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Doing Business Abroad

Posted on: 15th Jan 2015

One of the easiest (and most expensive) ways to live and work in a foreign country is to start your own business, which, in some countries, is virtually the only way that many foreigners can obtain a residence permit. The amount a business investor needs to invest varies considerably, e.g. from a few thousand to a million dollars or more (many countries 'sell' residence permits to wealthy investors). Businesses that create jobs are welcomed with open arms, particularly in areas with high unemployment, and a business licence may be conditional on the employment of a number of local citizens.

            Most people find doing business in a foreign country exceedingly frustrating and the bureaucracy associated with starting a business, even in many western countries, is often onerous. The red tape can be almost impenetrable, especially if you don't speak the local language, as you will be inundated with official documents and must be...


Posted on: 15th Jan 2015

BEWARE! For many foreigners, starting a business in a foreign country is one of the fastest routes to bankruptcy known to mankind! In fact, many foreigners who start a business abroad would be better off investing in lottery tickets - at least they would then have a chance of receiving a return on their investment! Many would?be entrepreneurs return home with literally only their shirts on their backs, having learnt the facts of life the hard way. If you aren't prepared to thoroughly research the market and obtain expert business and legal advice, then you shouldn't even think about starting a business abroad.

Generally speaking, you shouldn't consider running a business in a field in which you don't have previous experience. It's often advisable to work for someone else in the same line of business to gain experience, rather than jump in at the deep end. Always thoroughly investigate an existing...

Professional Help

Posted on: 15th Jan 2015

Due to the difficulties in complying with (or understanding) local laws and bureaucracy, there are agencies and professionals in many countries that specialise in obtaining documents and making applications for individuals and businesses. They act as a buffer between you and officialdom, and will register your business with the tax authorities, social security, register of companies, Chamber of Commerce and other official bodies. A lawyer or notary can also do this, but will be much more expensive. If you're a professional, you may have to take a routine examination before you can be included on the professional register with the Chamber of Commerce.

            There are also business consultants and relocation agencies in many areas, who provide invaluable local assistance. International accountants such as Price Waterhouse and Ernst & Young have offices in most countries and are an invaluable source of information (in English) on subjects such as forming a company,...

Legal Advice

Posted on: 15th Jan 2015

Before establishing a business or undertaking any business transactions in a foreign country, it's important to obtain expert legal advice from an experienced lawyer and accountant (who speaks English or a language you speak fluently) to ensure that you will be operating within the law. There are severe penalties for anyone who ignores the regulations and legal requirements. Expert legal advice is also necessary to take advantage of any favourable tax breaks and to make sense of the myriad rules and regulations. It's imperative to ensure that contracts are clearly defined and water?tight before making an investment, because if you become involved in a legal dispute it can take years to resolve.

            Businesses must also register for local sales, purchase or value added tax. Most people require a special licence to start a business and no commitments should be made until permission has been granted.

            Among the best sources of...

Avoiding the Crooks

Posted on: 15th Jan 2015

In addition to problems with the authorities, you may also come into contact with assorted crooks and swindlers who will try to relieve you of your money. You should have a healthy suspicion regarding the motives of anyone you do business with abroad (unless it's your mum or spouse), particularly your fellow countrymen. It's also generally best to avoid partnerships, as they rarely work and can be a disaster. In general, you should trust nobody and shouldn't sign anything or pay any money before having a contract checked by a lawyer.

            It's a sad fact of life, but foreigners who prey on their fellow countrymen are commonplace in some countries. In most cases you're better off dealing with a long-established local company with roots in the community (and therefore a good reputation to protect), rather than your compatriots. Note that if things go wrong, you may be unprotected by the...

Buying an Existing Business

Posted on: 15th Jan 2015

It's much easier to buy an existing business than start a new one from scratch and it's also less of a risk. The paperwork for taking over an existing business is also simpler, although still complex. Note, however, that buying a business that's a going concern is difficult, as most people aren't in a habit of buying and selling businesses, which are usually passed down from generation to generation. If you plan to buy a business, obtain an independent valuation (or two) and employ an accountant to audit the books.

