parent company will be an important resource for setting up overseas.
Is foreign direct investment (FDI) your goal? Offshoring? Foreign subsidiaries? Or are you interested in becoming a multinational corporation (MNC)? Determining the way you’ll operate will impact how you conduct business, where you want to locate, and how much startup capital you’ll need.
5. Start a Website
Opening a business abroad can make a website seem redundant. However, it is a vital step to your success, according to HBR’s seven traits. The results are “turbo-charged global growth.”
A website is worth more than the initial startup cost and effort it initially takes. The opportunities can’t be matched. Websites can provide almost instant magnification for your scope and bottom-line. Your ability to serve effectively grows exponentially.
HBR states that companies experiencing success abroad “favor the web” because it makes them “more nimble and capable of responding to opportunity in the market.” Even companies with deep roots and older operating formats grow faster on an international scale if they “invest heavily in online and software-based models for strategic areas of the business.”
Don’t forget, this includes mobile formats. Always check to make sure your website is compatible with mobile operating systems, and remember to check ease of purchase from your site on a mobile device.
When you’re ready to take your business idea to the next level, you’ll have this set of tips to get there.
About the Author
Nancy J. Wolf is a founding member and entity formation consultant of Advantage Delaware LLC, a company that specializes in forming Delaware business entities and managing Delaware Holding Companies. Ms. Wolf holds a Master of Business Administration Degree and a Bachelor of Science Degree with majors in accounting and management.