Many expats are living and working abroad, running successful businesses in the local area or online. Some entrepreneurs simply introduced a product or service from their home country, while others re-branded their initial product to better match the local market trends, or some even started a completely new online business abroad.
There are many challenges and obstacles involved when running a locally focused company cross-borders. Usually, targeting specific groups like other expats are too small. Therefore, most entrepreneurs focus either on the local market or the tourist industry.
Let me explain.
When you are not familiar with local culture and language, selling the right product to a specific local target group can be tricky. Due to these barriers, more and more entrepreneurs – some call themselves “Digital Nomads” – decide to launch an internet business. Its major advantage of such a business is: target market and reach.
Is that all? NO!
In addition to these two advantages, launching an online business can be done with very little investment, and information on how to market your online business is very accessible nowadays. Building a website can be done by almost everyone in today’s world, you can choose between a free or paid template, with often simple drag-and-drop features. The upside of running your own online business means you’ll decide when you work, how you work, and from where you work.
Perhaps it sounds easy to launch your own internet business abroad. However, this isn’t the case. It’s not simply smooth sailing to success. There are unique threats to every business and its location, but I’ve decided to highlight and discuss a few important ones that are relevant to pretty much every expat, entrepreneur, and digital nomad.
Let’s get started!
The business environment is changing rapidly but so is the banking world. However, international banks still show very little to no presence outside large economic areas and cities. It’ll be hard for any online entrepreneur to sell an idea to the bank that will provide them enough proof that investing in your business is profitable for them.
Even though online businesses tend to require very little money as the initial investment, it may sometimes hold back company growth and development. Many banks still seem to be a stuck in the old days where they could actually see a physical shop and company vehicles. That may clutter their view from recognizing a profitable business idea.
Entrepreneurs who are running online businesses are not bound to any location and can basically sell their product anywhere they want. It used to hard to recognize where the seller was based for customers. That has also changed now because for many businesses it’s either required to show or it will positively impact their Google rankings based on local search and directories.
Most people, usually not the online entrepreneurs, argue that to hide or show your location would not be of any effect to your business.
Is this true?
A vast amount of entrepreneurs would argue otherwise. Why? Well, a lot of customers tend to search the web for businesses based in their country. Regardless of many other factors such as language, pricing strategies, or promotions. A great number of customers wouldn’t buy any product or service from your website if the location shown isn’t home country.
It’s rather common for US customers to buy online products from US based web shops only. Differences exist, and multiple variables influence such decision-making as a customer would buy from other English-speaking countries as well. Yet, many people who search the web for products or services tend to perceive businesses in other countries but their own untrustworthy and too foreign, perhaps due to the unknown.
You’re likely looking for ways to avoid this from happening in the future as you might lose a significant amount of potential customer over this.
Let’s look at the solutions to address these issues below:
1) When registering a business, make sure to register it under a US or UK address, or any other country specific address that is relevant to your business. By doing so, your business can’t be registered in the country where you’re living abroad. Make sure to check on visa rules and regulations and whether this it’s allowed.
2) There are multiple agencies out there that provide notional business services. It might not be the most ethical way because you’re basically “lying” to your customers. I’m not here to take sides in an argument but rather stating the possibilities.
3) Create an offer people can’t refuse! When you offer such a unique value proposition based on price and quality, it will be hard to potential customers to ignore you, if at all. It’s not an easy task nor impossible. Many people have done it before you.
So, what’s stopping you?!
As we discussed in the first section about loans, banks are not evolving as quickly as us entrepreneurs. Don’t expect anything better from accountants and tax or financial institutions. They might find it hard to portrait a picture of what you’re doing.
Obviously, it depends on your location and the economic infrastructure around you. When you’re doing business in large financial communities, you won’t face many issues in regards to financial accounting and taxation. Around countryside communities, it may very well present such issues.
The solution to this is fairly easy.
Simply do your homework in regards to tax filing and other financial related paperwork. What do you have to file at the end of every fiscal year and to whom? It’ll save a lot you a lot of time and effort instead of struggling with filing the correct paperwork while you’re running your business. I’m sure can spend your time better then.
Save hard copies of all your paperwork. For double security reasons, save it in the cloud as well.
An increasing number of WordPress themes and other software providers offer multiple payment options incorporated within the tool. PayPal, Transferwise, and the Western Union are a few examples of multi-currency payment options.
Be aware that each of these payment options has their own exchange rates and commission rates. I’ve been a big fan of Transferwise recently. However, it’s still an unfamiliar payment tool for a large group of people.
Regular bank transfers are also an option, the disadvantages of bank transfers are:
- Unfavorable exchange rates
- Money transfers may take a couple of days
Business Registration & Taxes
Business registration is different per country, and it’s best to either seek advice from fellow entrepreneurs in the designated location or take in hand an agency that can support you with business registration paperwork. Especially in Asian countries, this can be quite a hassle.
Furthermore, dealing with VAT rules and regulations are usually a complex process. As for your business registration, I would recommend to bring in a third-party to assist you. It might cost you a small investment, but it’ll most likely be worth the money. Experienced advisors might also be able to give you specific tips and tricks within the legal boundaries of the VAT system in your area.
When selecting an insurance plan, you’ll have to consider both personal health insurance and business insurance.
How will your business be covered in the case of a disaster or tremendous potential risk, physical and/or emotional losses?
Within the international scope of insurance providers, consultation is mostly free of charge. Don’t hesitate to ask your current insurance company to shed some light on this chapter.
When you’re living overseas most of the time, you want to acquire an international health insurance since most local insurance providers only provide limited coverage for health care abroad. The big upside of such an insurance plan is that international health insurance plans usually cover you regardless of the country you’re in. In other words, when you’re traveling back to your own country to visit family or friends, health care coverage isn’t an issue.
Final Food for Thought
When you’re running a company on the brink of falling in your home country, don’t try to push and pursue the same business idea abroad. I wouldn’t be surprised if it wouldn’t hold up overseas either.
To sum it all up,
Expanding or starting a business abroad is super exciting and opens the door to new possibilities and significant success, growth, and financial benefits. The purpose of this article isn’t to scare you from doing it but rather guide you in the right direction. Don’t take it lightly and work hard for your success, be smart and well-thought about how to pursue this and get ready to run a successful internet business overseas!
About the Author: This is a guest contribution from Marcel de Jong. He is a lead content writer for Now Health, digital nomad, and entrepreneur. In his free time, he loves to do outdoor sports such as wakeboarding, climbing, or snowboarding. If not, you might catch him hanging out with his friends or travel and enjoy the beautiful countries in Asia.