Opening a company abroad comes with many advantages as many governments introduce incentives with the purpose of attracting foreign entrepreneurs who can generate money and add value to the economy. There are also other benefits one can consider when deciding to open a company in another county no matter how close or far from home.
Starting a new business is always a challenge. Whether you are a seasoned entrepreneur or this is your first crack at the whip, you will likely face the same issues and problems in getting your enterprise off the ground. From dealing with the early stages of your business plan to finding a niche within your particular industry, the journey is long and precarious, taking plenty of hard work and effort.
Let’s take a look at the pros and cons of setting up your business in another country.
Pros of Starting a Business Abroad
Reviving an Existing Business
There are countries with populations that do not have access to certain products and businesses which have reached a point in which their home countries cannot any longer absorb a large portion of their products. The best way of reviving a business is to extend to those countries which could really need their products.
Lower Operational Costs
Costs are a significant factor when running a business. Although moving operations may seem like a daunting prospect, it can have benefits to the bottom line. Depending on the country you choose to operate or manufacture, you may have access to lower labor costs and general operation charges, such as running a premise. In some cases, it can be a controversial move. Still, there are benefits to the locals in jobs and money going back into the economy.
A Large Pool of Talent
There are a number of locations across the world where you can gain access to largely untapped pools of skilled workers. In places such as Asia and the Middle East, there are highly skilled workers available that welcome new and innovative ideas to take their skills to the next level. There are also firms in the native country that can help with resourcing.
Fast Company Incorporation Procedures
There are countries that continue to provide for lengthy procedures related to opening a company that usually drives businessmen away. They will search for countries that allow them to register their businesses fast and there are plenty of governments who have understood this request and have cut the costs and simplified this process. UAE is one of these countries which has a pretty straight-forward company incorporation process in every emirate.
Government Aids and Incentives
Another advantage of choosing to open a company abroad is represented by the incentives available. Many governments provide targeted incentives, assistance schemes, and development programs to the benefit of foreign businessmen seeking countries that can accommodate their needs.
Cons of Starting a Business Abroad
You’ll Need to Learn New Market Intricacies
The benefits of a new and untapped market are clear, however, the intricacies and cultural mannerism of any country can be challenging to master. Before you sink all your effort into starting a business in your chosen market, ensure you research the competition, the viability of your products or services, and double-check your business plan has accounted for cultural and historical factors that may become a problem further down the line.
Language Can Become a Tremendous Barrier
If a business is entering into a new market, especially a new business, then the local language can become a barrier toward success. This barrier is slowing coming down with apps and software that translate words into a workable language, but this technology is still very imperfect. What a small business owner may think is a compliment might actually be a grievous insult.
Foreign Rules and Regulations
International business expansion certainly isn’t short on confusing paperwork, as every country has its own tax and employment laws as well as business registration and trademark considerations and papers that must be filed in a foreign language. The good news is that we are always on hand to help with these situations.
Following Foreign Politics
Assuming that your target country has the same political environment as your own nation could be a recipe for disaster. Staying abreast of developments is crucial, as political events can affect your business dramatically – what are you going to do if the foreign government embargoes or outlaws something you rely on? As with credit risk, securing political risk insurance is an excellent idea, as is establishing backup plans for your most crucial supply chains.
Riz and Mona Consultancy
Ultimately, there are pros and cons to any business setup, and setting up business internationally is no exception. With careful forethought and planning, your business can go to the next level and take advantage of a whole world of opportunities. For help and advice with setting up your company or business in UAE as an overseas investor, please don’t hesitate to contact us.
