In a world where we can connect with almost anyone the excitement of starting an international business is certainly attractive to many. It probably started as – “Darn that is a good idea – I bet someone in the world will want to buy my goods.” After all, there is always a demand for something, somewhere – right? You’re smart, so you make a plan, line up a supplier, financing, a few contacts and start shipping. What can go wrong?
In simple terms, you cannot make the assumption that people in different countries operate in the same manner as you. The list of potential traps is endless but many of these traps are common across all start ups. Listed below are just a few examples of things to think about that are associated with starting an international business.
Foreign markets may not work the same as your own: Each country has their own work ethic, values and traditional ways of conducting business. Other countries may seem disorganized, slow and business is conducted in what might appear to be a casual atmosphere. In contrast you may appear to be too direct, non-trusting or offensive in a manner in which you did not expect. This is an issue of perception not fact.
- Corruption – from custom agents to dock workers, expect delays and extra costs (money to encourage facilitation)
- Errors on classifications and tariffs
- Change in a port of entry
- Political climate
- Once product has arrived the terms of deal may change
- International banking laws – vary from country to country, fees vary greatly
- Country specific laws governing whom may do business
- Language barriers – you or your contacts may not have the skill to resolve some issues
- The product may not sell as quickly as anticipated
- Collection issues are a part of all economies
The good news is the risks can be minimized by taking the following actions
- Think your plan through – leave nothing to chance
- Deal only with trusted friends, family or contacts that can provide references
- Visit the country you are going to do business in and develop personal relationships with all parties. Get “Face-to-Face”.
- Make sure you have a clear understanding of the need for your product
- Perform a test run of the plan from shipping to collection
- Have a contact for problem resolution (International Attorney)
Lastly, do your homework! The more you prepare the fewer traps you might fall into. The following links may provide valuable information for:
Import/Export market size and potential
Research and Market Reports – they are not cheap
Banking/Transfer of Monies/Declarations
Intellectual Property concerns