While founding a new venture in another part of the world can be an exciting prospect, there are several things you need to factor to increase your odds of success. Here are some of them.
Cultural norms of influence a firm’s operations to a degree. What might be a viable business in one nation might be a tough sell elsewhere. If you’re a farm-to-fork company, for example, you would have greater chances of success in North America, or the EU compared to Israel.
Understanding the distinct and nuanced factors that dictate a country’s culture helps you navigate commerce in it better. If the dominant language is different from your primary language, you will need to learn it to communicate with employees, vendors, and customers effectively.
Visit the country you want to set up shop in several times in advance. Hands on experience will help you understand critical cultural issues more accurately. Visit various businesses and entrepreneurs to learn about their experience in that locality as well.
Politics can either support or kill a venture. It is imperative that you have a clear and accurate picture of the political terrain of the country you desire to operate in. You make a better decision on where and how to start working in the country.
If setting up in a country known for its disputed, violent or intensely emotive elections, you might need to assess all the risks businesses in that nation face during an election cycle. Find out how the country approaches the issue of foreign firms owning property, for example, to assess whether your physical assets will be secure. Study an international property rights index as a useful starting point on the ownership issue.
The rules and regulations a jurisdiction enforces will, directly and indirectly, affect the business you seek to establish. You, therefore, need to have a thorough understating of them to identify what regulatory risks you’ll expose yourself to and how to mitigate them best.
An excellent resource to further analyze this is the World Bank’s ease of doing business index. It ranks various nations according to how difficult or easy it is to operate a business in light of their respective regulatory environments.
Find out what steps are necessary for incorporating in that country to best plan the most efficient way to enter the market. For example, Vietnam has a robust business visa application process (including on arrival), requires 9 procedures and 24 days to receive full certification for a new firm. Neighboring Cambodia also requires 9 procedures to open a new business but takes 99 days.
Visit the desired jurisdiction severally before setting up and talk to other companies already operating there to have a better sense of this. Consult various industry bodies within the country to know what challenges foreign firms face when operating there.
Deep Domain Knowledge
Just as with starting a business in your home jurisdiction, a thorough understanding of the industry you want to venture in and how it operates in the foreign jurisdiction is critical. Carry out secondary and primary research to ascertain the viability of the sector and understand its terrain.
If you don’t have the extensive knowledge necessary, you can opt to partner with a local entity or person to provide this expertise for you. If you choose the partnership option, you may need to consider ways in which you will add value to the local partner other than just providing capital. This will help you attract and retain the best talent.
Before selecting a country to set up shop in, understand who your target audience will be. A firm understanding of who you will market your product or service to helps determine the viability of the jurisdiction. Study the marketing efforts of companies that already operate in the country to understand what your potential customer acquisition costs will be in communicating to the target audience.
The world is fast becoming a global village and setting up shop in different countries is now historically easier than ever. Several factors need to be taken into consideration to better start a business overseas. A careful analysis of these factors will shield you from common problems that plague new operations in a foreign jurisdiction.