Challenges You Might Face When Opening a Business Abroad and How to Solve Them


Opening a business is a challenging process. It is even more difficult if you decide to start your new venture overseas. The business practices in your home country may differ significantly from those in other parts the world. Below are some of the challenges you might face as when opening a company abroad, and what you can do to prevent any major problems.

Company structure

Those working in the overseas location need to be globally competitive. It is one thing to be a massive success running a domestic brand, but it is different when dealing with international competitors. You need people in your company’s structure that have enough experience for the new location. You also need to identify what key operations will be performed in your overseas branch, and what will remain in your headquarters. Figuring out all these details during the initial planning stages will help you avoid chaos later down the line.

Foreign laws

You might face different rules and regulations in another country. From tax to trading laws, your business needs to be aware of and deal with all of them. You need to have lawyers in the country where you intend to open the business since they can offer you the right advice at every step of the way. For instance, if you are a UK-based company, and you want to start operating in Spain, you need to find Spanish law firms that are able to advise you accordingly. They have experience not only in providing advice to foreign companies operating in Spain, but UK-based companies in particular.

International accounting

Tax compliance is another issue that you need to deal with when you have a company operating abroad. It could present a challenge since different laws govern multinational organisations, and the place where you decide to register your business could impact its tax liability. You also need to know the various tax treaties concerning the countries where you run the business. It helps ensure that you are not paying double taxes and wasting possible profits. Again, a competitive lawyer can help you discuss the tax implications of your plans to operate overseas.

Overhead costs

Given differing inflation rates, commodity prices, salaries, and various other factors, the budgets you set in the country where you first opened the business might not be the same for the new overseas company. You need to understand these differences to avoid overspending. After identifying them, you will know if it is still worth pursuing your plan to open a business or branch overseas. For instance, when Ikea opened in China, it struggled because of low-cost competing brands. The company solved this problem by moving its production to China to lower the labour costs and be more competitive.

You need to plan well and heed the advice of experts. It is important to cover all bases and be sure it is the right time to open a business abroad, otherwise, your plans will most likely fail.

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