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Starting a business in a different country is full of new opportunities, excitement, and the chance of a fresh start – but there are several things to take into account.
To eliminate any headaches, and as part of their new Startup Cities report, the personal finance experts at money.co.uk explore the social and economic factors that need to be considered before launching a new business venture abroad:
Here are our top tips for those considering a move abroad for work:
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Always consider potential language barriers
According to the new Startup Cities report, the Danish capital of Copenhagen was hailed as the best place to launch a new business, scoring 77.7/100. Picturesque and equipped with an enviable work-life balance, it is no wonder the city scored so highly when it came to the factors considered – but what if you can’t speak Danish?
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Luckily, around 86% of people speak English in Denmark, but that still leaves a fairly large possibility that speaking no Danish at all could become an issue. When it comes to the third-highest scoring city in the list, Prague, only around 27% of people speak English, meaning that language barriers would be a likely occurrence. Relocating is a huge commitment, especially to start a business, so learning the local language will always give you a huge advantage ahead of moving.
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Research different tax regulations
Business tax differs wherever you go in the world, how much you can make for the same profits can vary widely. For example, the corporation tax in the UK is 19% – that’s tax you pay on profits. By contrast, in Ireland it’s 12.5%, letting you keep more of your profits.
But even that can be beaten, with companies in Bahrain paying no corporation tax at all.
Of course, corporation tax isn’t the only Government cost businesses face – for example in the UK you need to pay business rates for premises on the high street, national insurance for employees and capital gains tax on profits made from selling part or all of your business on.
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Look into cultural differences
When it comes to cultural differences overseas, communication is key. Different countries have higher and lower-context cultures, the difference being that low-context cultures rely on direct and usually verbal communication, such as in the United States and in the UK.
However, in countries such as France, a high-context culture is applied. Countries with high-context cultures rely more on facial expressions and are generally more comfortable with longer periods of silence.
For example, British people typically like to avoid prolonged social silences, especially in business meetings, whereas people from high-context culture areas may not always consider this. Always do your research to avoid making a business meeting faux pas and make everyone feel comfortable.
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Consider different work routines
In many countries, workers are traditionally used to a 5-day working week, with one-hour lunch breaks and a two-day weekend. However, in countries such as Spain, Japan, and New Zealand the idea of a 4-day working week is being trialled, which could lead to major differences in workload and also how salaries are decided.
In Spain, it is also common to partake in a ‘siesta’ after your midday meal to avoid working in extreme temperatures. Due to this, some Spanish workers leave work at 2pm for their meal and an afternoon nap, rather than having their lunch during the working day.
In The Netherlands, an overall average of 29 hours a week is in place (vs 37.5 hours in the UK), making it imperative to consider different time-management methods when it comes to starting a business overseas to ensure maximum productivity.
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Study the student population
When it comes to hiring enthusiastic, fresh-faced employees, it can always be helpful to consider the student population of the city or country you’re planning to start up in. University experience is often considered to improve time management, writing, and critical thinking skills, making students ideal for your junior roles and fast-paced environments.
However, some cities, such as Singapore City, have only a 1.76% population of students, along with Seoul in South Korea with 1.19%. On the other hand, Aarhus, Denmark has a very high population of students at 15.51%, so those moving to the city would no doubt have a large amount of interest from graduates looking to get a foot in the door at a startup company.
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Inspect the cheapest office spaces and download speeds
Renting office space varies drastically from country to country, with some destined to cut into your budget and possibly profits. Coworking spaces in Singapore City cost an average of £37.70 per worker, whereas in Prague they cost just £4.35.
Furthermore, when it comes to download speeds, slow broadband can not only anger your workforce but also hinder your productivity.
According to the report, Cork in Ireland has an average download speed of just 34.6 MBPS, whereas Gothenburg in Sweden is equipped with an impressive 119.7 MBPS. Geneva in Switzerland has an average of 41.4 MBPS, while Singapore City has a staggering average of 256.3 MBPS. As each city has such different speeds, it is always worth checking out the average to see which would suit your new business the best.
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Visa and permit issues
Since leaving the EU in 2020, it is now harder to relocate to a different country to start a business. Knowing your visa requirements is essential, as different countries will require documents and even funding.
A ‘Right to Work’ compliance check may have to be completed – for example, in Singapore, an entrepreneur may obtain an ‘EntrePass’ to start a business in the country.
However, at least $100,000 in government funding must be obtained first, highlighting the many hoops an entrepreneur must jump through to achieve their goals. In Hong Kong, no funding is required, but a 2-year business forecast must be in place.
Courtesy: Seven tips for entrepreneurs looking to launch a startup overseas
