Has your business achieved the local goals and now want to conquer the next challenge? If the answer is “yes”, it is time to move on. But it is not just the success at the local level that should trigger moving the business offshore. Other indicators that it is time to move offshore include;
- The local business environment is not favorable for the business.
- Passing of policies that are likely to affect the enterprise negatively.
- Entry of new competitors who are likely to offer very stiff competition to the enterprise.
- The product you want to sell fits the offshore clientele more than the local customers.
When you make the ultimate decision to take the enterprise offshore, it is important to appreciate that success can only be achieved through proper planning. However, many are the businesses that fall by the way. To succeed, you need to avoid the following mistakes.
Failing to factor the legal requirements of the target jurisdictions
The legal landscape of most offshore jurisdictions is different from what you are used to at home. Indeed, the different policies might be the primary factor that made you go abroad. Failing to factor the different legal requirements in a foreign country imply that your operations could attract serious penalties.
In many jurisdictions such as Hong Kong and the British Virgin Islands, every business going there is expected to follow a specific process for company registration before starting to operate. However, Hong Kong requires investors to also register with the Internal Revenue Department (IRD) and other relevant authorities before being allowed to start.
Failing to operate within the legal limits implies that you have set the enterprise for confrontation with the country’s administration. You could have the operational license revoked or getting charged in a court of law. These events can harm the business and send the wrong image to the community.
Planning for the short term only
Once you have decided to register a business offshore, it is important to appreciate that it will take time before the enterprise becomes self-sustaining. For example, the sales might be very low during the first couple of months, and the business must be ready to operate at low margins.
If you plan only for the short-term, the chances are that the business will find it difficult to meet all the expenses. Some of these expenses include marketing-related costs, salaries, initial supplies, and legal compliance needs.
The best way to address the problem is getting ample resources to support the business for about one year or more. Even in the case of an unexpected urgent need for a large amount of cash, the business should also have a way of raising funds. A good example is a tender that goes through faster than expected.
Not working with experts when entering the market
When entrepreneurs are moving into new markets, there is a lot of enthusiasm and expectations. Even though they are the dream carrier, failing to work with experts is a great mistake that could easily kill the business.
The market is new, and the efforts that worked well back at home might not generate results in the new jurisdiction. For example, if you are opening a new restaurant, the culture of the offshore destination might be entirely different from your home.
Because many experts have been in the market, they know the strategies that work and those that cannot generate results. Therefore, getting experts in accounting, secretary services, and business expansion can help the business enter the market and march to success with ease.