Starting a Business Abroad - Key Considerations

Whether you have specific skills that will more easily allow you to establish a business overseas rather than back home - for example if you’re a dive master currently living in landlocked Luxembourg - or you dream of living in a specific country overseas but are too young to retire there or don’t wish to get a job, you may well be thinking about starting a business abroad.

We’ve done it and we know many more people who have done it both successfully and catastrophically unsuccessfully – it’s a fantastic challenge, it represents almost limitless opportunity, but at the same time it is difficult and it requires a lot of work, time, effort and ongoing research on your part.  In this article we’re going to share with you some of the key considerations to bear in mind if you’re thinking about starting a business abroad – all are based on our experience or that of good friends.

The first thing to really know is whether you can legally and legitimately and relatively easily begin working abroad in your chosen country - and what’s more, you need to be sure you can actually own your own business abroad. 

If you are an EU citizen you are able to work and trade elsewhere within the EU…however, certain countries in the world disallow foreign citizens the right to have 100% foreign ownership control of a business….this is the case in North Cyprus for example where foreigners can only own up to 49% of a business locally.  While this restriction does not stop foreigners from starting businesses in North Cyprus, you need to be aware of the issue so that you can either find a trusted Cypriot partner or you can find a decent solicitor and accountant combination which can neutralize the majority shareholder’s control with a clever piece of paperwork.

Other countries such as Canada, New Zealand, Australia and America have restrictions on the number of foreign citizens who can move to their country in a given year, and these restrictions are always at least in part based upon what you intend doing for a job or income once you relocate.

So, begin by researching the basic facts relating to your rights as a foreign citizen who wants to a) relocate to the given country in question and b) start a business there…

Once you have determined your right to move and work abroad you need to look more closely at the potential for your business idea to become a success. 

The initial consideration is based on supply and demand…

If you want to open an Irish bar it is less likely to be successful in a location where there is a small population which is already well serviced by a number of popular watering holes. 

If you want to open an English breakfast type café in a location which is already saturated with them, how likely is it you will get sufficient custom to ensure your business survives ahead of the competition? 

If you want to start a business renting baby accessories or mobility aids in a popular tourism destination check and make sure there isn’t already someone doing the same.

If on the other hand you want to pioneer and establish a dive school in an up and coming location and you have the cash to support yourself for a few years while you wait for the expected rise in tourism numbers to materialize, then why not go for it? 

If you want to establish an Indian restaurant in a corner of Argentina where I happen to know there is intense demand for one, you’re going to be packed out! 

Or, if you’re thinking of taking your already successful internet based business packed in your laptop and setting up on a desert island somewhere, just make sure you’ve got an internet connection and chances are you’ll be fine!

You need to carefully assess your skills, you need to then decide on a business that you personally can successfully run, next you have to ensure demand for your business, product or service exists, and finally you have to ensure that demand is strong, sustainable and sufficiently affluent to afford you sufficient profitability…so, ask yourself these questions: -

Who will your client base be, do they exist in the location you favour, are they really seeking your services, are they sufficiently affluent and/or likely to be in the market for your product in your specific location, will demand be seasonal, can you survive out of season?

Having covered these points and more besides to strongly determine whether you really can make a go of your business idea in your preferred overseas location you now have to go forward and make it happen.

The main thing to really get to grips with is the money side of it all!  How much is it going to cost to establish a company that is able to trade, how much will premises cost, what about your outlay for materials, product and staff?  How are you going to fund all this as well as your relocation and accommodation expenses?

Get enough money behind you so that you can afford to start your business and personally survive for at least a year – though ideally you’ll have enough in the bank to keep you going for two years. 

Now, open a business bank account as soon as you possibly can (this is one thing that surprisingly often gets overlooked and which can cause no end of problems when it comes to invoicing and actually being paid) – consider looking at any offshore options you have for optimising your taxation situation.  Understand local reporting and taxation requirements and restrictions from the outset and find a decent accountant who can guide you through the maze of business accounting in your country of choice for at least the first year or so before you’re confident enough to consider going it alone.

Finally, know this – if you are seriously thinking about living abroad and part of your plan is to start your own business, you will not only go through the ups and downs, euphoria and despair that is associated with totally changing your life before you settle down and settle in after about two long and challenging years, you will be intensifying the experience – both the glory and the gloom – by giving yourself the challenge of starting a business abroad. 

You need to be emotionally strong to survive, you need to have modest expectations on the financial side of things for at least the first two years, you need to make sure your marriage or partnership is strong enough to survive any knocks and shakes – and if you do it and you succeed you will be the envy of many, the inspiration for many and you will feel fulfilled, content and just a little bit chuffed!