Entrepreneurs Here’s What You Will Need To Know Before You Open An Overseas Office

Entrepreneurs What You Need to Know Before You Open an Overseas Office

There are a lot of situations where starting an overseas office is the logical next step in the growth of your business. For instance, you already have a hot product and a great business model, however, the area that you’re currently in is just too competitive. Other than this, costs of materials, labor and government regulations might be more heavily in your favor at a distant location. Either way, what you need to figure out are the rules, regulations and mechanics that will allow you to make this migration in the best, simplest way possible.

Study the local market

The reason why 42 percent of all startups fail is due to the fact that there’s no market need for the product/service that you’re selling. Keep in mind, though, that this is a survey that you need to repeat every time you intend to enter a new market. Moreover, remember that cultural differences and social norms may put a taboo on your industry, altogether, which is something that you need to check, as well. In order to get a slight boost, you should also check if there are any government grants or local incentives to attract foreign investors. This concept alone could change the cost-effectiveness of your idea even further in your favor.


Branch or subsidiary

The next question that you’ll face is the one of whether you should start a branch or a subsidiary. A branch is just another outpost of your business in a distant city or, in this particular case, country. A subsidiary, on the other hand, is a more or less, independent business in which the mother chapter has the majority ownership. From the standpoint of the corporate infrastructure, this changes quite a bit, which is why it’s one of the biggest issues that you have to settle before expanding internationally.

Creating a team

Creating a team

Creating a team in your overseas office is not such a simple thing. On the one hand, you may want to transfer some of your old team there, due to the fact that these are the trusted people who already know your work practices and your business model. This, nonetheless, means that you’ll have to closely collaborate with trusted Migration agents at your target locations. Other than this, you’ll have to hire some local workforce. This is due to the fact that A) in some countries such a thing is proscribed by law and B) it’s more cost-effective.

Study labor laws

Due to the fact that you’ll have a large local workforce, one of the first things you’ll have to get familiar with is the local labor laws. What is considered to be a minimum wage at the target location? How long is the employment termination notice? What kind of work conditions are you required to provide? You would be surprised to learn that the majority of these issues depend on the country. This is just one of the reasons why so many manufacturers are moving half-way across the globe in search of better cost-efficiency.

Taxes and repatriation of profits

Another thing that you’ll have to worry about is the income tax. Keep in mind that, chances are that you’ll have to pay the income tax both in your home country and in the location of your overseas office. Still, the scheme under which you do so is not the same. This is determined by so many things and the issue itself is closely tied to the concept known as repatriation of profits. The methods that you’ll use here about are dividends and profits, royalties, management service fees and inter-company loans. These are just some tricks that you can use in order to repatriate some of the income from an overseas entity.


Find local help

Find local help

Previously, we’ve already mentioned the importance of hiring some reliable employees in the target location, however, this is definitely not where you should start. Prior to your move, you need to start networking and find liaisons, in government or private sector, that can help you execute this. There are even some agencies out there who specialize in helping people establish overseas offices and this is definitely something that you need to take into consideration. Some of the people who help you get started can later be put in charge of running the place.

Neither of the above-listed issues can be skipped or overlooked if you’re to meet success in your business endeavour. Fortunately, this is a never move that takes place overnight and, chances are that you’ll have plenty of time to make all these considerations and set things in motion. Since this most likely won’t be the last international office that you’re starting, the better you learn these mechanics, the better.