Many companies have chosen to move overseas due to the potential business advantage that only moving can offer. For example, Singapore, London, and Hong Kong are all popular business hubs that are only growing with time as they offer new opportunities for aspiring international brands. But there are critical financial and general business considerations that must be made prior to making this type of move:
Look at Rules and Regulations
Every country has different rules and regulations for businesses. These must be researched and understood prior to making the move. Many businesses seek advice from an attorney regarding the specific laws of the country. If the business does not comply with the laws, they can prosecuted and receive serious fines. This can be avoided by knowing the laws ahead of time. There are also specific countries that restrict certain types of businesses from setting up. If the laws and regulations are not researched ahead of time, the business may be wasting their money, time, sourcing staff and marketing materials for an impossible task.
Taxes, banking procedures, and finances are handled differently in nearly every country around the globe. Even if the taxes are considerably lower than in the home country of the business, there is still a great deal of paperwork involved. The business must understand not only the laws of the country, but what must be done prior to making the move. One of the best ways to prepare is by consulting with a tax expert. One of the biggest hurdles businesses face is registering their business for taxes. If the red tape is dealt with ahead of time, the business can open their proverbial doors much sooner. Your business will not be able to operate until the tax registration has been completed.
Start Addressing Language Barriers
If you’re planning on moving to a country where they use a different language than you’re used to, the impact of this language barrier must be considered. This will impact the daily operations of the business and can even affect the company financially. If neither you nor your staff are fluent in the native language, an interpreter will need to be hired on full-time to bridge the gap. If you try to wing it instead (or heaven forbid, rely on Google Translate), this can lead to miscommunications and mistakes that will impact your business’ bottom line. Alternatively, you and your staff could take language lessons prior to the move. This is an excellent way to help ensure the productivity of the business, and will enhance your understanding of how the business is working in its new location. Furthermore, you will appear more impressive for taking the time to learn a new language.
Research the Culture
The culture of a country is often critical to the potential success of a business. A particularly good example is Western countries. There is always going to be something that is acceptable in this half of the world that will cause offense elsewhere. The best course of action, then, is to study the culture of your destination prior to making the move. If a large cultural breach occurs, it may have dire consequences for your business. Sourcing an expert is the best and most efficient way to circumvent this issue. If possible, visit the intended country to get a feel for the culture personally. Speaking with business consultants can also help you decide whether you are truly making the right decision for your company. Lastly, it can be helpful to remain current regarding foreign affairs. You can obtain a better grasp of the market you will be jumping into by reading online and watching foreign news channels.
Calculate Moving Costs
In most cases, the financial benefits of the move will take time to manifest. Although this is good news for the future, the initial move will be expensive. This cost must be calculated and factored into your budget, because otherwise moving to a new country can potentially bankrupt your business. Book an appointment with a financial advisor who is well educated in both finances as well as the financial aspects of your destination. You will also need to pay close attention to the current exchange rate. If money is exchanged at the wrong time, your business can easily lose thousands of dollars.
Consider the Bureaucracy
Without proper preparations, you can easily become overwhelmed by the laws and rules which comprise the bureaucracy of the country. A business must conform to the bureaucracy to be legal. Some countries require a new business to have another business already legally formed in another country. This business must act as the investor for the new business. Furthermore, the business must understand the language or have an interpreter to grasp the supply chain and the insurance policies and licenses required by the country. For example, if the new business is opening in Singapore, it is a good idea to find a business partner in Singapore that the business can trust. This individual will help guide you past bureaucratic barriers in Singapore.
Once the business has made the decision to move to another country, it is critical to understand the business structures in their home country are probably going to be completely different than in the new country. The business must know which business structure can be successfully adapted for their company. There may also be restrictions as to which structures the business may choose. Many businesses are restricted to one structure due to the size and nature of the business. Understanding these concepts ahead of time can save the business a lot of time, effort, and money.
Redesign Your Marketing
Even if your business was very successful in your own country with your marketing strategy, it does not mean that the same strategy will be effective in another country. Before moving, it is absolutely imperative to conduct a round (or several) of market research specifically for your prospective audience in the new country. You need to understand your new target audience inside and out — what they want, what the competition is doing to appeal to them, etc.
When a slogan or product name is translated into another language, the meaning can change entirely. The wrong slogan can be extremely detrimental to the business. This can effectively damage the brand and shut down the company before it even has a chance to get started. On a less extreme scale, there may be no literal translation and you will risk confusing your new customers. There is where hiring an expert becomes imperative. This will increase the initial costs to set up the business, but it can save the company millions in potential humiliation and damages.
Factor in the Factory
Many businesses require a factory for their operations. The costs of establishing a new factory in the target country must be weighed against simply sourcing a new factory. Plant equipment is often expensive to replace because it is highly specialized. Thousands can be saved by having the factory relocation managed by a specialist. The best way to see which option is more feasible financially is to obtain quotes for removal and relocation. There may be a lot of red tape to cut through, however, before you will be able to move forward.
The Bottom Line
Relocating a business to another country can be a phenomenal success or a total catastrophe. The key is taking the time to research the culture, customs, language, tax laws, bureaucracy, costs, and other strategies necessary to succeed in another country. Once you have taken the right precautionary steps, your international move could be the best thing to ever happen to your brand. Turn to PPMT Strategic Group’s professional business advisors for guidance today!