Setting Up Shop Abroad
Running out of selling territory? Extend it overseas.
- By Derek Torres
- August 01, 2006
If you're always looking for a new challenge -- something a little out
of the ordinary -- maybe now is the time to consider starting a business
overseas. After a number of years of working in the IT sector in Europe
and the United States, I decided to start a business with an associate
in France. While creating a foreign company isn't for everyone, doing
so can be an interesting -- and lucrative -- chapter in your career. But
before you begin the process, there are a number of factors you should
know that apply to any country in which you decide to invest your time,
energy and money.
Realize That You Don't Know It All
First, you must acknowledge that while you may be the boss, you
don't know everything. Surround yourself with specialists who are old
pros at launching overseas businesses -- in this case, you'll need to
find a consultant or an attorney you can trust (especially one who is
used to helping foreigners) and who specializes in starting small businesses.
As a foreigner, you simply won't know all the questions to ask, and even
if you did, you might not understand the answers.
Avoid dealing with American law firms in your adopted country; they often
cater to large corporations in that country and either won't work
with smaller groups or are outrageously expensive. A local law firm can
help you better understand the business mentality of working in the country -- often
at half the cost of an American firm.
Understand the Culture
It's impossible to over-emphasize the importance of getting
acquainted with the culture where you plan to set up shop. A working knowledge
of the local language and business etiquette will take you far. Applying
what are perceived as overtly American business styles or tactics can
only hinder your progress regardless of your location. If you're going
to make money in a foreign country, you need to know how the people there
think and act. A lack of language skills, cultural knowledge, business
etiquette and familiarity with local laws can translate into less than
stellar ROI. Handling business dealings, especially with small clients,
in a foreign country in exactly the same way that you'd handle them in
the United States may well prove costly.
For example, aggressive marketing tactics or calling a client or colleague
by his or her first name can both be red flags in some countries. In many
nations, such as France, business relationships are developed over time
and deals don't happen overnight, as they often do in the United
States. Business is often done outside the conference or boardroom -- it's
done over a handshake and a meal. Before starting shop officially, allow
plenty of time for courting new clients and developing business relationships.
Beware Arcane Tax Laws
Even though yours is technically a "local" company in your new
country -- for example, I am an American citizen running a French company
-- you are not exempt from the IRS. There are U.S. tax documents that
your foreign company must file. Early on, find an accountant or tax attorney
who specializes in both the local and American tax codes.
Starting a company abroad can be a rewarding or frustrating experience,
depending largely on how you approach the process. Much of your initial
success will be based on the decisions you make before you even register
your company. Taking into consideration some of the above tips does not
guarantee success in your overseas venture, but it may help you reduce
the risk of a quick demise.
Derek Torres is a Washington, D.C.-based technical communicator and author and a Microsoft Registered Member. He is also the co-founder of Standard 6, a Paris-based technical consultancy.