4 considerations before launching a business overseas
Starting a business is, without question, a serious challenge, but it is doable. Nerdwallet, an up-and-coming online financial services company, gives these three steps: “Find a business idea, make a plan, and get financing” (1). It sounds simple enough, but simple quickly turns to complex when your business is based overseas. These three steps can turn into mountains when you add in cross-cultural learning, language barriers, and government regulations, just to name a few. However, it is by no means impossible. The following are four things we encourage entrepreneurs to consider before launching a business overseas.
Know Your Launch Location
It seems like a basic step, but it is essential and goes beyond knowing the Wikipedia outline of the country or region you are looking at moving into. It means understanding the culture, language, and history of the area. For example, if you wanted to launch a start-up in Vietnam, then start a Duolingo course in Vietnamese, read a biography about Ho Chi Minh, and visit Pho restaurants in your town. Having this base of knowledge and experience will go a long way in developing community relationships and business partnerships. It will show that you respect and care about the region.
For many entrepreneurs, a soft first step to entering a region is to enroll in a university language program for international students. These programs can provide visas, a language program, and, in some cases, accommodations. During your studies you may be able to do market research to see what opportunities are available to launch your business.
Know Your Local Community
After identifying the market and community that you want to impact the next step is to determine what resources are available within the county, town, or village. What can happen is that your niche of expertise may not be what the region needs. For example, let’s say you are an educator- you are passionate about starting a for-profit language school. However, after researching you discover a more significant opportunity to provide economic dignity through agricultural products. These products will have a greater impact on more communities and families. Are you willing to reinvent yourself for the sake of the people in the community?
The majority of our partnering entrepreneurs have had to ask this question after the business scan phase is complete. We’ve had teachers become coffee exporters and intercultural experts operate processing plants. When the triple bottom line is the driving force of business development the lens of market research becomes tinted.
Know Cross-Cultural Operating Procedures
While English may be the standard language of business around the world, our westernized business practices are not. The Harvard Business Review writes, “Just as the way for saying hello or goodbye or exchanging business cards at a meeting differs by cultural context, so too can these critical underlying processes and procedures” (2). Put plainly, how you want to run your business may be efficient, but not culturally sensitive. Hiring practices are a great example. You may have to forego the application and interview process and instead consult with a community leader to introduce you to people. These little nuances, which can seem inefficient, are often learned through trial and error. Having a local partner or consultant will help you avoid unintentional offense or miscommunication.
Knowing the legal process
Looking solely at national laws in starting a business won’t necessarily provide you with all the information you need, because every country has vastly different rules and processes to incorporate a company. In Canada or New Zealand, the process usually takes less than a day. Meanwhile, in Venezuela it could take up to 7 and a half months to legally open the doors to your business. Not to mention the possibility of local administrations putting up barriers around their specific city or town. Also, the type of business that you are starting matters. Are you doing physical imports/exports within ASEAN or beyond? Then that would require understanding trade laws and regional trade blocs that they may affect you. It’s important to think about every stage of your business and the regulations that may apply.
This list is by no means exhaustive. There are many books and resources that address the wide range of topics related to starting a business overseas. However, in our 20 years of experience, these are the most common conversations we have with the entrepreneurs we consult with. Hopefully, through their experiences, we can help future social entrepreneurs cross these barriers a little easier.
SOURCES:
(1) https://www.nerdwallet.com/blog/small-business/
(2) https://hbr.org/2016/10/adapting-your-organizational-processes-to-a-new-culture
RECOMMENDED RESOURCE:
Culture Map by Erin Meyer