In an economy where globalization is the name of the game, many American businesses choose to site some of their operations abroad. There are a whole host of reasons to do this: placing a factory in the Far East could well be significantly cheaper than placing it in the US, for example. But siting your firm abroad can have other, more significant consequences. The language or culture barrier could cause a headache when looking to instigate smooth international business processes, for example, while issues like regulation and currency can also rear their heads. Here’s what to look out for.
Check for profitability
Just as you would before proceeding with a domestic business deal, it’s always wise to make sure that you complete your market research. Opening up in another country is a big move, and it’s one that could be costly if you get it wrong. For that reason, hiring a team of local experts who know their stuff when it comes to the area you plan to open in is essential, and a visit from you and your senior team to get that instinctive feel for the area is also wise.
Research the regulations
Different countries have different regulations when it comes to business. In the US, for example, the basic federal minimum wage currently sits at $7.25 – but in Britain, it’s the equivalent of over ten dollars. This is just one of many different areas of labor law and business rules that you’ll have to take into account, and it may be worth hiring some specialist assistants who can look into it all for you to ensure that you’re not flouting any rules.
Currency exchanges
Opening up a branch abroad is a tough job, especially if you need to transfer cash to the new destination in order to get the enterprise off the ground. If your currency is weak compared to the currency you need to convert it into, you might not be able to do so right away – and that could in turn lead to hold-ups, so building some pause time into your plans is wise. It’s also worth checking out FX Compared reviews to ensure that you’re not paying too much in fees, either.
Language barrier
While financial problems are the main source of problems when conducting international business, it’s also worth hedging against cultural problems. On the face of it, it might seem like not speaking the local language is nothing to worry about – especially if you have translators on hand. But if you ever find yourself in a business situation without a translator, it’ll be hard to communicate – let alone create that sort of spontaneity often essential for business deal success.
There are plenty of reasons why moving your business abroad might include some hurdles first time around. Conducting international business isn’t easy: from converting your revenue and profits in the currency of your international destination to your home currency, to ensuring that you’ve understood the local culture and its requirements; there’s plenty to think about.