Setting up a new business in a foreign country can be intimidating, even for the most seasoned entrepreneur. There are many moving parts involved, from overcoming the language barrier to versing yourself in local politics. Take a look at the following challenges to opening an overseas business and consider them carefully before making your decision.
Finding the Best Suppliers and Contractors
Choosing the best suppliers and local contractors for your business can be a trying task when you’re not on-site regularly. However, hiring the most reputable building product suppliers is crucial to ensuring your building materials are top quality and unlikely to fail.
In addition to suppliers, you’ll need to hire the best contractors. As with gaining local knowledge, finding the best contractors might require spending more time than anticipated on your chosen building site. The added cost and inconvenience will be worth it, though.
The language barrier is one of the first challenges you’ll likely face when building a business overseas. Depending on the country you’re expanding into, you should learn the basics of the local language in order to get by. This will show respect and help you feel more secure that you aren’t being taken advantage of.
One way to overcome the language challenge is to partner with a local organization that can help with translation and interpreting services. These interpreters will ensure that vital communication lines are always open, even if there is a language barrier. Additionally, consider hiring bilingual staff members who can act as liaisons between you, your on-site staff, and customers.
Time Zone Differences
Another common challenge businesses operating in foreign countries face is time zone differences. For example, if your home office is in Washington, D.C., and your business is in Paris, you and your team will have a six-hour time change to contend with. This time change can make coordination and communication difficult.
The best way to overcome this challenge is to use video conferencing tools to stay connected with your team no matter where you are. In addition, schedule meetings that are as convenient as possible for everyone. Also, prioritize employee recognition to show your overseas staff you’re aware of their invaluable contributions.
Lack of Local Knowledge
Another common challenge entrepreneurs face when expanding their businesses abroad is a lack of local knowledge. This lack of knowledge can manifest itself in several ways. For example, business owners who don’t understand the local customs and expectations risk scaring off potential customers.
As an outsider, it can be challenging to gain an intimate understanding of how things work in another country—but it’s essential if you want your business to thrive. To combat this struggle, spend as much time as possible exploring the region and getting to know the locals and their norms.
Exchange Rate Fluctuations
A complex financial challenge you’ll face when expanding your business abroad is exchange rate fluctuations. Currency values are constantly in flux, which can severely impact your business decisions. You may need to adjust your anticipated construction expenses in response to exchange rates.
You’ll also need to adjust your expectations for revenue based on exchange rates. For example, something that costs 500 US dollars could be double that in Australian dollars. You need to be certain your overseas business can handle these economic shifts. Otherwise, you could end up with a floundering business halfway around the world.
Navigating Foreign Politics
When you’re used to navigating the nuance of local politics at home, you might feel confident when faced with politics abroad. However, when it comes to business in your chosen location, you’ll need a deep understanding of local politics and laws to ensure success.
For example, policies that seem perfectly logical at home might be unheard of in other countries. Although it might sound overly compex, it’s critical you’re fully versed in local, national, and international politics. The last thing you want is to upset the people in your chosen locale because you didn’t do your due diligence.
Wrapping Up: Challenges of Expanding Your Business Overseas
Building a business overseas can be a great way to expand your reach and grow your company. The challenges listed in this post are just a few potential struggles that come along with doing business in a foreign country. By being prepared for these challenges, you can set yourself up for success when building your next big venture abroad.