            Never sign anything that you don't understand 110 per cent, and even if you think you understand it, you should still obtain unbiased professional advice, e.g. from local experts such as banks and accountants.

            In fact, it's best not to start a business at all until you have the infrastructure in place, including an accountant, lawyer and banking facilities. There...

Starting a New Business

Posted on: 15th Jan 2015

Most people are far too optimistic about the prospects for a new business abroad and over?estimate income levels (it often takes years to make a profit) and under-estimate costs. Be realistic or even pessimistic when estimating your income and overestimate the costs and underestimate the revenue (then reduce it by 50 per cent!). While hoping for the best, you should plan for the worst and have sufficient funds to last until you're established (under?funding is the major cause of business failures). New projects are rarely, if ever, completed within budget and you need to ensure that you have sufficient working capital and can survive until a business takes off.

            Banks are usually extremely wary of lending to new businesses, particularly businesses run by foreigners (would you trust a foreigner?), and it's difficult for foreigners to obtain finance abroad without local assets. If you wish to borrow money to buy property...


Posted on: 15th Jan 2015

Choosing the location for a business is even more important than the location for a home. Depending on the type of business, you may need access to motorway (freeway) and rail links, or to be located in a popular tourist area or near local attractions. Local plans regarding communications, industry and major building developments, e.g. housing complexes and new shopping centres, may also be important. Plans regarding new motorways and rail links are usually available from local town halls. 


            Hiring employees shouldn't be taken lightly abroad and must be taken into account before starting a business. You must usually enter into a contract under local labour laws and employees often enjoy extensive rights. If you buy an existing business, you may be required to take on existing (possibly inefficient) staff who cannot be dismissed, or be faced with paying high redundancy compensation. It's very expensive to hire employees in some...

Type of Business

Posted on: 15th Jan 2015

The most common businesses operated by foreigners abroad include holiday accommodation, caravan and camping sites, building and allied trades (particularly restoring old houses), farming, catering, hotels, shops, franchises, estate agencies, translation and interpreting bureaux, language and foreign schools, landscape gardening, and holiday and sports centres.

            The majority of businesses established by foreigners are linked to the leisure and catering industries, followed by property investment and development. Many professionals such as doctors and dentists also set up practises abroad, particularly to cater to the expatriate community. There are also opportunities in import and export in many countries, e.g. importing foreign products for the local and expatriate market, and exporting locally manufactured goods. You can also find niche markets in providing services for expatriates and others, which are unavailable locally.


Posted on: 15th Jan 2015

Companies cannot be purchased 'off the shelf' in most countries and it usually takes a number of months to establish a company. Incorporating a company in most countries takes longer and is more expensive and more complicated than in the UK or the USA (those bureaucrats again!). There are a wide range of 'limited companies' and business entities in many countries and choosing the right one is important. 

            Always obtain professional legal advice regarding the advantages and disadvantages of different types of limited companies.

Grants & Incentives

Posted on: 15th Jan 2015

A range of grants and incentives are available for new businesses in many countries, particularly in rural and deprived areas. Grants may include European Union subsidies, central government grants, regional development grants, redeployment grants, and grants from provincial authorities and local communities. Grants may include assistance to buy buildings and equipment (or the provision of low?rent business premises), research and technological assistance, subsidies for job creation, low-interest loans and tax incentives. Contact Chambers of Commerce and embassies for information. 

Wealth Warning!

Posted on: 15th Jan 2015

Whatever people may tell you, working for yourself isn't easy and requires a lot of hard work (self?employed people generally work much longer hours than employees); a sizeable investment and sufficient operating funds (most new businesses fail due to a lack of capital); good organisation (e.g. bookkeeping and planning); excellent customer relations; and a measure of luck - although generally the harder you work, the more 'luck' you will have. Don't be seduced by the apparent laid?back way of life in some countries - if you want to be a success in business you cannot play at it. Bear in mind that some two?thirds of all new businesses fail within three to five years and that the self?employed enjoy far fewer social security benefits than employees.